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Goldman's Take On Europe's "Marshall Plan" Newsflow

Tyler Durden's picture




 

As news comes fast and furious out of Europe, here is Goldman's take on the so far unconfirmed details of the latest Marshall Plan in Europe, which unlike last time comes before the war. Incidentally, Europe just approved debt monetization, only unlike in the US, it will do it off balance sheet, via the EFSF "CDO" SPV.

From Goldman's Franceso Garzarelli

On Greece: A 'Managed (and Generous) Deleveraging' Package

  • The second package for Greece will be funded by the EFSF. Total committed issuance by this vehicle just for the program countries could exceed EUR100bn, out of a current lending capacity of EUR440bn (of which AAA-countries support EUR255bn). AS EXPECTED, BUT THE SIZE OF THE EFSF COULD BE INCREASED FURTHER
  • EFSF loans to Greece will be modified and extended from 7.5-yrs to 15-yrs. This would represent the second extension of maturities. AS EXPECTED
  • Rate on NEW conditional loans to Greece (EUR70bn) could be as low as 3.5%. Currently swap +300bp on 15-yr loan would mean reduction from 6.5% to 3.5%. Probably similar terms also for Ireland and Portugal. BETTER THAN EXPECTED
  • ‘Marshall plan’ for Greece to spur investment; no details; but big emphasis on growth, key variable for debt sustainability, Note that co-financing on EU funds had already been lowered to 15%. BETTER THAN EXPECTED, PENDING DETAILS
  • No details on private sector PSI: debt buyback, rollover, swap; all should be voluntary; probably will trigger 'selective default', but ECB will probably compromise. STILL UNCLEAR, BUT BROADLY IN LINE

On the systemic stability: Both items on our ‘wish list’

EFSF empowered to buy in secondary markets with input from ECB; BETTER THAN EXPECTED, PENDING clarification on SIZE and ACCOUNTABILITY
EFSF able to recapitalize banks in non-program countries through loans to governments; BETTER THAN EXPECTED, ditto.

IF ALL OF THIS IS CONFIRMED, VERY positive relative to expectations. Particularly the systemic stuff is a big step forward to unconditional mutual help. If sovereign cross-correlation of default is low, ex ante risk sharing helps everyone participating

 

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Thu, 07/21/2011 - 09:23 | 1476731 entendance
Thu, 07/21/2011 - 09:40 | 1476793 MarketTruth
MarketTruth's picture

And remember kids, the Vampire Squid Goldman Sachs was instrumental in helping Greece cook their now known fraudulent accounting books. So whatever Goldman Sachs says, treat it as though the head of a Mafia family is giving you advice about one of their lower ranks.

Thu, 07/21/2011 - 10:32 | 1477028 Lord Blankcheck
Lord Blankcheck's picture

Greece sleeps with the radioactive fishies

Thu, 07/21/2011 - 09:24 | 1476732 Highrev
Highrev's picture

Pie in the sky positive spin.

Thu, 07/21/2011 - 09:24 | 1476734 oogs66
oogs66's picture

how is a loan to a government a recapitilization of the banks?

Thu, 07/21/2011 - 09:25 | 1476737 MFL8240
MFL8240's picture

Great to see the crime syndication have their nose in this, we can expect more fraud and deception.

Thu, 07/21/2011 - 09:25 | 1476740 benbushiii
benbushiii's picture

Where does all of this money come from? 

Thu, 07/21/2011 - 09:41 | 1476804 Long-John-Silver
Long-John-Silver's picture

1's and 0's on an Internet server.

Thu, 07/21/2011 - 09:42 | 1476810 Going Loco
Going Loco's picture

Thin air

Thu, 07/21/2011 - 10:04 | 1476906 mess nonster
mess nonster's picture

I think the European Financial Stability Fud works like this:

France and Germany take some of the FED money they got last year, and put this, along with some string, a broken skate key, a crumpled Bazooka comic-strip bubble gum wrapper, a couple of marbles, and a dried bug, into a hat and call it the EFSF. The EFSF then prits as much fiat money as it possibly can, with only human credulity as an upper limit, and loans it to Greece. In other words, it's like paying off one credit card with another, just to keep the pesky collection agencies who call at supper time quiet, because their phone calls frightgen the wife and make her less willing to have sex.

Thu, 07/21/2011 - 09:25 | 1476741 yabs
yabs's picture

pure torture how this bs continues

Thu, 07/21/2011 - 09:26 | 1476744 jkruffin
jkruffin's picture

All of this crap has WWIII written all over it......

Thu, 07/21/2011 - 09:40 | 1476790 hedgeless_horseman
hedgeless_horseman's picture

...the latest Marshall Plan in Europe, which unlike last time comes before the war.

Cruiser: I joined the army 'cause my father and my brother were in the army. I thought I'd better join before I got drafted.
Sergeant Hulka: Son, there ain't no draft no more.
Cruiser: There was one?

Thu, 07/21/2011 - 09:30 | 1476757 BurningFuld
BurningFuld's picture

Translation: We are going to make a truck load of fees moving all this shit around! Woot-Woot where's dem new hookers!

Thu, 07/21/2011 - 09:31 | 1476761 Johnny Lawrence
Johnny Lawrence's picture

Could Goldman's interests be any more transparent with this report?

Thu, 07/21/2011 - 09:31 | 1476762 the not so migh...
the not so mighty maximiza's picture

off balance sheet,  ahahahahahahahah

Thu, 07/21/2011 - 09:33 | 1476766 papaswamp
papaswamp's picture

So when the next set of greek numbers come out showing their economy is still degrading what?...all is ok? Private investment would have to be retarded to get in on this. Any default will hit them first.

Thu, 07/21/2011 - 09:33 | 1476769 alien-IQ
alien-IQ's picture

When Goldman calls it "Better than expected"...you just KNOW that people are about to get royally fucked.

Thu, 07/21/2011 - 09:37 | 1476782 jkruffin
jkruffin's picture

Amen to that, you would think people have woken up by now, but obviously they haven't.

Thu, 07/21/2011 - 11:50 | 1477324 anyways
anyways's picture

+1

Exactly.

Guess the junker is an asshole from GS spying ZH.

Thu, 07/21/2011 - 09:33 | 1476770 Version 7
Version 7's picture

Complete nonsense. Let's wait until someone does the accounting (because these folks don't) and come up with a time frame for the next bailout of Greece. And BTW, starts putting numbers together for Spain and Italy too.

Thu, 07/21/2011 - 09:37 | 1476783 thedrickster
thedrickster's picture

3.5%.....I guess zombie supernational, totalitarian unions from hell need not worry about RAR.

Thu, 07/21/2011 - 09:37 | 1476784 PulauHantu29
PulauHantu29's picture

More monetization means more inflation (the type The Bernank doesn't see).

Food + PM + oil prices skyrocketing.....

Can they reduce the size of food packets any smaller? The 16oz bags are now 10oz.

But the MSM writes..."Everything is Fine..."

...mmmmmm

Thu, 07/21/2011 - 10:09 | 1476933 mess nonster
mess nonster's picture

The 10 oz packet of Soilent Green does not satisfy like the 16 oz packet did!

Thu, 07/21/2011 - 09:38 | 1476785 Quintus
Quintus's picture

From the UK Telegraph's reporter at the Eurogroup meeting.

 

Speculation here in Brussels that draft eurozone proposals were deliberately leaked to Reuters to stop the euro plunging on the markets.

 

The markets wanted to hear about measures such as using the eurozone's €440bn EFSF bailout to give loans to non-programme countries (Italy and Spain) for bank recapitalisation or allowing it to "intervene on a precautionary basis".

All well and good except that these proposals could well require a change to the EFSF rules, the fund is supposed to be last resort for example, and changes must be agreed in parliaments.

Germany does not want that battle as German voters revolt against even more of their money flowing south. The Finns and Dutch don't like it either.

Markets have now firmed up. Will that message be passed on to Chancellor Merkel in a bid to twist her arm?

Your voters might not like it but the markets need it.

 

If the final agreement does not support the weight of expectations that have been placed upon it, watch out below.

 

Thu, 07/21/2011 - 09:37 | 1476786 espirit
espirit's picture

Yeah, yeah.  GS was net short yesterday and long today. THEY make the news to benefit THEM.

lol - crooks.

Thu, 07/21/2011 - 09:37 | 1476787 qussl3
qussl3's picture

GS spinning it as good?

No mention of how a slowing France and Germany are going to pay?

Wonder how long till the EUR rally peters out.

Give it till friday.

 

Thu, 07/21/2011 - 09:39 | 1476796 espirit
espirit's picture

Euro peter= limp

Thu, 07/21/2011 - 09:38 | 1476788 benbushiii
benbushiii's picture

Let's see, all of the PIIGs cannot pay their debts, all of the banks in Europe own these sovereign bonds?  Each country that has no money to pay their debts is going to contribute more money to a bail-out fund to buy their debt back and guarantee future payments.  Can anyone say PONZI?

Thu, 07/21/2011 - 09:43 | 1476806 espirit
espirit's picture

Govtslime Sacks.

Thu, 07/21/2011 - 09:40 | 1476797 earnulf
earnulf's picture

Who in their right mind would put funds into a 15 year vehicle at 3.5%?

Ah, "right mind", please disregard.   Taxpaying sheeple will be shorn so that the government can lose money on an pisspoor investment (recapitalization).   Any bets on whether the 15 year will ever see maturity?

Thu, 07/21/2011 - 09:40 | 1476799 jm
jm's picture

They had to do this for Greece or the bottom-up rot would spread to every Main Street on Club Med.  Would have killed all of Europe.  All-in which is the only way out. 

United States of Europe, bitchez.

Thu, 07/21/2011 - 09:40 | 1476800 milanitaly
milanitaly's picture

ECB will print Euro by night. Could it be this one the real meaning of the European Marshall Plan?

Thu, 07/21/2011 - 09:40 | 1476802 spongeBOB
spongeBOB's picture

Its amazing how the sector with the worst earnings , i.e Financials, are flying the past 2 days with BAC outperforming. I'm glad I was able to get out my short position with a little bit of profit.

Thu, 07/21/2011 - 09:40 | 1476803 Clowns on Acid
Clowns on Acid's picture

Yeh..."But wot about the Workers!?"....

Thu, 07/21/2011 - 09:42 | 1476808 Dr. Engali
Dr. Engali's picture

So we are going to lend them a bunch of money to build a bunch of shit they don't need. Goldman will make a shit load of money and the Greeks get to party on for 15 more years. Seems like a sound plan to me.

Thu, 07/21/2011 - 10:00 | 1476887 nodhannum
nodhannum's picture

Score so far...Greece 10 EU sip!  Wow where can I get a deal like that?

Thu, 07/21/2011 - 10:00 | 1476891 nodhannum
nodhannum's picture

Score so far...Greece 10 EU zip!  Wow where can I get a deal like that?

Thu, 07/21/2011 - 09:43 | 1476813 spongeBOB
spongeBOB's picture

Goldman's take is always positive when banks are dumping their toxic trash on the taxpayers.

Thu, 07/21/2011 - 09:46 | 1476821 buzzsaw99
buzzsaw99's picture

goldmember is a man baby

Thu, 07/21/2011 - 09:47 | 1476825 Clowns on Acid
Clowns on Acid's picture

Basically what the Slippery Squid is saying is that "The banks are saved! The banks are saved!"

We have removed the probability of default for another few months, and now lets get to work on rejuvenating the Greek economy. Zorba - how much EUR do you need to hire a few more olive pickers at 20 EUR / hr?

Thu, 07/21/2011 - 09:48 | 1476828 Reptil
Reptil's picture

It's not over till it's over.

Thu, 07/21/2011 - 09:55 | 1476860 Clowns on Acid
Clowns on Acid's picture

The sycophants at the Fed and ECB have finally figured out that you cannot have a real rally in the equity (vapor measured in real returns) without the banks participating....Sooo...pump up the carcasses with a mixture of bullshit, seminal fluids, and a pureed working class. 

Thu, 07/21/2011 - 09:56 | 1476865 nodhannum
nodhannum's picture

Better than expected means better than expected for the squid!

Thu, 07/21/2011 - 09:57 | 1476876 Bicycle Repairman
Bicycle Repairman's picture

Beat the dead horse harder, then cajol it, then ply it with candy, then open negotiations with it, then threaten to end the negotiations, then buy it some flowers, then threaten it with Gitmo, then flatter it, then order the tide to recede, then rinse and repeat.

Thu, 07/21/2011 - 09:58 | 1476879 Bicycle Repairman
Bicycle Repairman's picture

I forgot the step where you have S&P bad mouth the horse.

Thu, 07/21/2011 - 10:02 | 1476900 Bicycle Repairman
Bicycle Repairman's picture

S&P: "It now is clear that unless this lazy horse revives itself, the horse's food supply will be reduced and the horse will be hitched to a wagon.  The horse refused comment."

Thu, 07/21/2011 - 10:15 | 1476946 The Count
The Count's picture

The small fact that they call it a Marshall Plan and not a Merkel Plan or some other European, proves how clue and leaderless the EU really is. A bunch of spineless do-gooders that have no guts to take strong measures when needed. Wait, sound like socialist governments but Germany has a conservative government, right? Ha haaa, you see in Europe you can choose between various level of left.... rightish-left, center-left, and left-left (green/communist). Anything truly conservative is branded extreme right/close to nazi.

Thu, 07/21/2011 - 10:15 | 1476951 mess nonster
mess nonster's picture

S&P: "If the horse refuses to move, we will have to say that officially, maybe, we will consider a downgrade in the horse's working capacity from "sprightly, hard-working horse", to "somewhat lazy horse with a hopefully improvable work ethic."

Thu, 07/21/2011 - 10:20 | 1476975 mess nonster
mess nonster's picture

Meanwhile Roskolnikov, (GS) his Napoloeonic pretensions shattered, and the vivid memory of the old woman's (er, global edconomy's) shattered skull continually before his mind's eye, wanders the dark and frozen streets, moaning and cryig for Sofia, but she is nowhere to be found, having been scooped up by the vice squad and hauled off to Riker's Island.

Thu, 07/21/2011 - 11:18 | 1477194 pcrs
pcrs's picture

" Particularly the systemic stuff is a big step forward to unconditional mutual help."

Optimal conditions for moral hazard, too big to fail channenigans. Full steam ahead of creating animosity of war like proportions. Just need to get Turkey into the EU and have their gvt force the Turkish tax slaves to bail out th greek rulers. That will stirr up the much desired hate of people pushed over the brim, to get the optimal conditions for a big war the sweeps all debts under the carpet along with all bodies and the whole government elite ruling nonsense can start once again from the beginning.

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