Category: Debt

Greece ‘in a corner’ as Europe blocks payment

26-Mar (CNBC) — Greece’s last-ditch attempt to get desperately-needed funds from its euro zone neighbors failed on Wednesday, but the country appears eternally optimistic that a list of reforms — as yet to materialize — will unlock vital aid.

Greece appealed for the European Financial Stability Facility (EFSF) to return 1.2 billion euros ($1.32 billion) it said it had overpaid when it transferred bonds intended for bank recapitalization back to the fund this month, Reuters reported Wednesday.

However, euro zone officials ruled that Greece was not legally entitled to the money, the news wire said.

[source]

Posted in Debt, European Debt Crisis |

ECB Prepares For Grexit, Anticipates 95% Loss On Greek Debt

18-Mar (ZeroHedge) — Dear Greek readers: the writing is now on the wall, and it is in very clear 48-point, double bold, and underlined font: when the ECB “leaks” that it is modelling a Grexit, something Draghi lied about over and over in 2012 and directly in our face too, take it seriously, because it is time to start planning about what happens on “the day after.” And incidentally to all those curious what the fair value of peripheral European bonds is excluding ECB backstops, the ECB has a handy back of the envelope calculation: a 95% loss.

Which also is the punchline, because while the ECB is making it very clear what happens next in the case of a “Graccident”, it has yet to provide an explanation how it will resolve the billions of Greek debt held on its own balance sheet which are about to be “marked-to-default”…

[source]

Posted in Debt, European Debt Crisis |

IMF Considers Greece Its Most Unhelpful Client Ever

18-Feb (Bloomberg) — International Monetary Fund officials told their euro-area colleagues that Greece is the most unhelpful country the organization has dealt with in its 70-year history, according to two people familiar with the talks.

In a short and bad-tempered conference call on Tuesday, officials from the IMF, the European Central Bank and the European Commission complained that Greek officials aren’t adhering to a bailout extension deal reached in February or cooperating with creditors, said the people, who asked not to be identified because the call was private.

…Concern is growing among officials that the recalcitrance of Prime Minister Alexis Tsipras’s government may end up forcing Greece out of the euro, as the cash-strapped country refuses to take the action needed to trigger more financial support. Tsipras is pinning his hopes for a breakthrough on a meeting with ECB President Mario Draghi, German Chancellor Angela Merkel, French President Francois Hollande and European Commission head Jean-Claude Juncker this week in Brussels.

[source]

Posted in Debt, European Debt Crisis |

Tsipras Strikes Defiant Tone Ahead of Meeting With EU Leaders

18-Mar (Bloomberg) — Greek Prime Minister Alexis Tsipras struck a defiant tone as he prepared for meetings in Brussels with European leaders to discuss the cash-strapped country’s bailout.

“People have asked us to put an end to austerity and bailout agreements, to begin the process of reclaiming the dignity of the nation,” Tsipras said today in a speech to parliament. “Elected officials will negotiate with elected officials and technocrats will deal with technocrats.”

Tsipras is seeking a political deal at a European Union summit starting Thursday to unlock funds from the country’s 240 billion-euro ($254 billion) bailout package. Concern is growing among officials that the recalcitrance of his government may end up forcing Greece out of the euro, as the country refuses to take the action needed to trigger more financial support.

…“We will not back down from what we promised, and what society and economy need, in order to breathe,” Tsipras said Wednesday, adding that his government expected the “liquidity pressure.”

[source]

PG View: I keep hearing nobody really wants Greece out of the eurozone, but it sure doesn’t seem like negotiations are bringing either side closer to a deal. Today it was also reported that the ECB had run models on the debt impact of a Grexit.

Posted in Debt, European Debt Crisis |

Meet the new debt ceiling: $18,113,000,000,000

17-Mar (CNNMoney) — The suspense — or rather, the suspension — is over. The U.S. debt ceiling has been reset at $18.113 trillion, the Treasury Department said Tuesday.

That new limit on public debt is about $1 trillion above where it stood in February 2014, when lawmakers decided to “suspend” the ceiling through this past weekend.

That cool trillion reflects how much the Treasury Department has borrowed during the suspension to pay the country’s bills.

For lawmakers, a debt ceiling suspension is like a game of pretend. As in “We don’t want to publicly vote for an actual increase to cover all the spending we’ve already approved. So let’s pretend the debt ceiling doesn’t exist for awhile.”

The game isn’t quite over yet, either.

Yes, the suspension has ended and the country’s outstanding debt is now at its limit. But Treasury still needs to borrow.

[source]

Posted in Debt |

Greece has destroyed all the trust that was rebuilt, Germany’s Schaeuble says

16-Mar (Reuters) – German Finance Minister Wolfgang Schaeuble said on Monday that the new Greek government destroyed all the trust that had been rebuilt in the past.

Speaking at a panel in Berlin, Schaeuble also said that he did not expect Athens to keep its election promise to introduce higher taxes on ship owners. “Even a radical leftist government won’t keep that promise,” the conservative minister said.

Schaeuble reiterated his view that the reason for Greece’s debt problems was that the country lived far beyond its means in the past.

[source]

PG View: Seems like Germany is not so keen on the idea of working with Greece to resolve their issues.

Posted in all posts, Debt, European Debt Crisis |

It’s Back: Your Guide to the $18 Trillion Debt Ceiling

13-Mar (Bloomberg) — The cap on U.S. government borrowing kicks back into action Monday after Congress temporarily suspended it last year. The reinstatement means lawmakers in coming months must either lift or re-suspend the ceiling on the nation’s debt, which exceeds the size of the economy and which, divided among the world’s population, would make every person on the planet $2,500 poorer.

Partisan showdowns have become the norm for debt limit debates as congressional Republicans call for spending cuts and President Barack Obama refuses to sign legislation with strings attached. Whether this year’s negotiations bring renewed turmoil is important, for these reasons. . .

[source]

Posted in Budget/Debt Ceiling Crisis, Debt |

Roubini: Massive Contagion If Greece Leaves the Euro

13-Mar (Bloomberg) — In an exclusive interview, Roubini Global Economics Co-Founder Nouriel Roubini discusses what a Greek exit from the euro would look like.

[video]

PG View: Roubini does not think Grexit is likely, because if it happens it could be devastating and even the Germans know that.

Posted in Debt, European Debt Crisis |

The German government is discussing whether Greece should be cut from Europe like an ‘amputated leg’

13-Mar (BusinessInsider) — Even without the heat of official negotiations, relations between Athens and Berlin are getting more sour by the day. The latest example comes from Wolfgang Schaeuble, Germany’s finance minister.

When pressed by Austrian reporters on whether there could be a “Grexident” — an accidental series of events that could lead to Greece’s leaving the euro — Schaeuble said Greece’s future would be determined by Greek authorities “and since we do not know exactly what the authorities in Greece will do, we can not rule it out.”

Other German government officials are discussing whether Greece might be “amputated” from Europe like a “gangrenous limb,” according to the Financial Times. Greece’s official position is that it will stay in the euro, so Athens most likely will not appreciate the intervention.

[source]

Posted in Debt, European Debt Crisis |

Creditors Reject Greece’s Reform Proposals

09-Mar (Bloomberg) — Greece’s provisional agreement with creditors to avert a default started to crack as European officials said the country’s latest proposals fell far short of what was put forward two weeks ago and Greek ministers floated the prospect of a referendum if their reforms are rejected.

The measures Greece’s government sent to euro-region finance ministers last Friday, including the idea of hiring non-professional tax collectors, is “far” from complete and the country probably won’t receive an aid disbursement this month, Eurogroup Chairman Jeroen Dijsselbloem said on Sunday.

“We definitely still have an immense path ahead of us,” German Chancellor Angela Merkel said during a televised news conference in Tokyo. “We obviously have the political goal to keep Greece in the euro area. But at the same time, there always are two sides to the coin: the solidarity of European partners on the one hand and the readiness to carry out reforms and commitments in one’s own country on the other.”

[source]

PG View: Perhaps the kicked can didn’t go as far as expected…

Posted in Debt, European Debt Crisis |

Japan Public Debt is Keeping BNP’s Chief Credit Analyst Awake at Night

03-Mar (Bloomberg) — For most of her career, Mana Nakazora has taken a pre-dawn train to work regardless of whether she arrived home just hours earlier.

Her colleagues describe BNP Paribas SA’s Tokyo head of investment research as a powerhouse, and she was Japan’s No. 1 bond picker from 2010 to 2012 and No. 2 for the last two years in Nikkei Veritas newspaper polls. Even now, investors thank her for warning against getting into Lehman Brothers Holdings Inc. before the investment bank collapsed in September 2008.

“She’s frank and she says things that are difficult to say,” said Keisuke Tsumoto, the head of fixed income for Japan at Manulife Financial Corp.’s asset management unit in Tokyo, which manages money for Japan’s Government Pension Investment Fund. “What she can’t write down, she lets us know verbally.”

One thing keeping her up — analysis of Japan’s public debt, which is expected to climb to 1.06 quadrillion yen ($8.85 trillion) at the end of March. With a population that’s been shrinking for the past six years and annual debt servicing costs that are bigger than New Zealand’s gross domestic product, the world’s third-largest economy is quite simply running out of people who can pick up the tab.

[source]

PG View: Given the soaring debt burden and the realities of their demographic problem, I’m surprised anyone in Japan can sleep at night.

Posted in Debt |

CBO: Debt limit will have to be increased by October or November

03-Feb (Politico) — Lawmakers will have to raise the government’s borrowing authority in October or November, the Congressional Budget Office warned Tuesday.

The administration will have to begin using the accounting maneuvers known as the “extraordinary measures” later this month to stave off default, the nonpartisan budget agency said. That’s because the last debt limit hike, approved by Congress in February 2014, suspended the borrowing cap through March 15, 2015.

After that, if, as is likely, Congress does not immediately lift the debt limit, Treasury will have to begin shuffling money around in order to avoid slamming into the debt ceiling.

It will likely run out of those maneuvers as well as cash by October or November, CBO said, though the exact timing is still uncertain.

[source]

Posted in Debt |

The Negative Way to Growth?

by Nouriel Roubini
28-Feb (ProSyn) – Monetary policy has become increasingly unconventional in the last six years, with central banks implementing zero-interest-rate policies, quantitative easing, credit easing, forward guidance, and unlimited exchange-rate intervention. But now we have come to the most unconventional policy tool of them all: negative nominal interest rates.

Such rates currently prevail in the eurozone, Switzerland, Denmark, and Sweden. And it is not just short-term policy rates that are now negative in nominal terms: about $3 trillion of assets in Europe and Japan, at maturities as long as ten years (in the case of Swiss government bonds), now have negative interest rates.

At first blush, this seems absurd: Why would anyone want to lend money for a negative nominal return when they could simply hold on to the cash and at least not lose in nominal terms?

…Over time, of course, negative nominal and real returns may lead savers to save less and spend more. And that is precisely the goal of negative interest rates: In a world where supply outstrips demand and too much saving chases too few productive investments, the equilibrium interest rate is low, if not negative. Indeed, if the advanced economies were to suffer from secular stagnation, a world with negative interest rates on both short- and long-term bonds could become the new normal.

[source]

Posted in Central Banks, Debt, Monetary Policy |

Greece in talks for third bailout of up to €50bn, Spain says

02-Mar (Financial Times) — Negotiations have begun on a third bailout package for Greece worth between €30bn and €50bn, the Spanish economy minister said on Monday.

“We are negotiating a third rescue for Greece,” Luis de Guindos told a conference in Pamplona. The minister added that the Spanish government, which has been locked in an escalating war of words with Athens in recent days, would contribute 13-14 per cent of the new bailout. The new accord would provide for “flexibility” and would include new conditions for Greece.

…It has long been expected that Greece would have to seek yet another bailout to cover its financing needs. But Mr de Guindos is the first European minister to declare publicly that negotiations had begun, and to specify the amount of money at stake.

[source]

PG View: Use bailout 2 to pay down bailout 1. Use bailout 3 to pay down bailouts 1 and 2. Where does it end?

Posted in Debt, European Debt Crisis |

Germany is LITERALLY getting paid to borrow money

27-Feb (WashingtonPost) — Germany’s balanced budget couldn’t be more fiscally irresponsible.

It’s not just that Germany has gotten into the black by scrimping on repairs today that might end up costing it more tomorrow. It’s that Germany’s being so tight-fisted at the least opportune moment possible. It’s never going to have lower borrowing costs, so it might as well spend the money now that it’s eventually going to have to on upkeep and upgrading its infrastructure. In fact, it’s even worse than that. Germany is actually losing money by not borrowing money. That’s because it’s getting paid to borrow right now: for the first time, it just sold a 5-year bond at a negative interest rate.

[source]

PG View: Germany recently sold 5-year bunds at a -0.085 interest rate. German debt is certainly considered to be a low risk investment, because of the government’s fiscal prudence. However, the notion that there is less than no risk is nonsense. That is the direct result of activist central banks distorting the pricing of risk. This is not a healthy market.

Posted in Central Banks, Debt, Monetary Policy |

Greece Warns It May Default On IMF Loan As Soon As Next Week

26-Feb (ZeroHedge) — Now that the Greek tragicomedy of the new government “threatening” to leave the Eurozone if it doesn’t get its way, has been postponed for a few weeks, if not months, we can go back to the biggest story involving Greece, one we first covered in October of 2014, when we said that Greece needs about €43 billion through the end of 2015 to cover its funding needs. Earlier today, the broader market finally woke up to precisely this problem for Greece, when MarketNews reported that Greek creditors are now contemplating a third bailout which could be as large as €30 billion.

Of course, the only “use of proceeds” of this bailout would be to cover prior financing obligations: maturities and interest on pre-existing debt. None would actually go to the Greeks themselves; however a third bailout would certainly come with even more draconian conditions and terms that would make the current Greek “austerity” measures seem like a walk in the park.

So now that the Greek topic is back to overall debt sustainability, a few hours ago Greece Kathimerini reported that the Euro Working Group “discussed Greece’s imminent funding problems on Thursday amid mounting concern about how the country will meet its obligations next months.”

This follows a suggestion earlier in the day by the Greek Minister of State for Coordinating Government Operations Alekos Flambouraris that “Greece might delay payment to the International Monetary Fund if it cannot find the necessary money.”

According to Kathimerini calculations, Greece is due to pay the IMF 1.6 billion euros next month but Flambouraris said that Athens might ask to delay this payment for two months.

[source]

PG View: The 4-month kick-of-the-can may not even buy 4-months. It certainly solves nothing.

Posted in Debt, European Debt Crisis |

Greece’s Challenge: Appeasing Its Creditors and Its Population

27-Feb (Wall Street Journal) — Greece and the rest of the eurozone spent February fighting about the procedure for keeping the country afloat. They will spend the spring haggling over a tougher issue: Which economic policies can appease both Greece’s creditors and its population?
Analysis

This week’s agreement to carry on talking was hard enough to achieve. The next deal will be far harder because the airy communiqués that preserved a consensus so far must be turned into meaty policy decisions.

Part of the mistrust between Greece and its German-led creditors stems from an ideological rift over what has gone wrong in the small, distressed country over the past five years.

Berlin blames the economic collapse that followed Greece’s 2010 bailout on the fiscal and other sins that predated it. Greece’s new government blames the bailout for turning a financial crisis into a full-blown depression. Opposite policy prescriptions follow from these clashing interpretations.

Finding common ground will be the key to keeping Greece in the euro. The search must survive three stages, if Greece’s new drama isn’t to end in the drachma.

[source]

Posted in Debt, European Debt Crisis |

German lawmakers to back Greek extension despite misgivings

26-Feb (Reuters) – German lawmakers signaled that they will approve an extension of Greece’s bailout with an overwhelming majority in parliament on Friday although many will do so reluctantly amid fears Athens will not deliver on its reform promises.

Angela Merkel’s coalition has a big enough majority to easily win the vote in the Bundestag lower house to extend the rescue by four months. But many lawmakers, including Finance Minister Wolfgang Schaeuble, have expressed concern in recent days about whether Athens is to be trusted.

[source]

PG View: I’m going to go out on a limb here and predict that Europe will be right back in crisis mode in June, after Greece fails to advance the reforms they’ve promised (again).

Posted in Debt, European Debt Crisis |

Germany Sells Five-Year Debt at Negative Yield for First Time on Record

25-Feb (Wall Street Journal) — Germany on Wednesday sold five-year government debt at a negative yield for the first time on record, reflecting plunging borrowing costs across the region in the run-up to the European Central Bank’s sovereign-bond-buying program.

The German Finance Agency sold €3.281 billion ($3.72 billion) of bonds maturing in April 2020 at an average yield of minus 0.08%. At a similar deal in January, the yield was 0.05%.

The negative yield means investors are effectively paying the German state for holding its debt. Even so, bond prices—which climb when yields drop—are expected to rise further once the ECB starts its latest round of stimulus measures next month, meaning investors could potentially sell the bonds at a profit.

[source]

Posted in Currency Wars, Debt |

IMF warns Greece reform plan lacks ‘clear’ committments

24-Feb (Economic Times) — The International Monetary Fund warned Tuesday that Greece’s reform plan submitted in exchange for a bailout extension lacked clear signs that the government will follow through on its promises.

In a number of areas, “including perhaps the most important ones,” the letter proposing the reforms “is not conveying clear assurances that the government intends to undertake the reforms envisaged,” said IMF managing director Christine Lagarde in a statement.

[source]

PG View: Who cares if they really intend to follow-through on reforms. Just keep the charade going for another 4-months…

Posted in Debt, European Debt Crisis |

Euro zone backs Greek reform plan, 4-month aid extension

24-Feb (Reuters) – Greece secured a four-month extension of its financial rescue on Tuesday when its euro zone partners approved a reform plan that backed down on key leftist measures and promised that spending to alleviate social distress would not derail its budget.

Finance ministers sealed the decision in a one-hour telephone conference convened by Eurogroup chairman Jeroen Dijsselbloem after the new leftist-led Athens government sent him a detailed list of reforms it plans to implement by July.

“Following Eurogroup teleconference decision, national procedures for extension of the Greek programme can begin,” Valdis Dombrovskis, the European Commission vice-president for the euro, said on Twitter.

[source]

PG View: Gold eked out a new 7-week low on the announcement, but quickly rebounded back above $1200.

Posted in Debt, Economic Data |

Greece debt: EU says reform proposals ‘valid’

24-Feb (BBC) — Greece is a step further on its way to receiving a bailout extension after its list of proposed reforms was backed by one of its key creditors.

Top European Commission officials called the proposals “sufficiently comprehensive to be a valid starting point”.

European finance ministers are set to discuss the list shortly.

Greece needs approval from international creditors to secure a four-month loan extension.

Newly elected Greek Prime Minister Alexis Tsipras is trying to balance satisfying the demands of creditors with meeting his pre-election pledges.

[source]

Posted in Debt, European Debt Crisis |

This Is The Biggest Problem Facing The World Today: 9 Countries Have Debt-To-GDP Over 300%

23-Feb (ZeroHedge) — If anyone has stopped to ask just why global central banks are in such a rush to create inflation (but only controlled inflation, not runaway hyperinflation… of course when they fail with the “controlled” part the money paradrop is only a matter of time) over the past 5 years, and have printed over $12 trillion in credit-money since Lehman, the bulk of which has ended up in the stock market, and which for the first time ever are about to monetize all global sovereign debt issuance in 2015, the answer is simple, and can be seen on the chart below.

It also shows the biggest problem facing the world today, namely that at least 9 countries have debt/GDP above 300%, and that a whopping 39% countries have debt-to-GDP of over 100%!

[source]

Posted in Debt |

Greece scrambles to send draft reforms to EU institutions

23-Feb (Financial Times) — The Greek government scrambled to come up with economic reform proposals to satisfy its international creditors, even as cracks emerged in the ruling Syriza party over Friday’s last-minute deal to extend Athens’ EU bailout by another four months.

A draft of the reform measures was submitted ahead of a formal evaluation on Monday by bailout monitors who will determine whether a tentative agreement to extend the €172bn rescue until June can proceed.

European markets reacted positively to the eleventh-hour deal in trading on Monday, with Greece’s three-year borrowing costs falling 219 basis points to 14.44 per cent. The country’s stock market was closed for a holiday. Yields on the debt of eurozone peripheral governments also benefited, with 10-year Spanish and Portuguese yields falling 6 bps and 9 bps respectively.

Monday’s evaluation by the European Commission, European Central Bank and International Monetary Fund — previously known as the troika — was one of the most important conditions attached to Friday’s deal, which officials believe averted a Greek bank run and sovereign bankruptcy.

If the EU and IMF do not approve of the Greek measures as “sufficiently comprehensive to be a valid starting point” for completing the current bailout, eurozone officials have agreed that another Brussels meeting of finance ministers will be needed on Tuesday. Without approval, Greece’s EU bailout will expire on Saturday.

[source]

Posted in Debt, European Debt Crisis |

Eurozone agrees 4-month Greek bailout extension

20-Feb (Financial Times) — Greece and its eurozone bailout lenders agreed an eleventh-hour deal to extend the country’s €172bn rescue programme for four months, avoiding bankruptcy for Athens but setting up another potential standoff in June when a €3.5bn debt payment comes due, reports Peter Spiegel in Brussels.

The deal, reached at a make-or-break meeting of eurozone finance ministers Friday night, leaves several important issues undecided – including what reform measures Athens must adopt in order to get €7.2bn in aid that comes with completing the current programme.

The new Greek government is to submit those measures for approval by eurozone authorities on Monday.

[source]

PG View: If the list of reforms due Monday fails to satisfy the Germans, the deal is presumably off. Seems more like a 3-day extension than 4-month extension to me.

Posted in Debt, European Debt Crisis |

Worried depositors rush to pull cash out of Greek banks

20-Feb (CNBC) — In the midst of the dramatic showdown in Brussels between the new Greek government and its European creditors, many Greek depositors—spooked by the prospect of a Greek default or, worse, an exit from the euro zone and a possible return to the drachma—have been pulling euros out of the nation’s banks in record amounts over the last few days.

The Bank of Greece and the European Central Bank won’t report official cash outflows for January until the end of the month. But sources in the Greek banking sector have told Greek newspapers that as much as 25 billion euros (US $28.4 billion) have left Greek banks since the end of December. According to the same sources, an estimated 900 million euros flowed out of Greek banks on Tuesday alone, the day after the talks broke up in Brussels, sparking fears that measures will be taken to stem the outflow. On Thursday, by mid-afternoon, deposits had shrunk by about 680 million euros (US $773 million).

“If outflows reach 1 billion euros, capital controls might need to be imposed,” said Thanasis Koukakis, a financial editor for Estia a conservative daily, and To Vima, an influential Sunday newspaper.

[source]

Posted in Debt, European Debt Crisis |

REPORT: The ECB is preparing for Grexit

20-Feb (BusinessInsider) — The European Central Bank is making preparations again for a Greek exit from the euro, according to the German news magazine Der Spiegel.

…This comes just a day after another German media source said the ECB wanted capital controls to be brought in to halt any potential capital flight from Greece. The piece suggested the governing council of the central bank favoured the move, but the ECB denied it had even been discussed.

[source]

Posted in Debt, European Debt Crisis |

Why Germany Might Not Be Bluffing in Greece


20-Feb (Bloomberg) — As Europe’s high-stakes debt negotiations with Greece reach an impasse, Germany has appeared surprisingly willing to drive the country out of the euro, regardless of the potentially dire repercussions for Italy, Portugal, Spain and the entire currency union. One possible explanation for Germany’s brinkmanship: Its banks have a lot less to lose than they once did.

When the European debt crisis first flared up in 2010, Germany’s finances were closely linked to those of the euro area’s more economically fragile members. Its banks’ claims on Greece, Italy, Portugal and Spain — including money lent to governments and companies — amounted to more than 350 billion euros ($400 billion), about equal to all the capital in the German banking system. If the periphery countries had forced losses on private creditors, which they arguably should have done, Germany would have had to recapitalize its banks or face an immediate meltdown.

The picture is very different now. The European Central Bank, the International Monetary Fund and other taxpayer-backed creditors have pumped hundreds of billions of euros of loans into the periphery countries, making it possible for German banks to extract themselves with minimal damage.

[source]

Posted in Debt, European Debt Crisis |

Germany rejects Greek loan request

19-Feb (BBC) — Germany has rejected a Greek request for a six-month extension to its eurozone loan programme, after earlier signs that a compromise was possible.

Greece had sought a six-month assistance package, rather than a renewal of the existing deal that comes with tough austerity conditions.

However, a German finance ministry spokesman said it was “not a substantial proposal for a solution”.

The European Commission had earlier called the Greek request “positive”.

[source]

Posted in Debt, European Debt Crisis |

Greece’s game of chicken is starting to get dangerous

18-Feb (WashingtonPost) — For the second time in a week, talks between Greece and Europe have broken down over the semantics of whether a short-term bailout would be an “extension of the current programme as an intermediate step” or an “extension of the current loan agreement, which could take the form of a four-month intermediate programme.” The first is what Europe wanted, and the second is what Greece would have accepted. Now, it might seem silly that a disagreement over the order of the words “intermediate” and “programme” could force Greece out of the euro—aren’t they just a thesaurus away from a compromise?—but this is a real political problem. Both sides want a deal, but neither wants the other to be able to say they got the better of it. So their rhetoric is hardening, and the game of chicken is still on.

[source]

Posted in Debt, European Debt Crisis |