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Greece Places €1.95 Billion In 3 Month Bills At Fresh Record 4.05% Rate, 3.85 BTC Versus 4.61 Prior
Things are so back to normal in Europe that even a country living exclusively on ECB life-support can barely pull off a 3 month Bill auction. The interest on the just auctioned off €1.95 in Bills which had to be completed as else Greece will be officially bankrupt (as opposed to just make believe) with existing bills rolling and no more cash in the Treasury, was a whopping 4.05%, compared to 3.65% in the most recent April 20 auction. Yet despite this ridiculous yielld, the Bid To Cover still declined from 4.61 to 3.85. Also compare this to the 4.65% yield on the 26-Week Bills issued last week, and you get a postcard picture of financial health emanating from the beaches of the Aegean. One thing is certain: Euribor and short-term funding are completely unavailable to any Greek institution.
More from Reuters:
"Considering the circumstances, things seem to have gone quite well," said Jens-Oliver Niklasch, bond analyst at LBBW. "With the current junk rating on its bonds, it is normal that Greece had to pay more than in the previous auction," he said.
Greece's borrowing cost was cheaper than the 5.0 percent the debt-laden country pays to borrow under the 110 billion euro loan that the European Union and the International Monetary Fund put in place to calm a crisis that has shaken the euro zone.
Greece earlier this month sold 1.625 billion euros of 26-week T-bills at a yield of 4.65 percent. About 90 percent of the paper was bought by Greek banks, which use Greek debt as collateral to obtain funds from the European Central Bank.
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No EUR rocket after a "successful" auction?
Can't wait till Fri.
Greece is going to bring down the Euro, the ECB and Europe peace all at the same time. These cheaters should declare bankruptcy asap.
Whats to stop the ECB and Greek banks from continuing to play this game? When yields get too high? Print & buy....I'm starting to think they can just do this forever. As long as you have a central bank willing to buy soverign junk debt to keep the party going there is no end game.
Their debt isn't decreasing. At some point, most likely before debt hits 500% of GDP and the last employed person in Greece loses their job through a combination of increasing austerity and lack of competitiveness, they're likely to elect a government who promises to default.
Politics, not economics, will bring about the end to this charade.
Yes, it's a debt spiral all right - all countries to some degree suffer. The politicians will never end the game, economics must.
It wont be established mainstream politicians that end the game. As you rightly say, they never will.
I've said here before that Europe houses a decent amount of extremists. These will gain credibility (and ultimately power) before these fiscal policies run their course.
No, economists only wanders the battlefield and kill the wounded.
+1 BINGO!
How long before those headlines are replaced by the U.S.? Looks like our deficit spending will be pushed even further today when they turn the tap back on for unemployment benefits 4 eva.
In America, some states are already selling their capitol buildings, etc to augment income plus muni loans. CA, IL, NY, AZ, etc are... well, you know. As you know, IL has already stopped paying their bills.
Ireland downgrade EUR up!!!!
Greece "good" auction EUR down!!!
I guess the bailed out banks are buying these bonds, because a typical investor would hesitate. You would think at some point even the bailed out banks will be out of money.
So what you're sayin' is that Greece has spent way more money than it had, and, would have already declared "bankruptcy" had not the European Central Bank assisted with cash infusions and backing of it's bonds. Even so, the market is demanding extraordinarily high levels of interest from Greece for even short term lending, which will just compile Greece's indebtedness. So the solution is clearly for Greece to declare something like bankruptcy, restructure its debt, spend less money, borrow less money, and do a better job of collecting revenues owed the Government.
Anyone holding Greek Dept at the time the restructuring is declared will lose some money, some percentage of principle. In turn, this could place at risk those institutions taking a haircut, say large banks, which could trigger a capital flight out of those banks....
To some degree I suppose this has already been happening, but it will be interesting to see how markets respond once Greece finally succumbs. Maybe that will trigger Spain to go belly up, which is a much bigger enchilada.
...but...but...Bloomberg said it was a successful auction.
Does anyone have a better definition of "Ponzi"?
shit, how do I get in on that? I'd even lend to those broke-ass bastards at that rate
PS why in the fuck is captcha asking me to multiply to 4 digits and then telling me they only accept 2?