€10-14 billion was bad enough, but €25 billion may have been simply too much to bear...
Here is the punchline from Greek nemesis #1, Schauble: SCHAEUBLE PROPOSES TIME-LIMITED `GREXIT': FAZ; SCHAEUBLE SUGGESTS 5-YR GREXIT, HUMANITARIAN SUPPORT: FAZ
In other words, Germany just said kick Greece out, conditionally, for 5 years (it is not quite clear what Greece would use for currency in the meantime), quarantine it, and treat it as a third-world country until 2020. Somehow we doubt global stocks expected this outcome when they soared on Friday...
Perhaps the most concerning is the fact that should a “systemically important” financial entity go bust, any deposits above $250,000 located therein could be converted to equity… at which point if the company’s shares, your wealth evaporates.
Earlier today we showed one, less than official, interpretation of what may be going on in the Kremlin at this moment. And since a Grexit, despite Friday's relief rally, suddenly seems all too real, the topic of just what Putin thinks about Greece in European limbo (or rather its naval bases) becomes pertinent all over again. Luckily, we know precisely how Putin feels about Greece and a potential Grexit
Tsipras betrayed the public trust last night when we rammed through a draft proposal for a Third Greek bailout, one which would push total Greek Debt/GDP over 200%, which the Greek population overwhelming rejected in a democratic vote last weekend. And now, it is up to Europe to decide if it will trust the Greek government, which clearly has no problem lying to anyone, to implement reforms which Greece has been unable to effect for over 5 years.
"Schäuble is convinced that as things stand, he needs a Grexit to clear the air, one way or another. Suddenly, a permanently unsustainable Greek public debt, without which the risk of Grexit would fade, has acquired a new usefulness for Schauble. What do I mean by that? Based on months of negotiation, my conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone."
GREEK LAWMAKERS APPROVE GOVERNMENT'S BAILOUT PROPOSAL: TALLY
Every nation has a right to defend itself against attack – financial attack just as overt military attack. That is an essential element in the principle of self-determination. Greece, Spain, Portugal, Italy and other debtor countries have been under the same mode of attack that was waged by the IMF and its austerity doctrine that bankrupted Latin America from the 1970s onward. International law needs to be updated to recognize that finance has become the modern-day mode of warfare. Its objectives are the same: acquisition of land, raw materials and monopolies. A byproduct of this warfare has been to make today’s financial network so dysfunctional that nations need a financial Clean Slate.
Spontaneous combustion. Alien invasion. Zombie apocalypse. What do these have in common? Their likelihood is next to impossible. So why worry? This is how people tend to think about the financial system. Mentioning even the possibility, for example, that the US could default on its debt is met with so much scorn and contempt it would be safer to stand on the street corner warning about an alien invasion. The same goes for the imposition of capital controls. Or a collapse in the banking system. Or a currency crisis. And yet the most casual glance at the headlines proves that these events not only can happen, they do happen... and for one underlying reason...
"There is an estimated need of about 10 to 14 billion euros in new capital. Given the magnitude of the shock we have been through, regulators will take stock of the situation and the impact on non-performing loans."
Facing pressure from all sides, Greek PM Alexis Tsipras sells out voters and looks to push concessions through parliament ahead of Sunday deadline.
Greece has already collapsed, and the only real question is whether the ECB will give Greek depositors time to withdraw some of the €120 billion in deposits it holds hostage with the frozen ELA, or if the ECB will admit the truth about the Greek insolvent banking system risking Eurozone contagion. A better question is just what is the purpose of the IMF whose intervention in Greece can be described in one word: disaster. It can also be described in eleven, as the creator of the Taylor Rule, John Taylor, has done in a blog post which can be summarized as follows: IMF Loans To Greece Bailed Out Banks And Worsened The Situation.
The Fed’s Stanley Fischer has said that the U.S. was preparing such legislation – after Tucker had indicated that such legislation was in place. The EU is also at an advanced stage in forcing countries to ratify bail-in legislation. The legislation is being devised to protect the larger banks against the interest of both depositors, taxpayers and the wider economy.