GREECE EXCLUSIVE: ‘Deal has been done to pay off bondholders and forgive residue of debt’

Samaras…big secret, upping the pace of austerity


‘What the deal does is allow another default date to come and go with everyone pretending it hasn’t happened.’

Another day, another bonkers conspiracy theory from The Slog. Greece has done a deal to put the lid on the Greek crisis? Pah! Formation of Greek/Israeli/Cyprus/US alliance? Fiddlesticks!

Let’s take the deal first.

There is a tradition in Greek politics that the government of the day delivers a speech and holds a press conference during the annual Thessaloniki International Trade Fair. Organized by Helexpo, it takes place every September at the Thessaloniki International Exhibition Centre. This convention of a sounding-board for those in power has been going on since 1926. Only during the German Occupation was it interrupted.

But the Samaras government has decided to neither speak nor take questions. No explanation is being given as to why. Another email from a regular Athenian media contact:

“Something has been agreed, and whatever it is has made the bondholders and the Troika irrelevant overnight. There are half-hearted references to repayment schedules, but they don’t have that sense of panic evident just a few short weeks ago. But you can see that Samaras is now pushing for more austerity progress.”

He is indeed. Greek media are reporting that Prime Minister Samaras told government ministers to complete work this month on 77 amendments to be included in a bill that aims to speed up state asset sales.

One clue comes from a senior tax office executive who has blown whistles to The Slog before.

“I think the Troika made a catastrophic error some days ago,” this person told me yesterday, “either that, or they did this deed to create a showdown. I don’t know which, but it concerns the EU demand that the Greek civil service should have its headcount drastically reduced. Samaras and Stournaris are all for it, Venizelos [PASOK] is nervously against, and Fotis Kouvelis [Democratic Left] is flatly refusing to even consider it. No crooked politician in Greece dares to attack the civil service, for obvious reasons. This is a major sticking point”.

It’s an interesting view, but it doesn’t on its own in any way explain the dramatic change in Troika/bondholder v Government atmosphere the week before last. Somebody, somewhere in Europe flicked a switch within the last ten days, and everyone relaxed.

Now a close French diplomatic contact has told The Slog:

“Brussels or Berlin…or both…or others…have given Samaras a big reassurance that if he sticks with the [austerity] programme, Greece will not be thrown out of the euro. Those same people have given similar assurances to the key players in the IMF and bondholder groups…that if they take another haircut, the EU will pay off the balance and give them their money back. The secrecy is to do with Merkel being flayed alive at home if they thought she was doing this, and Draghi ensuring that his central bank doesn’t become an open door for insolvent States and panicky bondholders.”

Now this is an interesting one: the talks stick over the issue of bureaucrat firings, so somebody decides to break the deadlock using a judicious mixture of EU acting like a sovereign plus debt forgiveness. But it will be packaged in such a way as to disguise what it is. This is, of course, precisely what the ECB has done over Spain, and to some extent Italy; so to that extent it rings true. Has Draghi engineered this deal as the next step in neutering Germany…or has he formed some sort of pact with Merkel during her holiday – which ends tomorrow? Are the Americans in the loop?

I don’t know for certain: but logic points the finger at Mario Draghi.

This Tuesday, Athens will auction some short-term bonds to pay off the €3.2 billion bond repayment due on Aug.20. Greece being able to do this successfully will avoid the country having to seek yet more emergency funding on top of the bailout loans it receives from EU and IMF funds.

The €3.2 billion bond that matures August 20th is held by the European Central Bank.

It seemed odd that nobody looked concerned by everyone going on holiday with default due on August 20th. Now we know why. What the deal does is allow another default date to come and go with everyone pretending it hasn’t happened. Success or failure after the bond issuance, the ‘Greeks’ will meet the maturity date.


It is becoming increasingly potty to stick with the view that nothing is going on here. As the Economist points out this week:

‘There is a common fallacy, not least in Germany, that dropping the Greeks would be a fairly costless way to teach a useful lesson. In fact the European Central Bank (ECB) owns Greek bonds with a face value of €40 billion ($50 billion), which would be converted into devalued drachma and which Greece might not service. A further €130 billion or so of loans that Greece received in the bail-out would have to be written down, or written off. The €100 billion of the temporary debts Greece has stacked up in the ECB’s payments system would crystallise into a loss. Add in a one-off grant of say €50 billion to tide Greece over—call it conscience-salving “solidarity”—and the bill might come to €320 billion. Estimating the price of a “Grexit” is guesswork, but Germany’s share might reach €110 billion of this, about 4% of the country’s GDP.’

Those nutters at the Economist, eh? What will they come up with next?

Now for the strategic alliance story. Starting from the vantage point of Greece-Turkey relations over Cyprus, I was (I think) the first to point out that Putin was trying to strengthen his ties with the Greek Cypriot regime. I also posted several times earlier this year about Turkish raw material ambitions in the Aegean, and the virulently anti-Israel stance being taken by that nice, normal Recep Erdogan. The comms/energy pipeline agreement between Greece, Cyprus and Israel quickly followed as a topic here, and now – following the visit of Shimon Peres to Athens last week – comes further evidence of a cemented alliance.

The output from the visit is that Greece and Israel will move towards much closer cooperation on defense issues, including the joint manufacture of defence systems. Government sources confirmed this to news-site Ekathimerini, adding that the Syrian bloodbath and arrival of warships warships in the Southeastern Mediterranean have confirmed the two sides’ mutual view that closer defensive cooperation is essential. A senior bod in the Israeli Ministry of Defence, Shmaya Avieli, will visit Greece before the end of August to continue the talks and scope out some projects.

Clearly, neither side is hanging about on this one. But it’s all just more Slogbollocks anyway, so I wouldn’t worry over there at the Foreign Office, chaps. You just carry on getting it completely wrong: it’s a long-standing tradition, and it’d be a shame to change it now.

See also Why the Germans will quit the eurozone whether they want to or not.



64 thoughts on “GREECE EXCLUSIVE: ‘Deal has been done to pay off bondholders and forgive residue of debt’

  1. Pingback: John Ward – Greece Exclusive : ‘Deal Has Been Done To Pay Off Bondholders And Forgive Residue Of Debt’ – French Diplomat Source Confirms Big New Containment Plan For Greece – 12 August 2012 | Lucas 2012 Infos

  2. JW

    ‘If he sticks to the programme (austerity)’ enough said.

    ps What is the ‘lingua franca’ for this disparate group of bureaucrats? I guess they all have the cop out of ‘lost in translation’.


  3. What common defence projects have Greece and Israel?Israel,whose technology is at least on par with the most advanced parts of the USA are hardly likely to share this technology.The Israel technology for firing micro-particles of metal from an electrically charged gun may be the stuff of Buck Rogers but is unlikely to be shared technology.The ability to use common video cameras in public areas(Trapwire)to follow targets is also highly unlikely to be shared,but if they ask the Russians nicely they have a really useful version in use in London at the moment,being used to follow credit cards and momible phones.
    So again,”What common defense projects”?Or,would that be the procurement of German submarines from Greece by Israel?


  4. Tuesday’s short term T Bond sales will be oversubscribed again, and August 20th repayments will be met.
    How the conspiracy and secrecy comes into it is unclear to me other than making a good storytime.
    Nothing will change until the Troika announce a legalised plan and stick to it, or the markets make some decisions for them.
    Israel is playing Greece against Turkey and our Foreign Office knows exactly what is going on, but doesn’t need to tell the whole world.
    I’d like to know what WILL happen like everyone else, not what WON’T happen in these uncertain times.


  5. Dear Slogmaster, regardless of whether you will be proven right or wrong, your thoughts always make sense. Predicting which way the wind will blow is hard to do. Describing the type of damage however is easier and perhaps more useful since the wind w i l l blow for all of us eventually.Thank you and the rest of the Slogclan for the interesting reading.I just felt like saying that.


  6. August angst. It’s not a good month to get anything done anywhere, let alone in southern Europe where the population is basking in the sun for several weeks, thinking of nothing political. I wish they would send some sun here! Of course you do have to want to do something – anything – but that does not seem to be anyone’s job in Greece. Merkel is back from her hols and doubtless plotting her top priority, political survival, and hoping that Greeks will dump half a million surplus civil servants. Of course that won’t happen, the immediate cost is enormous and civil servants everywhere are experts at personal survival. They have the time for it and know they can outlast politicians. They just have to prevaricate, their specialist subject!


  7. @Jon, why not trust Greece? Israel has had great relations with Greece for years. Because of religion? Religion isn’t a reason, it’s an excuse. Israel is a player, and Greece is a victim with excellent strategic assets (up for grabs may I add). Sure this is all run by top tiers of conspirators etc but Israel is a bit of a scapegoat for the conspiracies of the world. The West want’s access to the Middle East but don’t want to be part of it. That’s why Turkey is being used by the West but not included. Greece is definately used, but is included selectively. Who would Israel rather trust, the Russians, the Turks?

    @Slog, please correct:
    “Greek Cypriot regime” there isn’t such a thing, it is called a Democracy (if that really means anything today). Often you will hear of the Turkish-occupied part of Cyprus though, which is not exactly recognized due to the fact that it is indeed an occupation. Not that today’s so-called democracies are not regimes though….



  8. Ioannis, I’ve said before that I’ve shared the Greek island experience (burning Judas Iscariot, drinking raki and firing guns in the air) with real joy, like many other visitors. But I’ve also done business at a senior level in Athens and I’ve still got the scar tissue. Idle, inept and dishonest with no discernible business ethics about sums it up. Give me the Turks any day; at least they stab you from the front.


  9. If you are naive enough to trust Turks… then good luck with that. So Greeks got the better of you at “senior” level business… and you are bitter? Says more about you i’m afraid. Like I said… haters. With reasoning like that it’s no wonder you were taken advantage of.


  10. ECB holds 55b Gr Debt bought @ 70’s.

    The 3.2b due bond is bought @ 60.

    So we issue paper with 4.8% int payable in 6 months! we pay face value ECB AND WE LOSE ALMOST HALF A BILLION ! plus we need to come up with the 3.35 in 6 months.

    i love this deal.




  11. Jacqui… and what cultural pillar of ethical superiority do hail from to have the authority to judge anything? What “civilization” taught you that your opinion on matters that are none of your business was valid?


  12. Trouble is all those Greek Bonds that the ECB hold are worth diddly sh*t. The Private Bondholders were earlier this year robbed of their money, but those rules didn’t apply to the ECB’s holdings. The bonds were written down 75% and swapped for shiny new ones, which are now worth a wee bit more than diddly sh*t. ECB should mark them to market ! I think that means that the ECB is insolvent. Don’t you just love Euroland !


  13. BT: I think that’s why “the EU” could et away with such an underhanded act. Its a massive organisation (minus the “organised” side of things) with no truly discernible leadership group or major figureheads.

    There’s multiple groups claiming jurisdiction over various elements and in a situation like this they could deflect blame from one to another ad infinitum so that we could never truly place responsibility with any one group or individual. And whilst we attempted to negotiate that maze, the deed would have been done and rapidly become yesterdays crime. Pretty much EU politics in a nutshell.


  14. Come now,
    you might do something useful today…
    roll up your sleeves, take your chin out of your hands, take your elbows off the bar, and start washing and polishing some glasses.


  15. Ahahhahaha… another weak link that needs to change the subject, and can’t engage in a dialogue… dear, keep your fly swatting gynecological conditions to yourself… and mind your own business. Everyone’s a specialist on Greece now… what a load of shite.


  16. Pingback: Breaking: Greeks Cut Behind the Scenes Deal

  17. Pingback: GREECE EXCLUSIVE: ‘Deal has been done to pay off bondholders and forgive residue of debt’ | A diary of deception and distortion « ΝΕΑ ΧΩΡΙΣ ΦΙΛΤΡΟ ΦΕΛΛΟΥ

  18. @BT. We would be entering Mad Max territory should that ever happen. Ask the hedge fund boys where a fair proportion of their personal wealth is stored.


  19. Pingback: GREECE EXCLUSIVE: ‘Deal has been done to pay off bondholders and forgive residue of debt’ | Last Generation News

  20. I think we all know where the money’s coming from…

    Bend over and get ready to do our patriotic, European duty.


  21. All these examples are straightforward criminal activities.

    If you induce a person to pay money or commit to paying money to you, and in the course of so doing, you lie to them about the product you are providing, and because of your lies, the other person agrees to the proposal, you have committed the criminal offence of fraud.
    If you lie to someone or even if you don’t properly explain important elements of a proposal and as a result they agree to allow you to obtain a financial benefit, you have committed a criminal fraud.
    If you take money from a client’s account without telling them or properly explaining the implications of what you are doing, you are committing a criminal fraud.

    There are effectively three main ways by which any person can commit fraud. Under the Fraud Act 2006, they are
    Fraud by false representation
    Fraud by failing to disclose information
    Fraud by abuse of position

    If a person misleads the benefits agencies as to the true state of their affairs when applying for social benefit payments, they commit the offence of fraud, and people are routinely imprisoned for such criminal offences. If a financial institution does the same thing, it is called ‘misselling’!
    The financial institutions commit these offences routinely every day and in every way, and have been doing so for years. The problem is that the incidence of such fraud is so immense that there has been no politically acceptable way to describe these activities. If the British government had to openly admit that these activities were fraudulent, can you imagine the international implications that would have for the British financial system and the financial sector?

    Two Questions
    Why does the benefit claiment who makes a false claim go to jail?
    Why to the Banksters, Financial Industry, O! and the Political Establishment, don’t?
    For more info check out the link below.


  22. Just because it might have lots of unintended consequences doesn’t mean they wouldn’t try.
    Would a gold sovereign only be worth face value ?


  23. MdS: Think outside the box on this one. That Israel would share defence secrets/technology with Greece is not to say that Israel would expect Greek defence secrets/technology in return. Maybe they would take something else in return………… favourable mineral exploration rights in the Aegean for Israeli companies.


  24. Ahh ethnic stereotyping………the cornerstone of any reasoned discussion.

    Well done Jacqui you should feel real proud.


  25. “No crooked politician in Greece dares to attack the civil service, for obvious reasons. This is a major sticking point”.
    Well this is the core problem here in Ireland as long as the incompetent Irish puppet Government holds off in dealing with the overmanned Irish civil service (in the top management positions) and the various Quinoas we the ordinary smucks will have to foot the vast amount of austerity measures demanded by the Troika. This is clearly an area that will eventually have to be dealt with the question is when will the parish pump politicians get enough balls between them to do so ???
    You do have to give the Greeks credit though! The managed to not pay any of their interest payments, told the Bondholders to get lost and showed Angela the two fingers as well told 300,000 German tourists to get their suntan elsewhere, and their reward was a cool 100,000,000,000 Euros taken off their debts! Meanwhile the teacher’s pet Edna was told to be a good boy and pay up and shut up!
    Where are the fighting Irish I’m ready when the rest of you are! Get up off your knees Ireland!


  26. Pingback: ‘Deal has been done to pay off bondholders and forgive residue of debt’ | Machholz's Blog

  27. Roop Blankfein
    Then keep searching in vain, because nobody knows. I offer evidenced opinons, not investment Nirvana.


  28. machholz,

    stop buying stuff, if it’s austerity they want then let them have it.
    You can be sure that you can hold out longer than they can. #JustStop



    Sources said the Israeli side has already expressed an interest in the capabilities of Hellenic Defense Systems (EAS) and the Hellenic Aerospace Industry (EAB) and that there will likely be an agreement on the co-manufacturing of shells and armored vehicles.

    Defense Ministry officials said that there is also interest on the Israeli side in the construction of navy vessels, which might help the government solve the problem of what to do with the Skaramanga shipyards west of Athens.


  30. I am quite surprised how everyone seems to be relaxed these days. You are right it is like someone flicked a switch somewhere in the Background and everyone seems not to be worried too much.

    Regarding Israel, I think that Greece and Cyprus are the only genuine allies in the region. In an area, with 250M Arabs that want Israeli heads on a plate, Greece and Cyprus are the only “Western” countries with their own bad experience from Islamic fundamentalism and expansionism.

    But what I still do not get, is Greece obsession for staying in the eurozone. The Euro itself is half of the problem… With the right reforms, Greece would be much better outside the insanity of the eurozone. Imo, all that Greece want is a good devaluation.


  31. You have to understand some Greek history. Remember that it is only just over 40 years ago since the Greeks saw their democracy overthrown. Twenty years before that they had endured a bloody civil war, which defeated the communists although that disgusting ideology still has a strong hold on many people. And you also have to remember that the Drachma, certainly in recent times, certainly since the restoration of democracy, has been a very weak currency and the people have seen their wealth destroyed.

    I agree with you regarding the Euro. It is a stupid and idiotic idea. Problem is that membership of the Euro has probably destroyed 25-30% of the productive capacity of the Greek economy. So yes devaluation would help. Strong political reform is also needed to clean up Greek politics. And that is, I’m afraid to say, one of the labours of Hercules.


  32. It’s not relaxation, it’s more like calmness before the storm. As for the Eurozone, people forget that there was an era before it that was much better.Half litre water bottles used to cost 50 drahmas but almost overnight that became 50 eurocents which meant 170 drahmas.A lot of people made a lot of money that way.


  33. @Jacob… not relaxed… resigned. We are too fatigued to give a shit… and too broke for a Grexit to scare anyone anymore. The only reason that Greeks want to stay in the Eurozone is because the only thing worse than a German controlled Eurosuperstate is Greek politicians running Greece without any oversight at all… the way it used to be.


  34. The way i see it,is that they are making us so sick of our own politicians so that we crave that superior Germanic management style and we outsource our leadership to Germany… Perhaps the eurocrisis is a ruse to turbocharge integration, which always results into centralization of corruption – no more crooked little guys, just top management thievery of the greatest level. And where does this lead? If they push for EU budgetary integration the EU will be a wannabe US Federation of states. Do we want to be more like the dollar???


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  36. Pingback: John Ward – Greek Crisis : Why Antonis Samaras Will Not Be Going Into Batlle Unarmed Next Week – 16 August 2012 | Lucas 2012 Infos

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  38. Pingback: GREEK CRISIS: Merkel’s ‘unexpected’ U-turn – Spiegel | A diary of deception and distortion

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  41. Pingback: GREEK CRISIS: Merkel’s ‘unexpected’ U-turn – Spiegel / Eλληνική Κρίση : Η “απρόσμενη” μεταστροφή της Μέρκελ « Ελεύθερη Λαική Αντιστασιακή Συσπείρωση ( Ε

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  43. Pingback: Smoke Signals | A diary of deception and distortion

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  46. Pingback: John Ward – Euroblown : Surprise, Surprise, Greece Set To Get Debt Rescheduling And Forgiveness Deal – 20 November 2012 | Lucas 2012 Infos

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