Greece Courting the IMF for Fourth Bailout

The Greek financial drama is playing out on the world stage once again, but this time European nations are looking for IMF involvement.

The problem is that suddenly IMF officials have alligator arms and can’t reach their wallets.

And it’s no wonder: After all, Greece is now positioning for its fourth bailout.

You read that right: Fourth bailout!

What’s different this time is that eurozone nations like Germany will only participate in a bailout if the IMF does. But the IMF views Greece’s debt situation as “highly unsustainable” and they’re trying to maintain their credibility.

That means IMF officials will only participate if a fourth bailout looks like it’ll work. And from where I sit, that’s not at all a done deal.

A European Problem?

Even the Trump administration wants the IMF to stand firm on refusing to bail out Greece, saying it’s a European problem.

In fact, according to my colleague John Isaacson, after three prior bailouts Greece’s finances remain a disaster. Consider …

  • Aggressive private-sector bank withdrawals in the last two months, with that metric plunging to its lowest level since November 2011.
  • Greek non-performing loans represent 70% of total bank assets, leaving local banks dependent on borrowing from the Bank of Greece and the European Central Bank (ECB).
  • Borrowing costs still too high, with 2-Year bond yields at 7.99%.

Certainly, Greece recognizes how bad they need a capital infusion, and its leaders made significant concessions in recent negotiations. They’ve committed to additional austerity measures, pension cuts and labor reforms.

Greece has also crossed over one of their previous red lines by agreeing to legislate structural reforms that will lower the threshold of tax-free income.

This time, eurozone nations like Germany will only participate in a bailout if the IMF does.

But the fact is it’s still not enough: Creditors are asking for more austerity measures.

Plus, the ECB wants Greece to address sustainability of current debts before Greek bonds can become eligible for asset purchases.

This is critical because very few investors are rushing out to buy Greek debt.

To get the ECB to include Greek bonds in their asset purchase program, officials need to complete the latest bailout review and other European nations must commit to more substantial debt-relief measures.

A delay in the ECB’s purchases of Greek debt will make it even more difficult for the nation to tap international markets for funding.

It also puts Greece’s economic growth prospects in jeopardy, making it harder for them to reach previous bailout objectives.

I’m watching the Greek debt debacle closely – because the eurozone experiment is unraveling right in line with my cycle forecasts. It’s just the latest in the growing sovereign debt crisis. And it means now, more than ever, it’s imperative that you protect your wealth and seek out only the best money-making opportunities.

Best wishes,

Larry

 

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Comments 19

  1. Al McNal March 3, 2017

    Thanks Larry your neural nets look good, Thanks

    Reply

  2. King Ralph March 3, 2017

    Greece needs to declare bankruptcy and be done with it once and for all.

    Reply

  3. Al McNal March 3, 2017

    Seems likely this Greek failure, and it is a failure whether there is a bailout or not, to get a bailout could at least cause the stock bull to correct. This although rather unrealized in the media currently is amazingly significant. For one thing you just have to wonder how many bankruptcies (which they actually are) does it take before this becomes a significant realization to world society?

    Reply

  4. Steven Davis MRICS March 3, 2017

    so we have a Greek Drama, with fourth and long to the goal line of a bail-out. Maybe if they Greeced the ball with Turkey.

    Reply

  5. Kenneth Brown March 3, 2017

    Hi Larry,

    No sooner did you publish your email on the recent drop on Gold and silver and there was a large retracement mid day today with Gold getting back up to 1236 . Do you feel there is still more downside in gold and silver coming this month?

    Reply

  6. tillamooktim March 3, 2017

    It’s like a drunk at a slot machine, they keep putting money in hoping for a payoff that will never come.

    Reply

  7. Joseph Bigio March 3, 2017

    The old Beatle song may apply here: WE ALL LIVE IN A YELLOW SUBMARINE….tralala.
    On a serious note, however, and in my ever so humble opinion as a neophyte in these matters, I dare say just two words: Occum’s Razor. Simply put, the easiest solution is for the IMF and only the IMF may follow the structured and controlled purchase of GREECE’s entire debt without any request for additional austerity measures. Of course, these “IMF” BONDS MUST BE FREE OF THE SPECULATIVE NATURE OF WALL STREET AND ALL OTHER FINANCIAL INSTITUTIONS. TADA

    Reply

  8. douglas Davidson March 3, 2017

    Adious Euros.

    Reply

  9. adrian March 3, 2017

    Dear Larry.
    I have been listening about , the collapse, of the europeon union, and the euro, for years. Yes the euro area does have massive debt. However no where near as much as America. Also they have much greater gold reserves than the united states. All the talk, and no follow thru, how frustrating for the euro bears. Yes I believe, in the short run, the euro will decline, to finish a fifth wave down. But in the competition for worst currency, I think the dollar, deserves far more respect!
    Adrian.

    Reply

  10. ron goddard March 3, 2017

    the greeks are the bunnies in the world global economy. taken for a ride with no strings attached. and then we say get real greece and do some homework, tighten your fiscal policy.

    its like telling a dead horse to get up and win the local derby. and the loonies who run the show wring their collective hands and tell the greeks : be good boys or go bust. see you later homer. and there goes a legendary country, the basis of our modern democratic processes. and the destination of many thousands of tourists etc. i cannot understand civilisation.

    Reply

  11. John Armesto March 4, 2017

    I am counting on you for a heads up just before the music stops.

    Reply

  12. F151 March 4, 2017

    Greece probably sees the writing on the wall. Get all the money you can before the European Central Bank casino closes for good. I was there last fall and found that things seemed to be working…at least in the streets. I saw very few homeless people (although it was a bit gritty) in Athens (compare L.A. or S.F.!!). IMO, they really need to totally dump socialism (which leads all nations trying it to poverty)…and go total capitalism.

    Reply

  13. James March 4, 2017

    Maybe Greece needs to follow Export oriented industrialization. The policy of industrialization pursued by some developing nations that involves increasing the output of manufactured goods for export.

    Reply

  14. jc March 4, 2017

    have you stopped sending out the real wealth report monthly

    Reply

  15. John Hasse March 6, 2017

    Greece has NEVER been bailed out. What has been bailed out is the banks that were foolish enough to lend them money. We are curious to see what will happen when Japan (or the USA ) needs to have the banks foolish enough to lend THEM money bailed out.

    Reply

  16. Alice Shcultz March 7, 2017

    I’ve followed Larry for several years and belong to Gold Miner Millionnaire and the RWR.
    I joined because I felt I could trust Larry.
    As a single woman preparing for retirement, it is hard to know who to trust.
    He was consistent, diligent and some how it felt as though he wanted me to prosper. .
    Things added up. He followed through with what he promised.

    I grieve with you. I will miss his splendid presence here on earth but am blessed to have been able to know him until now.

    He helped me on my way with his character, integrity and warmth. And what a blessing he has left behind three wonderful children to carry his heritage forward.

    I am asking God to keep his hand firmly on Elisabeth, the children and grandchildren, to bless you and bring you through this great loss.

    Alice Schultz

    Reply

  17. littlebit March 11, 2017

    You can only ride a dead horse so long. The stink will eventually get to you.

    Reply

  18. Mike S. March 14, 2017

    For pity sake, just toss them! They should have never been admitted in the first place. The world won’t end.

    Reply

  19. SimonP April 6, 2017

    I can’t believe that Larry was still making so much sense right up til he died on March 2nd
    We’ll miss you Larry!

    Reply