IMF and Europe in dangerous game of brinkmanship over failing Greek bailout

[alp227]

Source: The Guardian

The eurozone and the International Monetary Fund are locked in their worst showdown of Europe's three-year sovereign debt crisis, engaged in a dangerous game of brinkmanship over how to respond to a Greek bailout that is threatening to go off the rails.

The IMF, it is understood in Brussels, is insisting that Greece's eurozone creditors and the European Central Bank write down or write off up to €30bn (£24bn) in Greek debt to close a funding gap in the Greek rescue plan which may need to be extended by two years.

The showdown between the eurozone and the IMF is being described as eyeball-to-eyeball, a shouting match, and a contest to see who will blink first. It is expected to come to a head next month. The IMF is demanding that the eurozone and the ECB resort to a new policy of Official Sector Involvement (OSI), meaning a writedown or writeoff of Greek debt to its official creditors - a move that the ECB and the German government are resisting fiercely.

Greece needs a cash payout from its previously agreed bailout of more than €30bn next month, without which it will go bankrupt and be unable to pay public workers or pensioners.

Read more: http://www.guardian.co.uk/business/2012/oct/12/imf-europe-brinkmanship-greek-bailout

[Katashi_itto]

1. One wonders how far down the Rabbit hole Greece will go before it rises up.

Starts hanging it's politicians in the street. Its a good model to watch, if Romney gets elected.

[Yo_Mama]

2. The IMF is right

Greece obviously cannot pay the debt and a good amount of it has to be written off. ECB doesn't want to do it, and the bailout funds don't want to do it.

But the real reason they don't want to do this is because of the other countries that have gotten bailouts. They think it will set a precedent and that those countries will want writeoffs. And then when you think about Spain and Italy, the pressure gets worse.

This has turned into an exceedingly dark comedy.

[tama]

3. IMF is "first debtor"

it is not writing of it's own debt, but wants European taxpayers to write of debt so that Greece etc. can keep on paying interests to IMF. Fuck IMF.

[Yo_Mama]

5. That is true, BUT

The IMF however only holds 20 billion directly in Greek debt.

ECB is supposed to have about 50 billion. The rest (about 130 billion) I guess is in the EFSF.

Whether the write-down proposal goes forward or not, IMF would be covered.

The bottom line is that those obligations won't be repaid in full, and Europe doesn't want to admit that yet. They would rather give Greece more money now to prevent the admission. And that's what's going to happen. IMF has already refused to give Greece more money.

So actually, what the Europeans are doing is shifting more debt to the greater European sector. Greece simply can't pay its debt. Greece kind of has the rest of Europe by the balls now - they are negotiating to get money to pay the interest on the debt AND fund other internal spending. And they're going to get a good deal of what they want just so they will agree to keep the farce going another few months.

The cost of doing this is getting pretty high.

[tama]

6. It is obvious

that the priority and real motivation of the whole operation has been to buy time for private capital to get out of risk and transfer the risk to European taxpayers: "privatize profit, socialize costs and risks". I'm in favor of people in Greece and elsewhere getting rid of their corrupt governments of corrupt political parties, auditing and cancelling all odious debt taken by those governments, including IMF debt. If that would bankrupt IMF, all the better.

[Yo_Mama]

7. The reason they are not doing that

Is that the money they are getting externally is still paying for some of the ongoing government spending.

Greece itself is bankrupt. If they cancelled all non-domestic debt, they would still not have enough money to run their government and provide the basics to the people.

I support cancellation of a large fraction of the remaining debt.

[tama]

8. In fact

the budget is already practically balanced - except for the interest on debt. Which means that the "deficit" of interests will be added to the "capital" piling more debt on debt with no way out of debt slavery. If they keep on doing what IMF and ECB demand.

Budget is in fact on surplus, if you count out bank bail outs and the cost of tear gas etc. measures that corrupt government and parties needs against people.

[lovuian]

4. Who runs the world IMF but not for long ...the New World Order crumbles

Germany won't be a pansy any longer

for the rich elite of the world

Merkel is on her way out

Greece will go bankrupt as well as Spain ...and then the rebuilding starts
Iceland is the winning solution economically

Austere measures only promote the rich and the poor suffer to the point of revolution
Marx is right ...the worker will rise up