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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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.

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.

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. 

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!

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

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. 

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?

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...

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.

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.

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. 

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.

theMAXILOPEZpsycho's picture

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

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?

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...

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.

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

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?

EscapeKey's picture

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

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

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.

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.

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?

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.

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!

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.

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...

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.

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?

Mountainview's picture

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

Commander Cody's picture

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

glenlloyd's picture

I beg to differ, it most certainly can happen.

BlackholeDivestment's picture age or black hole?

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.

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?

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.

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!

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.


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. 

scatterbrains's picture

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

Franken_Stein's picture


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

Bring it on !


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)

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?


chump666's picture

total liquidity crunch on EZ meltdown

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.

Gandalf6900's picture

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

Sudden Debt's picture

2B2KTC !



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.