GREECE EXCLUSIVE: Geithner envoy ‘assured Athens of US support on return to drachma’ – sources

Meanwhile, the EFSF robs Petros to pay Pavlos

The US Treasury’s Assistant Secretary for International Finance Charles Collyns had a meeting with Greek Finance Minister Yiannis Stournaras in Athens on Wednesday morning. The official Greek media version was that Collyns ‘expressed the support of US-Finance Secretary Tomothy Geithner to Greece and his confidence in Greek efforts. Yinannis Stournas briefed Collyns on the situation of the Greek fiscal condition, and the key challenges of the Greek economy’.

In fact, Washington sources told The Slog last night BST that Collyns – a confidante of both Geithner and Stournas – was on a specific mission to impress on Greek Finance bosses the US Treasury’s sincerity in offering Greece “almost unqualified support in the event of a return to the drachma”. The White House is betting on the strong likelihood of Greece becoming formally insolvent before any more bailout monies are available from Berlin-am-Brussels.

Charles Collyns is uniquely placed to deliver the message credibly to the Athens government: he was at the IMF for many years, and is a personal friend of Geithner going back a long way;  but significantly, he is also an old classmate and close friend of Yiannis Stournaras himself.

As The Slog reported earlier his year  US Government covertly attempted to isolate Greece from the eurozone last March, in a bid to both make the country an important and loyal base for military intervention against enemies in the region, and itself play a beneficial role in the exploitation of Greece’s energy and mineral assets under the Aegean ocean. This move shows that the Obama White House remains determined to follow this course of action. A number of informed sources in Europe believe that the Greeks have had all the EFSF monies they’re going to get. On that basis, they would probably default on or around August 20th.

One day soon – allegedly – that EFSF will become the ESM. But it’s becoming increasingly hard to see how future bailouts are going to work given the likely contributors to the fund. As Yanis Varoufakis noted on his blog yesterday, on August 20th Greece is due to borrow €3.2 bn from the EFSF, in order to pay back the ECB. This idea is potty enough, but are we now to believe that Spain can cough up €600m for Greece, while borrowing another €3bn for itself?

That the whole ball of wool is unravelling could not be clearer given examples like these. Yanis Varoufikas urges Greece not to borrow the next tranche. I think he’s farting against thunder on that one. But as the American moves suggest, the money may well not be forthcoming anyway.

 

Greek update: Troika and Greek Coalition slug it out on more axe & more tax

65 thoughts on “GREECE EXCLUSIVE: Geithner envoy ‘assured Athens of US support on return to drachma’ – sources

  1. Just like I predicted at the end of the winter… end of summer. The only thing that may change… now that the oil testing has confirmed 300 billion euro’s of oil, and 9 trillion euro’s worth of natural gas… I notice they are talking about another write down… if they offer one, we will take it… THEN default anyway when the euro disintegrates 6 months later. Love the way they say they will give us the 3.2 billion… when it’s actually just going to pay themselves…

    • @kfc: It gets funnier by the day, I’m in stitches.
      From the DT:
      The favoured option is for the ECB and national central banks to carry the cost, but that could mean that some banks and the ECB itself having to be recapitalized, the officials said.

      Well, if the ECB needs recapitalising, I wonder who’ll cough up for that? I hear Spain & Italy are flush at the moment. Or maybe France can wade in with a few hundred…

      • @BT: I thought if Peter could pay Paul…….
        It’s beyond, way beyond a farce..But, they will still find a ‘Can kicking stunt’ Always living in hope that the Magic Fairy will make her long awaited appearance and solve all the EU’s problems, I suppose a bit like believing in Santa Claus….
        Unfortunately for us all, they probably will be able offset the inevitable, actually, for the foreseeable future. The Magic Bullet ‘Control P’, is still on the table, a bit like ‘Ask the audience’, ‘Phone a Friend’ etc. etc.
        Fat Lady is looking for another gig to fill in her diary…

      • The ECB is stuffed to the roof with Greek Paper. If they had been forced recently to take a hair cut, like all the private creditors, the ECB would be insolvent. They are desperately trying to dig themselves out of this hole only they keep making it deeper ! Odd that.

  2. The White House is betting on the strong likelihood of Greece becoming formally insolvent before any more bailout monies are available from Berlin-am-Brussels.
    If correct, then why is Greece still persuing the troica criteria in saving like heck to impress ? If Grexit is on the cards, why bother with austerity ? Seems a meaningless exercise.

    • Because although it’s nice they are saying they will help us if the Euro won’t but, considering the last 3 years worth of slander and betrayal we’ve had from people actually in a monetary “union” with us… we don’t have a lot of trust when it comes to what people say they are going to do… we will work all angles because we never know what the hell these people’s agendas really are… Greece has a long history of being betrayed by supposed supporters and so forth (Asia Minor 1915, Cyprus, the Junta in the 70’s)… our faith in the sincerity of other peoples is lost.

      • To be fair if I was a ‘Sprout’ I wouldn’t actually believe what the Greeks were telling me – and I say that as a Grecophile. Your politicians (and I have known some of them so speak from personal experience) lied and cheated. I’m afraid you need to face reality: the Euro is killing your economy and the sooner you get out of it the better it will be for you. Would have been better had you never joined the damn thing and at least had the sense to leave it 2 years ago.

      • Andy when you say we never should have joined … please include the rest of the PIIGS and France… everyone is guilty of the same “creative” accounting… or else the Euro would not be where it is. As far as leaving… well we just tried to vote our crooks and the troika out of office 2 times!!! almost worked the first time… this last election the Germans, and IMF showed their true colors when they were in the news everyday campaigning for Greeks to vote for proEU parties, going on and on with warnings of disaster, scaring the pensioners… even as the world intervened in our national election to protect their feeble banks… we were almost successful in getting rid of them again… only 60% of the electorate voted (because they knew it did not matter)… the Bar association here in Greece has declared the election legally null and void because of purposeful manipulations of census data to favor the PROEU party, and there have already been repeated prosecutions against members of the current govt. for ballot tampering… basically, the EU and IMF intervened and undermined our election, and their Greek partners (who caused the problem in the first place) proceeded to rig the election… this is the second time our democratic process has been compromised… as the appointment of Papademos as a representative of the troika to ensure our submission to a brutal fiscal program was the first. When you speak to us like children that should have known better to join your gang, and are too stupid to not have left 2 years ago… just understand we are trying, but your gangs influence scares the old folks into voting against their best interests, and just makes it all up as they go along (like always).

      • Ioannis,
        The EU isn’t my gang. I loath and detest the EU which is nothing more than a crypto Fascist state beloved of idiots and Socialists. The Germans and EU political elite have played you along quite nicely. They have now reached a point where Greek departure from the Euro wont matter – the ducks are now in a row.

        And when you have left you should round up those politicans that got you into this mess and execute a few of them. Might make the others behave better.

    • For the look of it, if Greece starts acting as if it knows the game is up then it may bring everything to a head before the 20th August 2012.

      Just a little bit more can kicking to keep all the spinning plates in the air until the 20th August 2012.

      • Hold the presses… looks like they read the Noble Oil reports…

        “The European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF) troika will stay in Greece until a credible package of measures is drafted, in collaboration with the Greek government.

        According to the initial itinerary, the troika was to depart Greece at end of July and return at the end of August, to see progress made in measures to cut state spending by 11.5 billion euros over the next two years and in the execution of this year’s budget. However, such a timetable would have resulted in a large delay in the disbursement of the outstanding tranche of the bailout loan to Greece.”

        http://www.athensnews.gr/portal/11/57322

  3. Excellent piece,as is Zero Hedge,September: Crunchtime for Europe and Germany.12 September looks like an awkward day for those in the Euro bunker in Berlin ,as the tanks of the market advance on a devastated Berlin.History repeats itself? Stay out of this market,stay in cash(sorry, all you gold disciples),a 1982 buyng moment may be coming ,particularly if the EZ time their implosion with a Gun fight at OK Coral in Syria moment.BTW, the Russian navy is there for the Dunkirk event,nothing more.

    • William, completely agree – stay in cash, cash will be king and you won’t need to hurry to pick up bargains as the way back is going to take many years, this time there’ll be no bounce!

    • a 1982 moment?? you mean the start of another huge credit bubble…pull the other one

      I agree about having plenty of cash, but there’s no way there’ll be a market crash between now and the US election. I say if greece leaves the euro markets may rally slightly.

  4. Problem is that Greece is caught between a rock and a hard place as it has no leaders willing to fight the fight and we are in danger of inviting 2 thieves to dinner (US/UK/Israel v Troika) not just having them banging on the doorstep.

    Explain to me why we dont leverage SCO Russia and China and the rest of the BRICS – with the Oil/Gas reserves / Rare earth materials Greece is and has to now be considered a BRIC (I welcome any flaming against this comment.) Note: the cost to transport Oil/Gas from the Aegean to EU is where its advantage is and will render importing from Arab countries insignificant.

    mmmm so why does US/UK/Israel want to stop this?

    Also The northern European countries will lose out here. Germany has its oil/gas reserves sort of secured from the scandanavian countries and they will be decimated (its harder to mine resources in ice than the mediteranean) if Gas/Oil pipelines are built by Russia/China from Iran –> Syria –> Cyprus –> Greece –> Europa.

    So is the Northern European game starting to unravel. Is the US/UK/Israel game starting to unravel?

    I think yes. The West’s Imperial Colonianism is startng to come apart.

  5. Pingback: GREECE EXCLUSIVE: Geithner ‘envoy assured Athens of US support on return to drachma’ – Ελλάδα , Αποκλειστικό : Απεσταλμένος του Geithner διαβεβαίωσε την Αθήνα για υποστήριξη τ

  6. Pingback: John Ward – Greece Exclusive : Geithner Envoy ‘Assured Athens Of US Support On Return To Drachma’ – Sources – 29 July 2012 | Lucas 2012 Infos

  7. They have made a good job of hiding Greece’s importance in the scheme of things, haven’t they? It’s all becoming clear now, isn’t it?
    Now, the Greeks are no fools, why haven’t they come to the obvious conclusion?

    • Keep your head down and wait for TPTB to turn on each other. As this happens more and more will be easier to fight back. Akin to let there supplies run dry and when they start starving attack. Only strategy when you out numbered the way Greece is.

      “but are we now to believe that Spain can cough up €600m for Greece, while borrowing another €3bn for itself?”
      Yep now that repsol has been booted out of Argentina Spain needs a new Falkland Islands…

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  9. Greece will get the next tranche. No question.

    There are still too many elements in play, everyone’s on holiday and no major decisions will be allowed to get made. So one more kick of that trusty can. Draghi will talk, as will strangelove and so the markets will be willingly tranquillised for a few weeks.

    We’ll survive the summer but come September the game will end.

  10. Obama is trying to figure out a way to keep Greece from imploding until after the election. If this effort entails support for the new drachma then he will do it, he will also try to keep the US taxpayers from finding out how much this support will cost.

    The oil issue will sort itself out. If there is oil in the area then companies from the US will be involved, not out of some sinister plot but because the oil business is one of the few things the US is good at.

    We have enough military bases at the present.

    • The Americans have been doing test drills and sonar all summer… they (and Israel) confirm the existence of 300 billion Euro’s worth of oil, and 9 trillion Euros worth of natural gas… these figures are confirmed, and they are only the prelim results… additionally, since the closing of Hellinikon the one thing the US does not have is a dedicated Air Force base in a friendly country, in the region, with it’s own oil supply in the back yard… that is why the Americans are here… at this point Americans, Germans, Israeli, Russians… are all in talks with the govt. the only problem is everyone wants to pay in Drachma’s instead of Euro’s… so forcing us out of the Euro is the best way for whoever we end up working with to make sure they get the “fire sale” prices… makes good business sense.

      • It’s about 1300 kilometers from Aviano airbase in Italy to Athens ,close enough. American oil exploration is going on all the time in many parts of the world. This is not a plot just business.

      • Never said it was a plot. Aviano lacks the ability to host bombers (having been built in 1911,it has limited runway) and the action is no longer in the Balkans. Athens has always afforded the strongest vantage of access to the middle east and Northern Africa, full scale combat facilities, combined with easy shipping access for resupply.

  11. Yeah, that’s how the American government is supposed to be. After their rating agencies have downgraded more or less every country and its states in Europe to help bringing the European economy down much faster and helping to destroy the Euro itself, they now already trying to install their absolut sick currency (the US$). Instead of interfering in other countries concern (monetary, military and political matters), which actually should be none of their business, they finally should start cleaning up their own houses.
    1. Sent all members of the fed to prison, cause they all are defrauters and criminals.
    2. Start reducing their National debts, which are definitely the highest debts in the whole wide world.
    etc. etc. etc.

    All I can say is: Dear Ami, please go home and stop bothering the world with your sick ideologies,currency and greed for resources.

  12. The claim is obvious , Hellas, the colony has to go back where it belongs.

    It is a geopolitical and energy reserves issue.

    After all these decades of s very poor EU structural performance and exploitation of EU by the Germans and their allies , finally Germany will be “heart” more than any other.

  13. I rekon that some sort of fudge will be found for August 20th….after all, the alternative would be the ‘Great and the Good’ having to cut short their summer hols…….BUT this repayment is utterly technical….it does nothing to pay pensions, run hospitals and schools or any other basic needs of the Greek people……any the pot is pretty empty now.

    So, even if this EUR3.2B gets deferred, it does nothing to keep the Greek economy going and the next promised Troika tranch looks highly unlikely to me, particularly given the timing……. Hence, any sane Greek government might as well tell the ECB to take a running jump now, default on the rest of its debts while it is at it, and watch the ECB go bust (or print) and Spain implode (+French banks etc), from a safe distance. I agree with Ioannis that Greeks should trust nobody BUT believe that ‘heroic US humanitarian aid’ would give Barry O some great sound-bites this Autumn as a World Stage figure (where he presently lacks a few points on the scorecard!)…..so I think that this Slog story is highly likely to be true.

    What we all need to remember is that the German Constitutional Court is going to rule on ESM ONE and Fiskel Pact….not ANY of these vague fixes and hollow media bites causing brief market rallies since. If these Judges have any integrity, they would see that a ruling in favour would be giving Merkel an inch, for her to promptly take a mile…………The most sensible course of action would be to grant the German people (taxpayers) a referendum on a revised constitution………….They should be the ones allowed to decide if they want to bale out Europe or out of the Euro.

    • I certainly hope at some point both in Greece and Germany that the rule of law, and the will of the people is taken into account.

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  15. so…all this stuff about greece being broke is rubbish…they’re swimming fossil fuels and stinking rich to the point where all the european countries are now going to join the drachma, just leaving the germans with the euro…

    • Well put ;) Imagine that then huh… in ten years everyone will want to join the drahma… ah Hellas and to be a hellene…

    • Resources take resources to make resources from… we’re broke… couldn’t get the oil out of the seas ourselves… we need partners… Germany and the EU no longer see a source of oil in their backyard as a benefit (don’t know why) so… the Americans like oil… maybe they can help us develop our resources… thing is no one wants to pay for oil in Euro’s so Greece has to be forced to return to Drachma… so that Europe or the States get’s that devalued price they like. We are not the first country to be destabilized, and sabotaged in the interests of securing cheap oil.

      • The price of oil is more limited by the Tar Sands of Canada than the exchange rate of the Euro vs Dollar. By that I mean if oil reaches a certain price the US has plenty of oil both under it’s own land or in the Tar Sands of Canada next door. Undermining a country’s currency to obtain cheap oil is a lot of work for little benefit. The problem with the Greek economy rests with Greece not external forces.

      • Still cheaper to drill for oil in the water than tar sands… and there is 9 trillion Euros worth of natural gas here… enough to heat almost all the Balkans… also, you are not listening… the point is to have the oil here, not ship it back to the states, making money by selling oil from Greek wells to the EU will be very profitable for whoever helps develop our reserves… also, you don’t seem to understand to what degree the US and Germany are working together on this… both countries win with a Greek default, as Germany will also gain cheap oil in their backyard… but I have a feeling you know all this and will just restate the same thing in some other way… here I will just cut to the chase… last word.

  16. Pingback: Geithner envoy ‘assured Athens of US support on return to drachma’ – [The Slog] « Mktgeist blog

  17. Pingback: Greece: the Washington v Berlin poker game returns…to Athens’ advantage. | A diary of deception and distortion

  18. Germany and the EU no longer see a source of oil in their backyard as a benefit (don’t know why)

    maybe german intelligence know something that the americans do not? maybe their friends in the east have let slip that a catastrophic world event (causing either severe global warming, devastating population reduction, or both) will negate the necessity for increased exploitation of fossil fuels?

    • You mean accelerated Methane release… maybe, maybe the Germans are really embracing their recent ECO push, and don’t want to get involved in the oil business (as it is so politically troublesome)… I wouldn’t blame them… also, I think after 3 years of failed attempts to get those oil rights as a part of the bailout conditions and still failing… maybe, probably in my opinion, Germans realize it’s not an attainable goal because Greeks will not sell the national oil company… maybe they are just tired of dealing with Greeks… when it comes to these things Greeks can be very maddening. I honestly can’t imagine why… maybe they just prefer the trickle of oil they get from Finland, etc. ?

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  23. Pingback: GREECE EXCLUSIVE: Geithner Envoy ‘Assured Athens Of US Support On Return To Drachma’ – Sources

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