So finally, the leader of ND Mr. Samaras has sent a letter to the EU partners describing his support for the program. He did make some noise regarding modifications that need to be done, in the program all within the context and spirit of the program. Would that be enough to satisfy Troika and thus release the 8bil? We do not know. What is probably irritating to say the least, is that it appears that Mr Samaras did NOT negotiate the letter before sending it. In practice, these letters are sent and published after secret negotiations have taken place. In this instance, it seems that he acted unilaterally which is not just odd but grossly irresponsible given the gravity of the situation.
The truth is that this is a power game. Why would a personal signed guarantee make any difference once the Greek parliament approves the measures.Mr Samaras may not be the leader for all we know in 3 months. He might go the same way his university room-mate Mr Papandreou went. If his signature is worth 8bil then he should give 50 of those and wipe out the Greek debt. It is irrelevant what he or he does not sign in the same way that Mr Papandreou signed the MOU with Troika and did not keep his word. So, reality is that this is a badly scripted show of force by Troika and Samaras.
Instalment of 8bil
Greece needs this 8bil to pay not just the redemptions coming in December but also to pay salaries. This instalment was due in September, so it is very very late. In theory, December had the next tranche of 5bil.
So what if Greece does not receive the 8bln. Does this automatically signify default? Well, not exactly. The Greek state can borrow in theory the 8 billion from the Greek banks. You may ask where would the Greek banks find the 8billion? Well, they can turn around and give this as collateral to the Greek ELA (Emergency Liquidity assistance) which currently runs at 26billion. It does sound like a Ponzi scheme and it is, as the ELA is a liability of the Greek state, but hey the Irish are doing it to the tune of 75billion. Why not the Greeks. All that is needed is the unofficial (or official) nod from ECB.
The truth is that this is a power game. Why would a personal signed guarantee make any difference once the Greek parliament approves the measures.Mr Samaras may not be the leader for all we know in 3 months. He might go the same way his university room-mate Mr Papandreou went. If his signature is worth 8bil then he should give 50 of those and wipe out the Greek debt. It is irrelevant what he or he does not sign in the same way that Mr Papandreou signed the MOU with Troika and did not keep his word. So, reality is that this is a badly scripted show of force by Troika and Samaras.
Instalment of 8bil
Greece needs this 8bil to pay not just the redemptions coming in December but also to pay salaries. This instalment was due in September, so it is very very late. In theory, December had the next tranche of 5bil.
So what if Greece does not receive the 8bln. Does this automatically signify default? Well, not exactly. The Greek state can borrow in theory the 8 billion from the Greek banks. You may ask where would the Greek banks find the 8billion? Well, they can turn around and give this as collateral to the Greek ELA (Emergency Liquidity assistance) which currently runs at 26billion. It does sound like a Ponzi scheme and it is, as the ELA is a liability of the Greek state, but hey the Irish are doing it to the tune of 75billion. Why not the Greeks. All that is needed is the unofficial (or official) nod from ECB.
