ATHENS TALKS UPDATE: NO WONDER ‘CHAOS’ COMES FROM THE GREEK

ATHENS TALKS UPDATE: NO WONDER ‘CHAOS’ COMES FROM THE GREEK






Why all is now confusion in the Greek debt talks

After today, I’m unlikely to get any more input from my Greek debt negotiator source…for reasons I can’t go into without revealing his identity. So this is his last despatch. Those with a heart condition should look away now.

Another element has entered the bull ring. We used to have three picadors fighting two bulls at once. Then the bulls retreated as, somewhat late, a matador entered the stadium and started a fight with the picadors. Now several bears have made an entrance, and are accusing the picadors of not trying hard enough.

The Troika of bears has taken another look at the books of Greece plc, and decided that – yet again – nothing much has happened going-forwardwise. (This is in addition to Mrs IMF Prong having picked up an FT, and noticed that the Hellenic economy is descending rather more quickly than anticipated).

So while the banker-bulls lick wounds and discuss tactics over in the far corner, the eurocrats in the crowd continue to soothe the nerves of outsiders. European Union Economic and Monetary Affairs Commissioner Olli Rehn said they are “very close” to reaching an agreement on a private-sector involvement in a Greek debt swap “this month”, which given its only the 27th today was something of an oxymoron. Venizelos once more last night said he was “confident” a deal would be wrapped up by the end of today (Friday) but it’s now very close to that time, and as far as one can see, most people are too confused to negotiate. What we can see here, however, is a quadrophonic cacophony of mendacity and deceit, Ithangyoo. So let’s leave the strained bullring/bearpit analogy to its fate, and move to another one.

It goes like this: 1. Berlin (especially Wolfgang Schauble) is looking for an excuse to let Greece default. 2. Greece is continuing to take the piss by not slitting its own throat (Can you blame them?) but doing just enough to keep the money coming. 3. Berlin and Frankfurt (with grudging Parisian support) are keen to nail the creditors to the ground on this one. And 4. The lenders/creditors/bondholders/Hedgies/Banks are starting to have second, third and fourth thoughts.

“If this deal gets done this weekend or even by the 30th, then I’m a Dutchman,” said my source today. But he isn’t Dutch at all as far as I know. And anyway, Bloomberg confirms Greek sources as saying the deal “might not even get done next week”.

I’m getting more firmly settled into the camp that says the Draghi-Merkel axis really don’t want the deal to happen: what they want is a Greek default – albeit fairly ordered – after which the EU survives, and the bankers catch a heavy cold. The problem for Frufru Lagarde is that by strolling down that street, she loses her chemise. My source wasn’t so sure about any of this, but unfortunately he had even more complications to impart.

“It’s a game, no doubt about that. But is it play-games – or is it like, you know, Roman Games to the death? Speaking for my colleagues, I said at the outset that the Greek economic numbers were lousy. As we paid top dollar for the bonds, and made 100% allowance for loss in this year’s results, there’s nothing to keep us here really. But I don’t think we’re in the majority. Also we’ve kind of lost faith in the Greek political situation right now. These guys are already thinking about getting re-elected”.

I have to say, my sense is that Mario Draghi has played a blinder. Whether this is reality or not, there’s a change of mood at the talks now: the bondholders are nowhere near as confident as they were…mainly because they too are in the dark about just how far the ECB/EU will push matters. Or indeed, in private, just how much pressure Washington will apply to get the deal done without a default….at the very least, without a default that triggers expensive CDIs for Wall Street to digest.

In theory, of course, there are just two working days – Monday and Tuesday – left in which to get this deal done and release the next tranche of bailout cash. In practice, the EU has gaily passed umpteen deadlines before, and simply pretended they never existed in the first place. A lot now depends on just how good a poker player Charles Dallara is. But he’s keeping a very low profile indeed.