ECB steps up financial pressure on Greece to reach deal

[webfact]

ECB steps up financial pressure on Greece to reach deal
DAVID McHUGH, AP Business Writer

FRANKFURT, Germany (AP) — The European Central Bank added pressure on the Greek government Wednesday by withdrawing a key borrowing option for the country's banks as it struggles to avoid defaulting on its debts and crashing out of the euro currency union.

The move underlines the key role the ECB, the monetary authority for the 19 countries that use the shared currency, is playing in the Greek drama.

The ECB said Greek banks could no longer access ECB credit by using Greek government bonds or bonds guaranteed by the government.

It had allowed the use of Greece's junk-rated bonds as collateral because the government was getting a financial lifeline through a bailout program that expires Feb. 28. The ECB said in a statement that prospects for a new deal appear uncertain. Greek banks could use other securities as collateral, but government bonds and government-guaranteed bonds play a big role in their ability to get the money they need to stay afloat.

Greece's new government has rejected the austerity conditions attached to the 240 billion euros in bailout loans from other eurozone governments and the International Monetary Fund, saying cutbacks have devastated the economy. It is seeking a new agreement to avoid default and possible departure from the shared euro currency. Creditor countries led by Germany, the eurozone's biggest member, have stressed that no write-off of Greece's debts is possible and that Greece should stick by earlier agreements to cut its deficits and remove regulations and bureaucracy that hurt growth.

Wednesday's ECB decision accelerates an already stressful timetable for Greece to sort out its financial problems by moving up disqualification of Greek bonds to Feb. 11, the last day Greek bonds can be used as collateral, instead of Feb. 28, when the old bailout deal was due to expire.

It puts pressure on the Greek government to reach a compromise with the so-called troika — the ECB, the European Commission and the International Monetary Fund. Greece is being pushed to enact structural reforms, such as selling off government-owned ports, airports and other assets to raise money to reduce government debt.

"This is clearly the ECB signaling to the Greek government: You're going to have to talk to the troika and get a deal," said Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics. "Otherwise, really bad things are going to happen."

The ECB said Greek banks could access emergency loans provided by Greece's own central bank to replace the lost credit. Greek banks did just that while the country was going through a 2012 default. However, the replacement credit comes at higher interest rates and any default losses hit the Greek government directly.

Credit from the Greek central bank, called Emergency Liquidity Assistance, or ELA, also must be approved at regular intervals by the ECB.

The ECB's role is key because it has been supporting Greece's banks through its credit offering. A complete cutoff from the ECB, including a refusal of more ELA, could lead to a collapse of the banks. However, analysts say the central bank will be reluctant to make such a move unless politicians have exhausted all their options in finding agreement on resumption of aid to Greece or the government's request for easier terms on its bailout loans.

A banking collapse could leave the government with no other source of funds to rescue them, except for printing a new national currency. Economists say that if an overall solution to the country's financial problems is not found quickly, the banks could be threatened by withdrawal of deposits from fearful depositors and the economy will continue to deteriorate as investors shy away.

Greece's new government insisted it was not the target of the ECB pressure.

"By reaching and announcing this decision, the European Central Bank is exerting pressure on the Eurogroup to swiftly pursue a new and mutually beneficial agreement between Greece and its partners," a statement from the Greek Finance Ministry said.
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Associated Press Business Writer Paul Wiseman in Washington, D.C. and Derek Gatopoulos in Athens, Greece contributed to this report.


-- (c) Associated Press 2015-02-05

[PepperMe]

The Mediterranean states and just as likely the eastern European states in the Euro will be looking on in dismay at the aggressive nature of the ECB... Something they have all paid into.

Greece should stand by it guns. Moves like this are nothing more than punitive.

Sod the Euro, sod the ECB and sod the EU.... Greece should pull out of the Euro, default and then return to the Drachma, that is what the EU fears the most. If the EU gets shirty about it, then pull out of the Union completely and ride its own fate.

Many will follow, and I hope it will collapse the EU completely.

[robblok]

The Mediterranean states and just as likely the eastern European states in the Euro will be looking on in dismay at the aggressive nature of the ECB... Something they have all paid into.

Greece should stand by it guns. Moves like this are nothing more than punitive.

Sod the Euro, sod the ECB and sod the EU.... Greece should pull out of the Euro, default and then return to the Drachma, that is what the EU fears the most. If the EU gets shirty about it, then pull out of the Union completely and ride its own fate.

Many will follow, and I hope it will collapse the EU completely.

They should break the Greeks.. lazy sods that they are. You make a deal you stick with it.

Maybe all European tourist should be able to have free holidays in Greece. They are the ones paying for those lazy Greeks.

Greeks are selfish.. other countries help.. they bite the hand that feeds them.

It would be better to kick all the southern countries out of the Euro and keep a northern Euro with countries that do work hard and have a good work ethics.

[JockPieandBeans]

They should break the Greeks.. lazy sods that they are. You make a deal you stick with it.

Using your analogy, have the Greeks turned into lazy sods since the joined the EU nightmare ?

It would be better to kick all the southern countries out of the Euro and keep a northern Euro with countries that do work hard and have a good work ethics.

Rather than blame nations, would it not be better to hold to account those that turned a blind eye to creative accounting et al to allow these nations entry to the club ?

As I seem to recall, there are only 4 net contributors to the EU. All the rest are freeloaders.

When you have such disparity it is only ever going to end one way.

The sooner that happens the better.

[robblok]

They should break the Greeks.. lazy sods that they are. You make a deal you stick with it.

Using your analogy, have the Greeks turned into lazy sods since the joined the EU nightmare ?

It would be better to kick all the southern countries out of the Euro and keep a northern Euro with countries that do work hard and have a good work ethics.

Rather than blame nations, would it not be better to hold to account those that turned a blind eye to creative accounting et al to allow these nations entry to the club ?

As I seem to recall, there are only 4 net contributors to the EU. All the rest are freeloaders.

When you have such disparity it is only ever going to end one way.

The sooner that happens the better.

Right now I think its a good time to make some changes and kick out the weaker parties. Enough is enough for those countries (Netherlands, Germany, UK) who are financing this. It was a great idea and with some changes can still work but not with the disparity there is now. The idea of a big trade block with same rules is good. 1 currency is good too but only with strong countries.

Personally I don't see why Brits moan so much they still got their currency. They have all the advantages but almost none of the disadvantages.

Maybe votes based on net contribution or so. Not allowing those that are not contributing to vote.

Edited February 5, 2015 by robblok

[maidee]

eu can go impound some land or buildings? sell parts to turkey ?

[JetsetBkk]

eu can go impound some land or buildings? sell parts to turkey ?

Confiscate a few popular tourist islands. Make them jointly owned by Germany, France, Italy, UK, Denmark, Finland.

http://en.wikipedia.org/wiki/Budget_of_the_European_Union#Net_contributors_and_recipients

Then the Greeks can have that "haircut".

Using your analogy, have the Greeks turned into lazy sods since the joined the EU nightmare ?

No. Always lazy.

[ExPratt]

I think Military Takeover is the only way forward here, Obviously the Governments were incompetent and the PMshould be impeached

[ExPratt]

The electorate cannot be trusted as they voted in such useless Governments . Marshall law then Coup please

[JockPieandBeans]

Right now I think its a good time to make some changes and kick out the weaker parties. Enough is enough for those countries (Netherlands, Germany, UK) who are financing this. It was a great idea and with some changes can still work but not with the disparity there is now. The idea of a big trade block with same rules is good. 1 currency is good too but only with strong countries.

Personally I don't see why Brits moan so much they still got their currency. They have all the advantages but almost none of the disadvantages.

Kick out the weaker parties ? I do not think that there is leverage to kick out the weaker parties. Again, the question should be asked as to why these weaker parties were allowed to join in the 1st place. Everyone and their dog knows that these weaker parties never met the criteria for joining, but that was swept under the carpet for the greater good of the EU superstate.

Yes, the initial trade bloc was a good idea. What it has morphed into was always set for disaster. The one cap fits all has never worked, will not work and never will work. High time some of these supposedly educated buffoons worked that out for themselves.

Sure, Britain still has its currency. I could be wrong but I think it might actually have been Gordon Brown that finally vetoed the UK joining the EU currency. Whoever it was, all I can say is that he played a blinder by telling the EU to shove it. With hindsight, what a shrewd move that turned out to be.

However, Brits still have plenty to moan about regarding the EU and rightly so. Not going to go into them here, but anybody that can read can work it out for themselves.

the Greeks have financial motives at the moment for getting out of the EU. If that happens it will start a chain reaction. Other Countries have different reasons for wanting out of the EU. The rise in left wing Anti EU parties are proof positive of that.

[JockPieandBeans]

eu can go impound some land or buildings? sell parts to turkey ?

Confiscate a few popular tourist islands. Make them jointly owned by Germany, France, Italy, UK, Denmark, Finland.

http://en.wikipedia.org/wiki/Budget_of_the_European_Union#Net_contributors_and_recipients

Then the Greeks can have that "haircut".

Using your analogy, have the Greeks turned into lazy sods since the joined the EU nightmare ?

No. Always lazy.

Your words not mine.

However, my point was that the failings of Greece were known before they were members of the EU and they were still allowed to join.

IMO, it is not Greece that is culpable here. It is the buffoons who rubber stamped their entry. That is not me picking on the Greeks. The same applies to every other Country that was dubiously rubber stamped into the EU.

[Thai at Heart]

The Mediterranean states and just as likely the eastern European states in the Euro will be looking on in dismay at the aggressive nature of the ECB... Something they have all paid into.

Greece should stand by it guns. Moves like this are nothing more than punitive.

Sod the Euro, sod the ECB and sod the EU.... Greece should pull out of the Euro, default and then return to the Drachma, that is what the EU fears the most. If the EU gets shirty about it, then pull out of the Union completely and ride its own fate.

Many will follow, and I hope it will collapse the EU completely.

They should break the Greeks.. lazy sods that they are. You make a deal you stick with it.

Maybe all European tourist should be able to have free holidays in Greece. They are the ones paying for those lazy Greeks.

Greeks are selfish.. other countries help.. they bite the hand that feeds them.

It would be better to kick all the southern countries out of the Euro and keep a northern Euro with countries that do work hard and have a good work ethics.

They are biting the hand that fed them before.

Now it is spanking them too hard. They can't force penury on their people for probably anothtrr decade. They should default. Simple.

[englishoak]

liquidate the country and sell it off in bits to pay the creditors, thats what they do to bankrupt businesses and people.

[JetsetBkk]

eu can go impound some land or buildings? sell parts to turkey ?

Confiscate a few popular tourist islands. Make them jointly owned by Germany, France, Italy, UK, Denmark, Finland.

http://en.wikipedia.org/wiki/Budget_of_the_European_Union#Net_contributors_and_recipients

Then the Greeks can have that "haircut".

Using your analogy, have the Greeks turned into lazy sods since the joined the EU nightmare ?

No. Always lazy.

Your words not mine.

However, my point was that the failings of Greece were known before they were members of the EU and they were still allowed to join.

IMO, it is not Greece that is culpable here. It is the buffoons who rubber stamped their entry. That is not me picking on the Greeks. The same applies to every other Country that was dubiously rubber stamped into the EU.

Totally agree. The Greeks were quite happy having a lousy economy, devaluing their drachma every year, keeping people employed in the tourist industry and making crap (and very cheap for foreigners) products that kept some hard currencies flowing in.

Joining the Euro was an obvious mistake. The buffoons should be forced to make public apologies, held up to complete ridicule and fired from any administration job they still cling on to.

[rickirs]

There is still options available to Greece without another bail or relief of debt - neither of which it will get considering the precarious economic situation now with Spain and Italy. Latest is that ECB is open to extending Greek's junk bonds 10-18% interest rate) into essentially perpetuity and provide additional funds under "emergency provisions" that would give Greece about one year's breathing time to organize additional austerity measures.

But eventually a financial day of reckoning must come and the majority will not be able to avoid the consequences of their choice for national leadership. If the new regime can spin the crisis to work within the framework of the ECB and convince Greek constituency it has done all it can, it will see a vote of confidence for another two years. If not, well there may be no government remaining to get elected.

"All things good to know are difficult to learn."

[Choctastic]

liquidate the country and sell it off in bits to pay the creditors, thats what they do to bankrupt businesses and people.

Yep. Stock banker scam, played for decades. Individuals and nations are seduced by easy money, until they are borrowed to the hilt. Then, irrational exuberance heralds pulling the plug and calling in the loans. Homes, businesses, land and physical assets are transferred to the bankers, in exchange for 'money', they pulled out of thin air.

First inflate, then deflate. Call it the innocuous sounding 'Business Cycle'. Rinse and repeat.

How long before you own the planet? Couple of hundred years?

Greece is not the first, nor will it be the last. They are trapped. Selling off national assets to private hands means there is less money available to service loans. Cuts are forced and taxes go up. Austerity for you. Bonuses for Goldinmysacks.

And while your attention and anger is directed towards a few scary media reports on Islamic extremists, financial terrorists are making off with their swag.

What a racket.