Lagarde throws a sabot into the eurogroupe tank
For the last three weeks, I have been posting and tweeting occasional reminders to those who say “a deal” has been done between Greece and its creditors. My general tenor has been:
1. Greece is in default to the IMF
2. The IMF is not on board with the emasculation deal driven by Schäuble
3. Having been lied to by Schäuble in 2012 about Greek debt sustainability, Christine Lagarde is not about to chuck good money after bad
4. The IMF insists that without debt relief, the Greek situation is hopeless.
I ended The Slogpost of a week ago today with these words: ‘Brussels-am-Berlin is in triumphalist mode for the time being. It won’t last.’
In their haste to use unrepayable debt and technocratic takeover to make an example of the Greeks, the Troikanauts completely forgot their sanctimonious cover-story about lazy and devious Athenians putting the entire world economy at risk.
But Lagarde’s not having any of it.
Last night, an IMF official said the fund would withhold financial support unless it has guarantees Greece can carry out a “comprehensive” set of reforms and will be the beneficiary of debt relief from its European creditors.
I knew this was going to happen: one could see it coming. Most commentators have allowed a false sense of relief to blind them to the IMF elephant in the room. But now the Americans (and it’s a classic example of their MO) are saying, “Your member State owes us money. It’s in default. Time for you to open the wallet and pay the price….we are not a charity.”
The ball is coming over the net, and landing in a court of the unlikely double-act of Draghi and Merkel. But as of now – without a drastic change of heart from the ECB and Eurogrope, the Greece Bailout3 is off.