(Reuters) - Greece is tapping into the cash reserves of pension funds and public sector entities through repo transactions as it scrambles to cover its funding needs this month, debt officials told Reuters on Tuesday.  Shut out of debt markets and with aid from lenders frozen, Athens is in danger of running out of cash in the coming weeks as it faces a 1.5 billion euro loan repayment to the International Monetary Fund this month.  The government has sought to calm fears and says it will be able to make the IMF payment and others, but not said how.  At least part of the state's cash needs for the month will be met by repo transactions in which pension funds and other state entities sitting on cash lend the money to the country's debt agency through a short-term repurchase agreement for up to 15 days, debt agency officials told Reuters.  However, one government official said they could not be used to repay the IMF unless Athens was able to repay the state entities the cash it borrowed from them...Debt officials sought to play the repos as advantageous for both sides, arguing that the funds get a better return on their cash than what is available in the interbank market.

"It is not something new, it's a tactic that started more than a year ago and is a win-win solution. It's a proposal, we are not twisting anyone's arm," one official said.  In such repo transactions, a pension fund or government entity parks cash it does not immediately need at an account at the Bank of Greece, which becomes the counterparty in the deal with the debt agency.  The money is lent to the debt agency for one to 15 days against collateral - mostly Greek treasury paper held in its portfolio - and is paid back with interest at expiry.  The lender can always opt to roll over the repurchase agreement and continue to earn a higher return than what is available in the interbank market. One source familiar with the matter has previously said Athens could raise up to 3 billion euros through such repos, but that it was not clear how much of that had already been used up by the government.   "There is a sum that has already been raised this way," the debt official said without disclosing specific numbers.   Athens - which has monthly needs of about 4.5 billion euros including a wage and pension bill of 1.5 billion euros - is running out of options to fund itself despite striking a deal with the euro zone to extend its bailout by four months.  Faced with a steep fall in revenues, it is expected to run out of cash by the end of March, possibly sooner, though the government is trying to assure creditors it will not default.   "We are confident that the repayments will be made in full, particularly to the IMF, and there will be liquidity to get us through the end of the four-month period," Finance Minister Yanis Varoufakis said during a late-night talk show on Greek TV on Monday. "March is sorted." (Additional reporting by Renee Maltezou, editing by Deepa Babington/Jeremy Gaunt)

The agreement signed between Greece and the EU after three weeks of lively negotiations is a compromise reached under economic duress. Its only merit for Greece is that it has kept the Syriza government alive and able to fight another day. That day is not far off. Greece will have to negotiate a long-term financing agreement in June, and has substantial debt repayments to make in July and August. In the coming four months the government will have to get its act together to negotiate those hurdles and implement its radical programme. The European left has a stake in Greek success, if it is to beat back the forces of austerity that are currently strangling the continent.   In February the Greek negotiating team fell into a trap of two parts. The first was the reliance of Greek banks on the European Central Bank for liquidity, without which they would stop functioning. Mario Draghi, president of the European Central Bank, ratcheted up the pressure by tightening the terms of liquidity provision. Worried by developments, depositors withdrew funds; towards the end of negotiations Greek banks were losing The second was the Greek state’s need for finance to service debts and pay wages. As negotiations proceeded, funds became tighter. The EU, led by Germany, cynically waited until the pressure on Greek banks had reached fever pitch. By the evening of Friday 20 February the Syriza government had to accept a deal or face chaotic financial conditions the following week, for which it was not prepared at all.  The resulting deal has extended the loan agreement, giving Greece four months of guaranteed finance, subject to regular review by the “institutions”, ie the European Commission, the ECB and the IMF. The country was forced to declare that it will meet all obligations to its creditors “fully and timely”.   Furthermore, it will aim to achieve “appropriate” primary surpluses; desist from unilateral actions that would “negatively impact fiscal targets”; and undertake “reforms” that run counter to Syriza pledges to lower taxes, raise the minimum wage, reverse privatisations, and relieve the humanitarian crisis.   In short, the Syriza government has paid a high price to remain alive. Things will be made even harder by the parlous state of the Greek economy. Growth in 2014 was a measly 0.7%, while GDP actually contracted during the last quarter. Industrial output fell by a further 3.8% in December, and even retail sales declined by 3.7%, despite Christmas. The most worrying indication, however, is the fall in prices by 2.8% in January. This is an economy in a deflationary spiral with little or no drive left to it. Against this background, insisting on austerity and primary balances is vindictive madness.  The coming four months will be a period of constant struggle for Syriza. There is little doubt that the government will face major difficulties in passing the April review conducted by the “institutions” to secure the release of much-needed funds. Indeed, so grave is the fiscal situation that events might unravel even faster. Tax income is collapsing, partly because the economy is frozen and partly because people are withholding payment in the expectation of relief from the extraordinary tax burden imposed over the last few years. The public purse will come under considerable strain already in March, when there are sizeable debt repayments to be made.  But even assuming that the government successfully navigates these straits, in June Greece will have to re-enter negotiations with the EU for a long-term financing agreement. The February trap is still very much there, and ready to be sprung again.  What should we as Syriza do and how could the left across Europe help? The most vital step is to realise that the strategy of hoping to achieve radical change within the institutional framework of the common currency has come to an end. The strategy has given us electoral success by promising to release the Greek people from austerity without having to endure a major falling-out with the eurozone. Unfortunately, events have shown beyond doubt that this is impossible, and it is time that we acknowledged reality.   For Syriza to avoid collapse or total surrender, we must be truly radical. Our strength lies exclusively in the tremendous popular support we still enjoy. The government should rapidly implement measures relieving working people from the tremendous pressures of the last few years: forbid house foreclosures, write off domestic debt, reconnect families to the electricity network, raise the minimum wage, stop privatisations. This is the programme we were elected on. Fiscal targets and monitoring by the “institutions” should take a back seat in our calculations, if we are to maintain our popular support. At the same time, our government must approach the looming June negotiations with a very different frame of mind from February. The eurozone cannot be reformed and it will not become a “friendly” monetary union that supports working people. Greece must bring a full array of options to the table, and it must be prepared for extraordinary liquidity measures in the knowledge that all eventualities could be managed, if its people were ready. After all, the EU has already wrought disaster on the country.   Syriza could gain succour from the European left, but only if the left shakes off its own illusions and begins to propose sensible policies that might at last rid Europe of the absurdity that the common currency has become. There might then be a chance of properly lifting austerity across the continent. Time is indeed very short for all of us. ( source : The Guardian)

"Austrian Finance Minister, Hans Joerg Schelling said the Greek proposals left much to interpretation, suggesting clarity and more detail would be needed  before an agreement is possible. This letter has many sentences with much space for interpretation. We have to work on it now...”Now there's a surprise! The Greeks are showing their usual preciseness. Oh, and somebody is working in Brussels on a FRIDAY AFTERNOON!...'Administrative error' = WHITE FLAG = surrender to the Troika - and to hell with what the Greek voters democratically voted for.  Just like re-runs of the LisconAct of Treachery - formerly known as the EU Federalist Constitution. Must admit I was wondering how they were going to 'con' us all - but an - 'administrative error' really is scraping the bottom of the barrel isn't it !!!! Where's the office bod who pushed the button - sack her/him.....!!!!!!  We're approaching silly o'clock in the eurozone. The Greeks are reported to have "accidentally" sent the wrong letter to their eurozone partners on Thursday, according to Germany's Bild. Greek Finance Minister Yanis Varoufakis sent an altered version of the letter in which - against previous agreements - he omitted assurances that Greece will accept bailout conditions agreed to by the previous government, according to Bild. "An administrative error" apparently.

The eurozone was never designed with an exit plan in mind. The Maastricht Treaty’s 112 pages make no mention of a way for a country to pull out of the euro project.  At the height of the eurozone crisis in 2011 and 2012, policymakers refused to countenance the idea of a splintered euro bloc.   When pressed on the issue in late 2011, Mario Draghi, the president of the European Central Bank (ECB), would only say the possibility “is not in the treaty”.   He was discussing the chance of a Greek exit - or Grexit - from the euro, a risk that has come back to haunt the project’s architects in recent weeks.   The rise of populist anti-austerity parties across the continent - including Syriza in Greece - threatens to tear apart the bloc. Last week analysts warned that the risk of a euro breakup was greater than at the height of the last crisis.   The odds on a Grexit offered this Friday - before a deal between Greece and its creditors was struck - gave it a more than a one-in-three chance by the end of the year.

The termite-eaten timbers under the rotten edifice of the EU are crumbling.

The Alpine region of Carinthia faces probable bankruptcy after Austria’s central government refused to vouch for debts left by a disastrous banking expansion in eastern Europe and the Balkans.

It would be the first sub-sovereign default in Europe since the Lehman Brothers crisis, comparable in some respects to the bankruptcy of California's Orange County in 1994 or the city of Detroit in 2013. Austria’s finance minister, Jörg Schelling, said Vienna would not cover €10.2bn (£7.4bn) in bond guarantees issued by the Carinthian authorities for the failed lender Hypo Alpe Adria, or for the "Heta" resolution fund that succeeded it. This leaves the 550,000-strong province on the Slovene border to fend for itself as losses spin out of control.  “The government won’t waste another euro of taxpayer money on Heta,” he said, insisting that there must be an end to moral hazard. The Hypo affair has alredy cost taxpayers €5.5bn. The Austrian state has said it will cover €1bn of its own guarantees “on the nail” but nothing more. 

Sources in Vienna suggested that even senior bondholders are likely to face a 50pc writedown, becoming the first victims of the eurozone’s tough new “bail-in” rules for creditors. These rules are already in force in Germany and Austria, and will be mandatory everywhere next year.

The cracks are widening - and just a few days ago we heard Austria telling us to treat Greece like lepers.  The euro falls like a brick - with a lot further to go.  It will be interesting to see who dumps this toxic currency first....Germany? France or Italy - a race to the bottom.

 

Greece: Just tell the Jackboots to bugger off.

Greece has secured a four-month reprieve from eurozone creditors at a last-ditch summit in Brussels, heading off imminent default and a traumatic rupture of monetary union.   The interim accord gives Greece breathing room to flesh out its economic agenda and reform plans, and effectively scraps the draconian fiscal targets imposed by the EU-IMF Troika.  Greece, Italy, Spain and Portugal: trying to get anything done in those countries is like trying to herd cats. The bureaucracy, the lack of flexibility, the absurd and utterly pointless rituals of administration and form filling, the insane hurdles that have to be faced when doing business or even the most basic of survival functions drives anyone from the Anglo Saxon cultures absolutely crazy. These are countries that live in the aftermath of decades of dictatorship, and the mentality of those societies is still bound by the dynamics between a violent oppressor and a nation of helpless dependents who were not allowed to think for themselves.  Individualism is just not what it is is in say the UK. Spain is a good example of a culture stuck in a corruption. If you want to get anything done you have to avoid going through the bureaucratic processes that are so punitive, irrational and unfair that you are forced into 'going black'. That means avoiding, as best you can, declaring anything you do to the authorities. This is why collecting taxes is difficult. No one declares what they are doing because to do so is such an ordeal of bureaucracy, punitive costs and legal processes that the only way to achieve anything is to avoid the system. Spaniards are very hard, skilful and committed workers, but they work within a framework of rules and regulations, of corrupt traditions and established interests that disable them. These countries need revolutions to throw off their oppressive regimes, and until that happens they will languish in dysfunction.

What did Greece do with the money? Put on an Olympics, pay higher pensions, hire more government workers and overpay them ? Even if we admit that Greece had a debt to gdp ratio far in excess of the 60% claimed when they joined it was not 120% or 150+% when they needed their first bailout. Even Ireland and Spain's own banking regulators could have applied the brakes to their housing bubbles by simply raising the down payments to get a mortgage or construction loan. They were also bribed to buy (faulty) German submarines and unreliable metro/trams and much else by German firms like Siemens (which profited mightily by use of slave labor, even going so far as to open a branch in the Ravensbruck concentration camp). The Greeks were also inundated by loans from French and German banks, and the so-called bail out was, in fact, a bail out be the poor, long-suffering European tax-payer, including Greek ones, of those banks by the corrupt Euro-political class.