Greece: Are we on like donkey-kong?

ancona said:

Grexit....followed by Spexit, followed by Portexit.........

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mmerlinn said:

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

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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. ...

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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. ...

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... 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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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”.
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rblong2us said:

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

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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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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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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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Between October 2014 and February 2015, over 52 billion euros have fled Greek banks. ...

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Eurozone watchers have said 11th hour so many times that no one believes it any more. To place new emphasis on the plight of Greece it's now allegedly 1 minute to midnight.

Given that Greek funds were supposed to last until April 30, there's plenty of time for 30 seconds to midnight, 20 seconds to midnight, then a countdown to Cinderella hour when Greece may finally turn into a pumpkin.
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Greece’s government has raided the coffers of its public health service and the Athens metro as it widens a hunt for funds to keep itself afloat and service debts.

Athens faces a €1.7bn bill for wages and pensions at the end of the month and then a €450m loan payment to the International Monetary Fund on April 9. Greek government and eurozone officials believe Athens does not have funds to cover both.
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ancona said:

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Prolonging the inevitable is absurd. It is just as absurd as taking more loans while paying off old ones. That feels a lot like borrowing a shitload of money on a credit card, then spending years and years making minimum payments, yet never eating away at the principle.

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Greece draws up drachma plans, prepares to miss IMF payment

Greece is drawing up drastic plans to nationalise the country's banking system and introduce a parallel currency to pay bills unless the eurozone takes steps to defuse the simmering crisis and soften its demands.

Sources close to the ruling Syriza party said the government is determined to keep public services running and pay pensions as funds run critically low. It may be forced to take the unprecedented step of missing a payment to the International Monetary Fund next week.

Greece no longer has enough money to pay the IMF €458m on April 9 and also to cover payments for salaries and social security on April 14, unless the eurozone agrees to disburse the next tranche of its interim bail-out deal in time.

“We are a Left-wing government. If we have to choose between a default to the IMF or a default to our own people, it is a no-brainer,” said a senior official.

“We may have to go into a silent arrears process with the IMF. This will cause a furore in the markets and means that the clock will start to tick much faster,” the source told The Telegraph.
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Greece moves to quell default fears, pledges to meet 'all obligations'

Greek Finance Minister Yanis Varoufakis said on Sunday that Greece "intends to meet all obligations to all its creditors, ad infinitum," seeking to quell default fears ahead of a big loan payment Athens owes the IMF later this week.

Following a meeting with the head of the International Monetary Fund, Varoufakis told reporters the government plans to "reform Greece deeply" and would seek to improve the "efficacy of negotiations" with its creditors.
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The interior minister suggested last week the government would prioritize wages and pensions over the IMF payment, although the government later denied that was its stance.

IMF Managing Director Christine Lagarde said in a statement after meeting with Varoufakis that she welcomed his confirmation that the loan payment due would be made on schedule.

“I welcomed confirmation by the minister that payment owing to the Fund would be forthcoming on April 9th," Lagarde said.
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A central bank official, according to The FT, said that Greece has repaid the €450m it owed the International Monetary Fund today. Bond yields have fallen across the Greek curve with 10Y GGBs now at 11.1% (down 70bps from Tuesday's highs). Greek stocks are not as impressed and are giving back their gains. Tsipras, on return from Moscow, explained Greece "was not a beggar...asking other countries to solve its problem," but as a senior Greek official earlier this week said that while it would be able to make Thursday’s IMF repayment, it will still exhaust its cash reserves very soon and "next month is a different matter." HSBC points out that the real crisis point looms on the 12th May.
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As a reminder, this is what Odious Debt is: In international law, odious debt is a legal theory which holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are thus considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.

Today, nearly four years later, Odious Debt is now a reality in Greece, where Zoi Konstantopoulou, the head of the Greek parliament and a SYRIZA member, released two videos which have promptly gone viral, designed to promote the investigative parliamentary committee to look into the circumstances surrounding the signing of the country’s two bailout agreements that led Greece to implement its austerity measures.

The short video spots, shown below, end with the message “Check it, Erase it” referring to the country’s 320 billion-euro debt.
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According to Greek Reporter, Konstantopoulou has said that the newly established “Debt Truth Committee,” will investigate how much of the debt is “illegal” with a view to writing it off.

Proving that this is more than just a populist stunt, during a vote that took place early yesterday, out of the 300 Greek MPs, 156 voted in favor of establishing the public debt auditing committee.

“The committee will examine how Greece entered into the bailout agreements with its international lenders, as well as any other matter related to the memoranda’ implementation,” SYRIZA Parliamentary Secretary Christos Mantas had explained earlier.
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Greece is preparing to take the dramatic step of declaring a debt default unless it can reach a deal with its international creditors by the end of April, according to people briefed on the radical leftist government's thinking.

The government, which is rapidly running out of funds to pay public sector salaries and state pensions, has decided to withhold E2.5 billion of payments due to the International Monetary Fund in May and June if no agreement is struck, they said.

“We have come to the end of the road . ... . If the Europeans won't release bailout cash, there is no alternative" to a default, one government official said. ...

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As the country’s finances reach a critical point, tax authorities have started seizing the deposits of small debtors, ...

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Earlier we detailed reports that The IMF was preparing a contingency plan in the event of a Greek default, and furthermore that Andrea Merkel was under increasing pressure to "let Greece go," and now, as Eurogroup ministers begin to gather for today's crucial 'deal-or-no-deal' meeting, Die Welt reports The Troika has 4 scenarios for Greece - one positive and three increasingly negative ranging from the need for further bailouts to paying staff in IOUs and issuing a parallel currency.
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- Greece will not be ejected from the EU – Faber on CNBC
- Greek default will trigger massive losses for ECB and European banks
- Highlights geo-political impetus to keep Greece within EU, NATO fold
- Shows strategic geo-political importance of Greece in NATO’s Cold war with Russia
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