Brussels, the European Central Bank, and the IMF are following different agendas – and it shows.
The European Central Bank has snatched Greek survival from the jaws of sovereign bankruptcy. It’s done this by securing interim financing in the form of additional emergency loans from the Bank of Greece, Die Welt reported today (Saturday).
It’s emerged that the ECB’s Governing Council agreed at its meeting on Thursday to increase the upper limit for the amount of Greek short-term loans the Bank of Greece can accept in exchange for emergency loans, Die Welt asserted.
Well zipperteedoo-dah what a wonderful day, but how will this meld with the euronotes that Greece is still printing (while the ECB quietly burns them on receipt) and the hard-to-ignore reality that technically, without a constant supply of Frankfurtergeld, the BoG would be insolvent itself? Nobody cares any more, for this is now the Bunker-whacky world of eurozone finance: short terms are safer than emergencies, toilet paper can bail out whole nations, and Berlin is the guarantor of last resort except when the Bundesbank in Frankfurt suggests otherwise.
Thus, a decision made in private will have approximately a hundred times the effect of Mario Draghi publicly vowing to do Whatever it Takes – up to but not defining ‘whatever’.
However, I am here to inform you that this decision hasn’t gone down well with Christine Lagarde, Queen of the IMF. She has been stunned, I’m told, to learn that the recent transaction whereby private Bank Piraeus acquired the healthy assets of the otherwise bankrupt State Agricultural Bank of Greece (ATEBank) had also involved (a) the debts of the Greek political parties being transferred to Piraeus bank at advantageous rates, and (b) the transfer of large amounts of cash (around €9m) abroad by a senior ATEBank executive during the immediate past.
What is it about elite Greek wealth, I keep on asking myself, that gives it an anti-magnetic repulsion effect causing its emigration to Zurich at the speed of Light?
But if the IMF frets about such petty-fogging details, the ECB and Brussels bigwigs are far more focused: in fact, so clear are they about objectives, a meeting about such things is only a month away.
It is to take place on September 3rd (the anniversary of the outbreak of World War II) and prior to this, Luxembourg’s prime minister Jean Claude Juncker will visit Athens on August 22. Juncker will hold talks with Samaras two days before the latter will leave Athens and travel to European capitals in an effort to persuade Greece’s political lenders to grant the debt-ridden country an extension to its schedule for meeting fiscal targets. The Greek PM will meet with German chancellor Angela Merkel in Berlin on August 24th, and French President Francois Hollande in Paris on the following day. Kissinger would’ve called this Shuttle Diplomacy, but to me it looks a lot more like Scuttle Delinquency.
However, what’s worrying Hellenic commentators in the meantime is that the Greek government keeps trying to table some “equivalent measures”…in place of ‘more tax, more axe’: the bonkers idea that must one day trigger uncontrollable social unrest. The Troikanauts on the ground in Athens keeps on sweeping these alternatives under the table again, and plodding on in that Berlin-am-Brussels style that only they can manage. Further, hey’re becoming adopt at leaking to all and sundry how the Athens Coalition’s projections on tax collection are “ridiculously over-optimistic”.
So to sum up then, Mario Draghi is giving the signal that anything goes rather than having Greece default, Christine Lagarde is having an attack of moral vapours about the corrupt denialism, and Jean Claude Juncker is Officer in Charge of the Athens Coalition jumping through every hoop he can think of as a means of begging for mercy.
Somebody needs to explain to me why this Thing running Greece is called a Troika, as opposed to a Tricolore salad. And why you can never find some Balsamic vinegar when you need it.
But meanwhile, Tim Geithner sits quietly watching the whole ball of wool unravel. It’s all going to get increasingly interesting. Stay tuned.