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Europeans to bail out French and German Banks
The 86 billion euros from the third so-called financial rescue approved for Greece will be paid by citizens whose governments are members of the European Union. The interests on the loans requested by the Greek government will be paid in perpetuity by the Greek people. The third bailout will be disbursed over the next three years. The details and conditions of the program will be reviewed every two months, according to the Memorandum of Understanding (MoU) issued by the parties involved in the negotiation. Athens major lenders called the Stability Mechanism (SM), draws annual contributions from the Member States-, the European Commission, the European Central Bank and, if Greece overcomes its first review in October, also the International Monetary Fund (IMF). This is what is now known as the quartet of creditors. The new program is part of the remaining lending capacity of the SM, which is 455 billion euros. Thus, the new program approved on Friday does not require any new contributions from the Member States of the euro area. The SM allegedly mobilizes funds on the basis of capital already signed to by the Member States. Of the contribution of every member of the SM The IMF has not yet issued a statement about its potential contribution to the bailout program. In fact, the IMF has said in multiple occasions that the third bailout is doomed to fail, so any contributions from the organization would be considered a surprise. “The Fund first wants to analyze the program”, said its managing director, Christine Lagarde, via teleconference. Right now, the Greek debt is unsustainable, as it has reached over 200% of GDP and no fiscal relief seems to be strong enough to stabilize the country. The IMF also wants to see substantial and immediate reforms in the pension system. Once Athens passes its first review from creditors in mid-October, the IMF will decide whether to participate in the rescue or not. Other lenders involved in the organization are believed to be “indispensable”, according to the president of the Eurogroup Jeroen Dijsselbloem. If the IMF joins the third program, the amount of money that each institution must disburse would be reduced. The SM is the body on which Greece depends the most for the third bailout. States that contribute more, which depends on the state of their economies include Germany with 17 billion euros, or 27% of the total;, France with 13 billion, or 20% of the total; Italy with 11 billion, just over 17 % of the fund; Spain with 7 billion, almost 12% of the total; and the Netherlands, with about 6% of total. The other euro zone countries provide approximately 14 billion. In sum, it will be the taxpayers of these countries the ones who will rescue German and French banks, who are the true recipients of the third bailout. The interests incurred into by the government of Greece will be charged to the people of Greece, who will continue paying them in perpetuity to the SM or otherwise the country will lose the majority of its most valuable assets. Of the timeline of the approval of the program and third bailout Germany: The Bundestag will meet on Wednesday 19 at 9 am to discuss the agreement and proceed to vote on the third program. Estonia: Parliament will vote on Tuesday. Netherlands: It will first discuss the program with Eurogroup chairman, Jeroen Dijsselbloem. Voting is not strictly necessary but is expected to be held on Wednesday. Spain: The vote in favor is not necessary although it will held. It is also planned for Tuesday. Austria: Austrian Finance Minister forwarded the agreement to the economic affairs committee that will meet on Tuesday. Luxembourg: Parliament’s vote is not required but officials will meet “in the coming days.” Lithuania: Parliament’s approval is needed although the third bailout will be discussed. The program was given approval by the Lithuanian government on Tuesday. Latvia: The approval of both the Government and the Parliament is required. Slovakia: Parliamentary approval is not necessary although a debate will take place. The House committee will meet next Thursday 20th. Finland: Already approved the program last August 13. One day before the celebration of the Eurogroup. Slovenia, Italy, Cyprus, Malta, Ireland, France and Belgium: no need to vote the program in their parliaments. Portugal: The parliament will also vote this week. Of the timeline of disbursement Once past the approval by national parliaments, Greece should receive 26 billion for the first installment this Thursday. The 19 members of the euro, having ruled on Friday in the Eurogroup the possibility of granting a second installment to the government of Alexis Tsipras, will make Athens use some of the money from the first part of the loan to pay for payments that the country missed on previous debt. It is more than 7 billion to IMF and 3.5 billion to the ECB due this Thursday. The Eurogroup agreed on Friday to split the first installment as follows: 10 billion will go to a SM Special Fund for “immediate” bank recapitalization. The Commission, however, has clarified the test to the Greek banking system which will be done by the ECB could take “weeks”. Once it is identified the exact needs of the Greek banks, Athens must use 10 billion euros for recapitalization. Another 13 billion euros will be used to meet debt maturities, payment of pensions and salaries of public officials, […] Read the rest below at the source link
Source: http://real-agenda.com/europeans-to-bail-out-french-and-german-banks/
