Meanwhile, Greece defaults on an ECB payment nobody remembered...
... at this very moment, politicians from Spain's Podemos to Italy Five Star movement are drafting memos demanding that the IMF evaluate their own debt sustainability. Or rather unsustainability.
"Millions of people in ex-Communist Bulgaria, Macedonia, Albania, Serbia and Romania have deposits in banks owned by Greek lenders, putting this corner of south-eastern Europe in the frontline if there is contagion from the Greek crisis."
Lesson 1: Make a big pile of mud; Lesson 2: ...
As that €126 billion or so of total ECB/Eurosystem claims on Greek banks were "charged off" in case of a terminal Greek "event" then the entire ECB capital buffer would also be wiped out, leaving the ECB with negative equity. Translated: dear Eurosystem members: we need more cash.
Draghi Freezes Greek ELA, Varoufakis Tells BBC "Looking At Imposing Capital Controls, Closing Banks"Submitted by Tyler Durden on 06/28/2015 11:29 -0400
A little under 24 hours before Europe opens for trading, and just under 12 hours before the open of equity futures, and things are not looking good.
Meanwhile, Tsipras gets a standing ovation in the Greek parliament!
An extensive look at what would happen if Greece were to leave the Eurozone, through a legal fudge.
The Bundesbank's Jens Weidmann unleashed a litany of cticisim on the Eurosystem (read the ECB) when he said that Greek banks should not continue to buy the short-term debt of their government, which is then repoed back to the ECB in exchange for precious cash. "The Eurosystem must not provide bridge financing to Greece even in anticipation of later disbursements," said Weidmann, who also sits on the European Central Bank's Governing Council, which approves such funding to Greece. "When banks without access to the markets buy debt of a sovereign which is likewise locked out of the market, taking recourse to ELA raises serious monetary financing concerns," he said in a speech to be delivered at a conference in Frankfurt.
Greece Rejects "Totally Unacceptable" IMF Counterproposal Demanding Pension Cuts: Full Redline ComparisonSubmitted by Tyler Durden on 06/24/2015 12:47 -0400
The renewed optimism that's surrounded Greek debt negotiations since Monday evening evaporated like deposits on a hot summer day in Athens this morning as the IMF has indicated it will stick to its "red lines" on pension cuts and the VAT, meaning PM Alexis Tsipras will either surrender unconditionally or embrace an EMU exit.
The Bank of Greece has been hard at work with securities services firm G4S over the past two weeks coordinating an unprecedented effort to keep the country's ATMs stocked amid billions in withdrawals. Although the situation has become "critical", G4S notes that it hasn't had to enlist military assistance -- yet.
Before taking a look at Europe, an update on China. Just a few short hours ago, when looking at the bursting of the Chinese bubble where stocks were down between 3% and 5% across the board in the first post-holiday trading session after the worst week in 7 years, we said that "without assistance (levitation) from the same PBOC that just clamped down on liquidity, the China bubble has burst." And then as if by request, minutes later we got, drumroll, levitation and the stickiest stick-save by the PBOC seen in months, when the Shanghai Composite staged an unprecedented 7% surge from the lows to close 2.2% higher after tumbling as much as 5% earlier in the session. And just like that, faith in the "wealth effect" is preserved.
Net of the latest ELA increase, when adding some €38 billion in collateralized EFSF bonds and other collateral usage, we find that we have not only reached parity but crossed it: as of this moment Greek deposits, which are generously estimated at €120 billion but in reality are lower, are less than the total ECB claims on Greek banks and the Bank of Greece, amounting to €126 billion. And with that the possibility of a Greek bail-in which could amount to up to 100% of total Greek deposits, becomes all too real.
today is Friday taken to the nth degree, with the markets having already declared if not victory then the death of all Greek "contagion" leverage, following news that a new Greek proposal was sent yesterday (which as we summarized does not include any of the demanded by the Troika pension cuts), ignoring news that Greece had again sent Belgium the wrong proposal which the market has taken as a sign of capitulation by Tsipras, and as a result futures are surging higher by nearly 1%, the German DAX is up a whopping 3.1%, on track for the biggest one day gain in three years, Greek stocks up over 8%, German and US Treasurys sliding while Greek and peripheral bonds are surging.