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Greek CDS Hits Ridiculous 1,900 bps On Total Chaos Over What Happens Next, Ongoing Greek Ruling Party Mutiny

Tyler Durden's picture


This morning Greek CDS is trading at a spread of 1,900 bps: a level that seals the fate of Greece, whose bonds are being sold into a bidless market. Two primary factors have totally shocked the market: one is that, as Reuters, reports, Germany now "wants the deadline for for a second
Greek rescue package to be pushed back to September, reflecting the
problems Europe is having hammering out the details, EU and banking
sources said on Thursday." This means that Greece may well run out of cash in the interim, but it appears that Germany is now fine with that outcome. The other news comes from which reports that the exodus of MPs from ruling PASOK is now picking up: 'Ruling Pasok MP Yiorgos Floridis on Thursday tendered his resignation, the second ruling party MP to resign in the space of two days, followed by Ectoras Nasiokas, Larisa Pasok MP. George Lianis was the first Pasok MP to resign on Tuesday afternoon. In addition, veteran Pasok MP and former minister Vasso Papandreou asks for an extraordinary meeting of Pasok parliamentary group. Floridis resigned from his MP post, but did not declare himself an Independent, thus in effect "returning" the seat to Pasok." With the PASOK already slender majority in parliament in its current formation, these ongoing defections mean that, just as we warned, the mid-term fiscal proposal will likely fail in parliament and Greece will do what Ireland should have done, and what in fact Greece should have done a year ago, and voluntarily leave the eurozone. It also means that keep a close eye on the FRA-OIS and Libor-OIS spreads as today all liquidity hell can break loose now that a break up of the eurozone appears certain.

More on the German push for a delay:

One EU source told Reuters that German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble favoured a delay.

"The argument goes: We don't know what to do, let's buy more time," the source said, adding that Berlin had its customary backing from the likes of the Netherlands, Finland and Slovakia.

A high level German banking source also told Reuters Berlin was targeting September as the point at which all the problems could be solved.

And as to why Athens is now becoming the Bounty:

Floridis, a former public order minister (2003-2004) and former deputy minister of finance (2001-2003), culture (sport portfolio, 2000-2001), and interior and public administration (1998-2000), said in his letter of resignation that he honors the Panhellenic Socialist Movement (Pasok) and its struggles, "but at this marginal time for the country, the national duty was defeated by the leader-oriented and partisan interest".
"Thus, will absolute awareness of the criticality of the moments, I submit my resignation from the post of MP," Floridis said in his letter, and blamed all the political parties of failing to reach elementary agreement in order to deal with the climaxing national crisis, due to the party-oriented nature of the effort, while he also warned that (early) elections, despite being the firm and irreplaceable democratic way out, "at this particular time entail severe danger for the country's economic viability".
Floridis further accused the government of "wrong choices in the economy and the state" and "inability of comprehensive planning", and a "clearly unequal and unjust distribution of the burdens and unprecedented inefficiency", and main opposition New Democracy of "investing in the government's wear and tear, with choices unprecedented for a conservative party of authority", and with the risk of the country's destruction as the "prize".
In the past days, initiatives for national understanding aimed at political stability had created the impression that such stability could be achieved, he said, stressing that only a transitional 'national salvation' governmental scheme could have contributed in that direction, with the mandatory participation of the two main political forces of the country (Pasok and ND).
"Unfortunately, the leaderships of the two mainstream political parties were once again beneath the national circumstances, in a politically unforgivable way," he said, adding that instead of a national rallying, what prevailed was a rationale of partisan and political pretexts, self-serving calculations and petty party pressures.
"There is no worse way to verify the end of a worn down and outgoing political system," he added.
Βriefing parliament on his intention, the third resigned MP, Ektoras Nasiokas said that "this is the least I can do to reverse today's condition of impasse, for the salvation of the country".

Expect more defections, and the EURUSD to drop below 1.40 very shortly on what is about to be a liquidity freeze of epic proportions.


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Thu, 06/16/2011 - 07:16 | 1373792 HamyWanger
HamyWanger's picture

I totally admit that the situation is both ridiculous, absurd and catastrophic, with "buy some time" counter-productive decisions being taken, and total confusion in the atmosphere. 

But a "credit event" can't happen, because it would mean that the "black swan" all goldbugs are waiting for has arrived.

The PigMen will do whatever it takes to avoid that and secure their wearing off power, including murders.

Thu, 06/16/2011 - 07:22 | 1373808 bigwavedave
bigwavedave's picture

Actually.... Apart from the better use of language and grammer. He sounds like a would be US polititian. Shame that DC doesnt have people of honour.

Thu, 06/16/2011 - 08:57 | 1373935 Widowmaker
Widowmaker's picture

Corporations exist solely for consolidated financial gain and power, not honor.  Their intent/purpose (by design) is to circumvent the rule of law, and distort/manipulate the common good to achieve said gains.

Hence the District of Corporations doesn't stand a chance of leading the way out for anyone, not even themselves.

The way out is in the hands of the people to dissolve and destroy TBTF corporations, which is fascism on the doorstep, not invite them inside to "solve" their own self-perpetuated ills.

Throw every bum out from all three branches that sucks incorporated-tit as a political platform for personal gain; pervasive in all three.

You hogs can default all you want, it's not going to solve the political crisis of entrenched incorporation favored over the common man in his own country and determining his future.

Most people are focused on the defaults of sovereign nations  which is a mere fiscal-sideshow.  It's the politics that is being gutted.  Look in the US, most of the tools necessary for freedom are being scrapped as fast as possible to preserve the big and incorporated at the expense of individualism, privacy, liberty, and individual sovereignty (to name a couple).

The same shameful mother fuckers in the US government (all three branches) that got us into this mess are throwing their own people to the dogs to get themselves out. 

Thu, 06/16/2011 - 08:58 | 1374001 writingsonthewall
writingsonthewall's picture

...bbb-but Friedman said that profit is good and that companies will stay within the rule of law and within the bounds of morality!


Why does this now appear to be total hogwash? - ah wait, it always was total hogwash - but while people were 'high on the hog' they didn't need to think about it too hard.


Are we really seeing the liquidity dry-up of 2008? I haven't got my seat and popcorn yet!

Thu, 06/16/2011 - 07:26 | 1373813 HpDeskjet
HpDeskjet's picture

But a "credit event" can't happen, because it would mean that the "black swan" all goldbugs are waiting for has arrived.


Actually this is 100% not correct... A default is highly deflationary and will result an flight into the $/treasuries/german bonds and a gold price collapse... Only printing to avoid a default would be good for goldbugs

Thu, 06/16/2011 - 07:25 | 1373819 HamyWanger
HamyWanger's picture

"A default is highly deflationary and will result an flight into the $/treasuries/german bonds and a gold price collapse..."

Deflation kills indebted States, dipshit. 

Thu, 06/16/2011 - 07:43 | 1373842 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Hamy, the goldbugs want inflation not deflation. Deflation does kill indebted states, but gives less reason to buy gold dipshit. Why are you still trolling on ZH anyways?

Thu, 06/16/2011 - 07:51 | 1373857 HamyWanger
HamyWanger's picture

"Deflation does kill indebted states, but gives less reason to buy gold dipshit. "

States control the money supply, and they won't accept their death, so they will print to avoid it, dipshit.

Are you sure your grey matter volume is sufficiently high to understand this simple connection? It seemed so simple to me that I did not feel the need to write it, but then...

Thu, 06/16/2011 - 09:50 | 1374159 Withdrawn Sanction
Withdrawn Sanction's picture

States control the money supply, and they won't accept their death, so they will print to avoid it...

Actually, they control a very small part (percentage-wise) of the money supply, and more importantly, they have virtually no control over velocity.  

In slightly different terminology, like any monopolist, the central bank can control the price OR quantity of his output, but not both.  As in any market--even a manipulated one--it takes 2 to tango.  Failure to keep this fact in mind often causes people to mistakenly assume the central bank is omnipotent.  It isn't.

Thu, 06/16/2011 - 08:15 | 1373907 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

I'm an all inner on gold and silver, but I'd still prefer a deflation. Why? because it would properly clear out the system of all the fraudulant lending, welfare grabbing, artificially held up crap and after some real pain might actually offer more fairness to working people; a hyperinflation (which does appear more likely now) will kill the currency, wipe everyone's savings out, and leave the same people in charge with everyone (bar perhaps the bullion bugs) at their mercy.

Thu, 06/16/2011 - 08:30 | 1373936 HamyWanger
HamyWanger's picture

What you prefer is irrelevant. What libertarians and Ron Paul lovers prefer is irrelevant. 

They are mosquitos in the grand scheme of things. They don't hold any power and never will. 

Thu, 06/16/2011 - 09:53 | 1374191 Withdrawn Sanction
Withdrawn Sanction's picture

They don't hold any power and never will.

I suppose it depends on what type of "power" you're referring to and, more importantly, why anyone would care about that particular sociopathy anyway...other than from a clinical perspective.

Thu, 06/16/2011 - 10:07 | 1374243 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

well, yeh, like I say thats why I'm an "all inner" on bullion

Thu, 06/16/2011 - 07:44 | 1373843 Calmyourself
Calmyourself's picture

The iron fist beneath the velvet glove of insipid vapidity is revealed. Lost count hamy is this the third iteration of your personality or just another shift chamge?

Thu, 06/16/2011 - 07:50 | 1373858 HpDeskjet
HpDeskjet's picture

Indebted states can simply raise taxes or cut spending, problem solved. The only problem is that the people living in the indebted states don't like this and therefore those indebted states will be forced to let the lenders suffer as well... Anyway, paper money is "destroyed" causing the price of the remaining paper money to go up. It's simple demand and supply dipshit...

Thu, 06/16/2011 - 07:56 | 1373865 HamyWanger
HamyWanger's picture

"Indebted states can simply raise taxes or cut spending, problem solved."

Raising taxes or cutting spending in a deflationary environment does not make the State richer, as the GDP drops nearly by the same amount. 

"Anyway, paper money is "destroyed" causing the price of the remaining paper money to go up. "

I don't want the definition of deflation, fucktard. I already know it. 

I'm saying that States have no rational reason to prefer default over monetizing, and that across three thousand years of recorded history they always chose the latter, to the great disappointement of cash hoarder deflationists, who sometimes saw their holdings devalued by 50% overnight by a simple decree, such as in 1932, Front Populaire, France.

Thu, 06/16/2011 - 08:12 | 1373893 HpDeskjet
HpDeskjet's picture

Ok, we are getting somewhere...

I'm saying that States have no rational reason to prefer default over monetizing

I, personally, also PREFER to have someone wiping my ass if i go to the toilet, although it doesn't happen all of the time. The monetizing route has been tried for the last decades with great "success"... It has reached its limits (commodity prices skyrocketing + debt saturation everywhere) and therefore States have no option left but default/austerity/cut spending. Even people at the FED seem to realize this considering their comments in the last few months

Thu, 06/16/2011 - 08:22 | 1373917 HamyWanger
HamyWanger's picture

"The monetizing route has been tried for the last decades with great "success"..."

Bullshit. There has absolutely been no single monetization event in the West during the last decades, except if you think low rates is "monetization", which it isn't. 

"It has reached its limits (commodity prices skyrocketing + debt saturation everywhere)"

Monetization reduces debt. 

" and therefore States have no option left but default/austerity/cut spending."

Which means their military and political death. On the other hand, monetizing is a stealth tax levied on all the population to fill the pockets of the government and big debt holders. Can you see a pattern there, or you don't have the level needed to box with me?

Thu, 06/16/2011 - 08:20 | 1373920 EscapeKey
EscapeKey's picture

Nah, you still fail at disproving gravity, I'm afraid.

Reminds me of the scientist in "Thank you for smoking".

Thu, 06/16/2011 - 08:27 | 1373928 HamyWanger
HamyWanger's picture

I always recognize deflationists five miles away through their ignorance of basic history, their lack of "outside the box" thinking, and their (logic) frustrated and revanchist tone about having been raped in the ass by a +110% stock rally since March 2009.

Thu, 06/16/2011 - 08:51 | 1373985 HpDeskjet
HpDeskjet's picture

Japanese stocks had some nice 50+% rallies too in the last two decades, still they are down 75% over that period...


I can think out of the box, I understand the goldbugs logic, and yes, printing seems the easiest solution if you think of a politician as a selfish fucktard. What I fail to see is, why do you think that "the people" will continue to let politicians/bankers rape them?

Greece is the perfect example of what will happen to all indebted countries => The people of that country simply revolt and overthrow the governments + the people of the countries that have to finance the "solutions" are also sick of it.


You are right that bankers/politicians will never change the system that is most beneficial to them, but the system itself can and will be replaced.

Thu, 06/16/2011 - 22:47 | 1376526 Crisismode
Crisismode's picture

Hamy Wanger doesn't understand what side of the toilet paper to wipe his ass with.

Why are you talking to him as if he was a reasonable adult?

Thu, 06/16/2011 - 23:49 | 1376654 XPolemic
XPolemic's picture

Monetization reduces debt.

The problem with that statement, is that you don't differentiate between notional value and purchasing power.

Yes, monetization reduces the debt burden in terms of purchasing power. (i.e. inflation), but it doesn't reduce the notional amount of the debt.

Monetization also reduces your credit worthiness, so with the exception of the United States, it decreases your access to capital (limits your future indebtedness) and increases the interest you pay on your existing debts, which does increase the total notional outstanding (principal + interest), but the present value remains unchanged (due the discount rate and the interest rate cancelling each other out). Finance sure is a strange beast.


There is a limit to monetization however. That limit is reached when your sovereign credit rating falls to a point roughly described as "will not repay before the Sun supanovas". At that point, you cannot borrow at all, and your citizens cease to use the currency as a medium of exchange, because the price of goods changes in between the time you pick up your beans from the shelf and when you reach the checkout. Then, at THAT point, another medium of exchange must be found so that trade can resume.


In Zimbabwe's case, people began trading in gold (or it's proxy USD if they held them).  There have been other countries (whose names elude me at time of writing) that used USD and gold/silver to trade during a period of hyperinflation and local currency collapse. In the case of the United States however, I can't imagine people using USD to trade while the USD is collapsing. In that case, the question is, is there another viable currency in which to trade? (gold is particularly inconvenient as a currency, except when computers are involved). If there is no viable currency, redeemable across the planet when the USD eventually collapses, the only two options for the United States I can forsee are

a) Precious metals are traded as currency or complex barter/credits systems spring up or much more likely

b) An iron curtain descends on the USoA, and the people are required to use the currency, attend politburo meetings and food rallies whether they like it or not.

Thu, 06/16/2011 - 09:01 | 1374016 writingsonthewall
writingsonthewall's picture

"I, personally, also PREFER to have someone wiping my ass if i go to the toilet, although it doesn't happen all of the time"


You mean someone wipes it some of the time?

Is it your mother?


I think Hamy is confused, we all agree that soverieng default is upon us, we all agree that it's deflationary - Hamy is assuming that the banks will print to avoid it - creating inflation - which may be true in the US - but somehow I don't think the EU can do that - it would destroy Germany and France - and at the moment they are the EU!

Thu, 06/16/2011 - 09:17 | 1374052 HpDeskjet
HpDeskjet's picture

It's always nice if someone finishes a joke you set up :)


But true, in EU printing won't happen. Default(s) will come. In US, default will not come. Not because of printing, but because US can still get out of the mess by redistributing the wealth more fairly... (read the ridiculously low tax rates will be raised + entitlements will be cut) and by stop waisting money on Afghanistan etc.

Thu, 06/16/2011 - 08:17 | 1373913 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

What about the late seventies/early 80's?? They hiked interest rates then...

We've gone too far down the road to do that now though...

Thu, 06/16/2011 - 07:53 | 1373863 dcb
dcb's picture

I don't believe you can say this. deflationary to whom.

if the greeks go back to the drachma it will have a low value and be inflationary to them, just like argentina. the drop in the euro, rise of dollar, may mean things in euros' become more expensive instead of less. the third thing, is that you have no idea of the response of the central bank, and we could see massive qe type liquidity injections.

the elimination of debt should be deflationary as in essence it eliminates the amount of currency in circulation. (I consider debt to be part of total currency as does that australian economist I like). While I believe deflation is what we need, and a good amount od debt destruction would in fact heal the economy, I think all the central bank pritting presses will run overdrive in response.

So to be honest, you answer comes from a matter of perspective, and time frame. In the normal course of events our financial crisis should have been deflationary, but big ben made it inflationary.

Thu, 06/16/2011 - 07:42 | 1373832 BlackholeDivestment
BlackholeDivestment's picture

...what ever? like blow up the buildings they built? the World Trade Center?

How far do you think ''corruption'' will be ''willing and able'' to go? ...until it's gone?

Thu, 06/16/2011 - 09:09 | 1374028 Mountainview
Mountainview's picture

Do real transactions happen at these levels? It most be the casino folk replacing Las Vegas by  a new game..

Thu, 06/16/2011 - 09:33 | 1374096 Commander Cody
Commander Cody's picture

Actually, Hamy is correct - the jackals have arrived and the marks are bailing.  War follows.

Thu, 06/16/2011 - 11:05 | 1374482 glenlloyd
glenlloyd's picture

I beg to differ, it most certainly can happen.

Thu, 06/16/2011 - 07:12 | 1373794 BlackholeDivestment
BlackholeDivestment's picture age or black hole?

Thu, 06/16/2011 - 07:11 | 1373796 Everybodys All ...
Everybodys All American's picture

Pushing this back to September is tied to the Merkle's visit to the US and the proposed debt ceiling raise here. No question Bernanke's hands are tied right now. Raise the debt ceiling and Bernanke goes wild again. Take it to the bankster.

Thu, 06/16/2011 - 07:29 | 1373811 scatterbrains
scatterbrains's picture

I've got some QID and SDS calls for July that are looking rather plump. Should I roll out to Sept or strap in for the flush here and now?

Thu, 06/16/2011 - 07:15 | 1373797 milanitaly
milanitaly's picture

Oh my God! ECB said this morning that I am really an I of PIIGS.



Thu, 06/16/2011 - 07:19 | 1373804 Gandalf6900
Gandalf6900's picture

You're the only I in PIGS

Thu, 06/16/2011 - 07:34 | 1373825 Cassandra Syndrome
Cassandra Syndrome's picture

We could have a shit hot national football tournament within the PIIGS. Ireland has improved immensely since Trapattoni took charge. The 2 former World Cup champions are in this group and Portugal are one of the best as well.

Thu, 06/16/2011 - 08:19 | 1373909 EscapeKey
EscapeKey's picture

MILAN - "In many countries must support the objectives of budgetary consolidation measures with concrete in order to correct the excessive deficit within the agreed terms." 

My God, Google translate is good. This sounds almost exactly like an Italian speaking english!

Thu, 06/16/2011 - 07:12 | 1373800 Franken_Stein
Franken_Stein's picture


So I should withdraw my cash ?

Bullshit !

The ECB will just lend, baby, lend.

Or uncle Benny will help a brother out.

Nothing new on the western front.

Some 3-month refinancing tenders will be injected soon for everybody to pile into.


Thu, 06/16/2011 - 07:18 | 1373803 HamyWanger
HamyWanger's picture

"Some 3-month refinancing tenders will be injected soon for everybody to pile into."

Of course, but the ECB is running short of true capital, and will soon be obliged to create "lines" out of thin air. 

Thu, 06/16/2011 - 07:22 | 1373812 scatterbrains
scatterbrains's picture

sounds like your saying *never let a crises go to waste* Are they letting the Bears swallow the bait first ?

Thu, 06/16/2011 - 07:27 | 1373814 Franken_Stein
Franken_Stein's picture


Why not, I have my gold & silver already stashed in the woods.

Bring it on !


Thu, 06/16/2011 - 09:09 | 1374029 writingsonthewall
writingsonthewall's picture

"and will soon be obliged to create "lines" out of thin air. "


If you think that is going to happen - you don't understand the EU at all. This would be inflationary for Germany - and do you remember what happened the last time Germany 'got inflationary'?


The US are irrationally fearful of deflation - thanks to the Great depression - hence their policy now, but Germany are irrationally fearful of inflation - thanks to Weimar - hence their policy now.


(when I say irrational - I don;'t mean they shouldn't be fearful - but they put more weight on it due to history)

Thu, 06/16/2011 - 07:26 | 1373822 XPolemic
XPolemic's picture

So what you are saying is that every trader in the entire world is passing up 1900 free bips on 300B EUR notional.

Wanna buy some CDS?


Thu, 06/16/2011 - 07:13 | 1373801 chump666
chump666's picture

total liquidity crunch on EZ meltdown

Thu, 06/16/2011 - 07:14 | 1373802 agent default
agent default's picture

The markets had more than a year to price in the default of this clusterfuck. Any 2B2F that loses money on this at this point deserves to fail.  End of story.

Thu, 06/16/2011 - 07:17 | 1373805 Gandalf6900
Gandalf6900's picture

2B2F can't fail by losses or implosion, only by outside destruction

Thu, 06/16/2011 - 07:30 | 1373826 Sudden Debt
Sudden Debt's picture

2B2KTC !



Thu, 06/16/2011 - 07:46 | 1373849 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

+! The endgame is near.

Thu, 06/16/2011 - 07:20 | 1373807 Soul Train
Soul Train's picture

yep, we may see a further run on equities the remainder of the week on this side of the Atlantic, as the spill over from Europe panics the markets.

Expect to head fake and then break the SPY 200 dma. Long day traders to get screwed and either capitulate to short term losses, or become holders of equities for a very long time.

Thu, 06/16/2011 - 07:23 | 1373809 kaiten
kaiten's picture

The only sensible solution for Greece:

1) Kick them out of EMU and send them back to their miserable drachma, which would, of course, suffer an immediate devaluation of 50% or more. Announce that this is not a divorce but an annulment, given that the Greeks lied outrageously about the size of their economy in order to enter EMU, and never should have been there in the first place, and make clear that this only applies to the special case  of Greece.

2) Allow European banks to continue to accrue interest on Greek government debt, through the following formula: the European Central Bank will issue scrip to the banks in the sum of unpaid coupon payments on sovereign debt, so that the bank creditors will own a sort of Payment-in-Kind (PIK) bond, an old junk bond device. Let the ratings agencies scream.

....... (cont.)


Thu, 06/16/2011 - 07:46 | 1373850 XPolemic
XPolemic's picture

2) Allow European banks to continue to accrue interest on Greek government debt, through the following formula: the European Central Bank will issue scrip to the banks in the sum of unpaid coupon payments on sovereign debt, so that the bank creditors will own a sort of Payment-in-Kind (PIK) bond, an old junk bond device. Let the ratings agencies scream

Agreed. It's only 300 billion.

The first problem is, what is the size of the swap market, and what spread will be used over LIBOR/EURIBOR for IR swaps where Greek banks/goverment were the counterparty?

Second problem, CDS. Buyer side already payed the risk premium on Greek spread, but the CDS spread on PIK bonds will be EURIBOR + 20bips? Converting a Greek EUROBOND to a ECB PIK bond would most probably meet the definition of a credit event under current CDS contracts. The actual payout would have to be negotiated with the holders of the CDS.

So, it's a little more complicated than re-issuing the bonds. How about this: EU GDP is 16T, with an average tax base of 34% == 5T. Greek debt is 300B, roughly 2% of EU GDP or 6% of total tax revenues. It's not much. I don't see why bondholders can't take a haircut, but again the problem lies in the derivatives market. IR Swaps and CDS.


Thu, 06/16/2011 - 08:11 | 1373889 Robslob
Robslob's picture

"Goldman Sacks taught the Greeks how to lie about their economy"


Thu, 06/16/2011 - 08:10 | 1373900 AnAnonymous
AnAnonymous's picture

The trouble with European debt negotiations is that they have not yet persuaded the citizens of highly indebted countries that they must consume less, work harder, retire later, and generally lead unhappier lives.


Stopped after reading the first two lines.

Working harder increases consumption. Guy is ignoring this little fact.

The Greeks (and the others in the west) might have to consume less and this includes a lower level of activity as activity is consumption.

Thu, 06/16/2011 - 09:32 | 1374106 kaiten
kaiten's picture

Haha, where do you live, dude? On the Moon? The entire greek consumption was based on borrowed money. But now, as they are bust, no one´s gonna lend them money anymore. And so, even if they work harder, they´ll have to consume less. Got it?


Same for the other indebted western nations.

Thu, 06/16/2011 - 10:48 | 1374419 AnAnonymous
AnAnonymous's picture

No, did not get it. If indeed they have to consume less, they will have to work less as work is consumption.

Thu, 06/16/2011 - 13:27 | 1375073 kaiten
kaiten's picture

Productive work is consumption.

Fixed that for you. Greece is not productive enough to sustain the current living standard. Too much bureaucracy, too much state-sponsored non-productive jobs and all that paid by borrowed money. The greek consumption is mostly imported goods, not greek production(work), and again, all paid by borrowed money. When you lose one source of income(loans in this case), you have to replace it by other source(harder work) just to stay even(in living standard). But the greek borrowing was so huge, that even with much harder work greeks won´t be able to afford as much as in past years. If you still dont understand, just wait few years, and you´ll find out by yourself.

Thu, 06/16/2011 - 09:56 | 1374205 nodhannum
nodhannum's picture

"Announce that this is not a divorce but an annulment, given that the Greeks lied outrageously about the size of their economy in order to enter EMU, and never should have been there in the first place, and make clear that this only applies to the special case  of Greece".

It can't be fined as an annulment since we can prove that Greece fucked Germany and most of the others in the EU, hence, no annulment.  Oh since it is divorce now Greece will want alimony and "child" support.

Thu, 06/16/2011 - 17:03 | 1375835 nicxios
nicxios's picture

Must be fun living in fantasy land.

Thu, 06/16/2011 - 07:49 | 1373823 Cdad
Cdad's picture

Expect more defections, and the EURUSD to drop below 1.40 very shortly on what is about to be a liquidity freeze of epic proportions.

And considering that absurd excessive liquidity is now and continues to be one of the key drivers of the epic problems that have stacked themselves on the chest of the world like anvils, on with the liquidity freeze then, already.

When oil is back down below $80 per barrel, we'll be getting the first sign that the plague like liquidity problem in the system is being dealt with.  And maybe then, the financial services industry world-wide can finally start mailing out long overdue pink slips, injecting into said system the ultimate and long term cure.

Gross misallocation of capital must be corrected.  Until such time, real capital will not form...but only fiat capital.  Enough trying to pretend that other new age, synthetic solutions are preferable.

And to the central bankers of the world....duh.

Thu, 06/16/2011 - 07:36 | 1373828 ArrestBobRubin
ArrestBobRubin's picture

Dollar up for a while, incredible as that is. What does that say? It says get diversified out of paper fast.

To do that, stay away from the market and use the frn's to accumulate physical gold and silver. Gold won't go below 1470 on Summer pullbacks so don't wait.  As for silver, it will take a bigger hit than gold during an economic slowdown, but Ag's mid & long term fundamentals are so solid the lower paper prices would be a huge gift. Crimex will only be able to paper over the real deal so much longer before there's a serious game changing event or development. You want your Ag ounces ahead of that.

The lower silver goes this year, the better for those who accumulate it. Just be aware that the paper price is totally disconnected from physical supply and demand. Meaning don't assume an easy supply will always be there. Just stick to the plan and keep dollar cost averaging.

Ag's payoff timeframe is 2012/2013 forward. 2011 is just your accumulation window. Keep things in perspective and the rest will take care of itself.

Thu, 06/16/2011 - 07:53 | 1373855 JFK.4PREZ
JFK.4PREZ's picture

+ agreed

Thu, 06/16/2011 - 07:34 | 1373830 Reptil
Reptil's picture

It's SOOOOO obvious: The plan is to delay, and then push it through during the summer, when ppl. are on holliday. THEY ALWAYS DO THAT.

That won't fly over here. Government is going to face a serious crisis. Moreover there's an existential crisis coming if the EU-ECB stays on this course. This will be during the coming currency crisis which is the also obvious next phase.

Strip-down Bitchezzz

Thu, 06/16/2011 - 07:36 | 1373833 Tom_333
Tom_333's picture

This is tragic...and great at the same time.Lot´s of money to be made off the back of this one!

Thu, 06/16/2011 - 07:39 | 1373834 The Answer Is 42
The Answer Is 42's picture

If you think 1900bps is ridiculous, wait until 10001bps.

Thu, 06/16/2011 - 07:47 | 1373844 Jack Sheet
Jack Sheet's picture

my broadband internet connection is 6000000 bps.

Thu, 06/16/2011 - 08:09 | 1373896 Sudden Debt
Sudden Debt's picture

you must have one huge Porn collection with a bandwidth like that...


Thu, 06/16/2011 - 08:39 | 1373956 Jack Sheet
Jack Sheet's picture

LOL, actually 6000 Kilobits/sec my friend. Quite a normal download. The SEC purportedly have 100 Megabits/sec.

Thu, 06/16/2011 - 09:22 | 1374077 writingsonthewall
writingsonthewall's picture

Well the tune in my head is currently 10,000 bpms

Thu, 06/16/2011 - 07:36 | 1373835 Sudden Debt
Sudden Debt's picture

120 billion to buy 2 years of default time is kind of much.

But on the other hand "the say" it will cost 1.2 trillion.

I don't buy that, that's just the bank bailouts for other thing, maybe related to Greece, definitely related to the derivatives.

They'll just let Greece go but and blame the cost of 1.2 trillion on them. And expell the later on. And the 1.2 trillion will be paid by the taxpayers.


If the banking crisis isn't resolved with that injection, they introduce Portugal and Ireland. And after that some other suckers.



Thu, 06/16/2011 - 07:44 | 1373845 sudzee
sudzee's picture

1.2 trillion is no problem. With a raise in the minimum wage to 64,000 per hour and 50% tax the debt will be vapourised in no time. Its just paper play money, you know.

Thu, 06/16/2011 - 08:02 | 1373882 Sudden Debt
Sudden Debt's picture

I could live with that :)


In the morning, I'll downpay my house and in the afternoon I'll buy a Porche :)

Thu, 06/16/2011 - 07:49 | 1373854 Hedge Jobs
Hedge Jobs's picture

Europe....bring out your dead

Thu, 06/16/2011 - 08:01 | 1373879 Gordon Freeman
Gordon Freeman's picture

Major Risk(back)-On Trade Coming!

By this weekend, the U.S. will agree to a "one-time","extraordinary". etc bailout of the EU situation, in the 50-100B range.

Result: Euro explosion, dollar crash, PM to the moon, and 100 pts on the S and P.  "Summer Rally", doncha know?  Be ready to go long on Monday.

Wash, rinse, repeat...

Thu, 06/16/2011 - 08:40 | 1373960 Bob
Bob's picture

This seems most likely to me.  IMF blinks and releases money, the Fed provides "emergency" funds, the Chinese help out . . . somebody comes through to keep the plates spinning. And Mr. Market, sadly enough, celebrates. 

Thu, 06/16/2011 - 08:14 | 1373899 Robslob
Robslob's picture


Thu, 06/16/2011 - 08:15 | 1373901 centerline
centerline's picture

Got to kick that can just a little further.  Buy some time.  Anything to avoid the collateral damage when a "true" default spanks the derivitives market.  Expect some seriously "unusual" steps being taken, and tentatively agreed to by the Greek government.

Of course, we know each trick buys less and less time on the clock.  In fact, the Semptember timing would be about perfect for QE3, wouldn't it?  Hot potato toss back to the US in motion.

Thu, 06/16/2011 - 10:04 | 1374231 nodhannum
nodhannum's picture

Everyone playing with a live hand grenade hoping to stall the crisis just long enough to have it blow up in the other guys hand so they can say the Greater Depression was caused by...fill in the blank.

Thu, 06/16/2011 - 08:18 | 1373911 G-R-U-N-T
G-R-U-N-T's picture

"The new austerity package foresees 6.5 billion euros ($9.4 billion) in tax rises and spending cuts this year, doubling the effect of measures agreed with bailout lenders that have jacked unemployment up to a record 16.2 percent and extended a deep recession into its third year.

The plan includes new luxury taxes, a crackdown on tax evasion and tax rises on soft drinks, swimming pools, restaurant bills and real estate."

LOL....Absolutely insane.

Thu, 06/16/2011 - 08:18 | 1373912 Instant Wealth
Instant Wealth's picture

"A high level German banking source also told Reuters Berlin was targeting September as the point at which all the problems could be solved."

Official German Bundestag parliament sessions end on july 8th, opening session (after the summer break in august) is on september 5th.

"Holydaaaay, celebraaaate ..."

Thu, 06/16/2011 - 08:32 | 1373948 Kokulakai
Kokulakai's picture

ECBs aren't buying gold for shits, grins, and giggles.




Thu, 06/16/2011 - 08:48 | 1373967 paint it red ca...
paint it red call it hell's picture



no honor, no heart, no soul, and not a single head that could be removed for a kill.

Thu, 06/16/2011 - 09:17 | 1374061 Peter K
Peter K's picture

What's funny about this sad situation is that the answer to the Euro crisis is quite simple. Germany needs to leave the Euro, and the PIIGS and the rest of Europe would realign in a heartbeat. Something worth considering......

Thu, 06/16/2011 - 09:20 | 1374071 Peter K
Peter K's picture

PS And no soverign default;)

Thu, 06/16/2011 - 09:33 | 1374115 markar
markar's picture

Whether we have inflation/hyperinflation in the interim, the final result of this disaster WILL be deflationary depression. Gold will prevail regardless.

Thu, 06/16/2011 - 12:12 | 1374393 cranky-old-geezer
cranky-old-geezer's picture

Nope, it will be hyperinflationary blowout, the endgame for all fiat currencies.

The banking system controlling fiat currencies will not allow deflation and collapsing prices on their paper assets (bonds, debt paper, stocks, etc).

They will print currency to keep those things inflated in nominal terms till they use every tree in the forest and all the ink in existence ...but those currencies will drop to worthlessness along the way ...not that banks care.

This is what happened in '08. Rather than allow MBS to collapse and wipe out most of Wall Street, Fed turned on the printing presses and started buying up MBS like crazy, keeping their value up.  Then Fed put their printing presses in high gear and started loaning trillions to Wall Street to pour into the stock market and buy up collapsing Treasury debt paper ...and it's still going on today.

Yes, QE3 will happen in some shape or form. Fed will not allow a deflationary collapse to wipe out Wall Street and collapse the federal government.

Thu, 06/16/2011 - 18:36 | 1376038 honestann
honestann's picture

Greece:  Wake up!  DEFAULT.

Iceland already showed you the way.

Completely and utterly DEFAULT on every penny of debt.  Then add to your constitution an unjiggerable prohibition on government debt.  That will require them to scale back the size of government (and the obscene level of benefits for government "workers") to a level that is at least possible.  Any time revenue falls short, make up the difference with pay cuts to EVERYONE on the government payroll (contractors included, so you don't create a loophole for them to immediately scam the system).

DEBT sucks.  DEBT reduces quality of life, and encourages a never ending feeding frenzy wherein everyone tries to jigger the system for their own benefit and leave the debt consequences for everyone else.  ONLY a firmly limited size and scope of government can lead to a healthy country.


Fri, 06/17/2011 - 12:38 | 1376888 Zero Govt
Zero Govt's picture

Greek politicians are resigning (running scared) because they're "scared to walk the streets"

Absolutely Brilliant

Mob Rule  (Rules OK)

How do the people bring down the Govt? There's not an Ap for that (surprise surprise)

Nothing works more efficiently or effectively than natural social justice.... beats that pile of expensive pompous time-consuming comical corrupt clowns, lawyers and the Judiciary

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