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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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Sun, 05/22/2011 - 13:36 | 1300161 reload
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.

Sun, 05/22/2011 - 14:05 | 1300206 Mountainview
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 !!!

Sun, 05/22/2011 - 14:46 | 1300258 THE DORK OF CORK
THE DORK OF CORK's picture

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


Sun, 05/22/2011 - 17:45 | 1300545 falak pema
falak pema's picture

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

Sun, 05/22/2011 - 15:34 | 1300343 Long-John-Silver
Long-John-Silver's picture

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

Mon, 05/23/2011 - 02:45 | 1301231 Michael
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. 

Mon, 05/23/2011 - 02:48 | 1301233 Michael
Michael's picture


Mon, 05/23/2011 - 02:52 | 1301234 Michael
Michael's picture


Mon, 05/23/2011 - 03:07 | 1301238 Michael
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!

Mon, 05/23/2011 - 04:26 | 1301257 Michael
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?

Mon, 05/23/2011 - 05:42 | 1301289 Michael
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!

Mon, 05/23/2011 - 07:40 | 1301358 jeff montanye
jeff montanye's picture

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

Sun, 05/22/2011 - 20:11 | 1300785 StychoKiller
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??

Sun, 05/22/2011 - 20:24 | 1300813 Zero Govt
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

Mon, 05/23/2011 - 00:49 | 1301165 Tail Dogging The Wag
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.


In times of change you need new alternatives and new ideas.

Land in Panama is one of the most undervalued assets in 2011.


In the event of a sale of land from any of the Thorsson Capital properties to any Zero Hedge reader, the vendor (Thorsson Capital) hereby pledges a donation of 1% of the total sale to Zero Hedge, said donation is to be made within 30 working days of settlement.


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Sun, 05/22/2011 - 13:36 | 1300162 Alcoholic Nativ...
Alcoholic Native American's picture

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

Sun, 05/22/2011 - 13:48 | 1300179 Missing_Link
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.

Sun, 05/22/2011 - 13:40 | 1300165 TooBearish
TooBearish's picture

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

Sun, 05/22/2011 - 14:09 | 1300212 Arius
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...

Sun, 05/22/2011 - 21:27 | 1300907 Ned Zeppelin
Ned Zeppelin's picture

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

Sun, 05/22/2011 - 14:17 | 1300223 Everybodys All ...
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.

Sun, 05/22/2011 - 17:06 | 1300471 dark pools of soros
dark pools of soros's picture

time to sell more poppies and raise the prices!


Sun, 05/22/2011 - 17:45 | 1300544 Captain Planet
Captain Planet's picture

thats one big dark pool

Sun, 05/22/2011 - 13:40 | 1300168 Re-Discovery
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.

Sun, 05/22/2011 - 14:00 | 1300194 Azannoth
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

Sun, 05/22/2011 - 14:10 | 1300213 Re-Discovery
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.

Sun, 05/22/2011 - 14:25 | 1300220 Azannoth
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

Sun, 05/22/2011 - 16:14 | 1300401 Arkadaba
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!)

Sun, 05/22/2011 - 22:35 | 1301010 MisterMousePotato
MisterMousePotato's picture

Maybe Azzanoth is Japanese?

Sun, 05/22/2011 - 14:51 | 1300267 cossack55
cossack55's picture

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

Sun, 05/22/2011 - 15:06 | 1300291 sangell
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.

Sun, 05/22/2011 - 13:45 | 1300172 agent default
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. 

Sun, 05/22/2011 - 14:10 | 1300210 dick cheneys ghost
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!!

Sun, 05/22/2011 - 14:22 | 1300228 Oracle of Kypseli
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 

Sun, 05/22/2011 - 14:46 | 1300259 agent default
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.

Sun, 05/22/2011 - 17:57 | 1300555 Captain Planet
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

Sun, 05/22/2011 - 21:13 | 1300823 Zero Govt
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

Sun, 05/22/2011 - 13:42 | 1300173 silvertrain
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....

Sun, 05/22/2011 - 13:59 | 1300193 Nicholaz
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).

Sun, 05/22/2011 - 18:49 | 1300646 Central Bankster
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.

Sun, 05/22/2011 - 13:51 | 1300180 High Plains Drifter
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.

Sun, 05/22/2011 - 13:52 | 1300188 IdioTsincracY
IdioTsincracY's picture

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

Sun, 05/22/2011 - 14:30 | 1300236 Azannoth
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

Sun, 05/22/2011 - 14:32 | 1300243 IdioTsincracY
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!!

Sun, 05/22/2011 - 17:57 | 1300560 Captain Planet
Captain Planet's picture

well said.

physical; bitches!!

Sun, 05/22/2011 - 13:50 | 1300185 IdioTsincracY
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

Sun, 05/22/2011 - 14:57 | 1300284 Oracle of Kypseli
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.


Sun, 05/22/2011 - 15:08 | 1300298 A Man without Q...
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.

Sun, 05/22/2011 - 15:24 | 1300332 IdioTsincracY
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

Sun, 05/22/2011 - 15:53 | 1300373 Arkadaba
Arkadaba's picture

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

Sun, 05/22/2011 - 17:42 | 1300533 falak pema
falak pema's picture

neither the greeks nor the Italians pay Italians are richer than the french!

Sun, 05/22/2011 - 13:50 | 1300187 Nicholaz
Nicholaz's picture

Just wait until after the vote Spain discovers that the situation is far worse than they thought and that they are playing in the Greek league:

Sun, 05/22/2011 - 13:54 | 1300189 Nicholaz
Nicholaz's picture

Pity that there'll be again a French head of IMF, because the French were fighting hardest to save Greece because their banks are far more exposed to Greek risk than say Germany's (and "were fighting hardest" of course means, kicking/screaming and pushing other EU countries [like Germany] to pay the bill and bail out French banks).

Sun, 05/22/2011 - 14:03 | 1300200 oogs66
oogs66's picture

And Trichet, another arrogant Frenchman, has made the problem worse by using his power as head of ECB to take on more and more Greek and Irish risk.

Sun, 05/22/2011 - 14:54 | 1300273 cossack55
cossack55's picture

Ah, reminds me of all those French rubber plantations in that remote and interesting Indo-china region so many moons ago.

Sun, 05/22/2011 - 13:54 | 1300190 Blorf
Blorf's picture

Reminds me of the bond issues that Illinois was contemplating a few months ago.  They were attempting to sell bonds to fund pension shortfalls or something.

It's one thing to issue bonds to fund a new road or some sort of infrastructure that might generate return on investment.  But who in their right mind would buy a bond that is being used to pay money already spent on worthless crap, issued by an entity that has already proven it can't pay its own bills?



Sun, 05/22/2011 - 13:58 | 1300192 Misean
Misean's picture


Sun, 05/22/2011 - 14:03 | 1300196 williambanzai7
williambanzai7's picture

I hate to say it, but this is fucking hilarious.

These guys are putting the clown profession out of business,

This is really starting to feel like going into the summer of 2008, except the shorts are all under cover.

Sun, 05/22/2011 - 15:59 | 1300381 Arkadaba
Arkadaba's picture

For some reason this song comes to mind (note - bad audio):

Sun, 05/22/2011 - 13:59 | 1300198 oogs66
oogs66's picture

Trichet's reckless open market purchases of Greek and Irish debt have made the problem for the governments even worse.  He took on the market and was wrong.  He is using his influence to protect his own horrible decisions.  He should be removed from the process of trying to fix Europe.  His actions, largely based on his egotistical assumption that the markets were wrong, is costing Europe more than the original bailout.  He is not helping anyone but himself at this stage. 

It should give our government some fear about the damage our own egotistical Fed chairman run amok is potentially causing to us in the long term.  Just as Trichet's first purchases seemed to help, all they did was buy some time and make the ultimated problem worse.  QE3 anyone?

Sun, 05/22/2011 - 17:08 | 1300480 dcb
dcb's picture

wrong, trichet was very smart. by making sure the ecb was also on the hook for greek debt in increases the chances of the bankers getting bailouts.


you'd think if we learned anthing from lehman, that stuff like this would be ring fenced and the banks would have some capitial know. But for the bankers of course the lesson was we always have to bail out these people (meaning us the bankers) because of the tax payers don't it will spook the market. LOL you got to love the logic. what a rigged piece of crap western capitialsim has become

Sun, 05/22/2011 - 21:45 | 1300568 M.B. Drapier
M.B. Drapier's picture

(I am not an expert on anything.)

Trichet's possibly less reckless, and certainly more cynical, than you're giving him credit for. He isn't gambling against the markets, he's wrestling with the EU's governments.

Here's how it works. When the crisis hit back in 2008, the ECB predictably decided that it would support the USA's No More Lehmans agenda to the hilt, in the interests of the banking sector ... sorry, in the interests of financial stability, of course. But it was facing two big problems. First, it had reason to doubt that the EU member states were really committed enough to doing Whatever It Takes to bail out everyone. This is mainly because bailing out everyone in the Eurozone would require one or both of 1) truly grinding austerity in the creditor countries, pushing their budgets far above primary surplus in order to pay off sovereign and private-sector bank creditors and 2) massive EU fiscal transfers to the creditor countries - Eurobonds, or whatever guise they would wear. You just can't trust politicians to deliver on things like that, even under the spectre of MOAR LEHMANS!~1 (And it doesn't help that 2) is banned under Lisbon.) It would all be a lot easier if the ECB could sugar the pill by printing lots of money. But that's also banned, and everyone can see that it would effectively create a huge net fiscal transfer as well.

Alternatively, the ECB could just bail everyone out itself. Except that it can't: it has little authority or mandate to bail out insolvent banks and sovereigns in the interests of financial stability - and worse, it has no mechanism to absorb the inevitable losses. There's no pre-ordained mechanism to recapitalise it, and any recap would of course be another net fiscal transfer. And it can't print away its own losses for just the same reasons it can't print away others'.

But you know all this. So, what can the ECB do? It's not supposed to lend to insolvent institutions, it's utterly forbidden to run up huge losses, and it can't trust governments to rescue all the creditors themselves. Sit around carefully lending only to sound institutions, beseech the governments to rescue the bust ones and hope they agree? Not if your name is Jean-Claude Trichet. The key is that big ECB losses would be almost as much of a nightmare for EU governments as for Frankfurt itself. Eureka: lend lots of money to prop up insolvent sovereigns and banks, then demand that the governments make sure you get your money back by hook or by crook, or else not only will there be MOAR LEHMANS in the private sector, but the ECB itself will also suffer huge losses! It's a textbook hand-grenade mugging. The only question, I think, is to what extent it was premeditated as opposed to something the ECB stumbled into. Of course, what you say you're doing is lending to Greece, Allied Irish Banks, etc. on the strength of your absolutely firm confidence that your friends in government would never consider allowing losses to senior creditors in these institutions. In reality, you're actually helping to close off the restructuring option which the governments might otherwise consider, and this is partly deliberate.

(Again, see Buiter, who also points out the distinction between the ECB and the Eurosystem which I passed over here.)

On your other argument, you are absolutely right: Trichet should be shot from a cannon.

Mon, 05/23/2011 - 07:25 | 1301348 oogs66
oogs66's picture


Wed, 05/25/2011 - 06:12 | 1308226 matrix2012
matrix2012's picture

Thanks for the light :)

Sun, 05/22/2011 - 14:09 | 1300208 virgilcaine
virgilcaine's picture

GS should be concerned very concerned.

Sun, 05/22/2011 - 14:09 | 1300209 M.B. Drapier
M.B. Drapier's picture

William Buiter spotted the ECB's problem early. Here's his "Does the ECB/Eurosystem have enough capital?" blogpost from May 2009, and his July 2010 Citi paper on "Games of ‘Chicken’ Between Monetary and Fiscal Authority" which was featured on Zero Hedge.


Sun, 05/22/2011 - 15:17 | 1300313 A Man without Q...
A Man without Qualities's picture

It's a very good point.  There is a fundamental flaw in the Euro structure with a centralized ECB, but individual states and individual ratings.  In a standard structure, the central bank can always take its own government's bonds, which will maintain a high rating in local currency terms, but the ECB cannot continue to accept bonds of individual nations if their ratings descend into the lower reaches of sub-investment grade.  

It seems to me there is a paradox here, because it suggests a deflationary effect, that there is a problem creating enough liquidity in order to prevent defaults sweeping the system.  It may even be possible that the Euro rallies as a shortage becomes apparent and the ECB is unable to provide liquidity....

Sun, 05/22/2011 - 15:42 | 1300354 Misean
Misean's picture

THE fundemental flaw is a central bank counterfeiting money for the cartel that runs it.

Sun, 05/22/2011 - 18:57 | 1300659 M.B. Drapier
M.B. Drapier's picture

The Treaty of Lisbon sidesteps all questions about fiscal transfers or agreeing bailout policy by basically assuming a Mellonite deflationary regime, where public or private insolvency results in default, come what may. Obviously this was quite acceptable to the EU governments, until the time came to put it into practise. As a born-again Mellonite, it's pretty acceptable to me.

Mon, 05/23/2011 - 04:37 | 1301259 zuuuueri
zuuuueri's picture

It would be a fine theory in an environment where the money of account is strictly limited in supply- but it's a flat-out scam when a few specially blessed players can create as much of it as they like, but everyone else has to work his balls off for it. 


Sun, 05/22/2011 - 14:13 | 1300216 Pseudo Anonym
Pseudo Anonym's picture

state-run enterprises are privatized and will sell real estate

how sweet.  so, the hofjuden print worthless confetti and loan it out; then they create financial crisis via fraudulent usury; and then they demand hard, real assets in return for their worthless paper.  Only conniving money changers could come up with such proposal.

Sun, 05/22/2011 - 14:26 | 1300222 Volaille de Bresse
Volaille de Bresse's picture

For me it's VERY satisfying to see this monstruous European Union (with 27 countries no less!) fall apart and crumble. Then we'll be able to rebuild the E.U. piece by piece... putting the banks where they belong (as butlers of individual entrepreneurship). 

Bye bye Brussels and its puppets manipulated by big corps and Washington fat cats. 

GO Greece go!

Sun, 05/22/2011 - 14:21 | 1300226 Motorhead
Motorhead's picture


Sun, 05/22/2011 - 14:30 | 1300233 TK7936
TK7936's picture

You gotta "love" how the Banking System eventually sets up all people against each other so they fight over the remaining cadaver. Its like 2001. Were the monkeys and the monolith is actually a Bank.

Sun, 05/22/2011 - 17:41 | 1300515 Augustus
Augustus's picture

The "Banking System" did not set up all people against each other.  The people are always against each other at all times.  What the "Banking System" did was to allow them to avoid the war.  The "Banking System" made it possible for all of the parties to get what they wanted and never face the bill.  Indolent and unproductive workers get their dole, and then early retirement.  Free healthcare for everyone from cradle to grave with everlasting life.  No one has to pay a tax to give it to them.  If the citizens were forced to pay for these schemes when the costs are incurred there would never be the situations that the US and the Euros are now facing.  The "banking system" did not cause it, the pols did at the behest of the voters, but bankers were the enabelers.

Sun, 05/22/2011 - 14:30 | 1300239 Volaille de Bresse
Volaille de Bresse's picture

"And Trichet, another arrogant Frenchman"

Trichet's stupid not arrogant. That's precisely why he was put in that position. Any normal person with a normal I.Q. would have realized the economic system in the Euro zone was shit. Trichet has ONE idea  : "no inflation". 

And fyi the most arrogant people I see in the streets of Paris (where I live) are... Amercian tourists who'll look down on ya like you're some kind of primitive! Do they think they're in Tijuana?

But you just have to shout at them "USA USA! Bankrupcy! Bankrupcy!" to see them shrink and shrivel ;-)

Sun, 05/22/2011 - 14:34 | 1300245 Motorhead
Motorhead's picture

Those American tourists are just angry that they stepped in some Parisian dog poop, hehe.

Sun, 05/22/2011 - 15:17 | 1300314 slewie the pi-rat
slewie the pi-rat's picture

just wonderful that you stick up for the french leadership (also @ the imf?) by calling trichet stupid, not arrogant. and, you cheer for greece!  i think you may be right abt the downfall of the EU, too, which you look forward, too. 

putting some limits on banksters?  yep!

i think folks should be a bit arrogant if they own gold & silver; even with the recent beat-downs;  maybe we can say they are styooopid, if they don't, too. 

and, you may also be right about us learning arrogance from the mexicans!

Sun, 05/22/2011 - 17:36 | 1300526 Arkadaba
Arkadaba's picture

Not sure I agree with you but I did live for a year in Mexico (part of my mispent youth - travelling and teaching English in Mexico City when necessary).

Shortly after arriving in some Mexican town in the north I was sitting on the curb - just watching. This woman came by with a little kid and she was furious and awesome. I think she thought I was a gringo sight-seeing. She did a dance for me - very angry. I could see the disdain. In any case, started me on questioning on why, where, when and how. 

Sun, 05/22/2011 - 14:33 | 1300241 Joebloinvestor
Joebloinvestor's picture

Buyers remorse at the end of 2011?


I didn't know the year was over.

Sun, 05/22/2011 - 14:43 | 1300252 Pullmyfinger
Pullmyfinger's picture

As I've said more than once, the PIIGS will be carved off, leaving Germany in command of 'middle Europe' as of days of yore. At the depths of the crisis, the euro will be backed by gold, becoming the heir to the old deutchmark and Germany will automatically re-emerge as a global superpower, and at the head of the core European Union; thus finally 'winning' WWII.

Sun, 05/22/2011 - 14:45 | 1300255 Pullmyfinger
Pullmyfinger's picture

As an an addendum to my own comment: You can bet the Fed and it's own bank-gang are inadvertantly --and ironically-- helping this same process in the mistaken belief that they are leading the euro into a death-spiral --thus supporting the dollar. All just a hunch of course, but as a concept it integrates alot of seemingly disparate events.

Sun, 05/22/2011 - 16:16 | 1300402 slewie the pi-rat
slewie the pi-rat's picture

currencies trade "freely" against each other.

they are all fully convertible into gold. 

as of friday's PM fix in the City, 1 Euro = 1/1050th troy oz of pure. 

Sun, 05/22/2011 - 15:12 | 1300309 My Days Are Get...
My Days Are Getting Fewer's picture

Same result the old-fashion way:

Germany sends their tax collectors (Finanzamt) to Greece with 100,000 paramilitary commandos.  The Finanzamt takes over the Greek tax collection system and starts hauling in cash or taking payment in kind.  The tax collector keeps 10% and distributes another 10% to the German military.  The rest goes to pay off the loans to the foreign banks, with the German banks getting the total cash flow until their are paid in full.


Sun, 05/22/2011 - 14:46 | 1300254 A_MacLaren
A_MacLaren's picture

"I advise all of us to use restraint in public debates about this question."

Because an unpayable debt, by or to a bank or a sovereign, lays bare the Ponzi, in extremis.  Debt as money fails again.

Commencing derivative and debt implosion countdown in 27, 26, 25...

Sun, 05/22/2011 - 14:48 | 1300261 Jack Sheet
Jack Sheet's picture

"Papandreou denies any form of restructuring"

He is truly up shit creek in a barbed wire canoe sans paddle after the saga of lies and obfuscation. His only move left is to buy up toilet paper and print new drachmas on it.



Sun, 05/22/2011 - 14:54 | 1300266 AUD
AUD's picture

provided as collateral asset-backed securities that are unfit for central bank loans as their debt rating is low or non-existent

So what? The Fed has bought outright MBS of 10+ years duration. It also holds US Treasuries, the biggest heap of shit in the universe. The Fed has been insolvent for years yet its credit is still 'money good'.

Sun, 05/22/2011 - 15:05 | 1300294 My Days Are Get...
My Days Are Getting Fewer's picture

Chess is not a good analogy.  If you play chess against a bank or a governement and you are winning, the following occurs:  You opponent calls a time out and changes the rules:  All of their pawns become queens and yours don't.  You are checkmated in the next 4 moves.

Sun, 05/22/2011 - 15:15 | 1300316 kaiten
kaiten's picture

How can a central bank be insolvent? Dont they all have printing presses?

Sun, 05/22/2011 - 15:21 | 1300322 NERVEAGENTVX

sooner or later the can being kicked down the road is going to have a hand grenade in it with the pin pulled.

Sun, 05/22/2011 - 16:20 | 1300411 skibumma
skibumma's picture

I have my honeymoon planned to the greek islands on July 18th.  Got travel insurance to cover just in case.  Should I be packing a bug out bag?

Mon, 05/23/2011 - 03:13 | 1301246 ejhickey
ejhickey's picture

Better get medical evacuation insurance.   greek heath care system is close to collapse.   by the time you get there , only medical people left will be the Hemlock dispensers. Enjoy your honeymoon! 

Sun, 05/22/2011 - 16:36 | 1300436 silberblick
silberblick's picture



Follow the link below to find out why the Hong Kong Mercantile Exchange must be seen and understood as an extension of the Chinese government and its long term goals, and consequently, why it will not help create an equitable or realistic price discovery mechanism for gold. Not for now anyway.



Sun, 05/22/2011 - 17:02 | 1300469 dark pools of soros
dark pools of soros's picture

what's next?  Pictures of Merkle being DSK's maid??   how do the bankers shut up germany ?

Sun, 05/22/2011 - 17:33 | 1300520 mcarthur
mcarthur's picture

Niall Ferguson called the arrest of the IMF chief a "black swan" due to knock on effects that he saw.  He did not explain himself well though.  But commanders absent on the battlefield (ironically for whoring and/or boozing) have often been huge turning points in the history of this planet we call earth.

Sun, 05/22/2011 - 18:26 | 1300613 goldenrod
goldenrod's picture

It is probably an infected black swan considering the fact that the woman he allegedly raped is HIV + according to some published reports.


Sun, 05/22/2011 - 17:34 | 1300522 umbertoz
umbertoz's picture
  • 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?
  • The assets will be buy from people choised from IMF and Greek government, they will pay under the market price and they don't go to use their own money but they going to get loans from Greek banks, so in the future they have to give back dracmas and NOT Euros. This is what they decided.

    Sun, 05/22/2011 - 17:52 | 1300551 topcallingtroll
    topcallingtroll's picture

    Restructuring is inevitable.

    Coercive "voluntary" restructuring is still a default.

    Sun, 05/22/2011 - 18:18 | 1300609 dbTX
    dbTX's picture

    So you think the Germans were pissed off in 1939? Wait till they get put on the hook for Greece, Portugal and Spain.

    Mon, 05/23/2011 - 04:09 | 1301254 zuuuueri
    zuuuueri's picture

    They're not on the hook for greece, portugal, or spain. they're on the hook for Deutsche Bank, Credit Agricole, ABN Amro, and pals. But these fine folks have a very obvious interest in maintaining the illusion that they're on the hook for those deadbeat greeks, portuguese, spaniards, etc. 

    The people of greece, portugal, spain, etc, are being roasted alive to feed the bankers at the same time. Once the bankers have squeezed the last drop out of them, they'll really get to work wringing the germans for whatever they have left. 


    Sun, 05/22/2011 - 18:43 | 1300635 Ag1761
    Ag1761's picture

    Self Determination again for the UK

    Grow our own and fight the gerry on the dips

    Keep on Stackin

    Sun, 05/22/2011 - 19:27 | 1300707 Problem Is
    Problem Is's picture

    "this time with a rather furious Germany."

    And we know what happens when the Krauts get furious... I can say Kraut... my granny is German...

    Alex Gloy of Lighthouse Investment Management should ask:

    "Why would the Greeks put up with an Anglo-Banking puppet like Papandreou when they should be trying him for treason?"

    Sun, 05/22/2011 - 19:32 | 1300721 MikeNYC
    MikeNYC's picture

    "Restraint in public debates" = lie, lie, lie and lie some more in every public utterance by every official involved in said "debates."

    Mon, 05/23/2011 - 03:11 | 1301242 ejhickey
    ejhickey's picture

    Headline from FT:

    Greece fails to pay medical bills

    By Andrew Jack in London and Kerin Hope in Athens

     May 22 2011 22:05

    The Greek government has fallen sharply behind on payments to healthcare companies only months after restructuring its €5.4bn ($7.6bn) debt to suppliers, raising doubts about patient safety while revealing the looming cash-flow crisis faced by the state.

    Supposedly the greek government has only paid 30% of the pharmacy bills from 2010 and only 1% of 2011's bills.

    What good is government healthcare if the government doesn't pay its bills.   Kind of reminds me of Illinois which has about $ 5 billion in unpaid bills lying around from last year.

    Mon, 05/23/2011 - 04:06 | 1301252 zuuuueri
    zuuuueri's picture

    Indeed, it was starting last year but now a lot of pharmacies refuse to fill orders on 

    government insurance plans- because the government never pays them. It's not just 2010

    that's behind. There are people waiting two and three years to get paid. 

    If you got cash, theyll happily do business. but they can't just keep handing out product

    for free (on an indefinite IOU). 


    Not just pharmacists, not even just the medical sector (hospitals often also have 

    shortages of supplies unless you're paying cash, because the government has slipped

    years behind in paying for them and suppliers have either gone out of business waiting

    to get paid, or else refuse to send anything more without payment.. if the patient is paying,

    though, it's all there) 


    (of course, pharmacists are one of the 'closed' professions, restricted number of operating licenses, so they do have better profit margins than they would in a totally free competition.. but they're almost all mom&pop family businesses)

    There has never been a free lunch in the universe. But some people still can't understand

    that, and even if theyve been burned 50 times on previous schemes for a free lunch,

    they are ever eager to hear a new promise from the mouth of the next politician.



    Sun, 06/12/2011 - 11:26 | 1362986 Monedas
    Monedas's picture

    The Democrat populist monolith buys votes, pays campaign expensies and rewards backers with public money ! It's called a machine ! Ron Paul has to finance his campaign with after tax contributions ! It is not a level playing field !..........As far as the $600 billion for the Euro Banks.........we must have been near the brink of collapse ? Monedas 2011 There never has been a new weapon nor a new Ponzi Fiat scheme than mankind could resist for long !

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