Today is really the D-Day for the Greek matter. After a couple of moves in this grand chessboard, checkmate is just unavoidable. Today we are likely to reach a point without return where nobody will be able to save Greece from collapse and the Eurozone from breaking down. It is the great final round and it is happening now and not on Friday as many believe.
No Bailout Extension!
On the one hand, the Greek Finance Minister just promised yesterday evening that he will file an extension today to Eurogroup. While a sigh of relief flooded the world’s media and thus the citizens of Greece and Europe, it was not exactly pointed out what kind of extension Mr Varoufakis is seeking to file. The leftist unconventional academic, who holds the fate of Greece in his two hands, is NOT going to ratify the document the President of Eurogroup handed to Greece last Monday. Instead, the modern “Hercules”, who has been accused by many as extremely arrogant, will say his own thing once more!
Greece will no way file today any request for extension of the current bailout programme! Again, whoever from the European side thought that Varoufakis would do so, is incompetent and should be better off doing a 9 to 5 office work with 50 days of holidays (European Commission is definitely the place for you). The current Greek government, as explained in previous Stings, knows nothing about how to run business or negotiations. Moreover, they are politically naive to believe that their fellow European politicians will sit with them in the school classroom to endlessly chat about austerity and about new programmes for the poor Greeks. Be it naive, innocent or stubborn, Greece will not ask today for an extension of the current bailout programme. If this comes as a disappointment to the EU leaders, then they really need to think of a career change immediately!
Devil is in the details
Instead, the good Greek Finance Minister will hand over to Mr Dijsselbloem today a document based on the “Moscovici’s Draft”, that had been withdrawn by the Eurogroup’s President. It is the same draft document that the politically naive Varoufakis referred to during his post-Eurogroup statements last Monday. He said then that he was more than happy to sign it but then “bad” Dijssebloem took it back and so on. All he accomplished Mr Varoufakis last Monday is to lose an important ally in this fight against the Titans, the allies being the European Commission “Grecophiles”, Mr Moscovici and Mr Juncker. So what we anticipate to see today is a document from Greece that is asking for an extension of the “loan agreement” and not the “bailout programme”, plus some hard conditions Varoufakis will include that will secure a fair distance from austerity measures to be taken.
Greek Vs. EU Incompetence
Someone would think, who would leave Greece and Eurozone collapse over one single document; more so over the “wording” of that document? Well, Mr Varoufakis and Mr Dijssebloum/Schauble – it is always better to take these two as one political entity- are certainly capable to let the bomb explode. The Greek side is able to fire this gun because of political naiveness, lack of experience, uncompromising Greek ethics, strong will to stay in power and be able to blindly fulfil the pre-election promises to the Greek voters, by coming back to sunny Greece with a triumphant signed extension which cancels austerity; let’s face it, it is due to incompetence!
On the other hand, Mr Dijssebloum/Schauble is equally able to fire this gun because they are objectively in the winning side in this negotiation and thus risk-averse (Nobel awarded – Prospect Theory basics), because 1/2 of Germans reportedly like the word Grexit, because Dutch people always wanted Greece out and the same stands for many Eurozone countries, because they want to polarise and please their electorate gaining votes over the threatening extreme right in their countries, because they don’t want the Greek stand-off example to be repeated by other member states, because they sadly do not have a sound, inspired and strategic vision for a United Europe; let’s face it, it is due to incompetence!
Incompetence of the main players in the Greek game to compromise and share responsibility for the European Union “holy” idea is more than evident. Apart from Mr Varoufakis’s much awaited move in the chessboard today, there is another one anticipated in response, which will be made later in the afternoon. The European Central Bank is convening this afternoon in Frankfurt, as planned, to decide whether they will keep the Emergency Liquidity Assistance (ELA) towards the Greek banks or suddenly pull the plug on the Greek economy.
Let’s all remember here that on 5 February the European Central Bank, amidst the Greece-EU harsh negotiations, and seeing the hard ball played by the country that has given birth to Democracy, decided to stop accepting Greek bonds as collateral for funding and thus passed the burden on to the Greek Central Bank to use ELA. Mr Mario Draghi, President of the ECB, just raised the ELA cap for the Greek banks by €5 billion last week to reach a total threshold of €65 billion. This was not done because he is planning his holidays in Greece next summer, but mostly because the Greek banks were on the verge of collapsing with €2 billion being withdrawn per week. Also, the Greek National Bank is “illegally” using some of this money to cover any hole it is possible to cover regarding public debt. Despite this being “illegal” according to ELA rules, now Mario is turning a blind eye on it because he has much bigger problems to solve.
So, this afternoon we will know if the ECB is truly an independent EU institution as described in its statute. There is certainly a lot of debate on that and it is not entirely related to the Greek thing. Let’s not forget that Super Mario has been stopped by Berlin to launch QE (Quantitative Easing) a couple of years ago, when Europe needed it most. As we were the only Brussels based media in World Economic Forum 2015 in Davos, we heard there the elite of the world acknowledging that QE had come too late. Also they said that if it had come when it should, and if ECB was not stopped by Germany, then the Greek crisis or further European crisis would have been avoided. But of course when the profit of the German funds is at stake, Europe has to shush!
If the ECB decision of the 5th of February to throw the Greek bonds out is not a political decision, which clearly breaks the “independence” principle of the European Central Bank, then words have lost their meaning. Mr Mario Draghi is often called “Super Mario”, not only because of the Italian hero featured in the Nintendo’s video game, but because more than often he takes off the “banker’s hat” and puts on the “politician’s hat” nowadays. With a discrete but clear political influence by the powerful German Central Bank, Mr Jens Weidmann who is President of the Bundesbank, and consequently Berlin as a whole, we do not expect today any decision from the ECB before the Varoufakis’s document is fully delivered.
He will do it!
While all the media in the world find it unlikely that the ECB pulls the plug on the Greek banks today by cutting ELA, we would insist on saying: “Don’t bet all your money on it!”. What if the ECB does not have really a reason to do this today, and what if Mr Stournaras, the President of the Bank of Greece, will beg and cry today for a continuation and even a further uplifting of the cap, according to the Sting’s sources? Nothing of the above matters if the Varoufakis’s bomb gets released today and signifies a “Grand Canyon gap” between Greece and Eurozone.
All in all, if the wise of the European Union do not step up, Armageddon will be released today! There will be no Eurogroup on Friday and the ATMs in Athens will not work tomorrow morning! There is no way that the Eurozone will let Greece drag her down. There is no way that the marxist Greek government will step back. The only way Super Mario will not “step on the ELA mushroom” for Greece today will be that a slight chance of hope is still visible for an agreement until Friday.
If naive Varoufakis does not please Dijssebloum/Schauble today to a minimum extent, then there will be no string for the Greeks to fly their kites on the coming Clean Monday.