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Three key takeaway items from this development:
In simple terms, at this point things have become truly farcical: Greece threatens, begs, and even lies in order to receive bailout funds only to then turn around and complete renege on the terms of the agreement. Indeed, we now have evidence that Greece was hiring more Government workers at a time when it was supposed to be implementing austerity measures:
- Greek leaders, no matter what party they belong to, are unwilling to get Greece's fiscal house in order (how many debt repayments and deadlines have they missed now?)
- The current Greek Government is formed via a very loose coalition, which could very easily fall apart, resulting in yet another election.
- Greece already wants a third bailout (note the additional €16 billion needed to cover the country's financing needs).Greece breached bailout rules with staff hirings: report
Greece breached the rules of its EU-IMF loan agreement by taking on some 70,000 public sector staff in two years, undermining efforts to reduce the state payroll, a report said on Sunday.
To Vima weekly said the hirings in 2010 and 2011 were highest in local administration, health, the police and culture, where the number of employees actually increased.
This is extremely problematic for several reasons.
For one thing, this sends a clear message to the EU as well as the ECB and IMF that Greece is lying to their faces every time it promises to implement reforms. This doesn't make for much political goodwill (note the survey quoted in the article below).Greek PM cannot attend EU summit due to surgery
German Finance Minister Wolfgang Schaeuble repeated this view Sunday, in an interview to newspaper Bild am Sonntag.
"It must now be the most important task of Prime Minister Samaras' new government to swiftly and immediately implement the agreed program without hesitation or asking, yet again, what the others could do in addition for Greece," German Finance Minister Wolfgang Schaeuble was quoted as saying. "The ball is in Greece's field; it is in their hands to achieve that Europe's citizens can regain trust. But this will only be achieved through concrete measures and actions."
The Sunday tabloid published a survey on Greece that it had commissioned with Italy's Corriere della Sera, Spain's ABC and France's Le Journal Du Dimanche.
In it, 78 percent of the Germans polled, 65 percent of the French and about a half of the Italians said Greece should leave the Eurozone if it fails to pay its debt.
EU political leaders and their respective citizenry aren't the only ones realizing that Greek political leaders are a bunch of crooks; the Greek people are also beginning to realize that their political leaders are not looking out for their best interests or for Greece's: only 20% of the Greek bailout money went into the economy, the rest went towards paying off Greece's creditors (read EU banks) and the ECB.
European leaders will be meeting this Thursday and Friday to discuss Greece and other issues. As the above articles headline reveals, neither Greece's new PM nor its Finance Minister (they no longer have one) will be in attendance.
However, we already know from the headlines this morning that Angela Merkel will not agree to Euro bonds or any kind of shared deposit insurance if it means "joint liability" (read: Germany being on the hook for other EU members' bank losses).
We also know that the ECB is not interested in buying more government bonds (it hasn't for 14 weeks now). And the ECB has stated point blank that Greek negotiations will not begin with Greece "wish[ing] for more time."
So, there is a relatively high probability that a Grexit will be coming sooner rather than later. It all boils down to one simple fact: the second the money spigot from the EU to Greece gets turned off, Greece leaves.
Consequently, the real question is: "when does Germany and the rest of the EU stop picking up the tab for Greece?" Judging from the above survey in which even the French and Italians now think Greece should leave the EU if it doesn't start paying its bills, it won't be long: Greece will need another €16 billion in financing if the EU accepts its request for another extension (yes, this would be the third bailout).