As Greece Has Less Than Two Months Of Cash Left, An Insolvent ECB Sees A Widening Rift With Germany

Tyler Durden's picture

Today's EUR trading session which begins in about 4 hours, may be rather violent. While on one hand we have bond-negative news out of Spain, the biggest news once again comes out of the Swiss journal NZZ, which citing greek newspaper Kahtimerini, discloses that insolvent Greece has less than two months of cash left, or enough to last it until July 18, unless a new installment in the bailout tranche is approved for the country by the now headless IMF, and the suddenly insolvent ECB. Insolvent, because as Spiegel will report in its headline article tomorrow, and as we have noted many times before, the bank is "suddenly" finding itself lending out money collateralized by now virtually D-rated bonds: something not even Trichet will be able to spin off to the increasingly malevolent media. Per Dow Jones: "Skeleton risks amounting to several hundreds of billions of euros are on the balance sheet of the European Central Bank, magazine Der Spiegel writes in a preview of its edition to be published Monday. Those risks arise because banks, above all from Greece, Ireland, Portugal and Spain, have provided as collateral asset-backed securities that are unfit for central bank loans as their debt rating is low or non-existent, the magazine says." Alas, the European central bank's dirty laundry is being exposed just as a rift between the bank and Germany: its most solvent backer, is starting to develop. Also from Dow Jones: "German Finance Minister Wolfgang Schaeuble cautioned in an interview published Sunday that there shouldn't be a conflict with the European Central Bank over a possible restructuring of Greek debt. "If in the end it should come to an extension of bonds, of course, we need the approval of the IMF and above all of the ECB. Under no circumstances should it come to a conflict with the ECB," Schaeuble told Bild am Sonntag. "I advise all of us to use restraint in public debates about this question." Several ECB officials have rejected a restructuring of Greek debt and have warned of possible catastrophic consequences, while European finance ministers are slowly warming up to the possibility of some kind of restructuring as a last resort." Thus the crunch time for Europe's latest kick the can down the road round, once again centered on a bankrupt Greece, may be coming fast, and this time with a rather furious Germany.

From NZZ:

If experts from the EU, the International Monetary Fund (IMF) and the European Central Bank (ECB) do not give the go ahead for the next installment of the bailout package totaling 12 billion euros by the end of June give, then Greece will become insolvent on July 18, as the conservative Journal "Kathimerini" reported.

In the coming days Athens will fast track an aggressive privatization program. According to media reports, real estate should be taxed higher than before.

Further cuts in wages and pensions in the public sector and pensions are no longer excluded. In addition, state-run enterprises are privatized and will sell real estate, they said. The new savings program should be approved by parliament in early June.

Prime Minister Giorgos Papandreou noted in an interview with the Sunday edition of the newspaper "Ethnos" denying any form of debt restructuring. This would be no debate. Greece will repay all his debts, he said.

The head of the Euro Group, Jean-Claude Juncker, has proposed the privatization of state property Greece after the German model of trust. I would appreciate it if our Greek friends would start following the example of the German Treuhand privatization agency, a non-governmental, "Juncker said in an interview with the magazine" Der Spiegel ". This institution should be staffed with foreign experts. "The European Union will support the privatization program in the future as closely as we would conduct themselves," Juncker announced.

The potential revenue he estimated at "significantly more than the 50 billion proposed by the Greek government." The EU is also expected from Greece, "that the two major political groupings in the country put aside their petty disputes," said the euro-group leader: "Government and opposition parties should jointly declare that they are committed to the reform agreements with the EU . 'Only when Greece had consolidated its budget, one could initiate a "soft debt restructuring." Then we can consider to extend the maturities of public and private loans and interest rates lower, "said Juncker.

And regarding the €50 billion privatization prgoram by the Greek government, Alex Gloy of Lighthouse Investment Management asks:

Re: EUR 50bn privatization by Greek government – has anybody dared to ask:

  • Who exactly is going to purchase those state-owned assets? Domestic buyers? Those are busy trying to get their Euros out of the country (‘s banks) before it’s too late. Foreigners? Which foreigner would fork over dear Euros now only to find a Drachma-denominated (and quickly depreciating) asset shortly afterwards?
  • Who would invest in a country whose entire banking system is hanging on a thread (which the ECB is threatening to cut)?
  • Why buy assets that could be nationalized when a populist / communist government takes over after Greeks are (rightly) enraged about suffering endless austerity?
  • Why not ask Deutsche Telekom what they think about their 30% stake in OTE (Hellenic Telecom), bought for EUR 3.8bn (at EUR 27.50-29 per share, now: EUR 7.60). Buyer’s remorse came at the end of 2011. Deutsche Telekom hat to write off EUR 1.3bn on their Greek (and Romanian) investment. DTE management must hate themselves for having given the Greek government a put option for additional 10% stake until end of 2011. Why hasn’t the Greek government exercised yet? Don’t they need the cash? Only explanation: the Germans are twisting some Greek arms to try to make that put option “expire”. Full deal structure here.

All great questions, most of which bring even further credibility to the Andrew Lilico-proposed next steps for Greece.

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reload's picture

 On one hand the Germans are going to have a very big political problem sending more taxpayer Euros to Greece, on the other a haircut for bondholders hurts the German Banks and makes other Nation States more likely to clamour for haircuts. Lets see who gets the shitty end of the stick...Bankers or Taxpayers? I think we already know the answer.

Mountainview's picture

It's only pretend and extend. In a chess game you would incline the king- gameover---Greece lost...Exit the EURO, default on your debt, create the NEW DRACHMA and start from scratch !!!

THE DORK OF CORK's picture

Maybe German auto - tourists can stimulate the periphery and create the conditions for sustainable growth.............


falak pema's picture

Imagine what you could do with two months of cash like Papy greek has!

Long-John-Silver's picture

The stick is nothing more than a rather hard piece of fiches.

Michael's picture

They just mentioned this article on CNBC World in the last few minutes.

I am totally appalled at this.

They have no right to elevate themselves to our level of understanding using us in that manner. 

Michael's picture

I bought a 2750sf new house for next to nothing paid in cash 10c on the dollar with no mortgage using the knowledge from this site and others on the Internet.

I'm buying hand over fist silver at $35 thanks to CNBC for helping drive the price down for me.

Not a word mentioned from them on the way up to $50, but they sure cheered it on the way down to $35 where I need it to be for a little while longer.

Please don't let them discover the silver bears videos on this site. Please!

Michael's picture

CNBC just mentioned Zero Hedge again in the last couple of minutes. Arrrgh! Can't we keep any secretes of counter deception tactics to ourselves for one freaking minute?

Michael's picture

Am I the only freaking person on the planet who realizes the reporters on CNBC are employees of the world central banking cartel? Throw me a freaking bone here. You can't be serious thinking they are independent journalists. Really!

jeff montanye's picture

no.  you are not alone.  we freak with you.

StychoKiller's picture

Several ECB officials have rejected a restructuring of Greek debt and have warned of possible catastrophic consequences, while European finance ministers are slowly warming up to the possibility of some kind of restructuring as a last resort.


How long does one shovel Euros into a black hole before one realizes it's futile??

Zero Govt's picture

Answer. until even Mr Futility throws its hands up and leaves the lost cause that is the EU zone

Only Mr Grim Reaper can sort this one out, the politicians are just too stupid

Tail Dogging The Wag's picture

The Germans had the Weimar Republic and Dr Havenstein, we have Bernanke which is worse and the Greeks will soon be on the New Drachma...   place your eggs in different baskets, not in confetti currencies.


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Alcoholic Native American's picture

2 months of cash left?  That's more than me.  Good luck to em.

Missing_Link's picture

Wait til the Icelandic volcano shuts down European airspace over the next week; followed swiftly thereafter by all the European economies.  Amazing how fast even that little liquidity can dry up.

TooBearish's picture

2 Months cash ?!?- shit thats about 59 days more than what Turbo Timmeh has in the bank for Uncle Sam!

Arius's picture

it will be a hot summer....we had cold wheather until last week....everything is shaping up  for July-August...the missing piece if this is a trial run or the real thing...will find out soon i guess...

Ned Zeppelin's picture

The fall is when these things happen. . . they'll push it off to September.  

Everybodys All American's picture

The ECB running out of cash has as much to do with our own debt ceiling as anything going on in the Euro Zone. No way Bernanke and the head clown at Treasury can ship more dollars for euro garbage.

Re-Discovery's picture

Germany would be smart to start constructing firewalls on its (economic) borders and let this thing burn out.  How?  Revert its currency.  Restructure its banks.  Re-arm its military.

Azannoth's picture

Germany would do very well playing on it's own, leveraging it economic dominance over Europe instead of shoveling hundreds of billions of german-tax payer money down the rat hole, but alas the (jewish) banks need to be saved

Re-Discovery's picture

Believe me, German people have lived this movie.  They will not let all the dominoes fall before they pull out completely.  I don't care who owns their banks.

Azannoth's picture

An anecdote

I play Starcraft 2(online strategy) and 1 of my team mates gets attacked and he says

"Help me, I am jewish!" - literary I am not making this up

and I am like "I don't like jews"

he's "why?"

... I didn't have time to respond

he "-my name- is a faggot!" and quits

And we where only playing a Co-Op againts a computer(for training) not even real enemies which makes his cry for help even more pathetic, and he wanted others to help him and 'die' for him only because "he's jewish"

This is the attitude those people have, he had to be between 15-30 this is the age group for this game

Arkadaba's picture

I think you meant "literally" not "literary". Normally I don't point out spelling errors (make enough of my own) but quite a difference in the meaning of those two words. 

I have done some online gaming myself - incredible for sociological research (and fun!)

cossack55's picture

Furious Germans are scary enough. When you get furious Austrians, look out.

sangell's picture

Merkel needs to use a technique the Fuhrer used when 'negotiating' with the Czechs over the Sudentenland. When the Czech president voiced objections to turning over the area to Germany Hitler grew furious and flung open the door to his office and screamed for Field Marshal Keitel, the head of the German High Command, to be summoned! The rest is history.

Merkel needs to prod G-Pap in a similiar manner.

agent default's picture

Why would anybody invest in a country with a track record such as Greece is beyond me.  Just fucking let them fail already. 

dick cheneys ghost's picture

From what Im reading....Greece has been in default 150 of the last 200 yrs!! bout we try jailing the bankers and politicians this time........see if that dont work.............


good day!!

Oracle of Kypseli's picture

If you going to default on your credit card, you might as well charge up to the limit + extension.

It's not like they are going to foreclosure on the Parthenon and Santorini 

agent default's picture

I don't know about the Parthenon but they can sure as hell get Turkey to arrange something for Santorini.  I hear the Germans are intrested though.

Captain Planet's picture

how about just giving the whole country to the germans.

kinda like a territory or maybe just a bundesland

then again, from an investment perspective its not very germanesque

Zero Govt's picture

you think Greece is an 'asset' to any debtors? ...looks like a huge liability of a place with any value, shipping and tourism, in private hands

silvertrain's picture

"real estate should be taxed higher than before"

"futhur cuts in wages and pensions in the public sector and pensions are no longer excluded"

Back to the streets we go and this time we get another turn up on the wick....

Nicholaz's picture

>> "real estate should be taxed higher than before"<<

One of the reasons why I don't own real estate is that RE makes it far too easy for the government to squeeze extra money out of you (oh, and no, I'm not Greek).

Central Bankster's picture

Yah, contrary to what most think, real estate does not do great during hyperinflation.  The issue is three-fold.  One, is that most people own some real estate and during a crisis are potential sellers  (though at the very END of the crisis it does great).  Two, the government levies ever greater taxation (because lets be honest, the thieving politicians want to steal most of your wealth).  Three, owners have trouble raising rents to keep pace with the inflation because their tenants are busy devoting all their cash to food/energy.

With all the stories about governments going after private pensions and raising taxes on everything they can find (real estate, income, sales, fees, soon to be financial transaction tax?)-  it is just another reason to buy physical metals.  They can't find it, they can't tax it.  Socialist central planners hate PMs because they hate honest money and they hate that they can't steal it without the use of force.

High Plains Drifter's picture

let the arab spring come to europe. however. attention muzzies. stay the hell out of the way. first things first. the indigenous anglos in these countries need to get the rothschild boot off of their collective necks, one way or the other. then they have to deal with all of the illegal immigrants that have invaded their prospective countries. for europe and its people, to survive, both of these events must take place. there is no other way to deal with it.

IdioTsincracY's picture

The flaccid people of Western states will not find the force to revolt until they are lean and 'hungry'!!

Azannoth's picture

True, and the old generation I mean people older than 35 religiously believe the old war time Allied propaganda about who is evil and who is good, but I think my generation (<30) has a more open mind about history and other things

IdioTsincracY's picture

open mind helps ... they also have more debt, higher unemployment, and probably no retirement to be had ...

they better wake up soon!!

Captain Planet's picture

well said.

physical; bitches!!

IdioTsincracY's picture

Greeks had to opportunity to lead the world in a revolt against the oligarchy ... after a few days of protest they decided to go back to their sofas and tv sets .... I guess they chose slow death ...

all these protests in Western countries show the true nature of the sheeple

Oracle of Kypseli's picture

Greeks do not watch TV and the sofas are mostly for the guests.

Soccer games, yes.

Chatting and sipping frapuccino at the cafes, yes. 

Eating well, yes.

Full months vacation to the islands, yes. 

Rejecting frozen french fries (called plastic) yes.

Just remember Alexi Zorba. "Dance my friend"

Note: Most Greeks are well off and own two homes outright. It's the government that's broke.


A Man without Qualities's picture

But the apparent wealth of the individual Greek has come about as a consequence of running the government into bankruptcy, and now there is an uproar and desperate attempt to find others to blame.

IdioTsincracY's picture

So ... oracle ... I guess it's time to lose the frappuccinos. isn't it?

14%+ official unemployment

22% poverty rate

GDP growth rate -4.8%

official inflatio rate %4.5

Yeah ... everything is fine

Arkadaba's picture

Nice video clip - I haven't seen the movie but plan to now.