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Citi Expects A 76% Haircut On Greek Debt (And 95% If Country Waits 4 Years) For Debt/GDP Ratio Back Down To 60%

Tyler Durden's picture


Yesterday we learned that in borrowing a page right out of 2010, when the Greek government was mounting a full frontal assault against CDS traders everywhere (only for Eurostat to tell us that CDS traders had absolutely no impact on Greek solvency), Greece is once again scapegoating unrelated third parties for its problems. In this particular case Citi London trader Paul Moss, who is being interrogated by Interpol because of a recap email indicating Greece may, gasp, restructure (or, as it isknown in enlightened circles, conduct a "liability management exercise"). Yet when Greece reads the following note by Citi's Stefan Nedialkov, it will most likely issue a cease and desist order in perpetuity against Vikram Pandit's bank. Nedialkov's summary (released one day after Moss' April 20 note): "If a 42% haircut is taken in addition to these measures, we estimate Debt/GDP falls to below 90% in 2013 and below 60% in 2020." The problem is that the market will likely give Greece at most a few months of breathing room in exchange for just a 90% debt/GDP reduction. If truly engaging in a liability exercise of some nature, Greece will likely pursue a permanently viable option. And as Nedialkov indicates, in order to achieve a far more credible 60% debt/GDP ratio, the country would need to take a 76% haircut now, or do nothing for five years, and eliminate a whopping 94% of its debt in 2015. Since the market is already expecting roughly a 50% haircut it remains to be seen just how much further bond prices will plummet, and how much bigger the ultimate impairment on Citi debt, and European banks, Greek pension funds and local bond investors, will ultimately be. One thing is certain: with Greek 2012 debt/GDP expected to peak at 159.4%, the country will restructure, and a a vast swath of insolvent European banks are about to see the tide go out.

Some more color from Citi, which is sure to get the Greek inquisition on the heels of Nedyalkov: "Citigroup said that no country with a debt-to-GDP ratio of
over 150 percent has “ever avoided a default.” Greece’s
austerity measures aren’t achieving the “desired results as
quickly as hoped,” it said."

And some more:

In Figure 11, we illustrate the path of Debt/GDP under some of the above scenarios. Privatisation appears to be the most effective solution on its own, with the Debt/GDP ratio at c.150% in 2020 vs. 175% in the base-case scenario, according to our estimates. Better yet, all options (short of haircut) taken together would bring the ratio down to c.110% in 2020. And if a 42% haircut is taken in addition to these measures, we estimate Debt/GDP falls to below 90% in 2013 and below 60% in 2020.

Most disturbing is Citi's sensitivity on the type of haircut needed in order to bring total debt down even more: Cut 76% of the debt now (to get Debt/GDP to a healthy 60%), or wait until 2014... and impose a 95% haircut.

As for the debtholders, we believe that most have come to the conclusion that some sort of haircut is needed, especially as the austerity measures are not bringing in the desired results as quickly as hoped. At this point, debtholders would rationally want to minimise the amount of haircut taken. In Figure 13, we calculate the “incremental” haircuts debtholders would suffer if they were to wait a certain number of years from today. For example, to bring the Debt/GDP ratio down to 90% in 2011 would mean a 52% haircut, 63% haircut in 2012, 68% in 2013, 70% in 2014 and 70% in 2015. Hence, the marginal haircut (“damage”) from waiting longer diminishes quickly — this is in-line with the expected recovery in the primary government balance and the return of real GDP growth. Therefore, we see two rational strategies for debtholders:

Option 1 — “Act Now”: Insist on restructuring as soon as possible in order to avoid more haircutting in later years. The market (see Figure 14) seems to be voting for “Act Now”, or rather act within the next two to three years. The yield on the 3Y GGB is 21.1% compared to the 30Y yield of 9.6%.

Option 2 — “Pretend and Forget”
: as the “haircut curve” starts to flatten out beyond year 2015, debtholders could close their eyes, help refinance maturing Greek debt, and hope that Greece slowly finds its way out. But this could be a long wait and may require concessions such as extending maturities. In addition, no country with Debt/GDP ratio of more than 150% has ever avoided a default anyways. Why would Greece be different?

As for the analysis of which European banks will suffer the biggest capital income in case of a 50-60% haircut, not surprisingly the list is topped off by France, Germany, Austria and Belgium. Here's to hoping (as the EU is currently doing) that these banks can easily digest the capitaliaztion hit should "assets" have to be written down post a restructuring.

Full Citi report below (just to give Interpol a headstart on their latest witchhunt):

Citi Barber-ians

h/t hugovanderbubble


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Sat, 04/23/2011 - 06:58 | 1198654 cossack55
cossack55's picture

Barber Bitchezzzz!!!!

Sat, 04/23/2011 - 07:12 | 1198667 thatthingcanfly
thatthingcanfly's picture

Why is it "cool" to regurgitate a random byte from the article and punctuate it with the (misspelled) word for a female dog?

I mean it. I really don't get it. Why is something like this present for EVERY ZH article?

Do these people really not have anything intelligent to add? How do they keep getting the CAPTCHA problem right?

Sat, 04/23/2011 - 07:34 | 1198689 cossack55
cossack55's picture

Tradition. Get over it.

Sat, 04/23/2011 - 09:12 | 1198786 Thorlyx
Thorlyx's picture

Traditionz, Bitchez

Sat, 04/23/2011 - 07:38 | 1198695 smlbizman
smlbizman's picture

why do people like you care so much......just shut the fuck up and enjoy zh.....


Sat, 04/23/2011 - 09:45 | 1198831 King_of_simpletons
King_of_simpletons's picture

“That’s the tight rope that the Federal Reserve will be walking next week,” he said. “If QE simply ends, that’s a change in policy, that’s going to make many markets roll over and they are going to avoid that. Anything short of QE3 is going to be called higher interest rates.”

QE3 and then QE4 by the end of this year.

Sat, 04/23/2011 - 07:46 | 1198705 css1971
css1971's picture

Culchur. Innit.

Sat, 04/23/2011 - 09:58 | 1198849 Hansel
Hansel's picture


Sat, 04/23/2011 - 07:45 | 1198707 traderjoe
traderjoe's picture

Why do you care so much? It's pretty easy to skip over a short comment.

If you really wanna know, IMHO it's a bit of harmless sophmoric humor that provides a little catharsis in a frustrating world and is a minor tradition that binds a community together.

I wasn't around for the very beginning, but think it started with Chumbawamba saying "gold bitchez" in response to some articles, which represented his investment advice and vote of no-confidence in the system - which turned out to be rather foresightful.

But feel free to be a sourpuss about it.

Sat, 04/23/2011 - 08:38 | 1198758 smlbizman
smlbizman's picture

please forgive the off topic question...

do open interest numbers from the comex just represent the amount of short contracts purchased that day?

thank you

Sat, 04/23/2011 - 10:51 | 1198914 traderjoe
traderjoe's picture

I'd have to see exactly what number you were referring to, but typically Open Interest represents the number of outstanding contracts at a particular point in time. For every short position, there must be a corresponding long position, so the number represents either the number of short contracts or the number of longs (since they are equal). In that sense, futures are a zero sum game - for every winner there is a loser. 

Open interest numbers sometimes are listed with a net change for the day, which shows how many contracts were opened or closed that day. 

Sat, 04/23/2011 - 23:23 | 1200275 Votewithabullet
Votewithabullet's picture

That was me in the rainbow flops and I picked it and flicked it. Sophomoric has 3 "o"s. Fucking awesome.Who says chicks cant add to the conversation.

Mon, 04/25/2011 - 13:22 | 1204096 smlbizman
smlbizman's picture

thanks joe....

Sat, 04/23/2011 - 08:51 | 1198769 thatthingcanfly
thatthingcanfly's picture

Why I care is immaterial.

Sophomoric has three "o's."

Catharsis may be realized in other ways that actually express an idea, e.g. the video clip Tyler posted yesterday of the 2-minute rant about the Barry Dunham administration's mismanagement of the economy. Contrast with "__(insert sound byte)__ bitchez!"

Putting up a Christmas Tree with lights on it in December is "tradition." Shooting fireworks on the 4th of July is "tradition." Typing a stupid repetitive comment on a weblog is not "tradition." Words have meanings, folks. While you're at it, look up the word, "community."

By resorting to ad hominem, e.g. "sourpuss," and "biggest dick of the day (see below)," y'all are demonstrating that you know there is no legitimate objection to what I typed above. And as a side-note, indulging in obscenity for its own sake is what conditions Americans (Brits too) into obnoxious Jerks who think it's OK to tour the Sistene Chapel wearing an untucked message T-shirt, baggy cargo shorts, and a pair of flip-flops.

Sat, 04/23/2011 - 09:07 | 1198783 Gordon Freeman
Gordon Freeman's picture

OK, I'll bite--go fuck yourself!  Happy, now?

Sat, 04/23/2011 - 11:10 | 1198955 thatthingcanfly
thatthingcanfly's picture

Ad hominem.

Sat, 04/23/2011 - 11:31 | 1199006 redpill
redpill's picture

Of course it is, and you deserve it.

Sat, 04/23/2011 - 09:11 | 1198788 Trillax
Trillax's picture

I bet your a blast at parties... yeesh.

Sat, 04/23/2011 - 11:09 | 1198957 thatthingcanfly
thatthingcanfly's picture

Ad hominem.

Sat, 04/23/2011 - 11:34 | 1199012 redpill
redpill's picture

Spam some more ya dumb fuck, with any luck you'll be disappeared soon.

Sat, 04/23/2011 - 09:16 | 1198794 Tim White
Tim White's picture

Yes Miss Pasternack

Sat, 04/23/2011 - 11:11 | 1198960 thatthingcanfly
thatthingcanfly's picture

Ad hominem.

Sat, 04/23/2011 - 10:02 | 1198856 smlbizman
smlbizman's picture

you are exactly correct....from now on we will all live to your standards....please advise us on how to act to reach the level of performance that will make you proud

Sat, 04/23/2011 - 11:10 | 1198962 thatthingcanfly
thatthingcanfly's picture

Ad hominem.

Sat, 04/23/2011 - 11:06 | 1198941 traderjoe
traderjoe's picture


There's too much irony in your statement to bother responding directly, beyond saying it must be nice up there on your 'high horse'. 

To most all of my fellow ZH'ers - thank you for the education, the sanity in an insane world, my new found appreciation for physical precious metals (real money with no counter-parties and no debt), my greater sense of calm as my preparations proceed, etc.

To those I say:

Thank you, Bitchez.

Community, Bitchez. 

Donate to ZH, Bitchez. 

Silver, Bitchez. 

Gold, Bitchez.

Spread the Word, Bitchez.


Sat, 04/23/2011 - 11:14 | 1198968 thatthingcanfly
thatthingcanfly's picture

Ad hominem, but with good advice imbedded.

Sat, 04/23/2011 - 12:26 | 1199154 Hephasteus
Hephasteus's picture

Ad hominen, but with good advice imbedded = gold bitchez!!!

Sat, 04/23/2011 - 11:08 | 1198945 Spastica Rex
Spastica Rex's picture


Sat, 04/23/2011 - 11:09 | 1198961 Ahmeexnal
Ahmeexnal's picture

"Sistene Chapel"


Now you ignorant retard, pick up a pencil, and write 2 pagefulls of how it's written correctly:




Obnoxious jerks like you should STFU.

Sat, 04/23/2011 - 11:16 | 1198972 thatthingcanfly
thatthingcanfly's picture

It's hard to take you seriously, but I'll acknowledge the embarrassing typo. "Sistine" it is.

Sat, 04/23/2011 - 14:12 | 1199399 Hephasteus
Hephasteus's picture

Well good. When things won't humble themselves they have to be humiliated.

Like how you legitimized one tradition and illegitimized another tradition.

This is called CULTivation of CULTure. And the reason why conspirers charge everybody with conspiracy and cult leaders acuse everybody of being cultists. And why mainstream media is simply the biggest most conforming cult that outpowers other smaller cults through parroting and ego extension.

The reason putting up christmas lights is "legitimate" is because it replaced an established cult with a new cult that overtook the old cults calendar planner. Easter is simply a cult overtaking the previous maypole cult who overtook the previous planting cycle cult. The maypole cult would wrap several ribbons around a pole and it was a kind o of a symbolic representation of dna, It was replaced with a staff and a couple of snakes. Like the old cult was stupid and didn't get something and the new cult added some new information to the belief that was superior.

The sistine chapel thing you mention is simply the cult leaders trying to make some intangible asset such as genious or something out of someone or some group of artists. It's a collective thing they do in order to make the paintings that they own more "valuable". It's constantly going on. I mean seriously you want me to think cambell's soup cans in different colors is art.

It's the bastardization of improvement and growth. Like a pole with ribbons wrapping is improved with a snake wrapping a staff. And art is somehow worthy of respect and getting dressed up for because you want to try to attract it and get it to give you a blow job or something.

This kind of stuff goes on and on and eventually you have it expressed as some crap like oral b toothbrushes. Where sticking the nylon bristles into nylon stick in a differnt angle is scientifically better and they keep doing it over and over until the valuation of the toothbrush goes from 45 cents to 8 dollars and then people get tired of the shit and just want to buy the toothbrush so they can cut it into a shiv and jam it into someones eye and say something like keep foreign objects outside of your brain or it will make you stupid.

And you're angry because gold bitches is a counter culture that cultivates resistance to a present culture that is harming a great fucking deal of people and everyones sick of it. So now that you've discovered the disagreement heiarchy and think you have some kind of great new powerful gun to go shoot your mouth off with. Now you have to discover the cult heiarchy and how it roots and branches to produce suckers and low hanging fruit.

Fuck your sistine chapel.

Refutation - Specifically refutes said chapel with penis.

Now don't you just feel like a jackass with a farming for dummies manual.

So here. Enjoy some cult culture and counter culture humor.

Sat, 04/23/2011 - 11:16 | 1198971 DeweyLeon
DeweyLeon's picture

lol, you're like the Les Nesman of trolls.

Sat, 04/23/2011 - 11:26 | 1199001 thatthingcanfly
thatthingcanfly's picture

Spastica Rex is right... for the wrong reason, of course; but one can't have his expectations set too high, can he?


Sat, 04/23/2011 - 11:52 | 1199067 UninterestedObserver
UninterestedObserver's picture

"And as a side-note, indulging in obscenity for its own sake is what conditions Americans (Brits too) into obnoxious Jerks who think it's OK to tour the Sistene Chapel wearing an untucked message T-shirt, baggy cargo shorts, and a pair of flip-flops."

You admit that it "offends you" because of your beliefs regarding obscenity. Others here call you a "dickhead" because they believe anyone with your belief is a "dickhead".

Sat, 04/23/2011 - 13:48 | 1199360 thatthingcanfly
thatthingcanfly's picture

You have read without understanding, then mischaracterized what I said, then demonstrated your inability to construct a valid analogy. Impressive.

Sat, 04/23/2011 - 14:41 | 1199440 UninterestedObserver
UninterestedObserver's picture

Wrong and you're still a dickhead so fuck off and buy gold bitch(ez)

Mon, 04/25/2011 - 04:45 | 1202685 thames222
thames222's picture

please cease.  thank you.

Sat, 04/23/2011 - 13:53 | 1199370 Calmyourself
Calmyourself's picture

Frankly, what is more immaterial is your sophmoronic (sp) cultural commentary, we have bigger things to worry about. So once your done with your spell check,your dictionary diktats, and decorum lessons say something relevant about economics or the massive ponzi scheme we are embroiled in or go away.

Sat, 04/23/2011 - 07:58 | 1198714 praps
praps's picture

Preferably alliterative and with two double syllables. It's a form or poetry really.

Sat, 04/23/2011 - 08:14 | 1198731 hardcleareye
hardcleareye's picture

Perhaps this is the verbalization of a young insecure boy that is unsure of his species preferences (nothing like porkin the pooch, or so I am told, not being of that gender)?  Some men never grow up.... <lol and rolls eyes>

Seriously, it is difficult to "add tone" and "inflection"  in a blog and this word is intended to convey approval, astonishment, "you got it right" "this is really cool man"..etc.., this expression is NOT used with the intent to be a "deogatory comment aimed at women". 

Look on the bright side, we could be in Australia, were no offense would be intended if someone called you a "funny cunt",

 "when used with a positive qualifier (good, funny, clever, etc.) in countries such as Britain, New Zealand and Australia, it conveys a positive sense of the object or person referred to.[6]"

Human communications are inherently flawed... and life is short...

Sat, 04/23/2011 - 08:35 | 1198752 Miss Expectations
Miss Expectations's picture

Regurgitate Bitchez!

Sat, 04/23/2011 - 09:06 | 1198782 Almost Solvent
Almost Solvent's picture


Sun, 04/24/2011 - 19:15 | 1201846 malek
malek's picture

Ad hominem bitchez!  (That's my first "bitchez" post ever, but that had to be said.)

Sat, 04/23/2011 - 07:11 | 1198668 imaginalis
imaginalis's picture

About time the bondholders got some Greek

Sat, 04/23/2011 - 07:45 | 1198706 falak pema
falak pema's picture

The Barber of Seville is already occupied full time with Hidalgos of Santander Espagna. Those of Lisbonna have a hard boner working overtime on Socrates and his Pintos. That only leaves the Turks to send their Yatagan merchants to Athens to shave their Greek friends down to their dry nuts dipped in olive oil. What a moussaka, houmous and dolmates pot pourri this will be!

Sat, 04/23/2011 - 11:59 | 1199085 Tail Dogging The Wag
Tail Dogging The Wag's picture

"Investors need to diversify, they need to own some real estate, they need to own some farmland, they need to own some equities, some cash, and some precious metals..."   Marc Faber —Investment analyst

Got real estate and farmland outside your home country yet?

Sat, 04/23/2011 - 22:18 | 1200208 banksouttacontrol
banksouttacontrol's picture

Beer Bitchezzzz!!!! and gold, silver, hogbellies and Bitches Bitchezzz!!!

Sat, 04/23/2011 - 06:58 | 1198655 traderjoe
traderjoe's picture

Leo, what should I do now with those Greek bonds you told me to buy? /s

Sat, 04/23/2011 - 09:08 | 1198785 Popo
Popo's picture

Don't worry,  I'm sure that little ol' 95% haircut is priced in to the market already.   

Sat, 04/23/2011 - 09:20 | 1198795 Gordon Freeman
Gordon Freeman's picture

Not just priced in--it's incredibly bullish, doncha know?  David Tepper told me so...

Sat, 04/23/2011 - 14:40 | 1199442 UninterestedObserver
UninterestedObserver's picture

Yeah I was going to mention that too

Mon, 04/25/2011 - 04:41 | 1202679 thames222
thames222's picture

Hold them for 20 years!  who knows what could happen, but Greece has some smart people, useful land and products for the future.  I'm actually looking to start a colony in Greece or elsewhere in the islands around there after the apocalypse happens.

Sat, 04/23/2011 - 07:02 | 1198657 Neoisolationist
Neoisolationist's picture

Thanks, Cossack55, you made me laugh out loud.

But to the point...I really don't see how the Euro can stay together as a functioning currency when this happens. I don't think it will be an isolated event. I prefer the Icelandic to the Irish solution for Europe, but the cost might be the Union.


Sat, 04/23/2011 - 07:16 | 1198671 thatthingcanfly
thatthingcanfly's picture

Yeah boy, that Cossack55 is SO FUNNY! I mean, who else could have made the connection between "Haircut" and "Barber" other than a true comedic genius?

Sat, 04/23/2011 - 07:36 | 1198691 cossack55
cossack55's picture

Man, you need to chill. Go look for some Easter eggs or chug some beers. Stay away from weapons.

Sat, 04/23/2011 - 07:42 | 1198703 smlbizman
smlbizman's picture

i  nominate "thatthing..." for the biggest dick of the day, although there is lots of time left in this day, i am most certain  no one will dislodge him from the top spot...

Sat, 04/23/2011 - 08:35 | 1198749 thatthingcanfly
thatthingcanfly's picture


Sat, 04/23/2011 - 11:10 | 1198956 Spastica Rex
Spastica Rex's picture


Sat, 04/23/2011 - 11:10 | 1198954 Spastica Rex
Spastica Rex's picture

Yeah, except he's too boring.

Sat, 04/23/2011 - 11:22 | 1198987 thatthingcanfly
thatthingcanfly's picture

Who could argue with that logic?

Sat, 04/23/2011 - 11:07 | 1198951 Spastica Rex
Spastica Rex's picture


Sat, 04/23/2011 - 14:42 | 1199447 UninterestedObserver
UninterestedObserver's picture

Are you the newest fucking troll on JPM's payroll or just an intern? Sounds like that Ivy League English degree isn't getting you the desired payback. 

Sat, 04/23/2011 - 07:19 | 1198675 RollOver
RollOver's picture

Correct. If Greece defaults by haircuts, Ireland, Portugal, Spain and Italy will manouver in order to do the same. Then UK will do it, and others. All of a sudden we will see a race to show all possible sorts of debt on the books instead of hiding them. Don't know if it means the end to the Euro, but if the Euro is to survive all these haircuts must be made in a fair order and magnitude relative all countries, whatever that is. Guess the odds of that happening is zero.

Sat, 04/23/2011 - 07:55 | 1198713 Hephasteus
Hephasteus's picture

You mean like when a credit card pumps interest rate to 24.99 percent and then let's it run for a year and a half before finally tossing it back to bernanke to throw into the taxpayer wholeness machine.

Sat, 04/23/2011 - 08:33 | 1198747 RollOver
RollOver's picture

If it's done northern European style, at least bank shareholders will lose their stocks and get nothing in return. But I presume costs will be incurred to the taxpayers, large costs. Hopefully some of it may be returned when/if some sort of stability is reached and the banks, or whatever is left of them after restructuring, are sold to highest bidders.

Pensions, however, are screwed. Another reason not to jump on some subsidized-lock-in-your-cash-here-until-retirement-or-until-your-politicians-pillages-it-all plan.

Sat, 04/23/2011 - 09:26 | 1198807 cossack55
cossack55's picture

That, my good man, is an absolute truth.

Sat, 04/23/2011 - 09:11 | 1198787 Popo
Popo's picture

I foud the above quote interesting:  ""Citigroup said that no country with a debt-to-GDP ratio of over 150 percent has “ever avoided a default.” Greece’s austerity measures aren’t achieving the “desired results as quickly as hoped,” it said.""


Which raises the question,  at our current rate of increasing debt -- when are we projected to hit 150% of debt-to-GDP?    


Anyone know?



Sat, 04/23/2011 - 09:36 | 1198800 falak pema
falak pema's picture

Around 2017...on current unaltered projections...see US official budget and debt clocks

Sat, 04/23/2011 - 09:29 | 1198808 cossack55
cossack55's picture

Which begs the question: What about Japan. Are they not at over 200%?

Sat, 04/23/2011 - 09:40 | 1198817 Global Hunter
Global Hunter's picture

I read yesterday (can't remember where sorry) that US debt to GDP will be over 100% by the next election.  At that rate that, back of the envelope that confirms Falak's 2017.

I think Japan is 225%, I was sent a nice research note from a bank dealer that says that Japan's debt to GDP is cool though because the debt is owned by Japanese rather than foreigners so there is no problems there.  I laugh at that thought though.

Sat, 04/23/2011 - 17:02 | 1199685 topcallingtroll
topcallingtroll's picture

japanese are freaks of nature.  Like bees in a hive.  No problem there.

Sat, 04/23/2011 - 07:14 | 1198672 hugovanderbubble
hugovanderbubble's picture

Thanks Tyler,

Hope its useful for ZH members,


Sat, 04/23/2011 - 07:19 | 1198676 tellsometruth
tellsometruth's picture


that little rodents face says it all...I guess he has been a loyal cnbc watcher judging by the look of shock/horror.

Sat, 04/23/2011 - 07:40 | 1198697 Snidley Whipsnae
Snidley Whipsnae's picture

"Liquidate them all"


Sat, 04/23/2011 - 09:21 | 1198709 falak pema
falak pema's picture

TD : Do these figures corroborate the RM presentation statistics in Holland? 


Just wondering if the Citi boys are playing catch-up ball with our one and only RM

Sat, 04/23/2011 - 08:08 | 1198721 Hephasteus
Hephasteus's picture

Send in arthur anderson with some accounting mousse!!!!

Extra fluffy volumizer.

I I I I look like shit.

You got any mousse?

Sat, 04/23/2011 - 08:08 | 1198723 Josephine29
Josephine29's picture

Back on the 13th of April I read a blog post pointing out that the latest figures for the Greek state budget deficit were not as good as the Greek government was claiming. Here is an excerpt.

Greece’s Financial Deficit

In spite of continual official talk that things are going to plan the numbers which keep emerging indicate that if they are it is in fact someone else’s! Last week more and more rumours surfaced that the Greek fiscal deficit which had been reported as 9.4% of Gross Domestic Product was in fact more likely to be 10% which continued a sad but by now familiar trend.

The Greek Finance Ministry has this week produced figures for the state deficit which are worrying. These figures do not include local or social security spending but I will quote from the press release below and omit the hyperbole.

The deficit amounts to  4,710 million Euros……… During the same period in 2010, the State Budget deficit amounted to 4,371 million Euros………Net revenues of the ordinary budget amounted to 11,114 million Euros, declining by 8.1% compared to the first quarter of 2010, mainly due to the larger than projected recession.

In case you are wondering the hyperbole proclaimed that these figures were only just above target. I have to confess that I see some very concerning factors in these numbers of which the most basic is that Greece is supposed to be in the middle of a severe austerity programme and yet the deficit level is higher than last years. Now as the latest figures for economic growth showed an annualised fall of 6.6% we can see that a rsing deficit is in fact an ever larger burden on economic output as the level of output has fallen. The falling revenue figures are something to be expected in a shrinking economy but they are still worrying.


Will Greece in an inversion of truth and lies continue to chase those who publish the truth? It is plain from these numbers that austerity in Greece is simply not working...

Sat, 04/23/2011 - 08:25 | 1198739 hardcleareye
hardcleareye's picture


Sat, 04/23/2011 - 08:27 | 1198740 Dick Darlington
Dick Darlington's picture

And here's a link to a story abt Portugal and their figures. Basically telling the same story abt the reliability of the reported figures. Edward Hugh has written in his blog abt the same thing regarding Spain. And i wouldn't be surprised if all the eurozone countries are using these kind of tactics when reporting their figures.

Sat, 04/23/2011 - 10:58 | 1198932 Kickaha
Kickaha's picture

Those bastards!  How unfair is that to all those banks that utilize sound and honest accounting principles!?!

Sat, 04/23/2011 - 08:36 | 1198751 Arius
Arius's picture

"Will Greece in an inversion of truth and lies continue to chase those who publish the truth?"

as compared to United States of Truth?  do you really believe greeks are alone on this? everything initiates from and ends here...greece just happened to be the weakest link...what matters though is the chain.

Sat, 04/23/2011 - 08:56 | 1198773 Mr Sir
Mr Sir's picture

the only stat out of Greece that isn't a lie is their total debt number. I have done an analysis proving that from 1999 to 2009 Greece on average had to be running 11% annual deficits to GDP a diirect contradiction to government stats. If you use the government numbers then they would have never grown their debt to levels they did. This is how they operate. If Tyler wants to see that analysis he can email me. my relatives there tell me it is getting worse by the day.

Sat, 04/23/2011 - 08:36 | 1198754 hardcleareye
hardcleareye's picture

This ties in nicely to what Reggie has been saying for some time.

I am still amazed that this is not getting more main stream media press, the fall out from this will be substantial, what am I missing????  (yeah I know, TPTB and sheeple)

Thanks Tyler, love this site and the blogging community!

Sat, 04/23/2011 - 08:46 | 1198766 Mr Sir
Mr Sir's picture

when this got main stream media attention last year the markets almost died. We can't have that. Besides they now have an unfunded bailout plan named the EFSF. Also, Goldman, BNP, and Morgan Stanley all said that the effects of a haircut on EU banks would be minimal since they own very little Greek debt. Greece has 330 billion euros of debt and nobody owns it you see. By the way Goldman would like you to sell them some protection in light of this, it's the best trade for you.

Sat, 04/23/2011 - 09:23 | 1198799 Gordon Freeman
Gordon Freeman's picture

"Greece has 330 billion euros of debt and nobody owns it you see." LOL!!  Very well put!

Sat, 04/23/2011 - 11:00 | 1198934 Kickaha
Kickaha's picture

Leo owns it.  That's why he wanted ZH folks to buy some.

Sat, 04/23/2011 - 09:47 | 1198829 falak pema
falak pema's picture

Greece will sell pronto 50 billion of national assets to increase national equity. It will also increase its production of 'hubris' the most sought for national treasure, as unique national idiosyncrasy; eagerly sought after by all the new international plutocrats, worth their rolex watches and extra long yachts. Gold mine right there...if they patent it without being creamed by a Squid banker on the way!

Sat, 04/23/2011 - 11:18 | 1198986 Ahmeexnal
Ahmeexnal's picture

Crete and Santorini will be auctioned off.

So will the Azores. And the Balearic islands.

Sat, 04/23/2011 - 13:27 | 1199313 falak pema
falak pema's picture

Azores and Balearic...wrong country friend..Viva ESpagna country there!

Sat, 04/23/2011 - 08:41 | 1198760 Mr Sir
Mr Sir's picture

we have two styles of haircut for you idiot Greek bondholder.....would you like the Argentinian look or do you prefer the Michael Jordan look???

Sat, 04/23/2011 - 08:47 | 1198768 GodsofGreektown
GodsofGreektown's picture

Greeks the weakest link.  Just follow the junkie brick road!

Sat, 04/23/2011 - 09:04 | 1198779 Atomizer
Atomizer's picture

Tyler, did you see this??

AIGFP's Massive Short Position In Commodities (which now belongs to the government)

Sat, 04/23/2011 - 09:24 | 1198802 Hephasteus
Hephasteus's picture

Nice bomb design. When do they set it off?

Sat, 04/23/2011 - 09:37 | 1198818 cossack55
cossack55's picture

Wow. Its all about the ol' counter-party risk thingy. Gee, is there any item that has no CP risk exposure? Think, think, think. I'll ask Nadler or Krugman.

Sat, 04/23/2011 - 09:42 | 1198821 Hephasteus
Hephasteus's picture

I've never heard of nothing with no counter party risk.

Them doomers talk about something like that. Is it peanut butter?

Sat, 04/23/2011 - 10:49 | 1198905 Atomizer
Atomizer's picture

Did you look to the right and see the video titled "Federal Reserve Shorting Treasuries?" I thought my peanut butter skittles would have worked. Go figure.

Sat, 04/23/2011 - 12:24 | 1199148 Hephasteus
Hephasteus's picture

I love his videos. He's like a modern incarnation of that cop show from the 50's where they'd talk really fast because they had to solve an entire mystery in 20 minutes, joe friday. He's wonderfully interconnecting and he does it fast enough that you don't have to wait to long for the connections to be made.

Sat, 04/23/2011 - 11:52 | 1199075 topcallingtroll
topcallingtroll's picture

Even gold, food, or high class poontang has counter party risk and its value is not set by the owner but by others willing to purchase.

Sat, 04/23/2011 - 11:04 | 1198938 vote_libertaria...
vote_libertarian_party's picture

I like this guys reporting style.  Very easy to understand.

Sat, 04/23/2011 - 11:30 | 1199004 ZeroPower
ZeroPower's picture

The guy's point is valid concerning AIGFP, however, if you'd look closely into the funds and ETF providers which supply these products, they all hedge their books. So noone is outright short (or long) unless theyre specifically making a directional bet.

However, firms (divisions) dealing with structuring and providing these securities are not typically the ones left in harms way if a market starts moving in a direction like our recent run in PMs.

Sat, 04/23/2011 - 10:05 | 1198860 bugs_
bugs_'s picture

would you like a free Greek Haircut with your Harrisburg IOU?

Sat, 04/23/2011 - 11:49 | 1199056 topcallingtroll
topcallingtroll's picture

He he.

Army style.....high and tight please.

After all who needs hair?

Any of you buggers ever get to shoot an M16 or its progeny?

Nice little weapon. It is designed for the common sheeple who would be afraid of a real man's weapon.....but i digress.

Sat, 04/23/2011 - 10:07 | 1198865 johnnynaps
johnnynaps's picture

Nothing like two entities (Greek government and Citi) neither which deserve to exist being caught in between a rock and a hard place.

Sat, 04/23/2011 - 10:20 | 1198880 jtaskinen
jtaskinen's picture

A rider on a dead horse at sometimes realises that it just does not work, some please explain this to EU governemts. Our governemtn in Finland hopefully has already understood this.

Changing a rider, improving quality standards and getting scarier whip does not help.

Just pull the plug, I hope to see this grand European lunacy go nose-diving with flames.

Sat, 04/23/2011 - 11:25 | 1198997 Ahmeexnal
Ahmeexnal's picture

In flames it will nose dive. Into the flames of WWIII.

Brought to you courtesy of the same idiots who brought you WWI and WWII.

"Sklaverei uber alles."

Sat, 04/23/2011 - 11:38 | 1199028 topcallingtroll
topcallingtroll's picture

Paul volcker was quoted at the start of the euro that it wouldnt survive its first recession.

Of course he hasnt said much since then. He doesnt want to be blamed as the boogie man who single handedly destroyed the euro.

Sat, 04/23/2011 - 11:09 | 1198959 vote_libertaria...
vote_libertarian_party's picture

So we see the table with the European bank exposure.  What about a list of US banks with exposure?


I remember 1-4 years ago those nice men on CNBC constantly telling people to buy Greek bonds. Surely there are a lot of hedge funds, banks and pension funds bought the bonds to get some yield.

Sat, 04/23/2011 - 11:17 | 1198974 TK7936
TK7936's picture

If they restructure then i want some territory in exchange.

Sat, 04/23/2011 - 19:19 | 1199940 downwiththebanks
downwiththebanks's picture

If they restructure, the banker-gangsters can take their "demands" and shove them right up their ass.  Fucking over the world with someone else's money entitles you to nothing but the contempt and hatred of the planet.

Sat, 04/23/2011 - 11:17 | 1198977 ZeroPower
ZeroPower's picture

Props to Denmark, Hungary, and Poland who have $0 exposure to GGBs.

@ Belgiums Dexia: Owned.

Sat, 04/23/2011 - 11:20 | 1198985 Atomizer
Atomizer's picture

"Phase Two of the Map Process"

Sat, 04/23/2011 - 11:32 | 1199008 topcallingtroll
topcallingtroll's picture



The greeks themselves were the only ones who could impact their solvency. But of course they waited and lied too long.

Traders are merely a risk signaling system. The collective wisdom of the market is already signaling the size of the haircut, given available information.

I am calling a top in greek bonds. Sorry i arrived a little late!

Sat, 04/23/2011 - 11:35 | 1199025 redpill
redpill's picture

Still more timely than Moody's!

Sat, 04/23/2011 - 11:42 | 1199035 topcallingtroll
topcallingtroll's picture

Rating agencies are no longer necessary and are ignored by the market. all rating agencies even dagong are just government shills and lie to the people.

A CDS and current bond yields and spreads tells you the current estimation of credit risk.

Sat, 04/23/2011 - 11:43 | 1199044 ZeroPower
ZeroPower's picture

 "Citigroup said that no country with a debt-to-GDP ratio of over 150 percent has “ever avoided a default.” 

Did C forget about Japan?

Mon, 04/25/2011 - 04:42 | 1202683 tomster0126
tomster0126's picture

No, perhaps they just didn't care to mention?  there's a ploy behind everything in media, there's a ploy behind everything...

Sat, 04/23/2011 - 12:30 | 1199167 Spalding_Smailes
Spalding_Smailes's picture

But , but , but ................ Spitzer told me the E.U. was the next reserve currency , the next big thing  .... Lol

I guess Milton Friedman was right, it will never last ....


...... " Before the launch of the euro in 1999, Milton Friedman predicted that the Eurozone would not survive its first economic crisis.

He noted that in a world of floating exchange rates, if one country faces a shock, it could simply respond by letting the exchange rate change. But with the arrival of the euro, that option is no longer available.

Mr. Friedman also highlighted the case of Ireland. In 2001, he said the country should have been tightening its monetary policy but couldn’t because it was tied into the new European currency. “The European Central Bank makes monetary policy for the whole of euroland.” ...................

Sat, 04/23/2011 - 19:15 | 1199937 downwiththebanks
downwiththebanks's picture

I guess Milton Friedman was right

Ha ha ha ha ha!

Sat, 04/23/2011 - 12:27 | 1199172 medanbola
medanbola's picture

This was an email sent to Tyler on May 2 2010 regrading a comment on Greece by GS. That day Greece received an aid package and I anticipated than in 1 year Greece will default and I showed the example of Argentina with a chronology of events to see the parallels. Tyler did not answer or care to comment. Perhaps you need certain pedigree to be answered or published. Knowledge may not suffice.

email: I do not see anything new in what the well compensated gentleman from GS is saying in his analysis and you so much appreciate. Just look at the chronology of events in Argentina.  Anybody with common sense may arrive at the same conclusions.
Pse read if you have a sec. Tad long to post as commnet. Rgds.
Argentina Road to Default:
May 2000 - Argentina announces $938 million in spending cuts. Two days later, 20,000 protesters march to protest the cuts.  Year 2 of recession. Currency pegged to USD, 15% unemployment.
Aug 2000 - projected 2000 deficit will reach about $5.2 billion, $500 million above target.  Modest 3% compared to Greece and developed countries.
Dec 2000 – (one full year before default) The Argentine government announces a $40 billion financial aid package led by the IMF. Markets post strong rally. Argentina debt is $135 billion. Package akin to what EU/IMF are announcing today for Greece.
Feb 2001 - Market jitters after calls to sack Central Bank head, accused of turning a blind eye to alleged money laundering in Argentine banks as cited in U.S. Senate report.
Mar 2001 – Econ Minister resigns. Newly appointed Minister unveils a $4.45 billion two-year austerity program. Resigns after 10 days in post. New minister (3rd this month) unveils a financial transactions tax and tariffs to shield local firms.
June 2001 - Argentina swapped (restructured) $29.5 billion of debt with local banks (forced to do so in hope of stopping balance sheet bleeding full of Gov debt). The swap defers debt service of $7.82 billion for 1 year.
July 2001 (6 months to default) - Argentine stocks fall to 28-month low on rumors of the resignation of the President. Argentina pays highest interest rates in five years in auction of short-term debt.  Rating agencies slash Argentina's credit ratings and warn of further cuts and risk of default. Country risk rises above 13 percentage points over U.S. Treasuries. Government austerity bill passed. The "zero deficit" law slashes state salaries and pensions by 13 percent.
Aug 2001 - IMF Managing Director Horst Koehler agrees to recommend an $8 billion increase in Argentina's $14 billion stand-by loan agreement. Depositors begin to return cash to local accounts.
Oct 2001 - Standard & Poor's and Moody's warn they could rate Argentina in technical default if bondholders lose money in a planned domestic debt swap. President says participation in a debt restructuring will be "voluntary". Argentina faces heavy capital and interest payments on its debt in the next 30 days. Country risk rises to 21 percentage points over U.S. Treasuries.
Nov 2001 - Government gives details of further economic measures, including a debt swap (restructure) that would comprise most of the $132 billion public debt. Econ Minister says offers to take part in local tranche (forced local banks) of debt swap exceed $50 billion, calls it a "resounding success." Country risk hits record highs.
Dec. 2001 – Econ Minister announces restrictions to halt a run on banks. The measures include limits on cash withdrawals and restrictions on the transfer of funds abroad. 
Dec. 5 (1 month to default) - IMF announces it will not disburse $1.3 billion in aid to Argentina this month as Argentina did not fulfilled agreed measures.
Dec. 19 - Government declares state of siege to stop looting and riots.
Dec. 21 - President resigns after thousands take to the streets. 29 people are killed in riots and looting around the country.
Jan 4 2002 – Argentina defaults on USD 150 billion

Sat, 04/23/2011 - 12:50 | 1199225 slewie the pi-rat
slewie the pi-rat's picture

heluva report, tyler!  slewie has crunched enuf, here, to do without grape-nuts til pentecost, thank you (or the appropriate jewish or moslem event, or pagan solstice).  i can see why interpol is acting:  any documents containing the words "mark-to-market" are pretty freaking subversive, these daze.

with scatological aplomb, you note:  "One thing is certain: with Greek 2012 debt/GDP expected to peak at 159.4%, the country will restructure, and a vast swath of insolvent European banks are about to see the tide go out."  

and, after trying every capitalist-financial "trick" in re-fi's, converts, slap-backs, begging, borrowing, and stealing,  and towering tier adjustments, to pretend to be "Basel III solvent", many of these poor banksters are still insolvent, altho the cypriotz and the hellenicz are actually be wearing bathing suits, and maybe the marfinz are only topless.

the ATE seems to be the "Animal House" of yer report, tyler, (p.20) and is a "european" bank:  "Rights Issue:  AgBank recently announced a reverse split of 10:1 followed by a 13 new: 1 existing rights offering for Euro 2.6 Bn and a subscription price of Euro 1.07/share....

"The rights issue is fully underwritten by the Greek state..."  slewie snapped several sharpened pencils, here,  and just got out the fuking finger paints.  again. 

so here is Citi just doin its job, trying to figure which will eat and which will be eaten while Sarkozy & Inspector Clouseau worry about the French Underpants thingy after leading The West against moQ and pissing off several million people who were just looking for a pissoir in the first place.

the zeroHeads seem to appreciate the counterparty risks in having insolvent banksters and their floods of fiat control the future of the world.  they are goin long on Lone Ranger brand peanut butter! 

and the Greek "trade" unions which also seem to speak quite clearly for the goobermint workers, there, are being wunnerful wunnerful militant mofo's and laughing all the way to the bank, too---in cyprus, it would seem.  and, they are still against selling the parthenon and 500 hectares to goldman sachs, too!

to paraphrase John Connelly when Nixon slammed the gold window shut on French fingers:  it may be Greek debt, but it's the EU's problem! 

maybe the "dollar" will rally or rallye.  just when stocks were getting so goldi, again, too...


Sat, 04/23/2011 - 14:58 | 1199471 citta vritti
citta vritti's picture

Can’t Greece make some of what it needs back by selling puts or CDS on its own debt?

Courtesy of GATA and others, this seems to be what our Fed is doing to help keep interest rates and expectations re same at prices so low, that like Crazy Eddie of old, they’re insane.

Check out:

or this abbreviated link:

Sat, 04/23/2011 - 17:50 | 1199775 buzzsaw99
buzzsaw99's picture

Doesn't matter how much they lose, C is like a fedgub backed utility.

Sat, 04/23/2011 - 23:06 | 1200256 AbbeBrel
AbbeBrel's picture

Ackerman goes "Ack!" (dbank + postbank, d-land)

But interestingly, he doesn't have as big a case of indigestion as:

Belgium less than France, or the reverse if scaled by GDP (!!)

(Moules-frites-land is 1:5 or so of Snail-land in GDP, but 4:10 in exposure)

No wonder Frite-land is in the news as being allegedly troubled

Sun, 04/24/2011 - 02:21 | 1200385 BlackholeDivestment
BlackholeDivestment's picture

I love Zero Hedge and all the Fight Club responses. Reading this article and all the reactions, well, all I see is the Holy Spirit among the Saints. The love for the truth here is compelling and inspirational ...Bitchez!<<<(this one is for you Mc Fly) Have mercy upon yourself. Everyone knows the evil lieing bastards are treating people like dogs Fed'n on their own crap.

P.S. ...I'm lucky when I can spell my name, much less get past the math. Look not upon our rags, get naked. You leafy wonder you. We need not get caught up in the spiders web and allow ourselves to be placed in the empty vault of the Fed pirate eye. Kick off the stardust and let us not cage ourselves like bitchez on hopium with a noose around our necks. 


Sun, 04/24/2011 - 04:30 | 1200432 Dick Darlington
Dick Darlington's picture

Fresh news from Portugal: Yet another revision to budget deficit. After correcting the figure in March by more than a percentage point for the worse, Portugal has now revised it again, for the worse of course, to 9,1% of GDP.

Mon, 04/25/2011 - 04:42 | 1202673 tomster0126
tomster0126's picture

Sucks for the Greeks...I try to help them out by buying my Voskos greek yogurt every day, lol.  it's gonna be awhile before they can even come closing to knocking out a sizeable chunk of that debt.

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