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Greek Spreads Tighten By Less Than 100 Bps, Vigilantes Refuse To Uncall ECB's Bluff
As the chart demonstrates, even after bailout #4, 10 year spreads are just wider than where they were when this latest risk-flaring episode commenced, and are now in the 6.6% range, a spread to bunds of about 350 bps. As the so-called rescue mechanism is supposed to come in at 5% for the 3 year and presumably cheaper down the curve the bond market is once again not convinced that this weekend's videoconference festivities are anything but hot air. That the kneejerk reaction on Monday was unable to tighten spreads more is very concerning, and likely indicative that Greece will activate the rescue plan within the week. Next catalyst: tomorrow's 6 and 12 month auctions.
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Papa-G’s (also known as G-Pap) nightmare #2:
There is a big Flashing Green Button “Activate a Bailout” on a G-Pap’s desk; he needs to push the button urgently…. but there is a strict precondition – he must read through 2,400 pages of a user manual on “How to Activate a Eurozone Bailout” before he is allowed to push the Button….
+100
Papa-G’s (also known as G-Pap) nightmare #1:
There is a big Flashing Green Button “Activate a Bailout” on a G-Pap’s desk; G-Pap tries to reach and push the button as soon as possible, he finally reaches the button, pushes it … and…. Nothing happens, he keeps pressing the button over and over again… but nothing really happens except the floor under his feet is cracking and...
+1
Wait, them "battling brains" at PIMPco haven't covered yet...lol!
The austerity measures that will be required will cause considerably more rioting in greece.
Rumors of another (larger) mass strike are circulating.
Greece will NOT be bailed out. Merkel will commit political suicide for not just herself but her entire party if she votes yes - and remember, it has to be unanimous.
Exactly. The ECB is running the US Central Bank playbook. If you say there's going to be a bailout, you don't actually have to enact a bailout because the market will assume there is going to be a bailout and interest rates come down. The next few days are going to be fun to watch.
I sense the following conversation is going on behind the scenes:
Merkel: "The rules forbid bailouts, and we're not going to break the rules."
Sarkozy: "Look, we're not asking you to actually participate in a bailout. All we're asking is for you to say you will. Once the market is convinced that we stand behind Greece, their rates will come down and they can work their way through this crisis."
Merkel: "Ok, we'll go along with your ruse. But we're not going to participate in any bailouts, and that's final."
this stuff is not funny. or is it?
someone deserves a bonus. i just know it.
Trendline not broken; nothing to see here.
Re: equities, the cartel muted the futures overnight so we can have a gradual, "sustained" buy in prior to AA earnings release.
The cartel is also firmly in charge of oil as the computers kicked into sell mode when a pre-determined percentage of retail gas stations hit the $3 mark.
Command and control.
April 12 (Bloomberg) -- Jens Bastian, a senior research follow at the Hellenic Foundation for Foreign and European Policy, talks about the prospect of structural reforms in Greece. Bastian also discusses the role of the International Monetary Fund in monitoring Greece's efforts to return to a budget surplus. He speaks with with Bloomberg's David Tweed in Athens.
the guy sounds like a stereo typical patronising European bureaucrat
It's easy to imagine this guy in an SS uniform dreaming up the Final Solution to the Greek problem.
In much the same way as companies go to the bond market or draw down rcf's before they default, Greece may be doing so also. The austerity measures will almost certainly be rejected. The only way to pay bank this bailout money is with bond sales
The only way to pay bank this bailout money is with bond sales
So waht is new? It would seem that the vast majority of borrowers (private or soveriegn) are in this position. Generally, I don't see why the whole world is so critical of Greece's fiscal position while turning a blind eye to other similar "disasters." Greece has been deemed TBTF. There is no point running the numbers (unless you are short), it will not be allowed to fail. Does anybody question the books of JPM, BAC, WFC & C?
zenon,
You're a rare voice of reason in this otherwise lopsided debate. Bravo!
The vast majority of borrowers are not in a similar situation. That is just a ridiculous comment. Has Germany asked for an IMF loan ? Has Norway, HSBC ? The difference is that Greece is being asked to decrease its "revenue" line via an austerity program to repay a nominal number which just got bigger.
As for questioniong the books of the financials the answer is yes, everyone has questioned them and whilst the asset valuations are bullshit they are income producing assets that are repaying creditors. Like it or not that is happening.
Greece can only fund itself by taxing its populace. That is the difference. The have just been lent money which is not coming back
And Leo, I don't think you even know what side of the argument you are on. You just post random comments from other sources without any of your own analysis and chime in when it suits you. How you even have the ability to be a contributor to this site given some of the complete crap you espouse is beyond me.
The only problem I see as a creditor is how will they repay these Loans? What does their Economy produce?
How do you say game over in greece, in portugese , en espanol, in italiano, in english,?
1) I wonder if bond yields in the rest of EU will increase the moment Greek government decides to take the bailout money
2) The bailout would cost Ireland $650MM - let the rich pick the tab :-D.
But their parliament needs to vote for the plan and I hope they'll vote it down.
Pay a lot of attention to that man behind the curtain. The great and powerful Oz..er.. I mean IMF has spoken! Dominique Strauss Con has suggested that deflation is the only way out for Athens and has mincingly proposed that perhaps trimming pensions and health costs (shades of Obama) might be a way forward out of the slag heap of $500 billion debt. Along with bobblehead Bastian in the above video trotting out the old IMF warhorse of "privatization", sharp public sector cuts and structural tax enforcement will bring the Greek guinea piigs to heal. Add to that the gutting of disability funds and the reduction of transfers and subsidies to public enterprises. Deprived of the ability to regulate exchange rates on its non-existent currency, the Greek experiment is the economic proving ground wherein the irresistible impulse(QE) meets the immoveable object (sovereign debt) the predictable results of which will provide the template for structural adjustment throughout the Eurozone. The result will undoubtedly be more "greek fire", but this time around with added emphasis, much as with their fellow IMF colonists over in Kyrgyzstan.