The 'endgame' is here as Greece gets crunched on two fronts | ||
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Two cash crises are about to come to a head in Greece, with signals that both the financial system and the public coffers are about to run dry. Athens barely made its latest payment to the International Monetary Fund (IMF), and only managed to do so when the government discovered that it could use a reserve account that it wasn't aware of, according to the Greek media. Kathimerini, a Greek daily newspaper, reports that Prime Minister Alexis Tsipras wrote to the IMF's Christine Lagarde warning that Greece would not be able to make its May payment, worth €762 million ($871 million, £554.2 million). Pension and civil servant pay packets are due at the end of the month, and based on this news Athens may struggle to pay them. Even if it does manage that, in on June 5 the country owes another €305 million to the IMF. In the two weeks following June 5 there are another three payments, bringing the June total to the IMF to over €1.5 billion. Here's what's coming:
If Greece couldn't manage the €762 million payment in May without the IMF's reserve account, it seems likely that the government will struggle to make payments twice as large after another round of pension and salary payments. But the public finances are not the only problem — pressure is building in the financial sector too. According to Bloomberg, pressures collateral is drying up there and the situation also seems likely to meet a head in the next few weeks. “The point where collateral is exhausted is likely to be near,” JPMorgan Chase Bank analysts Malcolm Barr and David Mackie wrote in a note to clients May 15. “Pressures on central government cash flow, pressures on the banking system, and the political timetable are all converging on late May-early June"... “We are in an endgame,” ECB Executive Board member Yves Mersch said in an interview with Luxembourg radio 100.7 broadcast Saturday. “This situation is not tenable.” The government seems to have made little progress towards a deal to unlock the next tranche of bailout cash, too. A leaked IMF document seen over the weekend by the UK's Channel 4 News confirms reports by Greek journalist Michael Ignatiou last week that while tentative compromises are in the making for a crucial bankruptcy law and some tax issues, there is still a gulf between Athens and its creditors on pensions and the labour market. The document seen by Channel 4 describes the labour market as "the area where in the past most progresses were achieved." In short, it's no small speed-bump for a deal, but a major roadblock. Without a solution, an agreement seems unlikely. There's only one hope for the government at the moment. Figures from Kathimerini last week suggested the government had managed to drain about €600 million euros from local government and other state funds. That boosts the government's ability to pay, but it's far short of the €2 billion that it was initially suggested the move could raise. If the government manages to find more cash through similar methods, it could prolong the current standoff. But unless Athens can think of more and increasingly inventive ways to shake down the country to make these payments, it looks like some form of default is looming. Join the conversation about this story »  | ||
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10 things in tech you need to know today (AAPL, NFLX, MSFT) | ||
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Good morning! Here's the tech news you need to know to start off the week. 1. Apple CEO Tim Cook gave a commencement speech to the graduating class of George Washington University on Sunday. He talked about what it was like to work with Steve Jobs. 2. Apple has acquired GPS mapping company Coherent Navigation. The company's technology is so advanced that it claims to be able to pinpoint a user's location to within a few centimetres. 3. Carl Icahn has invested $100 million in ride-sharing company Lyft. It raised $150 million, which brings its valuation to $2.5 billion. 4. The first trailer for Aaron Sorkin's movie about Steve Jobs has been released. It shows Michael Fassbender wearing a distinctive black turtleneck jumper. 5. A hacker allegedly told the FBI that he used a plane's in-flight entertainment system to make it fly sideways. Chris Roberts was detained in April after he warned that he could hack into flights. 6. The New York Times has named the man who may be the creator of Bitcoin. It says that Nick Szabo could be the elusive Satoshi Nakamoto. 7. Netflix stock hit a record high on the news that it's planning on entering the Chinese market. It was up over 5% on Friday afternoon. 8. A group of employees at payments company Clinkle left the company on Friday. The company was reportedly negotiating with Apple over an acquisition. 9. Microsoft has clarified that pirates won't get Windows 10 for free. It has previously indicated that even illegally downloaded versions of Windows would be eligible for an upgrade. 10. The Chinese army has banned smartwatches. It claimed that the devices could be hacked into. Join the conversation about this story » NOW WATCH: Here's what happens when you drop an Apple Watch face down on cement  | ||
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10 things you need to know in markets today | ||
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Good morning! Here are the most important stories in markets today. Greece may not pay up this month. Prime Minister Alexis Tsipras had warned foreign officials that Athens would not be able to pay the €750 million (£545 million, $856 million) due this month to the International Monetary Fund, Greek newspapers said Sunday. Iran's deputy oil minister says OPEC is unlikely to cut output. The Organisation of the Petroleum Exporting Countries (OPEC) is unlikely to implement a production cut at its next meeting in June, a senior Iranian official said on Monday. Asked if OPEC would cut output at the upcoming June 5 meeting, Iran's Deputy Oil Minister Rokneddin Javadi told Reuters: "I don't think so." The Bundesbank's monthly report is coming. At 12 noon London time (7 a.m. New York time) the biggest national central bank in Europe releases its monthly report, with a hint at the German institution's views of economic developments. China hopes the fall in house prices is bottoming out. China's new home prices fell for the eighth consecutive month in April from a year earlier but were flat from March, adding to hopes that a property downturn which is weighing heavily on the economy is beginning to bottom out. The West is clinging to a fraying peace deal in Ukraine. Western powers are clinging to a fraying peace deal in Ukraine and forcing Kiev to follow suit, even though Russian President Vladimir Putin shows no sign of wavering and NATO is warning that Moscow may be preparing for a new offensive. Saudi Arabia is selling less oil to the US than at any time since 2009. Despite the plunge in oil prices, the world's main producer is still struggling to sell more than a million barrels per day on average to the US, according to the Financial Times. Iran and Saudi Arabia are gearing up for a Naval confrontation. An Iranian cargo ship carrying aid and activists crossed into the Gulf of Aden on Sunday and will reach Yemen's Hodaida port on May 21, Iranian media reported, in a challenge to Saudi-led naval forces controlling Yemeni waters. Japan reported a solid sign on business investment. Japan's core machinery orders increased 2.9% in March from the previous month, rising for the first time in two months, the Cabinet Office said on Monday, in a sign of a pick-up in business investment. Asian shares are mixed. Hong Kong's Hang Seng is sinking, down 1.01%, while the Shanghai Composite Index is flat, up just 0.06%. Japan's Nikkei had a good session, rising 0.70%. North Korea is "not even close" to talks with the US. US Secretary of State John Kerry said on Monday North Korea has "not even come close" to taking the steps needed to rein in its nuclear weapons program to initiate talks, adding the United States was considering further sanctions. Join the conversation about this story » NOW WATCH: Here's how Floyd Mayweather spends his millions  | ||
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