As the Grexit debate is falling into the background a new, far more powerful conflict emerges: one between Germany on one side, and the IMF, France, Italy, and perhaps even the US, when it comes to the all important issue of debt relief.
As a reminder, it was the unexpected release of the IMF's debt (un)sustainability draft late last week (with US support over the vocal objections of Europe) that not only gave Tsipras a Greferendum win (he did not desire), but showed clearly that without a debt haircut of at least 30%, any Greek deal will merely lead to another, even more violent Greek default down the line.
Of course, it is not only Greece that needs debt reduction but so do all the other peripheral nations:
Overnight, the Telegraph reported that the "debt-haircut" axis has even more supporters in Europe:
Finally, it was none other than Tsipras who piggybacked on the IMF's imlicit recommendation and in the hours following the "victorious" Greferendum, made a clear demand of Europe:
Nein. (...)
Reuters just reported that "the German government does not see any reason to grant Greece either a classic debt haircut or any other measures that would slash the value of money on loan to the crisis-ridden country, a spokesman for the finance ministry said on Wednesday.
The only quesiton is whether the German hard-line stance against Greek debt reduction also means that the Troika as we know it is finished, and even more importantly, whether the two European camps, one for and one against debt reduction are now on terminal collision course. (...)
And all to preserve the equity "wealth" of a few banker oligarchs because as we showed on Tuesday, saving the banks is what this has been all about from day one.
As a reminder, it was the unexpected release of the IMF's debt (un)sustainability draft late last week (with US support over the vocal objections of Europe) that not only gave Tsipras a Greferendum win (he did not desire), but showed clearly that without a debt haircut of at least 30%, any Greek deal will merely lead to another, even more violent Greek default down the line.
Of course, it is not only Greece that needs debt reduction but so do all the other peripheral nations:
Overnight, the Telegraph reported that the "debt-haircut" axis has even more supporters in Europe:
French leaders are working in concert with the White House. Washington is bringing its immense diplomatic power to bear, calling openly on the EU to put "Greece on a path toward debt sustainability" and sort out the festering problem once and for all.The Franco-American push is backed by Italy's Matteo Renzi, who said the eurozone has to go back to the drawing board and rethink its whole austerity doctrine after the democratic revolt in Greece. He too now backs debt relief for Greece.
Finally, it was none other than Tsipras who piggybacked on the IMF's imlicit recommendation and in the hours following the "victorious" Greferendum, made a clear demand of Europe:
Fast forward to this morning when shortly after the latest Greek capitulation, when in Tsipras' official request for ESM bailout he said timidly that "as part of a broader discussion to be held, Greece welcomes the opportunity to explore potential measures to be taken so that its official sector related debt becomes both sustainable and viable over the long term" Germany made it very clear whether there will be any debt haircuts, or reprofiling in the coming years.
- TSIPRAS ASKS FOR 30 PERCENT DEBT HAIRCUT
Nein. (...)
Reuters just reported that "the German government does not see any reason to grant Greece either a classic debt haircut or any other measures that would slash the value of money on loan to the crisis-ridden country, a spokesman for the finance ministry said on Wednesday.
The only quesiton is whether the German hard-line stance against Greek debt reduction also means that the Troika as we know it is finished, and even more importantly, whether the two European camps, one for and one against debt reduction are now on terminal collision course. (...)
And all to preserve the equity "wealth" of a few banker oligarchs because as we showed on Tuesday, saving the banks is what this has been all about from day one.
by Tyler Durden, ZeroHedge | Read more:
Images: ZeroHedge
