Thursday, July 21, 2011
Yesterday the long awaited Euro rescue plan was announced. As ever, it is couched in euro-speak so TMM offer up their translation of the document -
Today, we agreed on the following measures:
1. We welcome the measures undertaken by the Greek government to stabilize public finances and reform the economy as well as the new package of measures including privatisation recently adopted by the Greek Parliament. These are unprecedented, but necessary, efforts to bring the Greek economy back on a sustainable growth path. We are conscious of the efforts that the adjustment measures entail for the Greek citizens, and are convinced that these sacrifices are indispensable for economic recovery and will contribute to the future stability and welfare of the country.
Papa will keep walking and keep smiling because we have a gun in his back. One slip and he's souvlaki.
2. We agree to support a new programme for Greece and, together with the IMF and the voluntary contribution of the private sector, to fully cover the financing gap. The total official financing will amount to an estimated 109 billion euro. This programme will be designed, notably through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of Greece. We call on the IMF to continue to contribute to the financing of the new Greek programme. We intend to use the EFSF as the financing vehicle for the next disbursement. We will monitor very closely the strict implementation of the programme based on the regular assessment by the Commission in liaison with the ECB and the IMF.
We'll cut Greece's interest rates because, let's be honest, they are pretty immaterial against never getting your money back. Now then IMF. It's pay back time. Lagarde will get on and do what we put her there for.
3. We have decided to lengthen the maturity of future EFSF loans to Greece to the maximum extent possible from the current 7.5 years to a minimum of 15 years and up to 30 years with a grace period of 10 years. In this context, we will ensure adequate post programme monitoring. We will provide EFSF loans at lending rates equivalent to those of the Balance of Payments facility (currently approx. 3.5 percent), close to, without going below, the EFSF funding cost. We also decided to extend substantially the maturities of the existing Greek facility. This will be accompanied by a mechanism which ensures appropriate incentives to implement the programme.
We will push Greece's debt forward up to 30 yrs as unfortunately we can't push it on any further. We don't mind charging low rates against EFSF funding (see 2), but we ain't going to take a "real" loss on it. Oh, and if you don't agree we will levy you.
4. We call for a comprehensive strategy for growth and investment in Greece. We welcome the Commission's decision to create a Task Force which will work with the Greek authorities to target the structural funds on competitiveness and growth, job creation and training. We will mobilise EU funds and institutions such as the EIB towards this goal and relaunch the Greek economy. Member States and the Commission will immediately mobilize all resources necessary in order to provide exceptional technical assistance to help Greece implement its reforms.
The Commission will report on progress in this respect in October.
Panzers start your engines. Bearing 135 degrees. We expect to have complete control of Greece by Oktoberfest or heads will roll.
Private sector involvement
5. The financial sector has indicated its willingness to support Greece on a voluntary basis through a menu of options further strengthening overall sustainability. The net contribution of the private sector is estimated at 37 billion euro. Credit enhancement will be provided to underpin the quality of collateral so as to allow its continued use for access to Eurosystem liquidity operations by Greek banks. We will provide adequate resources to recapitalise Greek banks if needed.
We have persuaded those nice kind banks to contribute E37bio using a menu of threats of levies, banking licence revokements, electrodes and wet sponges.
6. As far as our general approach to private sector involvement in the euro area is concerned, we would like to make it clear that Greece requires an exceptional and unique solution.
Look, we have only just managed to cobble this together because Greece is so small. Don't go thinking any of the rest of you are going to get this sort of deal.
7. All other euro countries solemnly reaffirm their inflexible determination to honour fully their own individual sovereign signature and all their commitments to sustainable fiscal conditions and structural reforms. The euro area Heads of State or Government fully support this determination as the credibility of all their sovereign signatures is a decisive element for ensuring financial stability in the euro area as a whole.
Your bosses agree to this too. Well, they say they do, like Greece did. So this is serious right?
8. To improve the effectiveness of the EFSF and of the ESM and address contagion, we agree to increase their flexibility linked to appropriate conditionality, allowing them to:
• act on the basis of a precautionary programme;
• finance recapitalisation of financial institutions through loans to governments including in non programme countries;
• intervene in the secondary markets on the basis of an ECB analysis recognizing the existence of exceptional financial market circumstances and risks to financial stability and on the basis of a decision by mutual agreement of the EFSF/ESM Member States, to avoid contagion.
We will initiate the necessary procedures for the implementation of these decisions as soon as possible.
We agree to turn the EFSF into a sub-prime leveraged mortgage lender, borrowing and spending like a crack-house ho in the 2006 housing boom, including bunging some still-wet money into the bottomless pits of the European Banks.
9. Where appropriate, a collateral arrangement will be put in place so as to cover the risk arising to euro area Member States from their guarantees to the EFSF.
We will ask our accountants to give the contributing countries a bit of paper saying "trust me, what can go wrong?"
Fiscal consolidation and growth in the euro area
10. We are determined to continue to provide support to countries under programmes until they have regained market access, provided they successfully implement those programmes. We welcome Ireland and Portugal's resolve to strictly implement their programmes and reiterate our strong commitment to the success of these programmes. The EFSF lending rates and maturities we agreed upon for Greece will be applied also for Portugal and Ireland. In this context, we note Ireland's willingness to participate constructively in the discussions on the Common Consolidated Corporate Tax Base draft directive (CCCTB) and in the structured discussions on tax policy issues in the framework of the Euro+ Pact framework.
We have bought off Ireland and Portugal with lower interest rates in return for which they will sensibly promise us their support for the introduction of a pan-european tax to fund our plans for global domination. Mwuahahaha...
11. All euro area Member States will adhere strictly to the agreed fiscal targets, improve competitiveness and address macro-economic imbalances. Public deficits in all countries except those under a programme will be brought below 3 percent by 2013 at the latest. In this context, we welcome the budgetary package recently presented by the Italian government which will enable it to bring the deficit below 3 percent in 2012 and to achieve balance budget in 2014. We also welcome the ambitious reforms undertaken by Spain in the fiscal, financial and structural area. As a follow up to the results of bank stress tests, Member States will provide backstops to banks as appropriate.
We know we need something in return, so member countries have kindly agreed to some crippling budget constraints that have little chance of being implemented. Even Spain has promised, but they might have had their fingers crossed behind their back.
12. We will implement the recommendations adopted in June for reforms that will enhance our growth. We invite the Commission and the EIB to enhance the synergies between loan programmes and EU funds in all countries under EU/IMF assistance. We support all efforts to improve their capacity to absorb EU funds in order to stimulate growth and employment, including through a temporary increase in co-financing rates.
We have included a clause that could mean anything and will be interpreted at a later date to encompass anything else we might think of, but it contains the phrase "growth and employment", so you can't say no to it.
13. We call for the rapid finalization of the legislative package on the strengthening of the Stability and Growth Pact and the new macro economic surveillance. Euro area members will fully support the Polish Presidency in order to reach agreement with the European Parliament on voting rules in the preventive arm of the Pact.
Can we get this wrapped up and signed off please? We have appointments with sun-loungers in Antibes for the whole of August.
14. We commit to introduce by the end of 2012 national fiscal frameworks as foreseen in the fiscal frameworks directive.
We really must try and do what we said we'd do before (but haven't done), but it won't be for ages yet.
15. We agree that reliance on external credit ratings in the EU regulatory framework should be reduced, taking into account the Commission's recent proposals in that direction, and we look forward to the Commission proposals on credit ratings agencies.
Luigi will be popping round to the homes of S+P and Moody's with a couple of horses' heads. Costa's boys will sort us out some new ratings, they are pretty creative with numbers.
16. We invite the President of the European Council, in close consultation with the President of the Commission and the President of the Eurogroup, to make concrete proposals by October on how to improve working methods and enhance crisis management in the euro area.
You are meant to be the bosses, we've had enough of sorting your shit out for you. Next time do it yourself.