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Greek Math: €12 Billion In, €18.2 Billion Out... And That's IF The Impossible Happens
Here is a simple summary of the Greek bailout math explained with just 2 numbers. First, the country has to do the impossible. As Citi's Jurgen Michels summarizes: "Once the whole new cabinet is announced, parliamentary discussions ahead of the vote of confidence will probably start on Sunday, with the vote actually taking place next week on Tuesday evening. Even if the new government manages to pass the vote of confidence, it will still have to submit to Parliament the new austerity package for approval, probably sometime later next week or the week thereafter. This will be key for the smooth disbursement of the next tranche of EU/IMF loans, of €12bn." In other words, the Greek government has to pass 2 near-Sysiphean tasks before it can even hope to sniff the IMF's €12 billion in rescue funding. That's number 1. Number 2 comes from the chart below, which shows the debt and interest payments through August. This number is €18.2 billion. This number does not include the billions in deficit spending that will also have to be funded somehow over and above debt paydown. Ergo, the math for a viable Greece is as follows: €12BN > €18.2BN + X. Simply said, unless somehow Greece discovers how to tax its citizens and actually record net revenue in July, the best the ECB can hope for before it has to mark its tens of billions in Greek bonds to about 45 cents on the dollar, is one month. So will someone please explain to us why again the EUR is up today? Actually the only possible reason is that Europe is now pricing in the fact that China will be the de facto owner of at least 2 European countries by this time next year, however not in an Asset Purchase Transaction but Stock, whereby China also acquires the liabilities. Which in turn may explain why Russia's just announced minutes ago that China may turn into "zone of risk" for the global economy.
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Tyler,
it's pointless to even attempt to figure out the market rationale nowadays. In a bizarro superman universe it could mean anything.
Carve it Up, The Creature From Jekyl Island is Hungry!
Before, we just knew less. Now we know more (or think we do).
Bizzare is monkey society market's middle name and always was.
Maybe somebody could tell me why China would WANT to own Greece and Portugal? Wouldn't that be like owning a bunch of REO that hasn't been marked to market?
there is no more "mark-to-market"....it is now "mark-to-fantasy"....that is the reason this whole ponzi is still going....
"Maybe somebody could tell me why China would WANT to own Greece and Portugal?"
They're running into a dearth of Falun Gong 'suppliers' for their human organ export business, and Europeans will provide better matches for the rapidly expanding Rotschild market?
Hunh. Gives new meaning to 'extracting a pound of flesh' from your debtors, no?
Lovely bit of lateral thinking.
Cheers!
Greece is a nice place to station lots of chinese fighter jets and bombers... and portugal can be used to regulate sea trade routes to and from the Meditteranean... Global oil wars bitchez!
China's Cosco, running one of the piers at the Port of Piraeus, has imposed a no-breaks
policy, including a no-urination one. No trips to the little boys' room.
Piss before the opening bell or forever hold your bladder. A sign o' things to come?
[Maybe somebody could tell me why China would WANT to own Greece and Portugal?]---GoldSilverDoc
Hi Doc.
IMO, China is not ready for the European dominoes to start falling. China still has too many USDs yet to spend on shoring up foreign resources and securing food supplies.
China, like everyone else, is pushing against the inevitable. Buying more time to prepare for the economic catastrophe.
Quad witch today.
Very volatile. I can't wait until 2-3 PM for the afternoon fireworks display.
Nasdaq is leading the way down right now. DJIA to follow.
That is because the mother of all liquidity driven bubbles is about to pop...and everyone knows it [except the folks at Citi, I guess]. I am talking about the life sustaining price action on Netflix, of course.
Surely, if Netflix can no longer maintain positive traction, doom is at hand.
Attention Netflix "Investors"! Please report to your "smoothing mechanism."
Where are the "value" investors snapping up the bargain priced RIMM at?
They're all afraid of a RIMM job.
Ask no questions, hear no lies.
They are unable to kick the can, now it is taking more and more force to move the can down the road. Bulldozers and cranes come to mind. Pretty soon the can is going to fall through the road and cause a huge fucking pothole. They will try to fill it with paper money and open the road back up.
Who's more confident here, bulls or bears? Really?
Is there really any hope of this situation looking any better on Monday? By then we might have riots in France and Germany protesting Greek protests.
Im shorting this equity market till 1.100
Tactically till 1.220
Good bounce target, but your final cover may leave much on the table.
This will make Greece GDP and tax revenue soaring
In the meantime, let's read EU headlines how we are one big happy family and as confident abt anything as ever. Can we sing Kumbaya too?
China owning two countries...? Sounds like a game of Monopoly....
and the winner is ...nobody!
Except they'll own Baltic and mediterranean avenue. Whoopdy fucking doo. (Funny how ironically that turns out to be what they would be owning...)
Even if you put a hotel on Greece its not like it'll be a worthwhile purchase.
Edit: Even the monopoly board game understands the value of the property... Unimproved... about 2 bucks, with full improvements about 250 bucks.
Let them own all they want, just do not let them have the "collateral".
Im confused. Ill go back to the Rimmberrrrrrrrr post. Its much easier to understand
The EUR is up today because all these shenanigans are at the expense of the reserve currency. More USD's will be printed to allow for more EUR's to be disbursed to buy more Greek Isle Bikini's!
Is it creditors choice or does China simply get stuck with whatever defaults? Can Chine trade one Greece and one Spain for 1/2 of Germany? Or does cash also need to change hands? Or better yet......Gold?
Im surprised that Germany would let this happen, me thinks they will buy Spain and Greece for .50 on the Euro. Have not wars started over less?
Oh, and Rimm job, good one CD.
Brilliant.
Market up on either DIP financing to be provided by China (look forward to the Nasdq listed RTO of Greece in 2014)
or
Market up because the ECB will prevail (just long enough for Trichet to retire with his legacy intact, although see Greenspan for viability of duration trade in ones legacy), by adding even more debt on to the Greek balance sheet, providing for an even more catastrophic default going forward.
I select number 2 under the premise that "Not on my watch" is the policy of all politicians the world over.
Rumor china to widen out band against the dollar this weekend
I thought this was because China [the single worst allocators of capital on the globe, bar none] was buying Euros yesterday [and by algo extension...today too]? In which case, and perhaps with about one more penny in the crocodile algo advance of that clearly FUBAR currency, I think it is time to sell it.
And since this entire US equity session is looking like every session in the last six weeks, with the ETF/underlying stock arb trade running wild, it seems pretty clear to me that a reversal is highly likely today, in equities and in currencies.
My math would also indicate that today's Greek cure [firmly established as something in the past tense this morning on the BlowHorn] is nothing more than a story started so as to convert dumbass upside calls into liquidity destined for downside put on Monday morning. But I freely admit that I might be missing something here...and the disturbing feeling in my posterior just now may well be, in fact, a unicorn horn.
I took The Cure once. But it still itched for several weeks afterward.
I suspect the world will be itching for decades from this fiat transmitted disease.
My guess is...come Monday, noonish est, the itch will resume.
I highly recommend liberal application of this. In physical form of course.
That'll be $3079.80 + tax.
Its all so broken I cant even look at it anymore...just like how 4 years ago I had to stop watching all the media because the assault to the senses was too much, now following this daily sausage making spectacle the only ingredient of which is bullshit and they tell us its the finest grade-A choice cuts is too insulting to me.
Its all just crap, frankly I think they planned the grand world melt down, but now have cold feet to go over the edge.
Biding their time to suck the rest of the marrow out before the world gets the BONE
Gee I wonder how the already rioting Greeks will view the new and worse austerity measures for 'the plan' to be accepted?
Umm...by breaking the front window of the new shiny Abercrombie and Fitch store front, and then curiously standing in line with their credit card to buy $30 t-shirts?
Yeah what the fuck is the "plan" they keep mentioning on Bloomberg and CNBC? Printing/stealing more money and throwing it to Greece? So they can do the same thing in the fall?
This situation reminds me of a compulsive gambler. He needs more and more money over time, and constantly is broke and losing money. The market going up is similar to the credit rating of the person providing the money to go up. Even though it is nothing more than throwing good money after bad, with the prospect of more money being lost later on.
This is Kabuki Theatre.
The FED will never let a domino fall that is part of the Ponzi.
Merkel has been told to fall in line with FED support.
A few more days of theatre and ECB will announce another "Solution".
wally_12
I thought the IMF, in an act of complete desperation, was going to approve the next distribution basically without any conditions:
Rehn strongly implied that the International Monetary Fund, which must also sign off on the loan payment, would agree even if euro-zone governments haven't put a multi-year financing plan in place for the country.
Tyler JPM has a big trouble with CDS
A chart that paints a 1000 words. Greece is bust, period.
It would be nice if we could have analogous charts for all five little PIIGS.
As a percentage of 2010 GDP.
CNBC should run a poll:
Which is more vital to the economic recovery?
Raising the US debt ceiling
or
Bailing out Greece
Liesman's head would explode.
I think Rick Santelli is about to start fighting Steve Liesman.
$100 on Rick in a first round knockout.
I dunno, Liesman has that thick ugly head with the underbite to match, he looks like a bulldog waiting for you to give him a biscuit. As dumb as he is, I reckon itd take more than one round.
You might be correct.
The most dangerous opponent is the one who doesn't recognize he is essentially dead with no discernible brain function and should fall down now.
I pay $200 just to get to watch Rick stomp his ass to a bloody pulp.
Nah, he was ready to punch out hobbs tho.
IMF/Goldman converting Dollars to Euros...
G-Pap: "Put it on my Uncle's tab,... his name is Sam."
"China may turn into "zone of risk" for the global economy"
Well maybe, but only after they bail out everyone else (including the U.S.).
What are the chances of that happening? My bet is on WWIII happening first.
the notion that China can bail everybody out will go down in history as one of the most laughable economic myths of the 21st century.
"...Russia's just announced minutes ago that China may turn into "zone of risk" for the global economy..."
And so they shied from signing the 1 tril gas deal with China? Hmmmmm.
But but I thought they agreed to quit using usd to trade with each other, that might create a sucking sound over there..
FUCK the Banksters......
Let them eat SHIT......
And Ps....Why are all these leaders(so called)
Bilderberger's...????
Am I missing something,or am I as dumb as I think I am...???
and yet somehow the markets belief in the viability of this mathematical voodoo is providing the USD with a major Rikers Island shower style ass pounding...for now at least.
IMO the EUR is should go up when the bottemless pit is getting restructured.
However, this does not explain the jump in NBG - not surprised to see a new concocted patchwork again.
trader math says it is Friday, and if you are short from this week's fall off the cliff, then it is time to cover for the weekend. Add in weekend event risk, and it comes as no surprise we get a Euro rally from some level.
Exactly. Throw in a bit of risk-on rally in EZ and US equities and you've got your Euro rally. Plenty of time for shorting the hell out of the Euro next week once nothing is sorted in Greece yet again.
Germany does not like beign pushed around by a bunch of dumb asses.
What will be very interesting is the alliances and changes that are going to occur because the US is telling Germany what is "necessary".
I have been to NATO meetings and can assure you that it's members consider it a very important political entity.
Do you remember Germany's reation to Libya invasion? I think OB was told to go fly a kite.
Wait for the rest of the story. Greece will be bailed out. The EURO will soar on Monday, but Geopolitics are changing!
wally_12
Chinese buying spree...transitory as a BoJ intervention.
Is risk on not really a risk off trade?
I get the sense that IMF/ECB/FED/EU/US are all trying to coerce the emerging markets (aka more solvent nations thought how much that will be remains to be seen) into keeping the inslvent system afloat. Hope they have enough sense to avoid the mess, but knowing the idiocy that follows greed I'm guessing there will be plenty o' collateral damage-- damage nobody could've seen (right).
Just need patience all. Playing out to script. Just taking a while. Greece is gone, lets concentrate on Ireland, Portugal next.
Image of anxious man holding several grenades and several different pins. Pucker Factor 5!
let Progressive Insurance bail out greece; they seem to have plenty of money to throw around in adverts (including on THIS site).
So which supposed leader would like to step up to the plate and make some decisions?
Many who want power choke when the cards are down and we're seeing lots of choking right now...
SeriIs there anybody who has a positive light on this? I guess that's a rhetorical question, sas it appears this group is in 100% agreement that this is a patch to buy time for the peoteam that is steering this Titanic...and the iceburg is looming.
Tyler,
The EUR is up today because it is a stronger currency without Greece and the other losers. Once Europe faces reality and starts accepting the defaults it will become a much stronger fiat...and the markets will turn their attention toward the dollar and the yen forcing our governments to go austere or turn on the presses into hyperdrive.
Greece leaving the EUR and the other weak nations is ultimately net Euro positive.
It's possible to make this case, but I suspect it would only become realized from much, much lower levels. You see, there first comes the running of the lemmings as a result of Greece defaulting. After that, sure, constant jibber jabber from criminal syndicate Wall Street banks about how great the Euro is...thus explaining to the world the counter trend rally.
And after that, Ireland, the lemmings, the jibber jabber. Then Portugal, etc, etc.
We got 12bn reserves, short term auctions 3bn, VAT income from tourism, tax revenue, etc. I am not saying we will make it in the end, but you might have to wait another 5-6 months for our default. Don't rush it yet.
Well I guess they can resort to US inspired tactics and finance directly from the pension funds...
All they are doing is delaying the inevitable. They are doing everything to not have a default situation, but it won't happen. Also I still don't believe that they will pass the severe austerity at all, it's impossible.
The chart would be more credible if "principal" were spelled correctly.
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