Tuesday, May 28, 2013

28/5/2013: That Cracking Success of the Troika Programmes

Some 'stuff' is coming out of the EU nowdays to greet the silly season of summer newsflow slowdown:

The loose-mouthed Eurogroup head Jeroen Dijsselbloem [http://online.wsj.com/article/BT-CO-20130527-702547.html?mod=googlenews_wsj] is striking again. This time on Portugal's 'progress' on the road to recovery:
""If more time is necessary because of the economic setback, that more time might be considered" as long as the country is being "compliant" with the program, Mr. Dijsselbloem told reporters after meeting with Portuguese Finance Minister Vitor Gaspar."

Of course, Dijsselbloem is simply doing what is inevitable - acknowledging that the EU/Troika programme for Portugal is as realistic as it was for

  • Ireland (which undertook two extensions, one restructuring, one expropriation round vis-a-vis pensions funds, and two rates cuts to-date on its 'well-performing programme' and is looking for more), 
  • Greece (which received three extensions, three restructuring, PSI - aka outright default, deficit and privatizations targets adjustments),
  • Spain (which so far got only banks bailouts, but has already secured two rounds of deficit targets extensions),
  • Cyprus (which hasn't even received full 'support' package yet, and already needs more funds).

It is worth noting that Portugal itself has already seen debt restructuring by the Troika in two rounds of loans extensions and two rounds of interest rates cuts.

So in the world of EU logic: if loans restructuring => success.

Please, keep in mind loans restricting ⊥ <=> success (for those of you who tend to argue that my above argument can mean that absence of EU restructuring implies success).

Oh, and while on the case of Ireland, Herr Schaeuble has stepped in to put a boot into Minister Noonan's dream of ESM swallowing loads of Irish banks' legacy debts [http://www.nytimes.com/reuters/2013/05/27/business/27reuters-germany-schaeuble-banks.html?src=busln&_r=0]:"European countries should be under no illusion that they can shift responsibility for problems in their national banking sectors to the bloc's rescue mechanism". Now, recall that Minister Noonan is having high hopes riding on ESM taking stakes in Irish banks to ease burden on taxpayers. See point 1 links here: http://trueeconomics.blogspot.ie/2013/05/26052013-ireland-hard-at-work-on-troika.html

So it looks like another round of loans restructurings is in works, just to underpin the immense success of the Troika programmes in Euro area 'periphery'.

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