Greece: Are we on like donkey-kong?

DoChenRollingBearing

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Just before the stockmarket closed, we got the news that the ECB is not going to let Greek banks use their debt as collateral. Sounds to me like Europe may be approaching a denouement....

Everybody knows (and has known) that Greece never could and never will pay off its debts. Though it seems to me that this fact has been ignored by the financial markets and MSM.

I guess that we will see soon if this is just another false alarm (or can kick) or whether this actually means anything.

Preparation, fishez!

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Cynical song "Everybody Knows" for your enjoyment:

 

pmbug

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I think we are getting close. There will likely be a few more rounds of unacceptable proposals offered and rejected though.
 

mmerlinn

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Grexit....followed by Spexit, followed by Portexit.........
I doubt that Spain will exit and Portugal will probably not either. Why? Simply because the Spanish and Portuguese "empires" (read that as South & Central America) hold the key to Europe's raw material needs. I suspect that one way or another those two will continue to be bailed out.

Greece, on the other hand, has no leverage at all, so once the EU has thoroughly raped her, she will be thrown away.
 

DSAbug

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Greece, on the other hand, has no leverage at all, so once the EU has thoroughly raped her, she will be thrown away.
Uh.. that's not really an accurate assessment of the relationship or the situation.

The "pretend" part of "extend and pretend" is that you are pretending that the Greek bonds are actually ever going to be paid back. Right now, these nations and institutions have those Greek bonds at 100 cents on the dollar on their balance sheet. If Greece exits and forces them to write it down to zero, they can't mark that asset at 100 cents on the dollar anymore.

Greece isn't better off by borrowing more money and using that money to pay old debts while liquidating their productive assets. The only one benefiting from this arrangement is the rest of Europe and once Greece leaves, they are going to be the only ones losing.
 

pmbug

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On the other hand... You might just be right DCRB ...

In the absence of any notable developments overnight, the market remains focused on the rapidly moving situation in Greece, which as detailed over the weekend, responded to Europe's Friday ultimatum very vocally and belligerently, crushing any speculation that Syriza would back down or compromise, and with just days left until the emergency Eurogroup meeting in three days, whispers that a Grexit is imminent grow louder. The only outstanding item is what happens to the EUR and to risk assets: do they rise when the Eurozone kicks out its weakest member, or will they tumble as UBS suggested this morning when it said that "the escalation of tensions between the Greek government and its creditors is so far being shrugged off by investors, an attitude which is overly simplistic and ignores the risk of market dislocations" while Morgan Stanley adds that a Grexit would likely lead to the EURUSD sliding near its all time lows of about 0.90. ...
http://www.zerohedge.com/news/2015-...european-ultimatum-ukraine-peace-talks-falter
 

ancona

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Shrugged off by investors?!?!? What about the derivatives, what about CDS?? Half a trillion dollars is nothing to sneeze at people. This ain't Lehman, and Greece won't be broken up in to little pieces and sold off to the highest bidder in an attempt to cover some losses, these "investors" are all fucked.
 

pmbug

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Talks between Greece and eurozone officials were expected to last through the night. Instead Greece Bailout Talks Collapsed in Acrimony after four hours. ...
http://globaleconomicanalysis.blogspot.com/2015/02/greek-bailout-talks-collapse-in-four.html

It really looks like the Greeks are not going to capitulate and the music is stopping. It looks like we are going to find out just how much financial contagion (or derivatives exposure) gets triggered if a solution isn't found roughly by the end of February.

... the binding dates for Greece have now also become apparent. Program conclusion on February 28th is not the point of "no return", but instead the soonest of when Greek banks are no longer able to access additional ELA at the ECB window OR when the Greek government runs out of financing. The latter would make the government incapable of meeting ongoing commitments to the IMF and other obligations, in turn rendering GGB-based collateral inadmissible to the ECBs ELA that would then be suspended.
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http://www.zerohedge.com/news/2015-02-16/greece-what-happened-today-and-what-happens-next
 

11C1P

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It's to the point that I'm just so impressed that this intercontinental juggling act is still going. Sure they drop a ball here and there, but they get another ball and a chainsaw thrown in and it keeps going. Of course that will make it that much worse when it falls apart, but it's hard not to stare slack jawed in amazement as it all swirls around us.
 

pmbug

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The embattled Greek government has been thrown a lifeline by the European Central Bank after the ECB agreed to €3.3bn more emergency funds for the country’s banks.
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After a further day of fevered briefing and statements, the ECB decided to extend its emergency funding for Greek banks by €3.3bn, taking the total funding on offer to €68.3bn. Greek banks are close to using up the €65bn emergency liquidity funds the ECB has already granted them. This had fuelled speculation that the bank’s policymakers could turn off the taps to force Greece to compromise with the eurozone.

The bank’s governing council was split on whether to extend the credit lifeline for Greece. But one eurozone central bank official told Reuters that the ECB had to try to preserve financial stability and was not there “to teach Greece some kind of lesson”.
...
http://www.theguardian.com/world/20...ees-extra-emergency-funds?CMP=EMCNEWEML6619I2

The ECB blinked first.
 

rblong2us

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its not in anyones interest to see greece leave the eurozone ( apart from a few goldbugs perhaps)

Ultimately Germany will roll over and even when other peripheral nations come cap in hand, printing will be seen as the least bad option
 

DSAbug

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its not in anyones interest to see greece leave the eurozone ( apart from a few goldbugs perhaps)

Ultimately Germany will roll over and even when other peripheral nations come cap in hand, printing will be seen as the least bad option
I think it's in the best interest of Greece to move on. Delaying the inevitable isn't going to last much longer.
 

ancona

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I agree with that sentiment. Do it and get it over with. Just like ripping off a Band-Aid, it will hurt a while, but then it gets better. Greece has been held hostage by the EU and ECB for far too long now. It's time for a real change, and I don't mean Obama style change.
 

rblong2us

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Its only going to help Greece if they are actually prepared for the event.

Just to stop paying all gov and local authority employees and contracts will be a huge problem if there isnt a detailed plan in place. Syrzia has not had time to do the preps.

And the big boys will do all they can to fuck up any preparations and fill as many Greeks with fear as they can because they in turn fear contagion.

Its easy to say 'just do it' when its not your country or livelihood in the frame.
 

pmbug

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Greek short-term default risk jumped over 300bps today putting the odds of a restructuring at 50-50 within the next year as the warnings we issued last week with regard Greece's imminent default on its IMF loan loom. Seeking to reassure its lenders (and avoid yet more capital flight), Reuters reports the Greek government said it was "exploring solutions," including delaying payments to suppliers or try to raise up to 3 billion euros by borrowing from state entities such as pension funds.

As Reuters reports, Athens is running out of options to fund itself despite striking a deal with the euro zone in February to extend its bailout by four months. Faced with a steep fall in revenues, it is expected to run out of cash by the end of March, possibly sooner.
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http://www.zerohedge.com/news/2015-...rnment-considers-borrowing-pensions-repay-imf

Life support isn't living. How long will the theater play this drama?
 

pmbug

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They are robbing the pension funds:
Greece is tapping into the cash reserves of pension funds and public sector entities through repo transactions as it scrambles to cover its funding needs this month, debt officials told Reuters on Tuesday.

Shut out of debt markets and with aid from lenders frozen, Athens is in danger of running out of cash in the coming weeks as it faces a 1.5 billion euro loan repayment to the International Monetary Fund this month.
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http://uk.reuters.com/article/2015/03/03/uk-eurozone-greece-funding-idUKKBN0LZ1XC20150303

This is a desperation move that could happen anywhere. Trial balloons for doing similar things have already been floated here in the USA:

http://www.pmbug.com/forum/tags/401k/
 

DSAbug

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Sounds like Europe rejected Greece's proposals. This is getting comical.
 

pmbug

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That Merkel would consider holding Syriza to an agreement made between Greece’s previous government and the Troika – which Syriza have eschewed – shows how little progress has been made in the intractable negotiations between the two sides since Syriza came to power.

All that has changed is that Greece is more insolvent and Europe has bought time to deal, albeit reluctantly, with a “Grexit”.

Bloomberg confirms that the Greek government may run out of cash to pay pensions and salaries in April.
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http://www.goldcore.com/us/gold-blo...-of-time-bank-runs-intensify-bail-ins-likely/
 
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