Greece just took a hit… and once again it’s depositors that will take it on the chin. But this process is only just begun. Similar Crises will be spreading throughout the globe in the coming months.
The ECB is moving to backstop Bulgaria's banking sector in an effort to get ahead of a Greek contagion."The ECB would provide access to its refinancing operations, offering euros to the banking system against eligible collateral," Bloomberg reports, citing unnamed sources.
In the utopian world of US equities - where every dip is a buying opportunity and "The Fed's got your back," - it is blasphemous for anyone to suggest this state of affairs cannot go on forever is extreme. However, as China encountered an accelerated version of the farce that the US has experienced in the past few years, the same "The PBOC's got your back" mentality dominated every fundamental fact and central bank omnipotence was doctrine. That is until 2 weeks ago... when modest efforts to rein in exponentially-growing leverage pricked the new normal's narrative. Now every "save" by the government and every plunge protected is sold into by a desperate population burned...
With Sweden's QE Officially Broken, The Riksbank Doubles Down: Lowers Rates Even More Negative; Boosts QESubmitted by Tyler Durden on 07/02/2015 08:04 -0400
Overnight the Riksbank confirmed that it neither learns from its own mistakes, nor reads BIS reports when at 9:30 CET, it shocked central bank watcher all of whom were expecting no rate change from the bank, and announced it is not only engaging in yet another rate cut, taking the key rate even further into record NIRP territory, from -0.25% to -0.35% but adding insult to broken QE injury, it would expand its QE by a further SEK 45 billion starting in September. The reason? Sweden is realizing it is losing the currency war (to a great extent due to its failed QE which is pushing bond yields higher and with it, its currency) and it needs to soak up even more collateral... which can barely be found.
The "Smartest Money" Is Liquidating Stocks At A Record Pace: "Selling Everything That’s Not Bolted Down"Submitted by Tyler Durden on 07/02/2015 06:23 -0400
Buyout firms conducted 97 stock offerings in the second quarter, more than in any other three-month period. "It’s clear that we are currently in an environment of frothy valuations,” said Lise Buyer, founder of IPO advisory firm Class V Group. Her disturbing punchline: "The insiders - those with the most knowledge - are finding this a very good time to take some money off the table." In an echo of Leon Black, Frank Maturo, vice chairman of equity capital markets at UBS AG, said, “Private equity is selling everything that’s not bolted down."
The oil price collapse of 2014-2015 began one year ago this month (Figure 1). The world crossed a boundary in which prices are not only lower now but will probably remain lower for some time. It represents a phase change like when water turns into ice: the composition is the same as before but the physical state and governing laws are different. The market must balance before things get better and prices improve. That can only happen if production falls and demand increases. That will take time. The most likely case is that oil prices will decrease in the second half of 2015 and that financial distress to all oil producers will increase. The hope and expectation that the worst is over will fade as the new reality of prolonged low oil prices is reluctantly accepted.
NSA Leak: "Washington Is Negotiating With Every Nation That Borders China... So As To 'Confront' Beijing"Submitted by Tyler Durden on 07/01/2015 17:06 -0400
"Houben insisted that the Trans-Pacific Partnership (TPP), which is a U.S. initiative, appears to be designed to force future negotiations with China. Washington, he pointed out, is negotiating with every nation that borders China, asking for commitments that exceed those countries' administrative capacities, so as to "confront" Beijing."
Following our post yesterday, in which we calculated the levels of ELA haircuts that would result in corresponding deposit haircuts, we - and the rest of the world - were patiently waiting to see if the ECB would commence using its nuclear option, first with a small increase in haircuts, then as we got closer to Sunday, with larger ones. Moments ago we got the answer, when the ECB not only kept the ELA frozen as expected, thus requiring the continuation of the Greek capital controls, but decided against a collateral haircut.
ECB SAID TO TAKE NO DECISION ON GREEK COLLATERAL HAIRCUT
In other words, so far Varoufakis' thesis remains intact, and the ECB has refused to push the "nuclear option" launch button.
Investors are losing money, which strikes us as largely inevitable with asset prices where they are and economic growth and profits on a downward trajectory. Losing the least amount of money may be the best source of success this year.
Low oil prices must be good for airlines profits, right - especially if they keep ticket prices artificially high...
*DOJ SAID PROBING WHETHER AIRLINES COLLUDING ON HIGH AIRFARE:AP
And now we await for the DOJ to probe whether central banks are colluding to keep stock prices high. /sarc.
What if Berlin and Frankfurt do not budge? What if they tell Athens to ‘go jump of the tallest cliff’? I have good cause to hope that Berlin will prefer to accommodate the Greek government and to look with a great deal more ‘kindness’ the ‘request’ for a debt relief conference. And if it does not, and wishes to bring the Eurozone down with it, let it do its worst, I say.
At the end of the day, the “Greek” issue is in fact a “debt” issue. And Greece is just a drop in the ocean of debt sloshing around the financial system.
*IMF SAYS GREECE FAILED TO MAKE PAYMENT DUE TUESDAY
*IMF BOARD INFORMED THAT GREECE IS NOW IN ARREARS
With the ECB reneging on its responsibility as lender of last resort – not the first time it has used its power to political ends in Greece – Greek banks may soon be forced to “bail-in” deposits – i.e. confiscate the cash of their customers.
Having thrown the kitchen sink at their collapsing ponzi-scheme of a market in the past two days, only to see stocks open and crash once again overnight, it appears The PBOC went full intervention-tard in the middle of the morning session. With CHINEXT down over 7% and Shnghai down over 4%, the manipulation was rooted in CSI-300 futures as while cash markets saw margin calls and liquidation, futures were surging. By the close China's 'Nasdaq' had ripped 13% off its lows and the broad market's intrday swing was the largest since 1992... The PBOC's got your back.