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A tale of several hours:

9 hours ago, Greece was going to achieve the additional requirements demanded of it on Friday by making cuts to the military:
http://www.bloomberg.com/news/2012-02-14/greece-to-pare-spending-in-defense-investment-to-close-gap- 1-.html

These were deemed unacceptable by Junker.

Two hours ago, this article came out. There's been a change:

Greece's prospects hinged on Prime Minister Lucas Papademos's Cabinet finding 325 million euros of the extra budget cuts demanded by European governments and the International Monetary Fund as conditions for fresh loans.

The Cabinet late yesterday agreed to trim pensions at state-owned companies and banks by 300 million euros, according to an official who declined to be named. Parties backing Papademos's interim government also need to endorse the savings.

Given the shoddy reporting prevalent in this fiasco, this latter report may be incorrect. But if it isn't, it seems noteworthy--to me at least--that Greece announced cuts in military procurements. They were then rebuffed. It's impossible to know why they were rebuffed or whether the denial was at all related to the plans as they stood at the time.

Now, after the talks are cancelled, we are told that they are making cuts to pensions instead. If indeed this turns out to be true, I will be very curious to see if the new plans will be more acceptable to Junker.

by Upstate NY on Tue Feb 14th, 2012 at 11:12:01 PM EST
From Eurointelligence today:

The other issue is the €325m shortfall in savings.  Kathimerini  writes that the Greek cabinet examined a proposal to use cuts in defense spending, public investment funds and the health sector, but that this proposal was rejected by Euro Working Group -- low-level EU finance ministry officials who were meeting in Brussels on Tuesday. Kathimerini's sources said that the EU officials insisted that the additional savings should come from cuts to pensions.  
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Feb 15th, 2012 at 02:52:46 AM EST
[ Parent ]
Let's turn up another rock and see what's under, shall we?

http://www.washingtonpost.com/business/markets/asian-stock-markets-on-hopes-that-greece-will-comply- with-demands-of-lenders/2012/02/14/gIQATBdgER_story.html

While many economists have advocated for a so-called orderly default, essentially allowing Greece to renege on all or most of its debts, others warn that would set a bad precedent.

"The ramifications from this are potentially catastrophic," said David White, a trader for Spreadex. "Why would any member state act on Eurozone ministers' demands when it's been proven doubtful that what is promised in return might not be 100 percent deliverable?"

What sort of assurances does the EU make to bond investors? If I headed a bond fund, I would run away from these people as soon as humanly possible. I guess if you are El-Erian at PIMCO, you have that luxury, as people try to keep you happy, and you have a reputation for stability. But maybe the smaller fry are seeking high returns to impress their bosses.

by Upstate NY on Wed Feb 15th, 2012 at 12:39:05 PM EST
[ Parent ]

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