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Is Greece About To Issue 3 And 6 Month Bills At 6%?
Tomorrow Greece is issuing €600 million of 3 Month and 6 Month Bills each. The latest curve from Bloomberg shows that absent some new bailout between today and tomorrow, Greece will likely be forced to offer a stunning ~6% yield for both issues (assuming these go off at market rates). Without having checked historical records, we are confident that never in its post-EU history has Greece had to issue short-term debt at such record levels. And with the bulk of Greek debt rolling over in 2-3 years, the country will gradually become bogged down in untenable interest expense, even as its overall output is decimated thanks to real (as opposed to imaginary) austerity measures. There is no way that this curve is indicative of a sustainable situation or a situation where a liquidity crisis can be avoided. Greece thought the loaded fire extinguisher of this weekend's announcement would be sufficient to generate a far more aggressive steepening of the curve. It was wrong. It is now forced to activate the EU/IMF rescue plan. Each day it delays results in one day closer to certain sovereign bankruptcy.
Note the ongoing 3M-6M curve inversion. We attribute this to various data sources used by Bloomberg to calculate yields for the curve.
The realistic Bid presented by BVAL of 99.831 translates to a yield of 7.6%, explaining the curve inversion. The majority of indicated yields are located north of 5.5%, so a realistic rate on both the 3 and the 6 months tomorrow is about 5.75/6%. As a reference point, the US just issued 3 and 6 Months at 0.16% and 0.24%.
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Sometimes a country has just got to say - "fuck this, I'm out."
Half Baked- "You're cool....I'm out!":
http://www.youtube.com/watch?v=Fp6olw9iaxE
LOL
Oh, I see: We have a "Class A" fire extinguisher (good for "ordinary" combustibles like wood and paper), but Greece is a "Class B" fire (flammable liquids and gas).
In this case, our Class A extinguisher will be ineffective.
Of course, the entire EU is a "Class D" fire (combustible metals), so our Class A extinguisher won't work for that either. Bummer.
This while America crowns, and the sheeple watch.
"Wow. It is magnificent."
Fire Crowns:
http://www.youtube.com/watch?v=w-uVuYPbkZo&feature=related
@mikla
LOL. That's a great analogy.
How do you we say Chrysler/GM redux in Greek?
By Mike Ramsey and Lizzie O’Leary
May 1, 2010 (Bloomberg) -- A group led by Italy will complete its purchase of most Greece’s assets this morning New York time, after the EU rejected creditors’ objections and cleared the way for a new Roman state, said two people familiar with the matter.
The new country, Greco-Roman Group LLC, will be owned 20 percent by Italy-based Italy, 9.85 percent by the U.S., 2.46 percent by Canada and 67.69 percent by an Italian olive oil canners’ union retiree health care trust fund. The U.S. and Canadian governments financed the sale with, "...a few more trillion dollars."
The sale will fulfill President Barack Obama’s campaign promise of a “quick” trip through bankruptcy and, ..."saving or creating countless oily Greek homosexual's jobs." Greece now starts fresh with lower debt, fewer expenses, reduced labor costs, a well-capitalized financing arm and access to sober olive pickers and world markets through its Italy partnership.
“They are going to be leaner and meaner -- with management across the Aegean,” said Stephanie Brinley, an analyst with Apac Inc. in Troy, Michigan. “The new country has not lost some of the challenges of the old country. They don’t have new olive trees yet and they are still competing in a difficult environment.”
The EU’s decision allows the creation of a “vibrant new olive growing country with Italy’s know-how,” said a Greece aid in a statement. “The transaction is expected to close very shortly.”
Greece Bankruptcy
Greece filed for bankruptcy protection using the reorganization to retain its strongest assets and form an alliance with Italy that ranks as the world’s largest olive oil producer.
In bankruptcy Court, EU approved the sale and an IMF tribunal ruled unanimously to reject challenges by German pension funds and Hellenic anarchist groups. Supreme Teutonic Commander, Angela Merkel, ordered a delay while the higher EU considered a request for a longer postponement.
In an unsigned four-paragraph opinion, the EU said yesterday it wasn’t deciding cases other than the Greco-Roman deity nomenclature dispute. The order “is based on the record and proceedings in this case alone,” the EU said.
Greece’s recovery may depend on efforts to turn back a U.S. olive oil sales decline of 46 percent this year through May. The olive growers lost $16.8 billion in 2009 as its domestic sales dropped 30 percent, according to EU documents.
Treasury Financing
The U.S. Treasury loaned the grappa-swilling country $4 billion in early January to prevent a collapse at a time when the economy was plunging deeper into recession. The Treasury has provided $15.5 billion in aid to Greece from Jan. 2 through May 27, according to statements from the department.
Italy will run Greece and can eventually increase its stake to 51 percent by meeting certain operating milestones with Greece-Roman Group, LLC, along with option purchases. Italy’s president will hold the same post at Greece and serve on the nine-member board, the other directors haven’t been named, but speculation is they all are named either Peter or Paul.
“We are delighted that the Greco-Roman alliance can now go forward, allowing Greece to re-emerge as a competitive and viable olive oil producer,” the U.S. Treasury said in a statement.
Different Products
The pairing brings together two countries with largely similar products and markets. Greece gets more than 90 percent of its sales from North America through its mob controlled brands, and Italy has almost no legitimate sales on the continent.
The Italian olive oil makers have the most graft enabled distribution in Europe while Greece olive oil is known more for its use as a lubricant between men.
The combined nations would have olive oil sales of 4.5 million barrels globally based on 2009 results, placing them just ahead of Spain.
For Greece citizens, the alliance means the third set of owners in less than two centuries, after spending the past 21 months under the control of Goldman Sachs. Goldman took Greece private for $7.4 billion in August 2008.
The sale transfers to the new country substantially all of Greece’s operations, including eight olive oil canning sites, dozens of islands, equipment leases, and contracts with 789 U.S. “affiliated families.”
Long Wind-Down
The assets left behind, including Nazi restitution claims, will be sold off under EU supervision with the proceeds to be distributed to creditors with claims against Greece.
Pure genius! Kudos!
lol fucking brilliant. Was that cubicle productivity?
The Greek situation could only be solved by others if they were the only Mediterrania in this situation. While their higher frequency rollovers make their problem more urgent, the other PIIGS will want same safety net and subsidized borrowing rates.
IMF austerity measures will mean Greek economy won't be able to actually grow - again, not as severe, but similar for other PIIGS if forced into austerity measures.
Meanwhile, will northern European countries really carry the weak as far as the eye can see? No.
Bite the bullet, declare insolvency, and let the global economy begin to find equilibrium with real acknowledgement of debts, assets, production and growth.
Fire extinguisher on a Greece fire?
lol. I once saw an oil depot burn. It was spectacular. The 5 gallon buckets of grease went off like Roman candles. The fire dept. arrived and quickly concluded that all they could do was watch and keep the surrounding area from burning too. Methinks Greece may end the same way.
Yes, exactly! Grease burns! The symbolism is unbelievable. They laugh all the way to the bank, steal the gold, and go then to their ivory towers. The writing is on the wall....
Wouldn't default be good for them (and the market)? They can just default on their debt, have all the other folks write-down their bad loans, and then they get to start all over again (with the proverbial 'clean slate')...
Good for them, bad for their bankster creditors. And it will give the other PIIGS ideas, like a snowball going downhill.
...unless banksters are allowed to extend and pretend with an implicit or explicit backstop from USG, then it's bad for taxpayers. And we may get into another AIG-like CDS counterparty issue....If the CDS will pay out and there is no CDS counterparty default, GS will probably make a killing.
IMF's SK says deflation is the answer; bernanke licking his lips over the tanker fleet; beats Alt'As
And the BDI keeps falling...
On the weekly, looks like a classic head & shoulders, with the head just shy of the 38.2% retracement from the 2008 high.
This is your Captain..."Now hear this. Set course for quantitiative easing."
Interesting dicussion going on here:
http://market-ticker.denninger.net/archives/2186-Did-The-Fed-Just-Surrep...
This should be sent to Congressmen Grayson and/or Paul's office asap.
Perfect fodder for the upcoming financial reform debate.
Is this "Reverse Repo 105" ?!?
another followup from Denninger
http://market-ticker.denninger.net/archives/2187-What-The-Hell-Outstanding-Credit.html
make that triple post...wtf?
double post
At 6 percent, I believe that it will be hire since Fitch downgraded the rest of the banks and bonds hours ago. If somebody is stupid enough to buy these bonds, if I was them I would be asking for at least 7%. I think for this bond sale to pass they have to have high interest rates, if not they will have a failed auction.
“Rescue Greece”
(To the tune “Rescue Me” by Bass, Miner & Smith, Sung by Aretha Franklin)
By “The Librarian” (c) 2010
Rescue Greece
Save from financial harm
Rescue Greece
keep them from taking arms
Let’s float those PIIGS
and euro zone
they need loans
not mobs with stones
Come on and rescue Greece
Come on, baby, and rescue Greece
Come on, baby, and rescue Greece
'Cause they need you to countersign
Can't you see that they’re defaulting!