– NSA Leak Reveals Both Merkel And Schauble Saw Greek Debt As Unsustainable Even After Haircut (ZeroHedge, July 3, 2015):
Several days ago, we posted a NSA cable leaked by Wikileaks, in which then French finance minister Moscovici (currently a European commissioner) was admitted that the French economic situation was “worse than anyone [could] imagine and drastic measures [would] have to be taken in the next two years.” It has not improved since then.
Overnight, in another perhaps even more relevant to the current quagmire in Greece leak, Wikileaks has released another intercepted NSA communication between German Chancellor Angela Merkel and her personal assistant reveals that not only Merkel, but Schauble, were well aware that even with a debt haircut (which took place in 2012 but only for private creditors and whose impact was promptly countered with the debt from the second bailout) Greek debt would be unsustainable. Technically, she did not use that word: she said that “Athens would be unable to overcome its problems even with an additional haircut, since it would not be able to handle the remaining debt.”
She was right. And yet here she is, telling Tsipras and the Greek people that all Greece needs is to comply with the existing program when she knows well by her own admission that Greece is insolvent in its current state – precisely what Syriza is arguing and demanding be part of any deal.
Because why bother making a deal if Greece will once again be in default a few months down the line, just as Varoufakis said earlier today.
But where it gets really humorous is where the cable notes that even “Finance Minister Wolfgang Schaeuble alone continued to strongly back another haircut, despite Merkel’s efforts to rein him in… with IMF Managing Director Christine Lagarde described as undecided on the issue.”
Fast forward to today and now Lagarde is decided, and the IMF admits a 30% Greek haircut is necessary. So, one wonders, why is Syriza getting hell for pushing what both Germany in 2011 and the IMF now admit has to happen in order to have a viable Greek nation. Unless, of course, they don’t want a viable Greek nation, and instead want a vassal state that is constantly on the brink of collapse and thus creating enough systemic risk to constantly push the EUR lower.
Becuase, just in case anyone has forgotten, the real issue here is not the fate of Greece or even the rest of the PIIGS, but how can Germany continue enjoying a currency that is substantially weaker than what a far stronger, and export-crushing Deutsche Mark would be at this very moment.
From Wikileaks:
Eurozone Crisis: Merkel Uncertain on Solution to Greek Problems, Would Press U.S. and UK (TS//SI-G//OC/REL TO USA, FVEY)
(TS//SI-G//OC/REL TO USA, FVEY) Discussing the Greek financial crisis with her personal assistant on 11 October, German Chancellor Angela Merkel professed to be at a loss as to which option–another haircut or a transfer union–would be best for addressing the situation. (The term “haircut” refers to the losses that private investors would incur on the current net value of their Greek bond holdings.) Merkel’s fear was that Athens would be unable to overcome its problems even with an additional haircut, since it would not be able to handle the remaining debt. Furthermore, she doubted that sending financial experts to Greece would be of much help in bringing the financial system there under control. Within the German cabinet, Finance Minister Wolfgang Schnaeuble alone continued to strongly back another haircut, despite Merkel’s efforts to rein him in, while France and European Commission President Jose Manuel Barroso were seen to be in favor of a gentler approach. European Central Bank President Jean-Claude Trichet was solidly opposed, with IMF Managing Director Christine Lagarde described as undecided on the issue. Finally, Merkel believed that action must be taken to enact a Financial Transaction Tax (FTT); doing so next year, she assessed, would be a major step toward achieving some balance in relief for banks. In that regard, the Germans thought that pressure could be brought to bear on the U.S. and British governments to help bring about an FTT.
Unconventional
The fools who decided to give Greece such enormous amounts of loans ought to have their heads examined. There is no way the Greek economy could have repaid such huge sums. Why loan them the money?
Greedy guts had a plan. They were going to take over Greece, and divide up their ancient treasures among their buddies, privatize these wonders.
Then Russia stepped in with a gas pipeline deal, and an offer to rent Greek ports. Greece has the 3rd largest port in the Euro, and would be very valuable to Russian enterprises. It would enable them to efficiently get their goods into the Euro and rest of the world. Just check out a globe of the world to see why.
This provides income and jobs……..
An absolute monkey wrench into the greedy gut monopoly on Greece…..and Russia, perhaps without realizing it, stopped the whole greedy effort, and gave the leaders the courage to tell the IMF to shove it.
Those ports are just as valuable to the greedy guts, and now, Russia has deals with Greece instead…….. Russia will probably establish others. Russia is one of the few nations not buried in debt, their economy is actually growing. They can afford investment into Greece, it is a wise deal for them. Nasty blow to greedy guts…….
Regardless of western propaganda to the contrary, Russia is expanding, their leaders working towards the betterment of their nation.
Our leaders work against our best interests every day, just look at the trade deal.