BREAKING NEWS - Disaster for Athens - Troika advises EWG to Reject Austerity Plans

BREAKING NEWS - Disaster for Athens - Troika advises EWG to Reject Austerity Plans

Breaking_News (Photo credit: kattanapilot)

Surprise, surprise – the meeting that the EU flatly denied would happen today just wound up.

The output is the biggest bombshell to hit the eurozone in a long time: Greece is to be denied access to the next bailout tranche … unless more cuts and reforms beyond those "agreed" to last Sunday are forthcoming.

In what looks to like a pretty serious case of stabbing Greek Prime Minister Antonis Samaras in the front, news reports are breaking in Athens as an anonymous EU official has confirmed the International Monetary Fund (IMF) report to the Eurogroup Working Group (EWG) is damning about the cuts "agreed" by the Athens government last Sunday.

This is a direct quote from the document:

“It is clear that Greece is off track and there is no chance they will cut the debt to 120 percent of GDP in 2020 as envisaged. It will be rather 136%. New prior actions will be needed, on top of the existing [ones] before any new tranches of eurozone and IMF emergency loans to Greece can be paid.“

Shortly after leaving the EWG meeting to leak its entire contents, the eurocrat noted in addition that the costs of a two year extension (the one Schäuble dismissed as “pure media speculation” on Thursday) to the Greek repayment schedule “are now seen at around 30 billion euros”.

As per the long-hold Slog view that some disguised debt foregiveness would, in the end, be involved, the report also notes that (debt) restructuring could take the form of a further reduction of the interest rate on existing loans to Greece and an extension of their maturities, but while that would reduce financing costs, alone it would not fill the funding gap’.

So, the good news is that a deal is on the table. The bad news is, Greece hasn’t fulfilled its side of the bargain ... assuming anyone in Athens was ever clear WTF that bargain was in the first place.

This is significant news, so much so that it’s been leaked just as most European financial and media executives were drifting off for the Friday lunch followed by another weekend of quiet denial in which to recover from reality.