Troika Delays Loan Tranche Vote Until November 26

Greek Aid Payment Call Won’t Be Made Next Week, EU Official Says – Bloomberg.

Risk Off(er) | ZeroHedge.

By the skin of his teeth, Samaras was able to ram through more labor reforms and other concessions dictated to him by the troika. You would think they would reward the Greek effort with a show of support rather than this dilatory tactic.

For the past month or so, we were all led to believe that once Greece approved the latest round of austerity legislation the eurozone finance ministers would vote to release the next tranche of loans on November 12. Samaras had even scheduled the last vote on the budget for November 11.

The vote has been moved back until November 26. This date is just about when Greece will run out of money.

The eurozone is adhering to its brinkmanship politics. Rather than strengthening Samaras’ hand, they are weakening it with this action, so there must be a good reason to do so:

  1. The troika needs to obtain more concessions from Greece and is creating a crisis to do so.
  2. The IMF is insisting that the ECB and eurozone government forgive some Greek debt so that it is on a sustainable course, and they need time to negotiate how to do this.
  3. The eurozone is considering a Grexit.

My money is on #2. The IMF has been releasing reports showing that Greece will never achieve a sustainable debt load without reducing what it owes whether through either debt forgiveness or some other means, and the organization’s own rules prohibit it from disbursing loans to countries that will not return to a sustainable debt load.

#3 is the least likely. Everyone knows how catastrophic a Greek default would be especially to its other periphery brethren.

The risk with pushing the approval date back is that the Greek government may crumble during the delay. Resentment is building up, and it is unclear how long Samaras can keep the governing coalition together. A new government would likely attempt to renegotiate the bailout agreement.

While all this is occurring, look for the ECB to lend the Bank of Greece money so that it may reloan it to the Greek banks, which will use the funds to rollover their Greek T-Bills. Greece is no danger of running out of cash until the end of the month at the earliest.

4 thoughts on “Troika Delays Loan Tranche Vote Until November 26

  1. I believe Draghi has previously made comments to the effect that OSI haircuts were out of the question. It will be interesting to see if he relents on this stance. My guess is that ultimately, Greece exits of its own volition. The political price of maintain the Euro will be too high. If this happens, things will get really interesting.

  2. Greece has NOT made the cuts, has NOT made the budgetary arrangements and has NOT lived up to the condition of the bailout.

    The rest of Europe is sick of this and isn’t in the mood to give a wad of dough for “good effort”.

    Greece is strong, smart and resilient. It will survive.

    It will not survive by cheating, whining, wailing and throwing flaming things around.

    • I agree and believe that Greece should default and exit. With the amount of debt, a default is inevitable, and the eurozone is cynically keeping Greece afloat just to avert a market panic and a “domino” scenario.

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