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Commerzbank Pulling Greek Repos, Lehman Deja Vu As Greece Shifts To Full Blown Liquidity Crisis Mode

Tyler Durden's picture




 

And so the Greek funding crisis shifts to a liquidity crisis yet again. Bankingnews.gr reports that Commerzbank, among many others, is now pulling its repos with Greek banks, essentially killing liquidity in the entire financial system. Cue Lehman Brothers and Sunday CDS trading. At least it's not Friday so OTC traders don't have to worry they will be pulled from their Hamptons retreat. The Greek website is reporting that according to sources, Commerzbank which is one of the biggest repo counterparties to Greek institutions, was dumping bonds in yesterday's sell off. Not only that, but it is now pulling repos, in essence starting a cascade of asset liquidation, in which banks, already experiencing a depositor run, will be forced to sell assets at any prices they can get just to fund their operations for one extra day.

A Google Translated version of the Bankingnews piece:

According to information Commerzbank was concerned about the Greek bonds accepted as guarantees of Greek bonds. Commerzbank has provided some liquidity to Greek banks are more concerned about the Greek bonds. Based on a reliable source in the recent past, foreign banks have applied to withdraw repo with Greek banks even offer powerful bonus.

The piece concludes:

Foreigners do not want to have in their portfolios Greek bonds. It is now clear.

We could not have said it any better.

 

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Wed, 04/07/2010 - 11:06 | 289679 Cookie
Cookie's picture

Oh dear

Wed, 04/07/2010 - 11:13 | 289686 Asimov
Asimov's picture

"Here we go."

Wed, 04/07/2010 - 13:19 | 290066 Bananamerican
Bananamerican's picture

end hoo iss yoo calling ze NAZI biz-nitch gehunden flicke??

Wed, 04/07/2010 - 11:14 | 289689 Ragnarok
Ragnarok's picture

Somebody's rocking the boat.

Wed, 04/07/2010 - 11:16 | 289693 Ripped Chunk
Ripped Chunk's picture

Accident?

Wed, 04/07/2010 - 11:19 | 289698 vote_libertaria...
vote_libertarian_party's picture

Everybody will be rioting and there will be banks runs...and everybody will have an IPad to watch movies while in line.

 

...as AAPL is at all time highs again today.

Wed, 04/07/2010 - 11:22 | 289704 HarryWanger
HarryWanger's picture

And a cnbc.com they're calling for a pullback....after SPX hits 1300 in September.

Wed, 04/07/2010 - 11:21 | 289701 CookieMonster
CookieMonster's picture

Better have Israel nuke Iran, quick! We need a distraction......

Wed, 04/07/2010 - 11:22 | 289702 Commander Cody
Commander Cody's picture

This must, in some way, be good for equities.

Wed, 04/07/2010 - 11:24 | 289708 HarryWanger
HarryWanger's picture

Certainly won't hurt. Ben about to speak in a bit and markets will go green once again. Even after we hear the same thing we heard yesterday in the FOMC minutes, market will act like it's the greatest news ever and rally.

Wed, 04/07/2010 - 11:40 | 289737 ZackAttack
ZackAttack's picture

Of course... meltup by that tsunami of liquidity exiting bonds, and it simply has no alternative but to go into stocks.

Wed, 04/07/2010 - 13:37 | 290103 ZackAttack
ZackAttack's picture

Just have to get with the program...

If commodities are higher, it's a sign of a healthy economy and should be taken as a bullish green shoot.

If commodities are lower, it frees consumers from a stealth tax and allows them to spend more on cyclicals and discretionaries.

 

So, like I was saying...

Foreign sovereign debt failures push money into the US bond market. This drives down yields, pushing investors into risk assets as a safe haven. The resulting lower rates are passed through to consumers.

See, this is a fun game.

 

 

Wed, 04/07/2010 - 11:24 | 289706 Village Idiot
Village Idiot's picture

Hey, why all the cynicism?

Wed, 04/07/2010 - 11:25 | 289709 sigmonster
sigmonster's picture

Why can't AAPL issue greek bonds. The company can solve all demand problems by throwing in a free ipad with all bond purchases. This can give a whole new meaning to ibond.

Wed, 04/07/2010 - 13:38 | 290108 stewie
stewie's picture

LOL!

+1

 

 

Wed, 04/07/2010 - 11:28 | 289713 bugs_
bugs_'s picture

This is a big f*ckin deal!

Wed, 04/07/2010 - 11:49 | 289771 DoChenRollingBearing
DoChenRollingBearing's picture

Well, yes.

So is California.  Illinois.  Florida.  New York.

So is the 100 x gold apparent fraud.

So is the $2 trillion deficit.

So is our huge (who's numbers do you use) debt.

So is the coming tax hike.

Wed, 04/07/2010 - 11:34 | 289722 doggis
doggis's picture

what game are the oligarchs playing? the disconnect between these events and the equity markets has a bad peutrid smell to it.  me smells "buy the dips" financial engineering at work here -aka GS with an end goal to manufacture a financial equity market collapse.

Wed, 04/07/2010 - 11:41 | 289740 rubearish10
rubearish10's picture

Looks like you're right sir! There's just no such thing as selling US Equities.

Wed, 04/07/2010 - 11:56 | 289795 Al Huxley
Al Huxley's picture

It would be, except that there are no longer even any dips to buy.

Wed, 04/07/2010 - 22:58 | 291047 Squid-puppets a...
Squid-puppets a-go-go's picture

nup. this is the oligarchy's engineers petrified that the machine has stopped working, and beating each other with their monkey wrenches in blame

Wed, 04/07/2010 - 11:33 | 289726 Al Huxley
Al Huxley's picture

Looking forward to the RBS article pointing out the 'hysteria in the blogosphere'  surrounding the pending default.  Wonder if they've managed to liquidate any of their positions.

Wed, 04/07/2010 - 11:34 | 289727 Village Idiot
Village Idiot's picture

Asset sales at any price?  Put me down for a Gyro plate with rice.

Wed, 04/07/2010 - 11:36 | 289732 docj
docj's picture

And here... we... go!

"Some men just want to watch the world burn."

Wed, 04/07/2010 - 11:52 | 289784 DoChenRollingBearing
DoChenRollingBearing's picture

I'll join you watching the world burn down if you will join me in the cheap seats section.  In the bleachers is fine.

Seems like the cliff comes ever closer each day.

Wed, 04/07/2010 - 12:02 | 289824 docj
docj's picture

Swim out past the breakers, watch the world die.

Yeah, I'm with you.

Wed, 04/07/2010 - 13:36 | 290101 Bonesetter Brown
Bonesetter Brown's picture

"Some men just want to watch the world burn."

Does this mean there is some "World CDS" I can get in on?

Wed, 04/07/2010 - 11:41 | 289741 sweet ebony diamond
sweet ebony diamond's picture

i asked this question before. how does the greek government know what islands it owns.

http://gogreece.about.com/od/greekrealestate/a/registergreece.htm

Wed, 04/07/2010 - 11:44 | 289752 truont
truont's picture

Advice for Greeks--please close your gaping mouths before the SHTF.

Wed, 04/07/2010 - 11:44 | 289754 KidHorn
KidHorn's picture

Isn't this the same thing that happened to Bear Stearns right before they went for $2?

Wed, 04/07/2010 - 11:53 | 289786 deadparrot
deadparrot's picture

Don't you get it. Equities are going up in order to entice some more dumb money into equities. Pros need to cooperate and create a perception of a risk-free, ever-rising equity market to get the suckers to buy. Who do you expect them to sell their over-valued shares to, each other? That only works for so long.

Wed, 04/07/2010 - 11:59 | 289806 Leo Kolivakis
Leo Kolivakis's picture

I can't read this anti-Greek propaganda. You guys have no idea about what is going on in Greece. It's actually disconcerting reading this nonsense. Even Greek television hit it on the head this morning: the crisis right now is mostly psychological. Get over Greece, and keep your eye on the real debt woes developing in the United States.

Wed, 04/07/2010 - 12:08 | 289847 Stranger
Stranger's picture

The crisis may be psychological, it's still going to axe-murder Greece.

Wed, 04/07/2010 - 12:14 | 289849 hedgeless_horseman
hedgeless_horseman's picture

Leo:

http://www.youtube.com/watch?v=dISKvZetkQI&NR=1

All crises are mostly psychological.

Love ya, little Buddy!

Wed, 04/07/2010 - 12:11 | 289862 CookieMonster
CookieMonster's picture

Interesting point but I would think that the squids are using this as a TEST CASE for what you are saying. No need to waste a good liquidity crises, eh???

Wed, 04/07/2010 - 12:14 | 289869 Ripped Chunk
Ripped Chunk's picture

All economic crisis is psychological.

Not sure what you are trying to point out? 

Wed, 04/07/2010 - 12:17 | 289876 Internet Tough Guy
Internet Tough Guy's picture

A crisis of confidence, kind of like 2008? Won't a liqudity tsunami fix that?

Wed, 04/07/2010 - 12:23 | 289895 ZackAttack
ZackAttack's picture

I'm reading carefully over this and I don't really see anything that would constitute anti-Greek propaganda, so I'm not sure what you mean by that.

 

I think the significance of Greece is as a template for what happens to other insolvent states. So far, it has resembled Argentina, where it was very important to be the first to panic.

Wed, 04/07/2010 - 12:29 | 289915 zero intelligence
zero intelligence's picture

Greece by itself is relatively small (if you can call $364B+ of debt outstanding "relatively small").

However, it isn't "psychological."

Nothing psychological about either their immense budget deficit or their immense debt/gdp, or their immense inability to correct either problem without the shock of a default.

We're watching Greece because of the timing. It's like Bear Stearns, or the RMBS CDOs breaking down. At which point do the problems that everyone knows about become a market event?

Wed, 04/07/2010 - 13:27 | 290082 ZackAttack
ZackAttack's picture

The 'psychology' part of it is the extent to which one is able to suppress concern over the reality of insolvency.

Wed, 04/07/2010 - 12:35 | 289938 BS Inc.
BS Inc.'s picture

I can't read this anti-Greek propaganda. You guys have no idea about what is going on in Greece. It's actually disconcerting reading this nonsense.

Now you know how I feel reading your "solars" crap.

Wed, 04/07/2010 - 12:48 | 289982 carbonmutant
carbonmutant's picture

Today may not be the best day to make that point.

http://www.tickerspy.com/newswire/?p=1887

Wed, 04/07/2010 - 13:59 | 290164 chet
chet's picture

Banking is psychological, Leo.

Wed, 04/07/2010 - 17:52 | 290677 MacedonianGlory
MacedonianGlory's picture

Λ?ο, λες βλακε?ες.

Leo, put your foot in your mouth and stop all these crap about brave Greeks. Greek people are in agony bacause of a totally incompetent government. Rumors about bankruptcy reminds to the oldest the years of 1946 and 1953. Government only speculates and media propaganda says that IMF is the only sollution since the EU dosn't lend more money to the corrupt system that governs. 

Something teribly wrong is happening to Greece and there is no hope anymore.

Wed, 04/07/2010 - 11:59 | 289811 Postal
Postal's picture

July my ass. They're going to be lucky to make it to Monday.

Wed, 04/07/2010 - 12:03 | 289829 moldygoat
moldygoat's picture

how was I just watching live video from a building with a power failure. I guess they needed some people to go and look at this shitstorm. The USA is a banana republic.

Pull the "power outage trick", why not the fire alarm.

Wed, 04/07/2010 - 12:04 | 289831 Rainman
Rainman's picture

This Greek debt crisis is like the story of Lazarus rising from the dead over and over. But sooner or later even Lazarus had to end up in the hole.

I think I'll dust off my Dow 10,000 hat. It's been sitting idle a while.

Wed, 04/07/2010 - 12:06 | 289840 hedgeless_horseman
hedgeless_horseman's picture

GS up 3.80 as their Hellenic CDS portfolio blossoms.

Wed, 04/07/2010 - 12:13 | 289861 Leo Kolivakis
Leo Kolivakis's picture

From Athens News (Buy when there is fear! That's what smart money is doing):

NBG gets Danish thumbs-up Issue No. 13384   Copenhagen    Danske Invest recently bought shares in National Bank of Greece (NBG), fund adviser Anders Hornbak said in a Danske Invest newsletter received on March 30.   NBG shares fell 55 percent between October 15 and February 9, while the Stoxx 600 European bank index  lost 22 percent in the same period. Greece stunned markets in October when it revealed that its 2009 budget deficit for 2009 would be 12.7 percent of gross domestic product (GDP) - over twice the previous estimate and more than four times the 3 percent ceiling imposed by the European Union. In the latest stock market upward leg, which set in on February 9, NBG has narrowly outperformed European peers . The bank is running a healthy business. Loans are fully covered by deposits and a big part of revenue is coming from Turkey where the economy is growing strongly,” Hornbak said.   The NBG Group’s loan-to-deposit ratio was 97 percent at end-2009, according to the bank’s 2009 results statement.   “Even though the Greek state is heavily indebted, Greek households have not taken on as much debt as is the case in countries such as Spain, Portugal and Ireland,” Hornbak added. Danske Invest, with nearly $60 billion worth of assets under management in over 200 funds, is part of Denmark’s biggest lender, Danske Bank.
Wed, 04/07/2010 - 12:18 | 289883 Internet Tough Guy
Internet Tough Guy's picture

Buy some bonds, Leo. Buy that yield. Call Bill Miller, he will probably want some too.

Wed, 04/07/2010 - 13:57 | 290160 ZackAttack
ZackAttack's picture

Oh, I don't think anyone here is fearful.

 

We're laughing at the superior intellect, Khan.

Wed, 04/07/2010 - 14:16 | 290198 Augustus
Augustus's picture

The households can just trust the government to take on that debt for them.  Welcome to the new normal.

Wed, 04/07/2010 - 12:18 | 289880 MAGICWIZARD
MAGICWIZARD's picture

well said rainman, well said.....

Wed, 04/07/2010 - 12:19 | 289885 economists_do_i...
economists_do_it_with_models's picture

Can you really trust the management at NBG?  During this crisis, they're opening up a new subsidiary.  What wonderful timing...

Wed, 04/07/2010 - 12:23 | 289894 Leo Kolivakis
Leo Kolivakis's picture

Umm, maybe they do not se the crisis that all of you traders are seeing on your Bloomberg screens. Ladies and gents, Greece is alive and kicking. I can assure you that the average Greek doesn't give a fuck about the traders on Wall Street engaged in trading masturbation.

Wed, 04/07/2010 - 12:27 | 289909 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Leo, so are the every day citizens in Iceland. What is your point?

Wed, 04/07/2010 - 12:29 | 289916 hedgeless_horseman
hedgeless_horseman's picture

He who panics last gets fucked.  You  look good with your yield-rally hat on, Leo.

Wed, 04/07/2010 - 13:17 | 290058 ZackAttack
ZackAttack's picture

I think we've established that Greece's leadership is batspit insane.

Hopefully, the average Greek will have the wisdom to vote out or kick out anyone who chooses appeasement of foreign banks over its citizenry.

Wed, 04/07/2010 - 13:49 | 290141 Bonesetter Brown
Bonesetter Brown's picture

Leo,

Dick Fuld was going to skull f*** the shorts at one time.

I have healthy respect for your liquidity arguments, and I think you are given way too much grief on this site.  But the Greek situation is just a case of weak hands being forced, and comparing this situation to the US states really misses what is going on here.  A number of European sovereigns are headed into default or bailout.  Greece is only the first.

Wed, 04/07/2010 - 12:25 | 289906 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

the reality is, whether you like it or not, that IF repos are getting pulled, depositors will follow.

Greece's survival is NOT an entitlement.

 

Wed, 04/07/2010 - 12:28 | 289914 wagefreedom
wagefreedom's picture

Anyone else find it interesting that the Euro is getting only slightly hit by all this?

Wed, 04/07/2010 - 12:32 | 289930 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Yeah, spanish market up all day. Weird.

Wed, 04/07/2010 - 12:37 | 289940 pat.heili@gmail.com
pat.heili@gmail.com's picture

Completely out of record but I really love Greece and if you want to relax a little bit have a look at this webcam. At this time, the night is coming but if you're lucky you will assist at an arrival of a boat. distressing

 

http://www.tvchannelsfree.com/watch/6471/Parika-Paros-Webcam.html

Wed, 04/07/2010 - 12:58 | 290009 carbonmutant
carbonmutant's picture

"Athens. The two major trade unions in Greece – the General Confederation of the Employees in the Public sector (ADEDI) and the General Confederation of Greek Workers (GSEE) are on high alert and are getting ready for new wave of strikes and protests over the draft bill for reforms in the pension-insurance system, Greek Express daily reports.

State employees have already planned a protest meeting in downtown Athens on Thursday, while on Friday there will be a sitting of the general council of ADEDI, which is very likely to declare a strike on April 20 – 22."

http://www.focus-fen.net/index.php?id=n215725

 

Wed, 04/07/2010 - 13:10 | 290032 docj
docj's picture

Today, Athens.

Tomorrow, Sacramento and Albany.

Soon, coming to a state capitol near you.

I'm dealing with it on the local level - we have (unionized) teachers in contract negotiations saying they "won't accept" anything less than +3% per year locked-in for the next 3-years.  The chief negotiator for the town tossed them the business section from the Boston Globe and told them they may want to have a look at what's going on in the dreaded private sector.  The MTA hack's response?  They couldn't care less what's going on in the dreaded private sector, they want their f---ing raise.

This is going to be about as much fun as a prostate exam.

Wed, 04/07/2010 - 13:31 | 290090 ZackAttack
ZackAttack's picture

Unionized public sector employees rioting... could there be anything less likely to garner support? 

Unless, perhaps, they were Taliban firing on unarmed puppies from attack helicopters.

Wed, 04/07/2010 - 14:03 | 290174 Stranger
Stranger's picture

Unions don't need support. They just need fear.

Politicians will always make the most convenient, short-term choice available. Unions exploit this by creating fear of chaos.

Wed, 04/07/2010 - 13:02 | 290019 ignorant
ignorant's picture

Lets see wht the the man writes in his article

""

According to information....

Based on a reliable source in the recent past....

Foreigners do not want to have in their portfolios Greek bonds. It is now clear.

""

Can you guys as pro, rely on such idiotic assumptions. amazing.

and a tip,  consider tht the same man on Oct last year was for days  promoting and strongly suggesting as an opportunity thru TV for people to enter in asset raising and buy shares of a greek bank at 12-13euro by tht time. Next couple of months was region 7euro.

Very clear indeed.  

 

 

Wed, 04/07/2010 - 13:16 | 290054 RunningMan
RunningMan's picture

Two ways to print money. (1) Treasury auctions which are starting to look dicey, and (2) get banks to pump market no matter how ugly the news and go massively short right before the rug gets pulled out. No one gets hurt because the investors are on the sidelines, right? Greece is a sideshow before the main event.

Wed, 04/07/2010 - 14:09 | 290182 stewie
stewie's picture

I fail to understand how (2) creates money?  Better is:

(1) Banks extend loans

(2) Fed expand balance sheet.

Wed, 04/07/2010 - 13:28 | 290084 ZackAttack
ZackAttack's picture

By definition, the swan is now being hatched somewhere other than Greece.

Wed, 04/07/2010 - 13:34 | 290097 williambanzai7
williambanzai7's picture

Will Mamouns stay open?

Wed, 04/07/2010 - 13:48 | 290139 cougar_w
cougar_w's picture

This will get really hot just in time for the weekend.

Then 48 hours for the real money to bail out or hedge to the moon.

Then "Implosion Monday"

Did I miss anything?

Wed, 04/07/2010 - 13:52 | 290148 tom
tom's picture

Leo, I suppose I'm making a rash assumption based solely on your last name, but it seems to me you're letting your ethnic pride interfere with your financial judgments. If your point is that Greece still has a relatively good future and there are some buying opportunities there, go for it. If your point is that Greek state finances and the Greek banking system are not in as bad a shape as the market thinks, you're fooling yourself. They are in even worse shape.

I think Greece should get it over with, just default now and push through a tough restructuring deal, and slash like crazy to completely eliminate the fiscal deficit. It's not the end of the world, and brings recovery a whole hell of a lot faster. What is trashing Greece's reputation are all these revelations about the previous government's dishonesty to private bond markets and now the current government's protracted effort to extort bailout money out from the EU and IMF with threats of riots.

("Any danger that they'll cross the Balkans or the Adriatic?" "Uh, no, definitely not, sir." "Well, let 'em riot, then.")

Wed, 04/07/2010 - 14:11 | 290188 stewie
stewie's picture

Replace Greece with US and your paragraph still makes sense :o)

Wed, 04/07/2010 - 16:11 | 290498 Miles Kendig
Miles Kendig's picture

Fire up the vaporizer, get the popcorn, grab a beer and watch the zombie dance party as it moves fully into mutual consumption time.

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