Would the Greeks hit the sunny beaches or their politicians?

The debate on the MTP has started in the Greek parliament and you wouldn’t be a good politician if did not blackmail for a better cabinet position or increased publicity by expressing your doubts and possibly reluctance in voting the MTP.

Today (Tuesday 28th) the debate would start at (18:00 Athens time)
The voting would proceed in two stages:
On Wednesday 29th MP’s would vote for the whole MTP plan as a “concept”. If this succeeds then:
On Thursday 30th MP’s would start voting for the individual clauses.
It sounds crazy but that’s what it is. In theory, then, once the “concept” is voted on the 29th the MPs can out their anger on the 30th in voting down some of the clauses.
The conservative opposition has already said that they will not vote for the “concept” on the 29th but would vote positively for many clauses on the 30th. Sounds schizophrenic, but that’s Greek politics for you.

We do not expect any major surprises in the actual voting the next two days. Yes, there would major horse-trading and macho political posturing but we should be used to it by now. The immediate real challenge is coming from the people who are organising mass protests today and tomorrow. There are general strikes in Athens (London seems to envy) and contrary to last time the weather is good. We expect good attendance and possibly some trouble to satisfy the world’s media appetite for broadcasting material.

In the news:

1) French plan for saving the EU. There details of the French proposal are scarce and not very clear. What we know thus far is that the bonds maturing between now and 2014-15 would be involved. According to press reports only 70% (French banks own around 14bln so this means 9bln would be involved) of these bonds would be rolled over. In the case of France this means 4.5bln out of the 9bln would be invested in 30Y bonds (at around 5.5%). These 30Y bonds may have a GDP warrant attached to it (details unknown). For the rest, the GGB would be place in an SPV possibly secured by EFSF or some other European entity/state and the SPV would issue AAA tranches that would be bought by the banks.
Comment:
It is too early to judge the proposal as it is neither final nor detailed. However, for the first time we have a on the table hybrid Brady bond solution. We expect many revisions and plans to be put forward as the summer temperature rises.
From the Greek point of view, a 30Y extension is great news. But this plan as many others ASSUME that the debt is SUSTAINABLE and that this is a LIQUIDITY crisis and not a solvency crisis.
2) The big decisions would come on Sunday the 3rd of July. This is when the leaders of EU would decide whether to release the 5th instalment and any future bailout II.
3) Do not underestimate the 5th of July. This is when the constitutional court in Germany would rule on the EFSF legality. Although, being lawyers they would find a way out, it may make future decisions more difficult to take.

All of the above assume a positive outcome in the Greek parliament and that the Greek would hit the beaches in the next few weeks and not their politicians.