Bank Run

The game of words continues, and following reports both yesterday and today that first Germany, and then Greece would compromise, and in the case of the latter even do "whatever it can" to reach a deal, it is time for Europe's bad cop, Eurogroup President Jeroen Dijsselbloem, to pour cold water on the party and crush Greek enthusiasm even more when he said moments ago that he was "very pessimistic" about the chances that a meeting he will chair on Monday of euro zone finance ministers would reach a final debt deal with Greece.  Cited by Reuters, he said that Greek voters' expectations of their new government were "a mile high", Dutch finance minister Dijsselbloem was asked whether a plan to resolve Athens' financial problems would be achieved on Monday. He replied, in a remark aired on Dutch television: "I’m really still very pessimistic about that now."

"Greece will make every effort to reach an agreement with its euro zone partners at Monday's meeting of euro zone finance ministers on how to transition to a new support program, its government spokesman said on Friday. "We will do whatever we can so that a deal is found on Monday," Gabriel Sakellaridis told Skai TV. "If we don't have an agreement on Monday, we believe that there is always time so that there won't be a problem." The reason for this rapid about face? "Senior bank officials have told Kathimerini that almost all the liquidity available to Greece (59.5 billion euros) has been absorbed and that banks’ total dependence on the Eurosystem amounts to 90 billion. The rapid deterioration in liquidity conditions has been attributed to the uncertainty that arose when the snap general elections were called as well as the new government’s inability to reach a swift agreement with the country’s creditors." As usual: money threatening to walk, walks.

It would appear the un-sourced rumors of Greek banks having used up their Emergency line of credit with the ECB are true. Following a hastily put together conference calls this morning:

• *ECB RAISES GREECE ELA ALLOWANCE TO EU65BN: FAZ

Up from the previous EUR59.5 Billion. It appears the stealth bank run in Greece is showing no signs of slowing.

As reported yesterday in his Q4 letter to investors, Third Point's Dan Loeb took down his net leverage going into 2015 for one simple reason: a "haunted house market" as he described it, where "a new scary event lurks around each corner", and no event is scarier than a worst-case outcome to the Greek situation. So how does Loeb see the latest Greek crisis ending? Read on for this thoughts.

Now that the possibility of a Greek exit from the euro is back to being topic #1 of discussion, just as it was back in the summer of 2012 and the fall of 2011, and investors are propagandized by groundless speculation posited by journalists who have never used excel in their lives and are merely paid mouthpieces of bigger bank interests, it is time to rewind to a step by step analysis of precisely what will happen in the moments before Greece announces the EMU exit, how the transition from pre- to post- occurs, and the aftermath of what said transition would entail, courtesy of one of the smarter minds out there at the time (before his transition to a more status quo supportive tone), Citi's Willem Buiter, who pontificated precisely on this topic previously. Three words: "not unequivocally good."

The cracks in the foundation, walls, and ceiling of the European Union are beginning to widen. During an interview with Italian State TV RAI3, Greek Finance Minister Yanis Varoufakis hinted at Greece's "New Deal for Europe" strategy (to be financed by the EIB) but it was the glimpse behind the curtain of EU solidarity that was most shocking as he explained, "Greeks don't have a monopoly on the truth. What we can do, for the rest of Europe, and for Italy in particular, is to open a small door to the truth," adding rather stunningly, that Italy "stands in solidarity with [Greece] but cannot tell the truth as they fear of possible consequences on behalf of Germany."

One of the bigger problems facing the new, upstart Greek government, which has set before itself the lofty goal of overturning 6 years of oppressive European policies and countless generations of Greek cronyism, corruption and tax-evasion is not so much the concern about deposit outflows and bank runs - even though it most certainly will be in the next few days unless the Tsipras government finds some resolution to the dramatic standoff with Merkel and the ECB - but something far more trivial: running out of money.

Update: And now this: "Moody's places Greece's Caa1 government bond rating on review for downgrade"

Europe has an unpleasant habit of dropping tape bombs at the most inopportune of times, like at 3pm or later a Friday. And while on Wednesday it was the ECB yanking repoable Greek collateral for local banks, today it was first S&P, which downgraded Greece 5 months after upgrading it, and moments ago it was none other than the Cyprus bail-in man himself, the Eurogroup's Dijsselbloem  who just have Greece a 10 day ultimatum to fall into place or risk a terminal bank run and capital controls (both hinted at earlier by the post-DOJ settlement political "rating agency')

• GREECE MUST APPLY FOR BAILOUT EXTENSION ON FEB 16 AT THE LATEST TO KEEP EURO ZONE FINANCIAL BACKING -EUROGROUP CHAIRMAN DIJSSELBLOEM

This means that Greece now has 10 days, or until the Monday after next to decide whether it will stay in the Eurozone or Grexit.

And the hits keep coming. On the heels of a demand for repayment of ECB's profits from GGB bond gains and to extend the T-Bill limit to give the nation time to negotiate with EU leaders (i.e. a Bridge Loan) which Jeroen Dijsselbloem already dismissed earlier in the day, S&P just piled on...

GREECE RATINGS CUT TO B- FROM B BY S&P; MAY BE CUT FURTHER

This downgrade comes just 5 months after upgrading Greece because "risks to fiscal consolidation in Greece have abated." EURUSD is not moving much (having already cratered after US payrolls) but Greek stock ETFs are sliding once again.

While today surprised some with its lack of images of Greeks standing in line furiously pulling cash from bank ATMs, as Bloomberg reports, Greeks are anxiously stashing cash in the most unusual places...

That didn't take long: just hours after Greece entered the ECB countdown mode, with now just 23 days until midnight on February 28, when the ECB is set to yank the final pillar of liquidity support, the ELA - as it has warned before - it is time to start contemplating Plan B, or rather plan Z. A plan, which as described by Nordea's analyst Jan von Gerich, would be quite unpleasant for that nearly extinct class of Greeks, bank depositors, because the "plan", or rather blueprint, is a well-known one: capital controls.

That's going to leave a mark...

Moments ago the latest attempt by the SNB to halt the surge of the CHF ended in flames, when following the ECB story, the EURCHF just tumbled well below 1.05, with barely a fight to keep it above the lower end of the corridor.

a day after the FT report sent futures soaring and has been responsible for the jump in European stocks this morning, the Greek finance minister made it quite clear that, as has been happening on pretty much every day since his ascent to power, he has been misinterpreted and that as Bloomberg noted a little over na hour ago, "there has been no "U-turn" on the Greek debt position, adding that "Our promise is solid, debt will be rendered sustainable even if haircut replaced with euphemisms, swaps" Greece’s Finance Minister Yanis Varoufakis comments in Twitter post.