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In Radical Change To ECB's Tune, Bundesbank Confident Euro Can Withstand Greek Default

Tyler Durden's picture




 

In yet another bad omen for Greece, now that Bailout Plan #2 has been demonstrated to be impractical and every question related to it is met at best with silence, it is back to plan B: letting Greece default. And in what is very good news for longs in the Drachma black market (which is already offered on an "when issued" basis by several large financial institutions), the Bundesbank's president Jens Weidmann just announced that “If the [Greek] commitments are not met, that cancels the basis for further funds from the aid package,” Weidmann told the newspaper. “This would be Greece’s decision, and the country then would have to bear the surely dramatic economic consequences of a default. I don’t think this would be sensible, and it would surely put partner countries in a difficult situation. But the euro would even in this case remain stable.” Translation: we now believe our banks are well enough reserved for what comes next. It also means that the rift with the ECB, which will be exposed as near-insolvent courtesy of using Greek collateral for tens of billions of loans that will have to be impaired, is now terminal. As for the far trickier, and now answered, question where the money to withstand this upcoming systemic shock comes from, just read this expose on the Fed's use of QE2 reserves.

From Bloomberg:

Weidmann’s depiction of a default as a liveable outcome contrasts with warnings from fellow ECB officials Lorenzo Bini Smaghi and Christian Noyer, as well as European Union Economic and Monetary Affairs Commissioner Olli Rehn, who described it as a “Lehman Brothers catastrophe” last week.
 
European officials are racing to find a plan to stem Greece’s debt crisis by June 24 while sharing the cost of a new rescue with bondholders. German Finance Minister Wolfgang Schaeuble is calling for Greek bondholders to extend the maturities of their debt by seven years, a move ECB officials say is akin to a default.

A bailout for Greece must include “voluntary” investor participation and meet the approval of central bankers, Luxembourg’s Jean-Claude Juncker said yesterday in an effort to narrow the dispute.
 
“We cannot push through private investor participation without, or against, the ECB,” Juncker said on Radio Berlin- Brandenburg. “A default would mean the ECB would have to end its accompanying programs. A default would mean we have reached the end of the line.”

Naturally, those German banks that did not have enough time to soak up Federal Reserve indulgences, are nervous:

Forcing losses on creditors may also hurt confidence, Commerzbank AG Chief Executive Officer Martin Blessing said in an interview published today in Welt am Sonntag. Investors had been told they wouldn’t need to join any efforts before 2013, and reneging on that pledge would “not exactly help build trust in the markets,” Blessing said, according to the newspaper.

Alas poor Angela, who is now caught between her electorate which will have her scalp should Germany proceed with some impractical Greek bailout, her bankers, which now are convinced they have enough cash to face principal writedowns, and the ECB and the europarliament which realize that a Greek bankruptcy is far from a contained exercise in Lehmanism, has to pick her words very carefully:

“We cannot accept an uncontrolled bankruptcy of a country,” German Chancellor Angela Merkel said yesterday in her weekly video message. Such an event may endanger the recovery of Germany’s economy, she said.

As usual, with a healthy dose of grandstanding, posturing and jawboning over the weekend, we expect the delayed reaction in the gravitational pull on the EURUSD to continue with full force in 5 hours.

 

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Sun, 06/12/2011 - 12:08 | 1363046 buzzsaw99
buzzsaw99's picture

such bullshit. if the piigs defaulted and the eurobanks went tits up the euro would strengthen, not weaken. It is the criminal banks that debauch the currency.

http://www.youtube.com/watch?v=sr0gNJ090JA&feature=related

Sun, 06/12/2011 - 12:41 | 1363089 Ahmeexnal
Ahmeexnal's picture

No, the euro will implode to zero. That is a fact.

But they need to keep the sheeple from bank runs before that happens.

This is the confirmation many of us needed. Their assurance that the euro will withstand a greek default is diametrically opposed from truth.

While the question of default was still in the air, TPTB warned the world about a total collapse if the greeks didn't honor their debt. When the scaremongers failed at their attempt they had to change their, now that everyone and their pet rock knows Greece WILL default.

Bank runs will probably comence next week. The MSM will not report the first occurences...until it gets really ugly. By then, it will be too late.

This makes sense with the topic of this post. The eurobanks (owned by european royalty)  are keeping those dollars since the euro will be worthless before september. The euroserfs have no clue as to what they have themselves been deluded into.

Sun, 06/12/2011 - 13:07 | 1363147 buzzsaw99
buzzsaw99's picture

So your argument is bailouts make for a stronger euro, defaults make it weaker? color me dubious on that theory.

Sun, 06/12/2011 - 13:39 | 1363195 ratso
ratso's picture

You are right ot be dubious.  The ECB lacks the centralized power to act in defense of the Euro and the economy of Europe should there be a "Lehman" type crisis in Europe.  The EU also doesn't have the flexibility to act decisively - too many governments have to many diverse interests to reach a timely conclusion about how to intervene.

Consequently, if the Greek bonds default, there will be a need for 1.5 billion Euros to shore up the banks because the Portuguese, Irish and Spanish bonds will follow them into default.

This will in turn cause the economy of Europe to seize without having the ability to act decisively the way the Fed and the Treasury intervened in 2008.  Credit will disappear. Libor will go thru the roof and the mortgage market will go into severe contraction.  Normal business lines of credit will also disappear.  It will cost another 1.5 trillion Euro injection into the economy to jump start it.  However, it might cost more because the individual countries might never agree on a solution resulting a the dissolution of the Euro system.

If the Euro is going to survive, the EU has to buy the Greek bonds and take the "haircut". itself.  The banks can share the "haircut" but they can't eat the whole thing without precipitating a major Euro crisis in all the weak bonds. Distributing this loss over the EU will reduce the pain but inflame the better functioning countries.  The only question now is when will this be proposed.  After that, Greece will be politely asked to leave the Eurozone

Sun, 06/12/2011 - 14:01 | 1363225 Arius
Arius's picture

i suppose problem solved then...ehhhh

would you care to elaborate how will you solve the irish, spanish, italian problems etc...

how about the US debt problems.....

or just ask politely everyone to leave the planet?? lol....

greece did not invent it, either is the only problem....it just happened to be the first one to go....

Sun, 06/12/2011 - 14:22 | 1363265 ratso
ratso's picture

No, Greece is different from Ireland, Portugal and Spain

Greece lied their way into the Eurozone with the help of Goldman Sachs.  They hid the extent of their financial mess before being admitted and then bought time by issuing bonds that they had no idea about how they would ever pay back.  They gave government employees huge pension and health benefit packages that could never have afforded before the bond issuance.  They collect less then 15% of the taxes they should.  Egregious tax cheating in Greece is a way of life with no consequences.  

They simply don't function with the same work ethics and financial ethics as the rest of the EEurozone.  Ireland, Portugal and Spain do by and large although Portugal has functioned until recently as if they think they should be supported by the rest of the Eurozone.

Sun, 06/12/2011 - 14:49 | 1363300 Ahmeexnal
Ahmeexnal's picture

So basically what you are saying is that Greeks love freedom and the rest of the Eurozone is happy paying taxes to TPTB, and being serfs?

Work ethics? You mean accepting the mantra that "work shall set you free" as the rest of the eurozone has?

 

 

Sun, 06/12/2011 - 15:59 | 1363383 Arius
Arius's picture

get a break pal...not sure how much you travel but people are not much different anywhere they live....greeks have been a bit longer than the rest under the sun, if you go down the road....

dont get me started on the lies....where do you live?  i mean you live in this planet correct?

greeks lied...man, where do you get your info from? newspapers? you really believe the greeks outsmarted all of these german, french and new york banks? dont you know Goldman Sachs wrote all of those derivatives to make it possible...its all planned...there are no suprises and lies....there are road maps for the next 30 years...

 

 

Tue, 06/14/2011 - 03:11 | 1367054 edotabin
edotabin's picture

greeks lied: hogwash! I have written many times before that you didn't need to be an insider to know how bad things were in Greece. Deficits were horrible, the country produces nothing, the retirement age is exceptionally low, the number of people sucking the coffers dry is huge. Many other examples can prove that a tiny bit of digging would reveal the financial disaster called Greece. This was offset by constant devaluations of the drachma and 25% interest rates. What else does one need to know ? 25% interest rates right before introduction of the Euro! You have to be einstein to figure this out?

They all colluded in the lie. This is why GPAP placed that bald idiot to be in charge of Greece's return to the markets. That bald dude was the guy that designed the whole Goldman scam! Leo K had spoken to that lying sack of deficits.... what was his name?

The Greeks usually refer to such situations as "They asked the wolf to guard the sheep"

Sun, 06/12/2011 - 16:10 | 1363410 swissinv
swissinv's picture

what Ratso says is 100% correct

Sun, 06/12/2011 - 13:23 | 1363164 buzzsaw99
buzzsaw99's picture

the bailouts have been great for the USD [/sarcasm]

http://finance.yahoo.com/echarts?s=UUP+Interactive#symbol=UUP;range=5y

If Europe has learned anything from the usa and japan it is that lying about bad assets on bank balance sheets is good, taking them onto the public balance sheet in broad daylight equals bad. It will be nothing but lies from here on out and the euro is grossly overvalued imo.

Sun, 06/12/2011 - 14:43 | 1363281 Ahmeexnal
Ahmeexnal's picture

Default is FREEDOM for Greece, bad for euro-banksters. It means game over for the NWO project.

Bailout is death for Greece, good for looting euro-kleptocrats. It means NWO can kick the can for a few more months, while at the same time bringing the greek population to slave status.  It means the imposition of the chaste system in europe (to be extended to the rest of the world).

 

 

Sun, 06/12/2011 - 14:43 | 1363290 Spastica Rex
Spastica Rex's picture

Nobody gets to have sex anymore?

Sun, 06/12/2011 - 14:47 | 1363296 Ahmeexnal
Ahmeexnal's picture

I guess it depends on your definition of sex. If the euro-kleptocrats get their way, it means greek knees -and pieholes- will hurt badly.

Sun, 06/12/2011 - 15:23 | 1363348 QQQBall
QQQBall's picture

 

hahahhahaha!+1

caste vs chaste. nice!

Sun, 06/12/2011 - 17:14 | 1363497 kito
kito's picture

thank the good Lord for our Grammar Patrol Officer S. Rex

Sun, 06/12/2011 - 13:38 | 1363188 Cdad
Cdad's picture

But they need to keep the sheeple from bank runs before that happens.

This is profoundly true, as is the case for all the sheeple mezmorizing talk about how this will be fine and that will be fine.  The attempt is to create a controlled collapse...so that certain very important criminal syndicate banks can profit from each step of the decline.

Short everything US to the 200 day sma on the S&P, short the Euro, get long the dollar...and buy VIX calls on any dip there.  We have all been here before!  The title wave of bullshit broke a week ago Wednesday.  On that day, you can clearly see that all those bullish just about anything threw in the towel [S&P daily chart].  Look for all the market darlings [the generals of the HFT squads] to be shot on the front end of the upcoming week...also a necessary event before any meaningful resumption of upward momentum can resume...if any can...which I seriously doubt.

It is time to ignore every last banker statement until such time as Ben Bernanke announces that he has the will to continue the money printing bailout scheme to its next level.  And for those hoping for that lifesaver, you had better hope he is not impeached and removed from his station.  Until QE3 is announced, all miracle, fractal algo lifts will be met with heavy selling...which was the case on Friday when the latest banker "news" was announced, bounced, and sold back into oblivion.



Sun, 06/12/2011 - 16:43 | 1363458 oogs66
oogs66's picture

+1. Wait til the hft's figure they can make most money by selling first and buying back later in addition to collecting subsidies from the exchanges

Sun, 06/12/2011 - 21:02 | 1363817 Roger Knights
Roger Knights's picture

"Short everything US to the 200 day sma on the S&P, short the Euro, get long the dollar...and buy VIX calls on any dip there."

Agreed. A drop in the euro will drag the S&P down.

Sun, 06/12/2011 - 16:23 | 1363429 TK7936
TK7936's picture

No, Greece just isnt enough for your doomsday scenario. Argentinia had more effect than a Greek default would ever have.

Sun, 06/12/2011 - 20:35 | 1363785 ISEEIT
ISEEIT's picture

No, the euro will not implode to zero. It will likely 'implode' to parity. The relationship is relative. Remember my good man  that it is a 'pairing', a 'relastionship'.

Zero won't happen because the eur will continue to be measured against usd.

I understand that you already know this...I'm just saying.

The 'pair' will become equally worth-less.

Fiat is to be earned in the race to the bottom, and smart bets are that the eur will win that contest.

Sun, 06/12/2011 - 12:54 | 1363111 Reptil
Reptil's picture

Normally, I'd say yes. But since there's no more "other reserves" this is the back of the line for the whole system.

Short of a massive loosening round and inflation, which will not happen, they're stuck. This whole thing is just posturing IMO.

Sun, 06/12/2011 - 13:01 | 1363126 MsCreant
MsCreant's picture

Tyler's lead post on today's blog. QE3. America is the new/old AIG. They suck us ($), we suck them (buy our treasuries). The check kiting continues and keeps things looking like they are running. God forbid someone had to stop the system and do a real accounting of anything. It is the motion that maintains the illusion that anything is working; intersecting derrivatives, loans, and guarantees keep us all distracted from the fact the system is broken.

Sun, 06/12/2011 - 13:25 | 1363170 Reptil
Reptil's picture

+1

I do believe though, they've run up to a wall now.

As Merkel said on the G20 last fall, in Toronto, germans don't buy that story (poor Angela haha).

Differences: 1. strong middle class with economic power - savers instead of debtors 2. they already went shopping for gold last year may. and will do so again. they have NO emotional ties with euros, like americans have with dollars 3. Higher average level of education 4. strong sense of nationality

Sun, 06/12/2011 - 14:19 | 1363250 PY-129-20
PY-129-20's picture

Yes, you're right about that, Reptil. We don't buy that story, but what can we do?

Just look at our parties - does it really matter if I vote for Greens, SPD, CDU or FDP? No, in fact, I think  we've already those parties elected that actually should care about being conservative or handing out money carefully.

But instead - what are they doing? They are handing it out as quick as possible. It doesn't matter to them or to anybody else in the Bundestag. They are looting the young German generation that is expected to reduce the national debt. They break our constitution for bailing out the PIIGS. It's a crime. I've said this a hundred times. It drives me crazy - listen, I am not an anti-european, in fact, I've always found the European idea great, but when they started this EUR project and took everybody in that could raise a hand, I instantly knew they would fuck up the whole system.

It is somewhat also ironic that their actions will destroy the whole European idea, instead of promoting it. And that makes me sad. Not that there weren't flaws in the system before, but at least it was great step forward after centuries of wars...

But what will happen afterwards? Will the be a new kind of EU? A more democratic EU instead of this lobbyist parading club of old politicians and bureaucrats?

I don't think so. I think people will abandon the whole European idea...

 

Sun, 06/12/2011 - 21:55 | 1363866 Reptil
Reptil's picture

+1 and that would be a defeat and a shame, and we have the apparatchiks to blame.

You'll see here if we think alike: http://www.zerohedge.com/article/unwind-begins-eurogroup-president-junck...

Sun, 06/12/2011 - 14:19 | 1363252 Founders Keeper
Founders Keeper's picture

+1

 

Sun, 06/12/2011 - 21:09 | 1363822 Roger Knights
Roger Knights's picture

"It is the motion that maintains the illusion that anything is working."

Agreed Here's a comment I read today on SA:

"This thing either goes up or it goes down."

Sun, 06/12/2011 - 14:15 | 1363244 ISEEIT
ISEEIT's picture

I love being a fundamentalist! I'm covering my (fake) short from 1.413.

Let it roll mutherfuckers.

Just because the average asshat heads south as I go east is reason enough for me. Play till you can't anymore shitheads.

I'm still covering and I will win.

Reality is a Bitch (or is it that YOU are realities bitch?)

 

I love ZH and the euro is set to fall,hard.

Fucking posures from the start.

Let's pretend we are married eh?

Turns out to be a bit more complicated than that you stupid shit's.

Who would ever have guessed????????????????????????????????????

Sun, 06/12/2011 - 12:14 | 1363055 oogs66
oogs66's picture

they are setting people up to deal with the default.  they realize it is going to happen eventually and that the governments will have less ability to deal with it as they take on all the debt, so they are preparing to have Greece default now and keep the problem at the bank level, which they can then deal with.

 

Zerohedge was first to spot that this was getting to the point of needing restructuring back in early May.  Isn't this what most people on ZH have been hoping for?  An admittal of defeat of kicking the can and trying to work through it?

 

And by now, European banks should be able to deal with this.

 

Portugal is not as bad as Greece and may actually be salvageable.

Sun, 06/12/2011 - 12:56 | 1363121 Reptil
Reptil's picture

Eeehmm the ECB is not "bank level". The ECB is massively overleveraged.

I see one tiny way out, they could appreciate the price of gold in euros, since the ECB holds gold as well. That will only work one time though... perhaps they'll pull the gold out of the ECB, and then do a greek default.

neh... My guess is, they'll posture some more, and then try to "make it through" the greek default eehm sorry debt restructuring.

http://www.ecb.int/stats/external/reserves/html/assets_8.812.E.en.html

Sun, 06/12/2011 - 13:01 | 1363134 oogs66
oogs66's picture

the ECB has a capital call on the governments of the EU.  the fact that ECB was buying bonds in the secondary market was effectively a doubling down of the amount the EU was providing Greece.  Certainly in hindsight, not a good idea, but at the time, as countries struggled to approve the bailout, why were they allowing the ECB provide an even larger bailout?  and one that wasn't even going directly to the country that needed the money?  the ecb took on more greek risk than the governments did through the formal bailout, and they took on the risk by buying debt in the open market, not supplying Greece with any new cash

Sun, 06/12/2011 - 13:44 | 1363187 Reptil
Reptil's picture

Up till one week ago the prevailing attitude here was that it still was a liquidity crisis. (Min. de Jager of the Netherlands said "whatever happens Greece needs more euros." and "there'll be a budget gap early 2012, so we have to act now to prevent this") And there was a genuine concern the banking system would collapse. (insert curseword here) So, then you know why.... they're very stupid like De Jager (as a lot of the current crop of politicians) or evil SOBs like Maxime Verhagen, and generally badly informed (i.o.w. don't believe in "conspiracy theories" and had the bankers as their advisors (because they're the "experts" that's why). This will cost them and us dearly.

With a clear conscience I'll enjoy the spectacle of squirming morons in the coming weeks, and perhaps a sudden dambreak and run on a bank followed by a run towards swiss francs first and from there gold, a glass of champagne in one hand and a nice spliff in the other.

Perhaps they'll stretch the elastic band a little further... even more fun in the summer. july is payback month.

http://www.youtube.com/watch?v=KBz4eK22-Zk

 

Sun, 06/12/2011 - 17:25 | 1363519 dracos_ghost
dracos_ghost's picture

+1000 on Bootsie Collins.

I agree with you, the music has stopped and their are no chairs and these self-anointed types are mentally masturbating while they scramble for cover.

It's as if they want a default to blame someone other than their own arrogance and stupidity.

 

Sun, 06/12/2011 - 15:08 | 1363326 M.B. Drapier
M.B. Drapier's picture

the ECB has a capital call on the governments of the EU.

But that's just the thing - it doesn't!

Sun, 06/12/2011 - 14:20 | 1363254 richard in norway
richard in norway's picture

reggie predicted it last year

Sun, 06/12/2011 - 12:16 | 1363060 Cleanclog
Cleanclog's picture

Not bad news for Greeks.  Good news.  So default already!  They're gonna let you out of the Euro, you'll control your own destiny with a currency that other countries aren't in charge of, and you can return to fiat, which means nothing, which means you can just keep spending without consequence like the rest of the world until . . . poof!  The survivors will have food, water, some form of shelter, a method of protection, and something of value that is portable enough to barter/trade with.  Survivors include individuals, communities, and companies appropriately ready.  

Contingency planning has rarely been more important.  It is not about the sexy car or McMansion folks.

Sun, 06/12/2011 - 12:15 | 1363062 sunnydays
sunnydays's picture

sounds like it is going to be an interesting week in FX this coming week.  Should be a fund week will be interesting what metals do this week.

Sun, 06/12/2011 - 12:17 | 1363065 johngaltfla
johngaltfla's picture

I'll bet that the Bundesbank isn't speaking for France, Belgium, Austria or the CDS and bondholders of the other PIIGS....

Sun, 06/12/2011 - 12:26 | 1363073 Going Loco
Going Loco's picture

If Greece defaults and "gets away with it" the Irish will be tempted to do the same. What then happens to the British banks?

Sun, 06/12/2011 - 12:31 | 1363082 oogs66
oogs66's picture

how are the Greeks "getting away with it"?  If (when) Greece defaults then the lenders should do everything they can to recover as much money as possible.  Sadly, for the lenders, that is harder to do with a sovereing borrower than a corporate borrower.  Blame the lenders, not the borrowers!

Sun, 06/12/2011 - 13:47 | 1363200 boiltherich
boiltherich's picture

Just like the obvious case of the Greeks the Irish and the Portuguese will eventually default, their debts are just too large, ditto Spain by the way, they could plow half their collective GDP's into debt service and still take 200 years to fully repay principal because 99.99% will go to interest as it is now.  The only way for it not to happen would be a massive devaluation and injection of cash into those economies which just isn't in the cards.  The taxpayers and consumers of these nations were had, especially Ireland which had almost no external debt as recently as 2007, and which have no consumer protection for discharge of mortgage debt in bankruptcy, as well as the fact that nearly all mortgages are variable rate.

The Euro might be able to withstand the default of Greece, but also of Ireland?  Portugal?  Spain?  And if the contagion gets that far what will the Euro still be really?  It will be a Deutshe Mark in all but name. 

Sun, 06/12/2011 - 12:27 | 1363076 zaknick
zaknick's picture

It is in China's and the Euro banksters' interest that the FRN be the one to bite the bullet. Can you imagine how they must be living their chops at the thought of being able to replace the US treasury market with Eurobonds? Sweet little Ponzi, no?

Sun, 06/12/2011 - 13:01 | 1363132 Reptil
Reptil's picture

eehmm euro-dollar banks is one team

Sun, 06/12/2011 - 12:39 | 1363092 G-R-U-N-T
G-R-U-N-T's picture

Greece produces little, if anything of value, therefore there is no way in hell this will ever be paid back. Why continue loaning money to a country when they know they can't pay it back?

How much of the last bailout and this potenial bailout is U.S. money?

 

Sun, 06/12/2011 - 12:56 | 1363125 bob_dabolina
bob_dabolina's picture

 Why continue loaning money to a country when they know they can't pay it back?

http://en.wikipedia.org/wiki/Indentured_servant

Sun, 06/12/2011 - 18:26 | 1363594 margaris
margaris's picture

yep, exactly.

to learn (in a playful way) what an indentured servant is, you might want to check the old pc game 'sid meier's colonization'

have fun

Sun, 06/12/2011 - 12:41 | 1363100 THE DORK OF CORK
THE DORK OF CORK's picture

 

Leverage is expensive

please google :

Central government debt; total (% of GDP) in Euro area

in the trading economics website
Back in 1996 as EMU was getting started it was 72/73% of GDP
in 2008 it was 51 /52 %
Bank credit filled this hole and created a massive malinvestment nightmare

Sun, 06/12/2011 - 12:47 | 1363106 Reptil
Reptil's picture

Obelix would say.. "guarantees, can you eat those?"

http://fr4awap10.wikispaces.com/file/view/Obelix.jpg/93914268/Obelix.jpg

Sun, 06/12/2011 - 12:53 | 1363109 Beancounter
Beancounter's picture

I see Greek islands for sale in the future at 3 drachmas on the $1.  

Anybody want to start a sovereign asset buyout fund?

Sun, 06/12/2011 - 12:55 | 1363110 MsCreant
MsCreant's picture

Read the lead ZH article to make sense of this one:

http://www.zerohedge.com/article/exclusive-feds-600-billion-stealth-bail...

Edit: Ben has your back (heh heh heh, that is your backside).

Sun, 06/12/2011 - 12:51 | 1363112 Subprime JD
Subprime JD's picture

Greece will be fine. Even if they "default" within a few years their tourism industry will rebound as foreigners will be able to come and convert their fiat into drachmas.

Sun, 06/12/2011 - 12:58 | 1363118 Weimar Ben Bernanke
Weimar Ben Bernanke's picture

I wonder what derivative contracts the French,Spanish,Britain,Italian,Belgium banks are tied to Greek debt? If Greece falls this will lead to a domino effect and the rest of the PIIGS will follow and that would lead to mayhem. If they continue to bailout Greece this will bring future hyperinflationary hell in Europe. So it's damn if they do,damned if they don't. Spain will be the camel that will break the euros back.

Sun, 06/12/2011 - 13:05 | 1363141 Reptil
Reptil's picture

Italy. Italians are much more cunning in the subtle art of embezzlement. Spanish are WAY to honest for their own good. Investors of these countries (not "Juan Estrella") have been equally greedy, but IMHO italy is the dark horse that'll leave the barn first.

Sun, 06/12/2011 - 13:53 | 1363213 boiltherich
boiltherich's picture

They also hold a lot of gold. Only the US, Germany, and IMF hold more than Italy.  2,452 metric tons. 

Sun, 06/12/2011 - 15:08 | 1363320 Ahmeexnal
Ahmeexnal's picture

No. Italy has some real industry left. Spain has.... E. coli laced vegetables (according to TPTB). And they will soon have islands for sale.  When Greece defaults, Ireland, Spain and Portugal will follow.  They will find out that the emergency exit door from the euro-trap will be very crowded.

Even the groupies are now realizing the extent of the lies:

http://www.marketwatch.com/story/economic-data-may-be-as-grim-as-bad-sum...

http://www.marketwatch.com/story/death-of-keynesianism-2011-06-10?link=M...

 

Expect many bankrupt traders to jump from office buildings next week.

Mon, 06/13/2011 - 04:41 | 1363995 Reptil
Reptil's picture

That real industry might pose actually an anchor, because it has slowed down. We'll see. Italy's economy has slowed down, they've not used the available funds and time to restructure this in the last decade. Spain did. They've used the EU funds surprisingly well. And they've modernised both energy and a lot of agriculture. The problem they face in debt and unemployment is to blame on the ridiculous real estate boom. Apart from that, I'm seeing more future growth there. In fact I'm planning to move my business there.

As for the e-coli vegetables, that was an attack with a bio weapon. It's a frankenstein pathogen constructed from different and rare e-coli strains with some PLAGUE mixed in to make it extra effective. They're now blaming organic farming, and are putting regulations in place, just like they did with medicinal herbs. This is a defeat of organic farming who often are small scale farmers, with local produce or with some channels to organic shops in the northern countries. http://www.youtube.com/watch?v=eHX_GHUQryQ Here's PROOF of the weapon: http://www.zerohedge.com/article/unwind-begins-eurogroup-president-junck...

--

There's been a massive consolidation phase in this industry which resulted in a concentration in a few multinationals.

I believe a divided europe is in their best interest, as they've used the divisions between nations, and weak border checks in South America to conquer country by country with illegal imports. http://www.grain.org/research/btcotton.cfm?id=306 and http://www.combat-monsanto.co.uk/spip.php?article302

Incidentally, a lot of information about this, including an interview with the minister or agriculture of Paraguay which was online, has been "sanitised".

So they're doing exactly the same in Europe now: http://www.gmo-compass.org/eng/news/453.eu_countries_should_able_ban_gen... (it reads like an upbeat story but really, it isn't, there was considerable political opposition against this)

Please note it's quite a big thing here, farmers recieved a lot of subsedies, and contrary to the Netherlands there's not really a strong bio-tech base in southern europe.

Dutch minister Verburg was one of the driving forces politically. She lied in the Parliament about this, presented a Monsanto study as independent, and then was caught. http://vorige.nrc.nl/economie/article2364298.ece/Kamer_veroordeelt_invlo... She got off with a "motie van treurnis" for lying, which is pathetic in relation to the serious crime she's committed, as it doesn't have any consequences. http://nos.nl/artikel/143115-motie-van-treurnis-tegen-verburg.html

After that, undeterred, she went on to Brussels and shamelessly, wrongfully represented the Netherlands there as being pro-GMO by voting in favour of adopting MON89788 a GMO Soy. http://www.gentech.nl/alle_berichten/nederlandse_politiek/tweede_kamer_w...

She also lied about milk producing farmers and was called on that. (Source: Dutch association of milk producing farmers)

I am of the opinion that this is high treason and she should be tried and sentenced for that.

The Netherlands government is WRONGFULLY stating it's protecting bio diversity and sustainabillity. This is a front for promoting the agriculture business here: http://www.rijksoverheid.nl/documenten-en-publicaties/persberichten/2010...

--

There's been a worldwide Consolidation phase, and this has had consequences in the Netherlands: FYI some background

Monsanto bought a number of seed producing companies in Holland including Seminis, Western Seeds and the prestigious De Ruiter Seeds in 2008. http://www.euroinvestor.nl/News/ShowNewsStory.aspx?StoryID=9783793

Holland is a world market leader in potato seed production: http://www.nivaa.nl/uk/about_potatoes/faq?faqmode=view&itemID=34

Here's a searchable database of dutch seed companies: http://www.plantum.nl/bedrijven-database and a brochure http://www.plantum.nl/englishversion/articles.htm

Here's the website of the ESCAA the european regulation office: http://www.escaa.org/pages/news.php

More info on the worldwide consolidation of seed industry: http://www.beginningfarmers.org/article-visualizing-consolidation-in-the...

--

As you probably know by now the whole GMO thing is turning pearshaped: http://www.i-sis.org.uk/newPathogenInRoundupReadyGMCrops.php and confirmation: http://www.vimeo.com/22997532

And Glyphosphate (Roundup) causes birth defects in human beings: http://www.scribd.com/doc/57277946/RoundupandBirthDefectsv5

An interesting documentary about scientists thrown under the bus. It has bias, anti-GMO but is factually correct: http://www.youtube.com/watch?v=ADNE1B2Rl5Y

This will result in massive crop harvest failure in the near future. IMO this is a real revolution taking place right now. It's a huge experiment, as it's not really tested what this has for an impact on biodiversity, health impact and food production.

I'm long organic seeds, silver and gold.

ps: I didn't junk you.

Sun, 06/12/2011 - 13:11 | 1363148 oogs66
oogs66's picture

The problem is going to come from actual losses made by lending to Greece.  Losses (and gains) due to CDS exposure from Greece are relatively small and the risk of some sort of counterparty cascade is minimal.

http://www.dtcc.com/products/derivserv/data_table_i.php?tbid=5

 

that site shows gross and net exposures of CDS for the top 1000 entities that CDS has been written on.

Sun, 06/12/2011 - 13:17 | 1363130 gwar5
gwar5's picture

@Ax-mal 1363089

Euroduct tape is all gone. Agree, bank runs could be in the offing, and they'll have to put the Euros into something like PMs.

Whatever unfolds in Eurotopia could be a preview of coming attractions for the USA. Be prepared, beat the crowds and panic early when there is still time.

Sun, 06/12/2011 - 13:08 | 1363149 MsCreant
MsCreant's picture

It doesn't matter. If Tyler's lead post is true, the Fed already has a way planned to come in the back door (get it, back door) with more cash. The Bernanke himself is Too Big To Fail. He will keep doing it until someone calls him on it. No one "Big" will call him on it because their interests are all interwoven together.

Sun, 06/12/2011 - 13:14 | 1363150 Dick Darlington
Dick Darlington's picture

the Bundesbank's president Jens Weidmann just announced that “If the [Greek] commitments are not met, that cancels the basis for further funds from the aid package,”

Roughly a week before the kleptocrats aka Troika released their latest "liar flyer" on Greece's situation (giving green light for the next tranche of bail out money), IMF said Greece had not fulfilled ANY of the goals the foreign overlords had set. Yet somehow the report found it's all golden after all. Uh huh... I guess they realised that within a month Greece will have burned the former tranche of the bail out money and come the end of June/early July it's game over unless they give them more. At the same time they are designing NEW package for Greece on top of the old one and now Weidmann says this. Is the chaotic and contradicting news flow from ECB/EU/IMF intentional or is the division real within the Troika? Or does Germany have some other plan just for themselves afterall?

Sun, 06/12/2011 - 13:27 | 1363171 oogs66
oogs66's picture

I believe that Germany now realizes it is throwing money down a hole, and their banks are in good enough shape that they would rather stop the nonsense and deal with the real problem

I believe the people of Greece will not deal with any more austerity easily without first seeing bankers take a loss

I believe the ECB is conflicted as they took on bonds from the secondary market, so they face big losses on Greek debt without having ever given Greece any money directly - so they are cajoling everyone into a opinion that lets them hide their mistake

France is too busy trying to get Lagarde into new role as IMF head to do enough

Junky is confused and saying whatever he thinks will soothe the market, as he has told us he does

 

So I think real confusion and ultimately high likelihood of some serious write-downs finally been taken and Greece moving forward with a manageable debt level

Sun, 06/12/2011 - 13:21 | 1363156 CrashisOptimistic
CrashisOptimistic's picture

Bottom line would seem to be that Merkel told the German banks to divest themselves of swaps, and they finally did so.  They no longer are at risk in the default and have no reason to bailout further.

There is, of course, the profoundly significant question of who now owns the swap exposure.  Probably the French.  We must presume German banks closed those positions at a loss, knowing they were going to force default.  Maybe they even got aggressive and took the other side of the trade, profiting hugely on Greek default, and told their relevant German gov't officials to make it happen.

Just like Citibank's note pointing out that hedge funds had bought Greek debt in small quantities to go with their large swap positions.  They bought the debt to deny unanimous consent to the *voluntary* requirement that hopes to avoid default declaration.

This is equities re-visited, where SPY trading at hyperfast speeds can move the market.  Funds no longer try to predict it.  They create it.

Sun, 06/12/2011 - 15:17 | 1363341 Ahmeexnal
Ahmeexnal's picture

Yes, this is probably very true.  The german banks considered the greeks would not kneel so they stealthily started to prepare for an alternate situation.

You are correct in assuming that german banks sold their greek baggage to their neighboring Frankreich. You see, it is infinitely easier to place Frankreich under another Vichy, than to deal with a greek intifada.

 

Sun, 06/12/2011 - 13:27 | 1363172 gwar5
gwar5's picture

I hope Greece defaults, and the rest of the PIIGS join them. It's an abomination the banks are dictating to the sovereigns in the first place, so F' em.

New World Order: Countries live within their means and banks don't overextend to known risks or they get kneecapped. 

Sun, 06/12/2011 - 13:27 | 1363174 Joebloinvestor
Joebloinvestor's picture

Now they are gonna let Greece default.

After all the real money has been moved and the bankers have gotten their bonuses.

This whole thing was just to buy time.

Sun, 06/12/2011 - 13:26 | 1363175 TexDenim
TexDenim's picture

Bundesbank's president Jens Weidmann is a master of Game Theory. So if he says that a Greek default is "liveable," this likely means that Germany is going to put a lot of pressure on Greece in the next week, because it is quite unlikely that Germany wants to give up having the entire EC as a market for German products. We forget that the Euro is really the Neue-DM, and that the German Finance Ministry and the Bundesbank are Europe's Treasury and Fed.

Sun, 06/12/2011 - 14:07 | 1363228 Reptil
Reptil's picture

Greece inside the euro is nice, but I doubt the germans will stop coming to Greece. A Drachme devalued is IRRESISTABLE as investment. I mean where can it go after that. Lower?
And, there's always Spain. Spain is a bigger country, lots of half build condos to put a trade surplus in.

I don't really see the problem. But probably you're right in that they'll minimise their loss.

Sun, 06/12/2011 - 14:08 | 1363234 A Man without Q...
A Man without Qualities's picture

Exactly, this is his response to G-Pap's ludicrous (& offensive to German eyes) comment that further cuts need to be put to a referendum.  Basically, Greece is bluffing that they hold all the cards, and it will hurt the creditors more than them if there is a default.  So far the Greece have failed to meet every target and are being given another chance to do what is necessary.  The more they try and label the Germans as "Nazis" and "overlords" etc, merely wastes time and ignores the reality that they brought this upon themselves.

Anyway, I suspect G-Pap is doing what his American masters tell him to.  They desperately need this story to fester and distract the world's eyes from their own insolvency.

Sun, 06/12/2011 - 13:32 | 1363182 PulauHantu29
PulauHantu29's picture

Of course the euro can withstand a Greek default..since the Fed is handing them $600 Billion...and counting.

Sun, 06/12/2011 - 14:14 | 1363238 A Man without Q...
A Man without Qualities's picture

Ok genius, the Fed gives them $600 billion in exchange for Treasuries.  Doesn't that mean they had to buy those Treasuries before?

Sun, 06/12/2011 - 15:28 | 1363360 Sudden Debt
Sudden Debt's picture

Which is strange because the first calculated costs back in 2008 where around 600 billion so the costs should be covered back then.

I had Dexia shares back then and was on every blog calculating the maximum exposure for Dexia alone throug all the connections.

This means there are Ghosts in the closet which we don't know of yet. AND it ain't Greece.

Something more of the books... I can't figure this one out yet but don't keep looking to Greece. It's all already accounted for.

I just can't put my vinger on it. We're missing something.

 

 

Sun, 06/12/2011 - 13:47 | 1363201 skepticCarl
skepticCarl's picture

Very astute, on-topic comments from the above posters.  Thanks for the thoughtful commentary.

Sun, 06/12/2011 - 14:05 | 1363226 Dick Darlington
Dick Darlington's picture

Who's gonna bail out Spain and the banks when the rotten apple falls from the tree? Is it Bernank the Allmighty or will it mark the end of eurozone as we know it.

http://ftalphaville.ft.com/blog/2011/06/09/589196/nomura-says-spanish-ba...

Sun, 06/12/2011 - 14:33 | 1363271 speconomist
speconomist's picture

hey guys, i have no idea what does the last paragraph mean (for me is completely cryptic), will the euro continue plumetting when markets open or it will surge?

Sun, 06/12/2011 - 15:30 | 1363364 Sudden Debt
Sudden Debt's picture

Everybody is expecting it to drop so it will go up.

THAT are the rules of the puppet game.

 

 

Sun, 06/12/2011 - 14:39 | 1363278 Glasgow Gary
Glasgow Gary's picture

Gold and Silver are going to rock. Gold could hit an all time new high in most senior currencies this coming week.

Sun, 06/12/2011 - 15:34 | 1363368 Sudden Debt
Sudden Debt's picture

Gold and Silver will stay flat untill August. PM's aren't good runners during the summer. Check the history stats.

After that it will skyrocket again. Like it did last year and the year before. I believe in a repeat. +50% is very likely from here on in the next 6 months.

Miners will even drop about 4% in the next 2 months as will the PM's. That's also very likely checking the history stats.

 

 

Sun, 06/12/2011 - 19:06 | 1363640 Ahmeexnal
Ahmeexnal's picture

This is a special summer. Peru was already debunked from first position as silver producer in 2010. The elections last week makes things worse. Winning candidate, Lieutenant Colonel Ollanta Humala, is about to shake the PM markets as soon as he takes office. Already the smart money is scrambling. Peru will nationalize it's gold and silver mines.  Expect Peruvian silver output to plummet as the looters and the moochers start carving the host. And that's just the beginning.

Got Ag??

Mon, 06/13/2011 - 04:28 | 1364209 Reptil
Reptil's picture

eehmm yes :-D

This guy? http://www.youtube.com/watch?v=bogDSKdVCD4

aha

 

 

Sun, 06/12/2011 - 15:40 | 1363376 ruffian
ruffian's picture

not so sure about that matey.....I am a huge gold bull but weak euro has not exactly been the green green grass of home for gold. it's actually a great excuse for the bullion banks to execute a massive bear raid. Ultimately you are right but the kneejerk reaction may be totally different

Sun, 06/12/2011 - 14:47 | 1363295 Franken_Stein
Franken_Stein's picture

 

I hope that the Euro will crash.

This will be good for exports.

And this will make the PM prices in Euro rise.

 

A-hahahahaha !

O-hohohohoho !

 

"Heute back' ich,

morgen brau' ich,

übermorgen hol ich der Köngistochter Kind.

Ach, wie gut, daß niemand weiß,

daß ich Rumpelstilzchen heiß !"

 

Sun, 06/12/2011 - 15:35 | 1363371 Sudden Debt
Sudden Debt's picture

Gold is at a all time high against the pound. And England still is one of the biggest financial centers of the world.

 

Sun, 06/12/2011 - 15:12 | 1363327 lawrence1
lawrence1's picture

¨The way to do is to be¨.... Lao Tzu

¨To be is to do¨ ... Jean Paul Sartre

¨Do be do be do be do¨  Benny Goodman

 

Sun, 06/12/2011 - 15:17 | 1363336 kito
kito's picture

so as i stated before, the eu/ecb/imf/fed has decided to bail out dumb (german banks) and not dumber (greece) which will allow this game to continue indefinitely.....

Sun, 06/12/2011 - 15:40 | 1363369 lawrence1
lawrence1's picture

Off topic, I apologize ... but what the hell is happening on the Kitco front with their alleged participation in defrauding the government?  Has Nadler committed suicide? Hey, one can hope. Hope this promotes the possession of physical and-or apparently honest

funds like Sprotts and CEF. 

 

 

Sun, 06/12/2011 - 16:00 | 1363403 poydras
poydras's picture

Looks like they are ready to pull the plug and initiate the controlled bankruptcy sequence.

"Already today, a considerable amount of Greece's debt has more or less been transferred into public hands -- either through loans from other euro-zone member states or through the state bonds that have been purchased by the ECB."

http://www.spiegel.de/international/europe/0,1518,767371,00.html

 

Sun, 06/12/2011 - 16:57 | 1363478 Problem Is
Problem Is's picture

Deutsche Teleprompterin'

Teleprompter (Bilderberger): "Merkel, say: We cannot accept an uncontrolled bankruptcy of a country.”

Merkel: "We cannot accept an uncontrolled bankruptcy of a country.”

Teleprompter (Bilderberger): "Merkel, say: Bilderberger does not exist. I was on holiday with Frau Clinton."

Merkel: "Bilderberger does not exist. I was on holiday with Frau Clinton."

Teleprompter (Bilderberger): "Merkel, smile to the audience and nod your head."

Thu, 06/16/2011 - 14:25 | 1363481 Yperkeimenos
Yperkeimenos's picture

I see that some blame the Greeks for lying and cheating their way into the Eurozone but forget that the Greek people where never asked,via a referendum,whether they wished to be part of that madhouse.Nor where they asked about the bailouts,cause if they had been they would choose to default.So don't make the mistake of identifying the greek people with their corrupt goverment.Their responsibility is that they elected those unworthy politicians.

Sun, 06/12/2011 - 16:57 | 1363483 TK7936
TK7936's picture

A Euro Dollar Parity would make my company almost double exports.

Sun, 06/12/2011 - 17:35 | 1363517 Reptil
Reptil's picture

FYI:

Private banks cannot be forced to help Greece. If they're forced to, Europe is "in deep trouble".
That's what Nout Wellink, president of De Nederlandsche Bank (DNB) said today in the radioshow Tros Kamerbreed. Minister of Finances Jan Kees de Jager pressed the important today that it's important that the private sector contributes to solving the economic downturn in Greece, because more money is needed than the 110 Billion euro in loans Greece received from the hands of the EU and IMF.
http://www.nrc.nl/nieuws/2011/06/07/de-jager-griekenland-heeft-hoe-dan-o...

According to De Jager a solution wherein banks and institutional investors can extend the possibility of their Greek state loans is part of the possibilities. Wellink is of the opinion that the minister must make sure this only happens on a voluntarily basis. Because if the Greek bonds' value will drop, this will mean consequences for banks that own a large amount of those, because these are collateral for the loans. Wellink: "If the collateral will be downgraded, the European Central Bank won't be able to fulfill it's function towards the Greek banking institutions."

Wellink stressed again that Europe, and therefore the Netherlands too, cannot let Greece fall down: "We've build a system in which everything is connected with everything else. The damage to us would be substantial". According to him the accords within Europe to handle such great economic descisions are "too weak" because a mechanism is missing to be able to take those descisions. That would make possible a system in which descisions will not have to be taken unanimously.

 

Nout Wellink will resign as president of De Nederlansche Bank on the first of july. Klaas Knot will be replacing him in that function. http://www.nrc.nl/nieuws/2011/05/20/kabinet-besluit-over-nieuwe-presiden...

This morning it became known that Greece will receive a second package of support from the European Union. In two weeks there will be deliberations, about the definitive sum of money that entails this support package. At this moment, an amount of around 80 billion euros is being discussed.
http://www.nrc.nl/nieuws/2011/06/11/eind-juni-nieuw-noodpakket-voor-grie...

 

Source: http://www.nrc.nl/nieuws/2011/06/11/wellink-banken-niet-dwingen-griekenl...

(emphasis mine)

I wonder how in such a weak system the descision to put a hundred and ten BILLION of our public money at risk could have been taken? Wouldn't this imply that the last years' bailouts are illegal? I think it would.

The last sentence in bold is deliberately vague, and not even proper dutch. I've translated it as exactly as possible. It's either sloppy journalism, or meant to be vague; to be absolutely PRECISE in the dutch language is very important, as the slightest difference in emphasis can mean something different.

Cheers,

R.

Sun, 06/12/2011 - 19:33 | 1363694 Buck Johnson
Buck Johnson's picture

They are finally saying just let them default and we will get our money from them when they try to get back into the market (either from assets or higher than usual interest rates with backed collateral)

Sun, 06/12/2011 - 20:19 | 1363765 Bazza McKenzie
Bazza McKenzie's picture

Looks like the Bundesbank is making a strike against the ECB.

Having had to swallow the mark being replaced by the euro, they have been overridden while the Frenchman Trichet had the ECB take on massive volumes of near worthless PIGS securities.  Now Trichet is due to be succeeded by an Italian, not a German, the Bundesbank no doubt expects the same profligate ECB behavior to continue.

So trigger some defaults so the ECB is left with a transparently broken balance sheet and the German public can demand the Bundesbank be put back in charge of Germany's currency.  Goodbye euro.

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