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From "Sovereign Liability Management Exercise" To "Reprofiling" To "Muddling Through": The Many Faces Of The Greek Bankruptcy

Tyler Durden's picture




 

A week ago it was called "Sovereign Liability Management Exercise" following the politically corrected definition of the Greek bankruptcy by Goldman Sachs. However, after Zero Hedge proposed the unpopular acronym SLiME to capture the essence of this idea, the latest appellation of the current Greek metamorphosis stage from solvency to bankruptcy appears to be "reprofiling." Per Bloomberg: "European finance ministers for the first time floated the idea of talks with bondholders over extending Greece’s debt-repayment schedule, saying that last year’s 110 billion-euro ($156 billion) rescue has failed to restore the country to financial health. Europe would consider “reprofiling” Greek bond maturities as part of a package including stepped-up sales of state assets and deeper spending cuts, Luxembourg Prime Minister Jean-Claude Juncker said. “If all these conditions are fulfilled, we can discuss the question of reprofiling,” Juncker told reporters late yesterday after chairing a meeting of euro-area finance chiefs in Brussels. “It’s not reprofiling or nothing. It’s measures, measures and measures, and then maybe reprofiling.” (And speaking of simple profiiling, perhaps someone can tell us why the Rikers island inmate directory is still down, now for almost 12 hours, and since the time of DSK's admission). But back to Greece, where "reprofiling" is merely the latest term to push for what will likely end up being a consensual restructuring: "Introducing that prospect marks a break in Europe’s crisis- fighting strategy, with governments potentially shifting some costs to bondholders instead of relying on taxpayer-funded bailouts to stamp out the debt crisis. The talks were clouded by the absence of International Monetary Fund Managing Director Dominique Strauss-Kahn, who was denied bail in New York yesterday after being arrested on sexual-assault charges." Of course, when that fails, there is always the last case definition: the "muddling through" one, which is the one known as the "rolloff" where reality finally meats the can in the street, and freefall bankruptcy follows.

Bank of America is on the last case:

Last Friday’s GDP releases painted a much less worrisome picture of the pressures the European periphery faces from the triple-whammy of higher oil prices, a stronger EUR and higher interest rates. We have also seen a significant correction in oil, the EUR and ECB rate-hike expectations over the last week. This has resulted in unchanged spreads of Italy and Spain, despite the wider risk-off moves, and against a strong rally in Bund yields. Portugal has also benefited from Finnish support and last night’s approval of its €78bn funding program by  the Eurogroup and ECOFIN. However, the woes experienced by Greece highlight the extent to which investor confidence remains susceptible to uncertainty. Without the results of the IMF review, Monday’s statements on Greece were another example of the muddling-through approach forced onto European policymakers.

The table below (please click on publication link to view) discusses all the various options that have been proposed for Greece, along with the likely market impact. As is obvious from the table, the most likely options are the ones that will represent a continuation of the current approach of incremental funding in return for continued reform. Catharsis of the kind some market participants imagine would be achieved by an early restructuring will remain elusive. We, therefore, remain strategically underweight Greece, Ireland and Portugal. Ireland cash bonds in particular look prone for a correction given the significant tightening in CDS spreads.

For Italy and Spain, the absorption of Spain’s supply this week will present a key test of market appetite. With the weaker EUR and lower oil, the market may remain sanguine, until we get closer to the publication of the EU bank stress tests. However, we maintain our tactical short in BTPS vs Bunds going into the Spanish supply.

And a pretty but completely useless chart:

 

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Tue, 05/17/2011 - 08:03 | 1282336 FOC 1183
FOC 1183's picture

but, but...it's just so pretty it HAS to mean something. Thank you Bank of Lynch, Merrill, and Whatfuckingever Global Research

Tue, 05/17/2011 - 08:03 | 1282351 Ray1968
Ray1968's picture

As much as I hate to admit it, part of my job is making pretty and completely useless graphics, charts, and slides. Its just artwork.

Tue, 05/17/2011 - 08:11 | 1282369 anynonmous
anynonmous's picture

I have no idea what this is about but it seems to point to the inevitable solution for Greek insolvency

Ontario Rat 3 - Testing after re-profiling

http://www.youtube.com/watch?v=jlnuunxtqpQ

Tue, 05/17/2011 - 08:19 | 1282379 Id fight Gandhi
Id fight Gandhi's picture

Saw another site with news of a soft restructuring. Please, just quit the foreplay and default.

Tue, 05/17/2011 - 08:32 | 1282391 aint no fortuna...
aint no fortunate son's picture

I think "consensual restructuring" is more like legal sodomy, IMF-EU style.

Tue, 05/17/2011 - 08:00 | 1282342 Oh regional Indian
Oh regional Indian's picture

I hope the irony of the statement "Greece is history" is understood by everyone. The history of the western world will be history too. It is after all the home to most under-pinnings of western thought.

As goes Greece so goes the west.

Sobering thought, I think.

ORI

http://aadivaahan.wordpress.com/2010/11/18/enchanted-mesmerized-en-chained/

Tue, 05/17/2011 - 08:04 | 1282343 orange juice
orange juice's picture

Yes lets cut off the: nose, eyebrows, lips, ears and buff the skin down to the muscle and call it 'reprofiling.'

Tue, 05/17/2011 - 08:01 | 1282346 ivana
ivana's picture

Guess this chart is made before DSK ended in jail - now likelihood & probabilities for some options look very much different! Miracle happened!

Tue, 05/17/2011 - 08:04 | 1282347 jkruffin
jkruffin's picture

Greece default is INEVITABLE!!! I don't care how many bailouts they try to come up with, it doesn't help. The rest of the PIIGS are in the same boat. Run for the hills.

Tue, 05/17/2011 - 08:58 | 1282468 Mountainview
Mountainview's picture

It's a political game. If the EU want Greece has never to go bankrupt (it's very small in comaprison to the whole EU).

But is this in the interest of common Greek citizens? Nobody asks?

Tue, 05/17/2011 - 08:04 | 1282348 Dick Darlington
Dick Darlington's picture

Soft restructuring is very popular way of presenting the bankruptcy today it seems. Well, lovechild has many names. =)

 

OT: FT writes an interesting article abt Spain and the "hidden" debt they have.

Tue, 05/17/2011 - 08:08 | 1282365 Oh regional Indian
Oh regional Indian's picture

Yep Dick, Spain is the big un. When it blows, goombye EU and Brazil.

Santander, the Square of London's Spanish enforcer. And portugese too I guess! 

ORI

Tue, 05/17/2011 - 08:10 | 1282364 tom a taxpayer
tom a taxpayer's picture

 

"(And speaking of simple profiiling, perhaps someone can tell us why the Rikers island inmate directory is still down, now for almost 12 hours, and since the time of DSK's admission)"  Answer - The Rikers inmate directory is down as Rikers officials must approve final wording of this OFFICIAL press release on directory website:

Rikers Jail Inmates Welcome Committee: PRESS (Arrrgh!) RELEASE (Ahhhhh!!!!!)

"We wish to reASSure the NYC CorRECTAL Authority that we inCANcerated jail MEMBERS will give DSK the respect he deserves. First, we know how DIS-TASTE-FULL it is for the Frenchie to wear jail JUMPsuits. So us inmates have taken up a collERECTION and bought French maid lingerie for DSK.  Second, we plan an OPEN HOUSE where DSK will be WELL-COMED in every jail cell. Third, we plan to make the Frog feel COME-FORTH-A-BULL by playing frog games, like JUMPing the Frog and playing leap frog all night long. Fourth, we will make sure DSK never goes HUNGgry as we stuff him every day with a variety of MUSTHARD-filled HOT and JUICY saucisson (LE HOT-DOG).  Yeah, we gonna give the International MuthaFucha every inch of respect he deserves."

 

Tue, 05/17/2011 - 13:18 | 1283556 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1000 tonnes of gold at the IMF

That was very funny, well done tom!

Tue, 05/17/2011 - 08:09 | 1282368 IslandMan
IslandMan's picture

They are waiting to see how "reprofiling" DSK works out, then they tackle Greece.

Tue, 05/17/2011 - 08:12 | 1282372 TooBearish
TooBearish's picture

Reprofiling would be illegal in US because you cant even profile - so re profiliing impossible.

Tue, 05/17/2011 - 08:16 | 1282376 PY-129-20
PY-129-20's picture

Double Springs, Ala.
Dec 27, 1934
Dear Mrs. Roosevelt,

I know you get letters like this almost every day. But here is one I hope and pray will be answer. I live in Ala. on a farm, and it seem mighty hard for us. we have so much sickness in our homeWe have a farm. But it seems if there isn’t something done we will lose it.We owe lots of Hospital Bills. Wasnt for that we would Be in a better shape. My father and one of my sister had a operation the same year. My mother and father is in very bad Health. I am the oldest child at home and I am only 16. Mrs. Roosevelt if you please will send us a few dollars not to pay our debts But to get us a few clothes to wear. if you can’t send us none, please answer my letter and tell me why you can’t. if you possible can just send us a little bit. don’t never think it will be wasted for it won’t. I am sure it would be put to good use. we want to thank your Husband Mr. Roosevelt for his good plan he has planned for us poor people. We know it is for the poor people good. But it seems it hasn’t reached us yet much. Mrs. Roosevelt this is my first time to write any one for any money. or any of the familie. But I know you are very very rich. And we have to work hard. I don’t dread working if we could only get one thing much for what we raise. Now if you please will send us a few dollars and it will gratley Be appirshed. And we never can and never will thank you enough for it. Please answer my letter.

Your friend that lives in Ala. E. B.

Tue, 05/17/2011 - 08:24 | 1282380 Mercury
Mercury's picture

However, after Zero Hedge proposed the unpopular acronym SLiME to capture the essence of this idea, the latest appellation of the current Greek metamorphosis stage from solvency to bankruptcy appears to be "reprofiling."

Jeez, first Bill Gross has to "clarify" his position re: Treasuries on TV and now Greece has to put a different spin on their bankruptcy. 

 Libel can usually be successfully deflected upon presentation the right data but Zero Hedge is getting to be a real pain in the ass, blatantly committing journalism like this...

Tue, 05/17/2011 - 08:28 | 1282390 lizzy36
lizzy36's picture

Nah, not "getting to be a real pain in the ass"...BUT is a "complete pain in the ass".

Tue, 05/17/2011 - 09:03 | 1282491 Stormdancer
Stormdancer's picture

lets spell it "compleat".....'cause it's just ....classy.  We can raise our pinky and talk about
The Hedge" ...classiest PITA in history :)  Go Tyler :)

Tue, 05/17/2011 - 08:23 | 1282381 nmewn
nmewn's picture

"(And speaking of simple profiiling, perhaps someone can tell us why the Rikers island inmate directory is still down, now for almost 12 hours, and since the time of DSK's admission)."

DOS for DSK...oh the irony ;-)

Tue, 05/17/2011 - 08:21 | 1282382 bigwavedave
bigwavedave's picture

Tyler...

We are building toward a crescendo. I think most people believe that and yet are a little flat in the market of choice. You have been screaming blue murder now for a few years and yet here we are. Spreads are being replaced with Corellations. Almost all activity across the (sum) / (sum) are in line with a major event. The tin hat crowd are still buying. The end game is ON HOLD for now. I cannot see the bets being placed as yet. I just see the de-facto trade in place. Prices are full of shit on all asset classes. I've made great money this last 6 quarters. I am not long stocks and havent been at any point. How is that possible? Dont say phisical silver. LOL. I was short silver over 49 and still am.

Tue, 05/17/2011 - 13:01 | 1283493 ConfusedIdiot
ConfusedIdiot's picture

Good ? BWD.. From down South (Mex) we see all has converted to One Trade. Globally, One Trade. All asset classes are now either long the USD or Short. If butterfly flaps and dollar rises then One Trade is be in any asset as long as it's long the USD. It's a One Trade world now. Regards CI

Tue, 05/17/2011 - 08:24 | 1282389 UGrev
UGrev's picture

The inmate site isn't down. Your link had a double whack in it. 
here's the his booking ID 09132366L

Tue, 05/17/2011 - 08:27 | 1282393 rsnoble
rsnoble's picture

How about we discuss our own insolvency here in the US. 

Tue, 05/17/2011 - 08:37 | 1282413 scratch_and_sniff
scratch_and_sniff's picture

I can see another euro hatchet job today...lots of jostling going on up to now, its looking well shakey. 

Tue, 05/17/2011 - 08:41 | 1282421 mayhem_korner
mayhem_korner's picture

Random meanderings...

The Bigger Fool has gone completely global.  The MSM straw-grasping is beyond feeble.

The EU reminds me of a Loony Toons scene where Foghorn, Chicken Hawk and the Hound are playing hot potato with a lit stick of TNT...

Sovereignty is preserved only by mass void of information.  Ignorance may be bliss in the short run, but it's The Plague in the long run...

About the IMF: You will never find a more wretched hive of scum and villiany.  We must be cautious. 

- in my sopwith camel

Tue, 05/17/2011 - 08:57 | 1282474 ellandroadfaithful61
ellandroadfaithful61's picture

i wonder what the IMF, EU and the ECB would make of the Duck Billed

Platypus

Sorry greece. If it looks like restructuring, sounds like

restructuring, it ain't anything else. Doesn't matter what the

Squid says!!

Tue, 05/17/2011 - 09:27 | 1282594 Itsalie
Itsalie's picture

How do you help someone too indebted? You lend him more! That's restructuring european-style :)

Tue, 05/17/2011 - 09:32 | 1282601 GMRobertson
GMRobertson's picture

Monty Python Norwegian Blue is coming to mind....

Tue, 05/17/2011 - 09:34 | 1282610 Itsalie
Itsalie's picture

How do you help someone too indebted? You lend him more! That's restructuring european-style :)

Tue, 05/17/2011 - 09:40 | 1282635 treemagnet
treemagnet's picture

After they default, they need a new name for their currency.  Something catchy - with worldwide appeal, like "the gyro".  Its got that special cache that so many currencies lack. 

SYMBOL: GYRO, gyo:usd, 1.3884

Tue, 05/17/2011 - 10:23 | 1282807 HedgeFundLIVE
HedgeFundLIVE's picture

EURUSD has further to fall, already having broken support zones multiple times: http://www.hedgefundlive.com/blog/forex-eurusd-respecting-long-term-fib-levels

Tue, 05/17/2011 - 10:35 | 1282884 slewie the pi-rat
slewie the pi-rat's picture

why me, tyler?  ok: 

tyler writes:  Of course, when that fails, there is always the last case definition: the "muddling through" one, which is the one known as the "rolloff" where reality finally meats the can in the street,...

so, don't bend over around zeroHedge, and keep yer soap on a rope!  i did get a kick outa GATA's "release" yest:  IMF to sell gold to raise bail for Strauss-Kahn | Gold Anti-Trust Action Committee

good one!  Hahaha!   GATA will be on comedy central, soon!  with the arrest of Strauss-Kahn, i fear there may no longer be any hope for tyler, tho. 

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