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Greek Bonds Collapse As ECB's Nowotny Announces Bank Will Compromise, Agree To "Temporary" Greek Default
Wonder why the Greek 2 Year bond just plunged, sending its yield to a laughable all time high 39.09% (a 312 bps move today alone)? Wonder no more. According to the ECB's Ewald Novotny the central bank has folded to German demands, and will now allow a "temporary" Greek default. Of course, what happens next will be a complete freeze in capital markets (see the chart below which shows borrowings on the ECB's Main Refinancing Operation while itis still available) but who cares: the central planners think they have it all under control.
From Bloomberg:
European Central Bank council member Ewald Nowotny suggested the bank may compromise and allow a temporary Greek default as officials scramble to fix a sovereign debt crisis that’s spreading to Italy and Spain before a leaders’ summit in two days.
As Spanish financing costs surged at a 4.45 billion euro ($6.31 billion) treasury bill auction today, policy makers are trying to ease a split that’s pushed interest rates on Spanish and Italian 10-year debt above 6 percent for the first time since the euro debuted 12 years ago. The ECB has until now argued that any Greek default could spark a new financial crisis, derailing a German push to make investors help foot the bill for a second bailout of the country.
“This has to be studied in a very serious way,” he told CNBC in an interview broadcast today. “There are some proposals that deal with a very short-lived selective default situation that will not have major negative consequences.”
Ironically, the ECB is correct about the consequences, which explains its unwillingness to push forward with this plan. However, Germany's realization that none of its banks are pregnant with Greek debt is waht has allowed the follow through. The problem however, as everyone who dabbles in these things, is known as unintended consequences. And despite what you may have read in various books by assorted namedropping anchormen, the administration was 100% confident it could contain Lehman when it failed as well. Oh well, it was bound to happen sooner or later.
We still have a sinking feeling that a "temporary" Greek default may be announced as soon as 48 hours from now when the EU leader meeting concludes on Thursday.
One thing is certain: European banks arent taking any chances, with borrowings under the ECB's weekly MRO just surging to a 2011 high of €197 billion as everyone seeks to shore up capital in advance of what could be a complete liquidity freeze later this week.
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Ho-Ho-Ho. Let's see what kind of wet blanket this provides to the elevated futures this am.
This happened overnight around 1-2 a.m. EST, futures took it as good news, hence their elevatedness originally
No futures are up because China prevented ice9 from seizing up the system by buying European bonds overnight.
Futures are up until they go down ... the trick is to buy low and sell high ... its the old saying: know when to hold them and when to fold them.
Or just sit in there like the deer ... until the car kills u ...
Bingo. China is the bagman helping to keep both EUR and USD afloat until TPTB are ready to pull the plug. Minor skirmishes between some US players (eg. the DSK setup) and some EU players (eg. the Murdoch hoo-hah) attempting to advance their position in the final dénouement keep the bout interesting, but there are still many rounds to go.
Of course, being a centrally planned bout, someone in the audience could jump the ring and deck the referee at any time...at which point the master plan could go pear-shaped......
Pass the popcorn, bitchez!
Oh, and PS: IMO, none of the CBs are planning on this WWE farce going on more than (or much less than) another 15 months.
It ain't good news.
Swan Lake: Europe Swan Lake- Europe:http://lhmarketwatch.blogspot.com/2011/04/swan-lake-europe.html
Yes, those damn futile lords! Everything they do leads to complete uselessness. Will they ever learn?
- Chumblez.
The German banks may not be pregnant with Greek debt, but they are the leading financiers of CRE about to be rolled over and a rate spurt caused by a Greek default will push already anemic CRE values down just in time to create an equity gap in said rollovers. One should expect the planners that be to of throught these things through a little more thoroughly. Reference http://boombustblog.com/BoomBustBlog/Now-That-We-All-Agree-Greece-Will-Default-What-Happens-As-A-Result.html
The PLANNERS that be (lol!)
we can all agree
say default is temporary
to keep jobs at the E-C-B
Where can I sign to get a guaranteed 40% annualized return on my money? Lol...
you can go to Greece. And you can dollar cost average it if you like...depending on your risk tolerance of course. If you have money just "laying around" (or is it lying?) why not?
Comex.
Very bullish. This will send Apple over $400.
the next question is will we see this spread to the others?
I would have expected Irish and Portuguese yields to rise on this news, but oddly they are declining. I wonder how long that will last?
Definately ... untill one of the EU-Countries commits a jail-break ...
It's already spreading to the others. Ireland and Portugal are priced out of the debt markets. How long can the ECB keep both of those countries afloat? If interest rates don't come down then eventually both of them will default too.
The Mother of All Depressions is well underway.
Hopefully she leaves her husband at home = 'Vater aller Dinge' = father of all things = German metaphor for war.
Is this the detonator? Default = Default. A rose by any other name still smells like napalm in the morning. Holy shit.
Or, this could be one of those test firings. I can't think of the term, you trot out a type of horse as a test balloon for an idea???
Maybe the term you're looking for is "trigger mechanism". It's like the old saw, "being a little bit pregnant"; if they're doing a 'temporary default' wouldn't that imply lots of financial firewalls, firehoses, and designed backfires, etc? See any? Really, are the Europeans capable of this level of preparatory humility? I question the entire culture here, it's got h_u_b_r_i_s writ large.
Walter Russell Mead said it best a few days back: "Look, for example, at Europe. Not since the 1930s has the incompetence, incapacity and selfish shortsightedness of Europe’s governing class been so shockingly on display. For eighteen solid months Europeans have been trying and failing to come to grips with the economic crisis of the eurozone. And for eighteen months they have ignominiously failed."
Maybe this is where they need to start on the reprogramming their mindset: http://www.eastglenvillefd.com/_mgxroot/page_10845.html
not just failed, but ignominiously failed (bitchez)
Again, I think the term is "repudiation". Debt saturation => repudiation.
A missed coupon payment by any other name is a ... uh... oh, moratorium...deferral, temporary impairment?
Pass the Synonyms for Dummies
But what's best is the ECB agrees that...
Like "Well, OK, we'll let you go into default but just this one time."
(Delusion of Control. But then again, must at least posture...)
As if the ECB has any say in the matter.
The Imitation Stalking Horse Delusion.
(Oh and PS, I owe you the response you'd requested.)
Stalking horse, that's it!!! Thanks.
Look forward to it, no rush. You do not seem to be about rabid, random hatred (unless banksters or corpulent corporate hucksters are involved) so I will enjoy the discussion when you have the time.
One may hope, but I've grown cynical (and older) waiting for the moment when I can finally inhale again.
We wait and we see.
I am Chumbawamba.
You can't fool me sweetness, I know you inhale. ;-)
there is a german solution in the works. the only solution that will be adopted will be a german solution. nuff said
Holocaust seems about right.
How low cost seems about wrong!
ORI
http://aadivaahan.wordpress.com/2011/07/16/66th-anniversary-of-trinity-a...
How much cost would a holocaust cause is a holocaust could cause cost?
now that's not funny! no wait, yes it is, lol
Yeah, it is. Very funny.
lol, very nice. If you allow me...
A Holocaust causally casting it's cast caused costly cost to caucasian caucus Kauss & Co.
:o)
So you think Merkel the Urkle is ready to commit political seppuku on behalf of the geniuses at DB?
<presses start on microwave>
Pop...pop...pop.
So far there have been only german solution, the City(Britain), Wall Street (US) are all located in ethnically german countries.
I have to ask, when is a default considered temporary?
When taxpayers take the hit.
I called my loan servicer and told them I was in temporary default, just until my next paycheck. Like that? Maybe they could go to one of those cash for titles places and get a lil bit to hold them over, just till the end of the week when they get paid.
They should try the idea floating around here to solve the US debt problem and just let people kick G-Pap in the sack for a few zooro each.
transient
The default you have when you're not having a default?
Big deal! Laszlo Birinyi just said the S&P is going to 2,000 in the next 13 months! </sarc>
<rotates Laszlo's chart 180 degrees for him>
Look at those futures! The Governments obviously have it under control. Gold's overbought and will correct a few days. Load AAPL for another blowout quarter!
As Gomez Addams said in 'The Addams Family' films, it's ...
SHOWTIME!
http://www.youtube.com/watch?v=uOvscpTgI7c
The Aristocrats!
one would think such news would make metals go skyward. but no. they are under attack. hmmmm?????
Don't forget, with central planning everything is coordinated. Gonna release some news that would send gold/silver screaming higher...........go ahead and let your pals know there are large margin hikes coming for the metals.
It wouldn't surprise me to hear of margin hikes later today.
cramer just said a while ago that he doesn't know anyone who owns gold. yet they should. same with me. nobody cares about. nobody i know (except me) owns any and they don't want to talk about it either. so this bull is just getting started really...
[...nobody i know...owns any (gold) and they don't want to talk about it either.]---High Plains Drifter
SOT (slightly off-topic)
Spoke to a UPS delivery driver last year. He said they are delivering TONS of ammo and bullion to people's homes.
I don't imagine things have changed this year.
(Nevertheless, regarding gold specifically, most folks I know still think bullion is pirate treasure.)
how does the driver know?? is the content printed on packets in the US???? are the sender names distinct enough? Or did all recipients have a chat with that driver 'ahhh, finally you bring me the uranium ammo, together with some loveley pounds of gold buillion which I am gonna hide unter the mattress by the way'???
Ordinance is so freaking heavy in such a small package, they know. UPS jokes with my hubby all the time. I ask them to set it in the house for me. No secrets there. The PMs one does have me puzzled.
Imagine Silver is heavy enough in quantity - and if it comes insured - wouldn't take much to make a leap as to content.
I"ll bet they recognize those 35lb ASE monster boxes.
Out here in the boonies, the UPS, Fedex, and Mail persons are all pretty chummy, know everyone pretty well, and what they are doing - and people love to talk. I'd guess the return address is always a giveaway too, or often enough. A heavy box from some well known ammo supplier (midway or cheaper than dirt or cabellas) is obvious, as is a small be heavy box from someone with gold, silver or whatever in their name.
In general, they know and they ask if they're curious. I get a lot of exotic physics gear, and they like to see it too (most are underemployed enough to have a clue what it is as well). In return, I ask them about their business, and get nice street-level leading indicators that aren't faked like the cooked numbers most trade from - it's a two way street more people should be aware of.
COOL STORY BRO
Troll.
Bullion is...
its because its not news.
Do not worry: China will swoop in and buy Greek bonds before, during and after default.
Possibly China is outright purchasing Greece. Will relocate Greeks to Iceland for training and ship Chinese dissidents to New Greece Kung Pow.
hmmmm.... u may be on to something !
This is a big deal for the European Central Bank as it is the organisation which would be most affected by a Greek default as explained below.
The world financial markets need an enema. Greece is where they'll put the tube.
That post just made me laugh out an enema
TU. laugh better than cry.
+++
So why is it good for Euroland to do a short selective default, but not the US?
It is impossible to be good for E.U.
U.S. markets needed to bring out their AAPL show pony today and the Greece announcement will be ignored until tomorrow. The big investors needed to get a nice jump in their AAPL price before selling it.
It's only a little collapse....
it just died a little bit...
and markets will go up because of the lack of news...
I guess it just goes to show you that what's good for one reserve currency in not necessarily good for the other reserve currency. Go figure.
Sounds plausible knowing that Goldman Sachs has this quarter taken alot of risk off the table. Don't you think they would know soemthing big is about to happen?
The banks are either going to have to "voluntarily" take a write-down and accept a real rollover that costs them money, or the IMF/EU is going allow Greece to default and force a writedown on them. Less than a month until Greece defaults one way or the other.
NO SUCH THING AS A TEMPORARY DEFAULT.
PEOPLE ARE SUCH JACKASSES SOMETIMES.
In some Euromoron's head there is.
It's the "new math." LOL
https://www.youtube.com/watch?v=da0eaiZ0CKw&feature=channel_video_title
the lint in their pockets is transitory
Temporary infidelity, temporary rape, temporary 3-alarm fire...
i only ever buy AAPL just before the dividend payment...
Would you make an icon of a penis being flung around please?
Apple is ripe for shorting after earnings.
Better call the Central Capital Markets Trading Command...
I don't think the 3 stooges could make this up. What the hell is going on with these idiots. Like being just a little bit pregnant. Man oh man.
The bottom line on Greece is that they will never be able to grow economically at a rate high enough to service this debt or stop the need to keep borrowing [much like the USA?].
So all these attempts to stave off default only raise the stakes and the size of the default. Had Greece pulled an Iceland early on, they may have had some hope in hell. Now they are puppets to the ECB/IMF who will now be the sovereign power in Greece. Or perhaps that was the plan all along?
Greeks are going to experience a depression of epic proportions. For a few short years after joing the Euro club money poured in and they thought thay had made it. Wrong! It takes real growth in a real productive economy to grow and get rich. Greece never met that standard in any sense.
The bottom line is they are going to get stuffed down the toilet in a last ditch attempt to stave the leak and safe the ship.
"They" did have it made if by they you mean the elites of Greece who sold out their country and got rich in the process.
Yes, and its nice work if you can get it. Ask US elites.
...Much like the USA! In fact, I think if you substituted "USA" in your comment everywhere you wrote "Greece", it would fit perfectly.
The US futures market doesn't care about Greek default by it's reaction so maybe it won't care about US defaut either. This result should give Washington confidence in pushing forward for austerity and allowing US default if neccessary. All the politicans comments on TV have been their concern for the stock market's reaction. Well we just saw what that would be - NONE.
there will be a reaction. it will go up. the us stock market disconnected from the us economy about the same time that us jobs moved overseas. face it. fat ass yanks are fucked. and the global champion corporates are in free trade heaven.
"We'll see," said the Zen Master.
Temporary Greek default?
Draghi please change immediately ECB staff
It's a plus for the markets, and the euro!!!
They are all Greek now.
Yea everyones going to get bent over.
The music may have just stopped. Got a chair?
Chair! Chair? We don' need no steenkin' chair.
We have Chairsatan.
I think of him more as an "organ grinder" if you know what I'm saying. That little monkey fucker, what do they call it, a Geithner? just keeps dancing and dancing while the organ grinder just grinds and grinds. They keep collecting money from the populace. I am amazed at how long the music goes on. That is the strategy, keep the music playing and everyone distracted by the songs. The Titanic sinks, Rome burns, and my metaphors get so tired they just don't want to play any more.
Hope you and yours are well UR.
"These dominoes will fall like a house of cards...Checkmate!" -- Zap Brannigan
Only sensible way is to break up the eurozone permanently. It hasn't worked, it's not working and it will never work. Temporary exit... What a douche!
It's like the world's largest Hokey Pokey dance.
I betcha all of these "temporarily defaulting" Greek bonds came with an "insurance policy" against default, which turned less than pristine financial instruments into glorious pristine ones. So now that these Greek bonds are defaulting where is the insurance policy payoff that the original purchasers were promised. The bottom line is the bond buyers have been scammed. If bond insurance policies had to pay off, then the other PIIGS bonds would be in the same situation, and a trillion or so dollars related to insuring these bonds would tank the system. Thus we have a new banking defined term called a "temporary default" which is of course not a real default, it's only a default that allows the insurance policies to not pay off, and the bond holders get screwed. That is except the banks which get special privs in these loss conditions becasue they have their hand in the taxpayers wallet.
http://www.entendance.com/forums/viewtopic.php?f=5&t=762&p=18220#p18220
I want to follow Greek in the exit!!! NOW
Let me fix that for ya "Greek in the exit, ouch" Nothing wrong with that of course. They (ptb)will extend this fall as long as possible, this will last much longer than most of us think. Yes, substitute the U.S. in Greece's place as we will never grow out of this mess. Our poor children..
See you on the darkside of the moon.
Naturally equities are up. These markets are like a guy who slaps a band-aid on a gunshot wound and thinks he's good to go.
if aliens would blast our planet, some skynet satellites would still be bullish on stocks. EUR/USD took 1,42 minutes ago.
Looks like all the bots are buying the V-bottom in Asia last night
murdoch is performing his "who me, i am just a old man , i don't know anything " routine.......ha ha ha ha
Let the Greeks default, be it through a 50 % Haircut or other methods. Im tired of this circus. Push the fucking button.
And todays spanish omelet, served with newly found debt and deficit.
07-19 10:36: Spanish region of Castilla-La Mancha says H1 budget deficit 6.4% of regions GDPMaybe there will be minimal market disruption because the default has long been priced in and events stalled long enough to allow institutions to prepare accordingly. News of a potential default alone should have caused market turmoil but alas they are in the green. I hate the charade as much as everyone else but I question if Greece will have a big impact
For the nonce, what will Greece do now that it's bankrupt? The same dumb stuff they did before they were bankrupt. Eventually, they will be doing it with US money instead of Germany's.
I am cynical enough that I usually dont get angry about blaitant manipulation of the market, but the fact that calls for Greek withdrawl from the EU, and open talk from Merkel about Greece's inevitable default and a really open possibility of the Euro failing drove it up over 1.42 honestly just pisses me off. "Breakup of the EZ, failure to prevent Greek default, RALLY"