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Saturday, July 8, 2017

Bail-Out Tranche Will Arrive On Monday... And Will Leave On Monday!

The heading of this article is a bit sarcastic. Of course not the entire 7,7 BEUR which Greece will receive on Monday will leave on Monday. A grand total of 800 MEUR will actually stay in the country, allegedly for the repayment of state arrears to suppliers and tax payers. At least that is the intention (or mandate) of the ESM. It might be an idea to check whether it actually gets done.

This routine of pushing the can down the road always reminds me of Argentina's Economy & Finance Minister in the early 1980s, Bernardo Grinspun. Grinspun was a totally unconventional minister who simply had no time for the games bankers play. The establishes rites of international finance (avoiding default, keeping the ball rolling, etc.) never really found a place in Grinspun's attention span.

The game was the same as the one now being played out with Greece: disburse new loans to pay off existing loans; make the disbursement into an escrow account which is beyond the country's control; make sure that none of the disbursed money bypasses the recipient banks and stays in the country.

In one meeting with foreign bankers which I attended, Grinspun said something like the following:

"Make an escrow account and run all your lending/repayment transactions through it. If you want to disburse new loans to repay yourselves maturing loans, fine with me. If you want to disburse new loans to pay yourselves interest, fine with me. Just don't bother me with it!"

Perhaps the Greek Finance Minister should take a page from Grinspun's book!

8 comments:

  1. In other words you are suggesting that the Greek FM no longer pays attention to the ridiculous "reform" game since there is zero benefit for Greece in participating in such charade. You are also suggesting that the Greek FM no longer participates in any discussions related to lender finances and let the Brussels and Berlin arrange for any payments to themselves. Finally, you are suggesting that the method and manner by which the lenders self-refinance should be irrelevant to Greece.

    All of these are very nice thoughts. Are you overwhelmed with guilt or is this simply a confession of sorts?

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    1. Yes, it seems that Klaus has finally twigged onto what it going on! After years of being told by various of us, finally there is a glimpse of reality.

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    2. Well, I think I had this glimpse of reality a long time ago. Perhaps you didn't read my articles of 2011. The Grinspun anecdote I wrote about in November 2012.

      https://klauskastner.blogspot.co.at/2012/11/make-not-one-escrow-account-instead.html

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    3. Yes, Kleingut but we already took a page from his book. I don't think we have had any FM that has lasted more than 2 years like him. The methodology we are following is that we find a victim that wants to serve (meaning obey Berlin) for 2 years than we fire him, assign all wrongs to his e-mail or other of his attributes (we are very creative in this regard and we use a wide range of options on the choices of wrongdoing), destroy his reputation for life and then we search for the next volunteer. It helps tremendously if they die along the way, like Bernardo did, because there is no need to have multiple stories on what actually happened. We accept the Schauble version of the "truth" and we move on.

      https://en.wikipedia.org/wiki/Bernardo_Grinspun

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  2. @kleingut

    This behavior seems to be typical for many sovereign debtors. They love to spend other peoples money yet they get quite angy when they realize that the skyhigh debt they amassed with their spendthrift attitude reduces their room for political manoeuvre to zero.
    Urs

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    1. Yes, we do love to spend OPM so please send in more money for us to spend. No need for manoeuvering; these are the EU rules. More money please.

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    2. Now we know what you want, which makes you vulnerable and a target for conquest!

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    3. Kleingut:

      On second thought maybe we like deprivation and misery instead. Don't send more money please. Keep it yourselves and hold on tight to it in case we change our mind again. How's that for unconquerable?

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