Contrary To Previous Lies, Greece May Not Be Able To Access Capital Markets After All; Likely To See 50% Creditor Haircuts

Tyler Durden's picture

Following the just completed teleprompted preaching of concentrated, yet inverse, truthiness, we find that yet another bankrupt country has in fact been lying about its economic prospects. Following the recent stunning disclosure out of Portugal that contrary to constat promises to the contrary the country was in fact, broke, now we get another admission, this time from a country already bankrupt. Per the FT: "Greece needs time to convince international investors about its reform programme and may not be able to return to financial markets next year as planned, its finance minister has admitted. Greece’s budget plans are fully funded this year but Athens will have to raise between €25bn-€30bn on financial markets in 2012 – a step that would mark the first stage of its international rehabilitation. But Mr Papaconstantinou suggested that goal was in doubt and the timetable would not become clearer until an EU-IMF agreement had been struck for Portugal, the latest victim in the eurozone debt crisis. “A judgment cannot be made before the summer and before Portugal closes its deal,” he said." So now it is trendy for one broke country to bash another broke country? In retrospect Greece should have a right of first refusal of bailout funding: after all it first (was forced to) disclose its bankruptcy. Surely there should be some brownie points for that. But all this may well be moot: Germany is now openly saying the need for a Greek restructuring is coming. Which means that senior creditor haircuts (supposedly up to 50%) are imminent.

From Reuters:

Germany  acknowledged for the first time on Wednesday that Greece may need to restructure its debt but said such a step could only be pursued before 2013 if it were done on a voluntary basis.

In an interview with Die Welt newspaper, German Finance Minister Wolfgang Schaeuble said on Wednesday "additional steps" would have to be taken to deal with Greece's huge debt burden if an analysis from the European Central Bank and European Commission in June showed it is unsustainable.

 When asked by the daily how Greece, or other countries like Portugal, would ever be able to eliminate their "mountains of debt", Schaeuble said:

"In June we will get a progress report. I'm expecting a detailed analysis on the debt sustainability of Greece, that will be done in consultation with the Commission and the ECB. If this report concludes that there are doubts about the debt sustainability of Greece, something must be done about it."

Uh, doubts?

Schaeuble made clear, however, that any restructuring would have to happen on a voluntary basis if done before 2013, when new rules go into effect that envision private creditors shouldering losses in the event debt relief is provided to stricken euro zone states

"Until then a restructuring could only take place on a voluntary basis," Schaeuble said.

Yes, bankers are just lining up to be forced to disclose that their holdings of Greek debt, market at par plus, need to be haircut by over half.

Earlier on Wednesday, German weekly Die Zeit reported that EU experts have estimated that Greece must wipe away 40-50 percent of its debt load through a restructuring in order to return to a sustainable economic path

The newspaper, citing EU sources, said no decision had been taken on whether to pursue a restructuring of Greek debt, but various options were under consideration, including "less radical" solutions like a voluntary extension of maturities.

Which means a viable "fresh start" position will require at least a 100% haircut. And so what - by now each European bank should have been able to access the Fed's discount window and buy enough Netflix to make up for any possible losses associated with a complete wipe out of not only Greece but every single other insolvent European country. Which would be pretty much all of them.

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Fox Moulder's picture

Which fucking dip should I buy?

Ethics Gradient's picture

I see this type of comment several times a day on ZH. It still makes me chuckle.

Michael's picture

I want those stupid Greeks to become debt slave aficionados for life. If Americans can put up with having their children molested at airports, those fucking Greeks can put up with being debt slaves forever.

Yield2Greatness's picture

Billions and Billions in bailouts just doesn't buy what you would expect anymore.

redpill's picture

At some point soon when the EU has come apart at the seams, when emerging market inflation gets entirely out of control, and reality really starts smacking people in the face, there will be a sudden awareness that the United States has yet to take any material austerity measures, that our central bank continues to feed the flames of global inflation, and our officials (elected and otherwise) continue to pretend it is not happening.  There will be a growing global anger directed at America that will make all this blowback from the terrorists look like elementary school recess.

LowProfile's picture

There will be a growing global anger directed at America that will make all this blowback from the terrorists look like elementary school recess.

USD repudiation would fit that bill

jus_lite_reading's picture

I"m afraid you're right. That anger will also spread to Germany where their real unemploymnet has fallen from 10% to now just over 7% and getting better each day while our real unemployment goes up on a daily basis. Now well over 20% if count the 99weekers.

samseau's picture

So, if in the end, after all the bailouts, the result is that creditors still get haircuts as if Greek had defaulted years ago, why do bailouts in the first place?

LawsofPhysics's picture

Exactly what many people have been saying for a long time.

Harlequin001's picture

because it buys another two years of 'normality'...

Harlequin001's picture

did I say two years, I meant a year, no I meant six months, or maybe two months, or maybe a week, 24 hours or even a few minutes...


Then Kabooom...

Yield2Greatness's picture

Gives time for the rich to get out of town with the loot.

Sudden Debt's picture

It looked like a good idea at the time.


Bringin It's picture

Gives time for the rich to get out of town with the loot.

Once more with feeling.

Blank Reg's picture

If the banks do take a haircut, this will be good news for Iceland (yea). The UK and Holland may stop huffing and puffing and trying to blow their house down. (Don't ya just love that pluckey little country?)

kaiserhoff's picture

50-60 percent hair cuts...

And this is where kick the can finally ends, and interest rates start to reflect risk.  Whatever markets you're in, lookout below.

Sudden Debt's picture




MacedonianGlory's picture

Socialists in Greece always lied.

Greeks suffer of the Socialist Regime.

Help us to restore Democracy

redpill's picture

Democracy is what got you Socialism.

What you need is a Republic with rule of law to limit government, protect personal property and stop the mob from binging on public coffers endlessly.  Of course even Republics are vulnerable to corruption, corporatism, and an eventual slide into oligarchy.  But it takes a lot longer than with Democracy, as it takes longer than one vote to undermine Constitutional law.  If America is any indication, it takes about 150 years before you really start to lose prosperity permanently to the oligarchy.  After that I'd say it'll wind up taking another 100 years before the people are awake and pissed off enough to overthrow the government and start over.

Of all people on earth, the Greeks should understand this process better than anyone.

magpie's picture

Queue fraudulent regime change /coup, excellent, as long as you stay in ze Eurozone.

Just give Deutsche Bank a head start before you default...

falak pema's picture

Caramanlis was not a socialist. He was the prime scam starter, after the military fascist coup ended. He sold his country to the bankstas and demolished all State structures, due diligence. But that is an OLD story in Greece. It is the country of the house of the Atreus, Dukaks, Comnenos. The country always belonged to these Oligarchs since time immemorial. Pericles was just a small but remarkable  episode in this long Greek history of despots. Capito??

whisperin's picture

The bigger question is will these haircuts hit some of our hallowed institutions (insert here) and what dominoes will follow?

Harlequin001's picture

No, when you look at how your money is created it is created from nothing. When it is destroyed it is returned to nothing.

The Fed will now simply print up another shit load of dollars, buy up the defaulted debt and return it to the Treasury in exchange for dollars. The Treasury will shred the defaulted debt and the Fed will shred the currency thereby balancing the balance sheet, destroying the defaulted debt and a commensurate amount of dollars. The Treasury will immediately print up another T Bill and sell it to the Fed, which will create another shit load of dollars from nothing with which to buy it et voila, no losses for everyone. Fuckin magic that one...

That's why European banks go to the discount window, because only the Fed can do this...

of course to do this the entire sum of defaulted debt must be monetised and placed squarely in the hands of the banks...

work it out, a major, major increase in the real money supply and major, major increase in inflation...

stand by for more riots...

lots more riots.

ivana's picture

(hair)cut the crap!
Is this bankster response to chinese PIGS "help"?

QaplaSilver's picture

What a mess... how is this system even running day to day anymore? its completly lost touch with reality.  Wonder if Ireland etc will 'do an Iceland' ?

slewie the pi-rat's picture

i've been rootin 4 it 4 months!

The Hawk's picture

Why doesn't the US just give them a day or two of their treasury auctions... FIXED! and then repeat for all the other PIIGS... White House math at its best!

Cdad's picture

Look everyone...another pretend rally!  The last rally, the criminal syndicate known as Wall Street simply does not care that they have destroyed the market's credibility.  Not good.  Does anyone really think people are going to trust paper equities again?  What...maybe three generations from now?

During the screaming and plunging act just ahead, I suspect the syndicate will say things like, "Wow...we couldn't see it coming" or "Well, you have to take a long term view."  However, I think the gig is up in this entire industry now.  All that remains is for J. Dimon to finally start putting out honest quarterly earnings reports and lay off about half of his employees.  Will anyone really even care when the news of those firings are announced?

I wonder if the poor sap that bought the earnings "beat" on JP Morgue this morning would argue what I am saying? It is such a sad state of affairs...a contagion whose source is a syndicate of bankers that continue to rip off the entire world.  What will be done?  Haircuts on US T Bills?

God help us. 


Ruffcut's picture

Japans radiation from the west and greece austerity from the east. Get ready for the pinch of a lifetime.

AldoHux_IV's picture

Greece's best option and any other country in the EU is to break apart from the union-- bailouts = continuation of a monetary slavery regime.

ivana's picture

Agree but next and true question is : who's greek gov really representing? citizen or EU (bankster & corporations) interests?

slewie the pi-rat's picture

slewie sees the greek goobermint as a bunch of cafe rider anarchist types who have been hanging out for millenia, enjoying the local and import/export sex...

topcallingtroll's picture

But the greeks love the euro subsidy.

They promise if you let them renege on their debts
and stay in the euro they wont ever do it again.

Big Ben's picture

Kind of reminds me of those old Peanuts cartoons where Lucy would offer to hold the football for Charlie Brown to kick. He never seemed to learn.

unky's picture

what is this bullshit? cant they pay of the debt with new debt (given by ECB) ? problem solved

ivars's picture

Just not to forget important things:

Spent fuel pool at Fukushima reactor 4 has become open air reactor as spent fuel rods are admitted to be damaged and undergoing nuclear fission since March 13th:

CheapKUNGFU's picture

All your haircuts, are belong to us... make your time

AldousHuxley's picture

Best remedy against banksters is bankruptcy.

topcallingtroll's picture

Best remedy against the euro too.

We americans are just too uneducated to maintain
a currency.

nah's picture

they all going to die YOU HEAR ME



slewie the pi-rat's picture

lol!  brussels and the euro fuks, under IMF "reasoning"  will just hafta lash these debtors a bit more tightly to the wheel, is all, and beat them just a bit more severely and often.  no biggie.

have the irish got even one of their styooopid little bloodshot eyes open, here, yet?

pendragon's picture

how does that leave the ecb holdings of gtreek debt? better raise some more capital trichet

topcallingtroll's picture

If you allow greek haircuts then the irish will demand one as well as the portuguese.

Then spain, belgium italy and france.

Those smartypants eurosnobs are in a pickle.

Long live king dollar.

ivana's picture

possible game change. USD goes high, chinese are still pegged and than less competitive, some real trade wars start btw USA-China-EU (check Trump), good for local economies in EU & USA, interest rates higher, FED "somehow" continue printing, USA bond buybacks ... bla bla

other opinons?

magpie's picture

China buys EU junk bonds for a reason, to "uplift" the Euro.

slewie the pi-rat's picture

ok, but china doesn't just buy the junk, does it? 

and, other reasons (not all unrelated to your correct one) may involve diversification into non-US currencies and instruments, spreading chinese currency around for new trade deals with the EU, for supply side and raw materials reasons, and to project a presence in stark variance to the criminal fraudsters from the USA to the USA's very victims. 

these are all fiat meisters, ya know!  trading colored paper is really huge, isn't it? 

got PMs? got food?  got cash?