Greece debt crisis: IMF payment missed as bailout expires

Greece has missed the deadline for a €1.5bn (£1.1bn) payment to the International Monetary Fund (IMF), hours after eurozone ministers refused to extend its bailout.

But the ministers say they will discuss a last-minute request from Greece for a new two-year bailout on Wednesday.

Greece is the first European Union country to fail to repay a loan to the IMF and is now formally in arrears.

There are fears that this could put Greece at risk of leaving the euro.

The IMF confirmed that Greece had failed to make the payment, shortly after 22:00 GMT on Tuesday.
"We have informed our Executive Board that Greece is now in arrears and can only receive IMF financing once the arrears are cleared," said IMF spokesman Gerry Rice.

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Europe’s Attack On Greek Democracy - by Joseph Stiglitz

The rising crescendo of bickering and acrimony within Europe might seem to outsiders to be the inevitable result of the bitter endgame playing out between Greece and its creditors. In fact, European leaders are finally beginning to reveal the true nature of the ongoing debt dispute, and the answer is not pleasant: it is about power and democracy much more than money and economics.

Of course, the economics behind the program that the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund) foisted on Greece five years ago has been abysmal, resulting in a 25% decline in the country’s GDP. I can think of no depression, ever, that has been so deliberate and had such catastrophic consequences: Greece’s rate of youth unemployment, for example, now exceeds 60%.

Read more: Europe’s Attack On Greek Democracy

Greek leader assails 'absurd proposals' from European creditors - by Steven Zeitchik

A day after ‎the Syriza-led Greek government acknowledged it couldn't reach a deal with European creditors, Prime Minister Alexis Tsipras took to the airwaves to sound a defiant note on the failed talks.

In a nationally televised address to Parliament on Friday evening‎, Tsipras rebuffed the European Commission and the German-led creditors who hold much of Greece's debt.

"The government is not going to give in to absurd proposals," he told lawmakers in Athens. This is "a bad negotiating trick."

Greece is seeking a debt restructuring that would alleviate the burden of its massive financial obligations and release about $8 billion in previously agreed-upon bailout funds, in turn preventing a default and potential exit from the euro currency.

The German-led creditors are refusing to meet Greece's demands until the country makes promises of more austerity and labor reform.


Read more: Greek leader assails 'absurd proposals' from European creditors - LA Times

Greece: Seeking compromise deal, Greece warns it might skip IMF payment - by Karolina Tagaris and Deepa Babington

Greece's international creditors signaled on Wednesday they were ready to compromise to avert a debt default even as Athens warned it might skip an IMF loan repayment due this week.

Prime Minister Alexis Tsipras visits Brussels later on Wednesday to see senior European officials, where he is expected to hear the terms of the plan drawn up this week at a meeting of top leaders, including German Chancellor Angela Merkel.

With time running out, and looking to draw a line under months of acrimonious negotiations, the creditors have effectively come up with a take-it-or-leave-it offer.

However, Tsipras has produced a plan of his own and said he intended to discuss this document in Brussels, calling on euro zone partners to show some "realism" and urging a deal that would let Greece escape from "economic asphyxiation".

Read more: Seeking compromise deal, Greece warns it might skip IMF payment | Reuters

US Banking Industry: U.S. Banks Expect Rise in Energy-Sector Loan Defaults - by Jeffry Sparshot

 Banks in the U.S. are cutting credit lines to energy companies and forcing firms to cough up more collateral to guard against fallout from the past year’s plunge in oil prices, a Federal Reserve survey found.

Read more: U.S. Banks Expect Rise in Energy-Sector Loan Defaults - WSJ

Greece optimistic on deal with euro zone next week

Greece is optimistic about reaching a deal on economic reforms with its euro zone peers early next week, unblocking urgently needed funding, its economy minister said on Thursday.

After talks with EU leaders including German Chancellor Angela Merkel in the past week, Athens said it would present a package of reforms to its euro zone partners by Monday in the hope of unlocking aid and avoiding bankruptcy.

"I believe that at the beginning of next week we will have an agreement on the package of reforms the Greek government is proposing, and on the funding of the country," Economy Minister George Stathakis told Antenna TV.

He did not specify when the list would be sent.

The reforms are a sensitive issue for Prime Minister Alexis Tsipras's leftwing government, which came to power in January pledging to end austerity.

It is not clear whether they will include measures agreed by the previous conservative-led government, such as privatizations and pension reforms.

Euro zone authorities have said Athens, which has been kept afloat by EU/IMF bailouts worth 240 billion euros since 2010, will not get any further aid until the reforms are approved by the bloc's finance ministers.

A source familiar with Greece's financial position told Reuters on Tuesday Athens would run out of money on April 20 without new cash.


Read more: Greece optimistic on deal with euro zone next week | Reuters

Greece Defiant Greece sets itself on collision course with European partners - by Deepa Babington and Renee Maltezou

Leftist Prime Minister Alexis Tsipras laid out plans on Sunday to dismantle Greece’s “cruel” austerity programme, ruling out any extension of its international bailout and setting himself on a collision course with his European partners.

In his first major speech to parliament since storming to power last month, Tsipras rattled off a list of moves to reverse reforms imposed by European and International Monetary Fund lenders: from reinstating pension bonuses and cancelling a property tax to ending mass layoffs and raising the mininum wage back to pre-crisis levels.

Showing little intent to heed warnings from EU partners to stick to commitments in the 240 billion euro bailout, Tsipras said he intended to fully respect campaign pledges to heal the “wounds” of the austerity.

Greece would achieve balanced budgets but would no longer produce unrealistic primary budget surpluses, he said, a reference to requirements to be in the black excluding debt repayments.

“The bailout failed,” the 40-year-old leader told parliament to applause. “We want to make clear in every direction what we are not negotiating. We are not negotiating our national sovereignty.”

In a symbolic move that appeared to take direct aim at Greece’s biggest creditor, Tsipras finished off his speech with a pledge to seek World War II reparations from Germany.

Tsipras ruled out an extending the bailout beyond Feb. 28 when it is due to end, but said he believed a deal with European partners could be struck on a so-called “bridge” agreement within the next 15 days to keep Greece afloat.

Read more: Defiant Greece sets itself on collision course with European partners - The Globe and Mail

Argentina Default: Argentina blames US mediator for debt default

Cabinet Chief Jorge Capitanich said his country was considering opening proceedings at international tribunals in The Hague after it was declared to be in technical default.

The announcement came just hours after last-minute talks in New York with a group of bond-holders failed.
The bond-holders are demanding a full pay-out of $1.3bn (£766m).

Argentina says the bond-holders are "vultures" using the South American country's debt problems to make a big profit.

The investors are US hedge funds that bought debt cheaply after Argentina's economic crisis in 2001-2002.

They are also known as "hold-outs" because they did not sign up to a restructuring of debt which the majority of bond-holders agreed to in 2005 and 2010
.
Under that deal, investors agreed to settle for about a third of what they were originally owed.

Read more: BBC News - Argentina blames US mediator for debt default

USA: And so America's skewed democracy lurches on toward its next crisis: by Gary Younge

ust as the House of Representatives was finally voting to reopen the government and save the nation from reneging on debt and inviting a downgrade, a House stenographer appears to have suffered a breakdown. Grabbing the microphone, she started defending God's honour before the nation.

He will not be mocked. The greatest deception here is this is not one nation under God. It never was. The constitution would not have been written by freemasons. They go against God. You cannot serve two masters.

After being removed and questioned, she was taken away for psychiatric evaluation.
Her mental health is no laughing matter. But the description of her interjection by much of the media as a "bizarre" interruption to the House vote deserves interrogation.

Because everything about this was bizarre. From the moment Ted Cruz got up and started quoting Ashton Kutcher and talking about Star Wars into the wee hours, this entire process has been nothing but bizarre. America, once again, took the familiar road from the height of dysfunction to the brink of default – until reality grabbed it by the scruff of the neck and slapped it straight, before it did itself and others grave harm.

Because America is powerful, the world has to take notice of these self-inflicted crises. But because it has become so predictably dysfunctional and routinely reckless, they are difficult to take seriously or, at times, even fathom. To the rest of the world and much of America, this is yet another dangerous folly. The fact that the nation did not default should come as cold comfort. The fact that we are even talking about it defaulting is a problem.

This particular flirtation with fate was driven by a visceral opposition to the moderate provision of something most western nations take for granted: healthcare. The reforms they opposed had been been passed by the very body of which they are a member and had been been approved by the US supreme court, the guardian of the very constitution they claimed to be defending. For this, they started a fight they never had the numbers to win and carried on waging it long after it was clear they had lost.

"We're not going to be disrespected," insisted Republican Indiana Congressman Marlin Stutzman, recently. "We have to get something out of this. And I don't know what that even is."

Read more: And so America's skewed democracy lurches on toward its next crisis | Gary Younge | Comment is free | theguardian.com

USA: Shutdown deal averts catastrophe but leaves the US economy in peril - by Zachary A. Goldfarb

The deal reached by Congress on Wednesday to end the government shutdown and raise the debt ceiling averts a financial catastrophe but leaves the weakened U.S. economy facing new threats.

The agreement will send about 450,000 federal employees back to work and restart paychecks for the 1.3 million employees who stayed on the job during the shutdown. Getting those salaries back in circulation will help economic growth, particularly in the Washington area.

More important, the threat of a default on the national debt has been avoided, along with the recession and financial crisis that may have accompanied a failure to raise the borrowing limit.

But while the bipartisan deal ends a period of disruption that has slowed the economy — the shutdown removed more than $20 billion in direct government spending and related economic activity — it creates new perils, setting up other economy-shaking deadlines in just a few months.

It also does almost nothing for the country’s existing economic challenges, including automatic spending cuts that are worsening the problem of high unemployment and a long-term debt challenge posed by mounting costs in health-care and retirement programs.

Under the terms of the bipartisan agreement, lawmakers in both parties will spend the next two months trying to hash out a deal that could alleviate some of these risks. But there is little optimism that effort will succeed, given that several similar bipartisan initiatives in recent years have failed over disagreements about taxes and spending.

Read more: Shutdown deal averts catastrophe but leaves the economy in peril - The Washington Post

Greece struggles back to markets with elections looming

Greece continues to hold a place in the news as it completes a series of milestones on its path to recuperation, while it awaits a possible change in its government that could endanger the completion of targets agreed to its second bailout.

On Tuesday, Athens sold EUR1.3bn of 3-month T-bills (Treasury bills) with borrowing costs backing down as demand remained stable. Specifically, the auction’s bid-cover ratio came in at 2.69, compared to February’s 2.7; while the yield dropped 36 basis points to 4.25%.

The auction comes on the same fateful day that EUR14.5bn in Greek bonds mature. The Hellenic Republic was theoretically able to avoid default thanks to funds issued after the IMF and EU approved the second EUR130bn bailout.

For more: Ifa Magazine • Greece struggles back to markets with elections looming

42% See U.S. Debt Default As Somewhat Likely

 Looking overseas at the catastrophic economic problems plaguing Greece and other European nations, a sizable number of Americans still think the United States is also a candidate for default in the near future. A new Rasmussen Reports national telephone survey finds that 42% of American Adults believe it is at least somewhat likely that the U.S. government will default on its debt in the next five years. Forty-eight percent (48%) now rate a national debt default as unlikely.

For more: 42% See U.S. Debt Default As Somewhat Likely - Rasmussen Reports™

Hungary faces ruin as EU loses patience - by Ambrose Evans-Pritchard

The European Commission has launched legal action against Hungary's Fidesz government for violations of European Union treaty law and erosion of democracy, marking a dramatic escalation in the war of words with the EU's enfant terrible.

Hungary's defiant premier Viktor Orbán has no hope of securing vital funding from the EU and the International Monetary Fund until the dispute is resolved, leaving him a stark choice of either bowing to EU demands or letting his country slide into bankruptcy.

Yields on Hungary's two-year debt jumped to 9.17pc on Tuesday, an unsustainable level for an economy in recession with public debt of near 80pc of GDP. Hungary's debt was cut to junk status by rating agencies last week. Capital Economics said Hungary must repay €5.9bn (£4.9bn) in EU-IMF loans and raise external funds equal to 18pc of GDP this year, the highest in Eastern Europe. Two-thirds of household debt is in Swiss francs, leading to a lethal currency mismatch as capital flight weakens the forint.

"Hungary is playing with fire," said Lars Christensen from Danske Bank. "The EU is not bluffing. It will let Hungary go over the edge to make the point that EU countries must play by the rules. Our worry is that Hungary's government has not yet got the message.

"For more: Hungary faces ruin as EU loses patience - Telegraph

French downgrade sends stocks slumping

Stock markets and the euro traded lower Friday as Greek debt swap talks were put on hold and France’s finance minister confirmed that Standard & Poor’s has downgraded the country’s credit rating.

Francois Baroin confirmed media reports that the rating has dropped one notch from the top triple-A level to AA+. Various reports said Germany and the Netherlands would keep their top ratings.

Earlier, representatives of private bondholders said crucial negotiations between the Greek government and its private creditors on a deal needed to avoid default had been "paused for reflection," which raised concerns the negotiations were close to collapse.

The talks are aimed at renegotiating the face value of bonds Greece has issued in order to reach an agreement on how much of a haircut the banks will take voluntarily.  By making the deal voluntary, Greece would dodge a legal default, which risks triggering a much deeper financial crisis that could curtail European lending.

For more: French downgrade sends stocks slumping - Business - CBC News

Greece: Punish the Politicians and Bankers, Not the Public - by Eric Margolis

In 1922, Greek armies trying to conquer western Anatolia were routed by Turkey's military leader, Mustafa Kemal Ataturk. Hundreds of thousands of ethnic Greeks were uprooted from Ionian coastal areas. After this debacle, Greek officers took three former prime ministers, a general and two other politicians who had led the Turkish-Greek War and shot them. Greeks cheered. Many Greeks today must be wishing to see similar punishment inflicted on their politicians and bankers who were responsible for the nation's bankruptcy and staggering $500 billion debt.


Today 2011 after intense debate, Greece's EU partners and the International Monetary Fund have just staved off Greece's impending default on its maturing debt by a $165 billion loan. But Athens must soon make more huge payments. The EU aid package piles more debt onto Greece's already mountainous debts -- just as President Barack Obama is doing in the US.

Greece politicians and bankers are using the same scare-tactics that the supposedly too-big-to-fail insolvent US banks employed in 2008: "If I go down, I'll take everyone with me." In this case, it's Europe's big banks. Three big French banks, BNP, Crédit Agricole, Société Général, hold large chunks of Greece's debt. If Greece defaults, goes the hue and cry, French, German, Swiss, and Belgian banks may crash.

Politicians have allowed the banking industry not only to grow larger than manufacturing, notably in the United States, where the top five banks control 40% of all deposits, but to become so powerful, over-extended, and risky they are a danger to itself and the public. It's time for the bankers to pay for the mess their greed and recklessness created.

The fact is that bankers who invested in Greek debt or US subprime mortgages were greedy fools and should be fired, not rescued. Just this week we learned that the US government loaned $15 billion to Goldman Sachs during the 2008 crisis.


Bottom-line: Greece's only viable solution is to renege on its debts, go bankrupt like Argentina did, and start afresh. If the European banking system is such a house of cards that the collapse of tiny Greece, with only 10 million people, will bring it crashing down, it should be nationalized, set right, and refloated as private corporations. The US should have done the same instead of allowing insolvent banks to continue as financial zombies.

Europe's banks obviously will be shaken, but they will survive the jolt, just as the US banking system survived 2008. Time for Europe's banks to get these bad debts off their balance sheets. Rescue funds should be focused on Spain and Italy, if necessary.

For more: Greece Eric Margolis: Punish the Bankers, Not the Public

Greece: Confidence vote reminds Europe that threat of default is far from over

Greece faces a day of political drama as the government faces a confidence vote in parliament tonight against a backdrop of a looming EU ultimatum of more austerity measures in return for the loans the country needs to avoid a disastrous default.

Eurozone finance ministers have given Greece's beleaguered ruling Socialists a fortnight to pass new far-reaching austerity measures or lose out on a €12bn instalment of last year's bailout, and a new €110bn rescue package.

The tougher-than-expected stance from the EU further raised the political temperature in Athens, where tens of thousands of protesters are expected to surround parliament ahead of tonight's vote.

For more: Confidence vote reminds Europe that threat of default is far from over - Europe, World - The Independent

MAJOR PROBLEMS FOR US ECONOMY: May Lose Its 'AAA' Rating says Martin Hennecke at Tyche

The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche.

"The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.

"In the United States there is already a funding crisis, and they will have to sell a lot more bonds next year to fund the bailout packages that have already been signed off," Hennecke told CNBC.

In order to solve or stem the economic slowdown, Hennecke suggested the US would have to radically reduce spending across all sectors and recall all its troops from around the world.

For more: US May Lose Its 'AAA' Rating - CNBC

US default could be doomsday option for economy

The United States has never defaulted on its debt and Democrats and Republicans say they don't want it to happen now. But with partisan acrimony running at fever pitch, and Democrats and Republicans so far apart on how to tame the deficit, the unthinkable is suddenly being pondered.

The government now borrows about 42 cents of every dollar it spends. Imagine that one day soon, the borrowing slams up against the current debt limit ceiling of $14.3 trillion and Congress fails to raise it. The damage would ripple across the entire economy, eventually affecting nearly every American, and rocking global markets in the process.

A default would come if the government actually failed to fulfill a financial obligation, including repaying a loan or interest on that loan. The government borrows mostly by selling bonds to individuals and governments, with a promise to pay back the amount of the bond in a certain time period and agreeing to pay regular interest on that bond in the meantime.

For more: The Associated Press: US default could be doomsday option for economy