Germany Gives Greece One Final Ultimatum After Friday's "Optimistic" Talks Devolve Into Disagreement And ConfusionSubmitted by Tyler Durden on 03/22/2015 17:05 -0400
"Yes, Alexis, the time has run out"
"That is between December and February €22bn of deposits likely left the Greek banking system and of this €10bn or 45% went under the mattress. What is clear is that the Greek banking system cannot withstand another big wave of deposit outflows."
Fraud grows in good times because rescission is rarely sought (or granted) when asset values rise. Fraud is not a problem, till it is.
In the previous installments of this series, we discussed the hidden and often unspoken crisis brewing within the employment market, as well as in personal debt. The primary consequence being a collapse in overall consumer demand, something which we are at this very moment witnessing in the macro-picture of the fiscal situation around the world. Lack of real production and lack of sustainable employment options result in a lack of savings, an over-dependency on debt and welfare, the destruction of grass-roots entrepreneurship, a conflated and disingenuous representation of gross domestic product, and ultimately an economic system devoid of structural integrity — a hollow shell of a system, vulnerable to even the slightest shocks.
Varoufakis Explains How The Video Of His Middle Finger Is "Turning Proud Nations Against Each Other"Submitted by Tyler Durden on 03/20/2015 09:39 -0400
Varoufakis' middle finger was useful in one specific way: to rip away the facade of solidarity and freidnship in Europe, and reveal just how ugly the undelrying truth is, and to hint just how much uglier it will become once the money runs out not only for Greece, but for everyone else, or as Varoufakis himself who in a blog post today summarized his "middle finger" best when he said that it "has sparked off a kerfuffle reflecting the manner in which the 2008 banking crisis began to undermine Europe’s badly designed monetary union, turning proud nations against each other."
Moments ago, the German DAX roared gingerly back over 12,000 dragging US equity futures alongside it, with the catalyst cited as the somewhat optimistic tone following the three hours of talks held late last night to try to break an impasse that risks sending Athens stumbling of the euro zone. As a result, a smiling if only through his teeth, Tsipras said Greece was "moving swiftly to meet creditors' demands for a detailed economic reform plan" and assured euro zone leaders his leftist-led coalition would speed up work to avert bankruptcy. Alas, even a best case scenario which sees some €1.9 billion in payment unlcoked, will not be enough: as Bloomberg calculated, "The country’s cash shortfall is projected to hit 3.5 billion euros ($3.7 billion) in March, according to Bloomberg calculations based on 2015 budget figures."
- Fed May Not Hit Neutral Until 10th Anniversary of Lehman Collapse (BBG)... make that never
- Global stocks and bonds roar Fed approval, dollar fights back (Reuters)
- EU to tell Greece time, patience running out (Reuters)
- U.S. likely to delay planned closure of two Afghanistan bases (Reuters)
- Norway Signals Reduction After Unexpectedly Holding Rate (BBG)
- Oil Falls to $55 as Kuwait Comments Refocus on Oversupply (Reuters)
- Tsipras Heads to Summit as Merkel Tries to Defuse Greek Crisis (BBG)
- Yahoo Pulls the Plug on China Operations (WSJ)
With Greek bank bonds collapsing, stocks near record lows, Greek default risk at post-crisis record highs, and Greek government bond yields spiking, it has been surprisng that we have not seen the ATM lines and generalized 'panic' of a population in fear of being "Cyprus'd." Well, now as ekathimerini reports, that appears to escalating and rapidly as credit sector officials estimated that the flight of deposits yesterday alone amounted to 350-400 million euros, which was some five times higher than the daily average in previous days.
Where is the Greek government going with its approach? Four scenarios present themselves and hold the possible answer...
Draghi, we have a problem. Despite the omnipotent buying power of the all-knowing ECB, peripheral European bond spreads are blowing out again (and stocks dropping) as Grexit fears start to spread contagiously across the continent. As Greece's cash crunch looms ever closer (with capital controls looming) and bulls "throw in the towel" on the "nuts" Greeks, the IMF has come out and rubbed Mediterranean salt into that wound by telling the Eurogroup that Greece is the most unhelpful country the organization has dealt with in its 70-year history. As Bloomberg reports, in a short and bad-tempered conference call on Tuesday, officials from the 'Troika' complained that Greek officials aren’t adhering to a bailout extension deal leaving Dijsselbloem hinting at Cypriot templates for Greece.
Is Greece truly on the verge of capital controls, especially the kind that has the blessing of the very man who created the Cyprus "blueprint"? For the answer we go to ISI, which discussed just that in a flash note issued earlier today:
While investors have grown to used to knife-catching heroics in equity markets, the Energy credit markets have been a poster child of yield-reaching, bottom-guessing, dip-buying exuberance in the past six months. As every leg lower in oil was met with more Oil ETF buyers and bond buyers (or loan financers) as "the bottom is in," so each low has failed and new lows are made. The last few days have seen credit risk soar the most in 2015 in the energy sector as numerous firms enter bankruptcy or approach it with huge looming coupon and principal due. What is even more telling is the news of a huge liquidation sale of energy heavy equipment which will be the 'tell' for the entire industry if it is weak...
Moments ago the January TIC data update was released, and while China continued selling US paper, liquidating another $5.2 billion in January and bringing its new total to the lowest since January 2013, Japan - yes that Japan whose central bank is now moentizing 100% of its own debt issuance because the country is now effectively insolvent and absent constant monetization of its debt it is finished - bought $8 billion in US debt, in the process trying China as America's largest foreign creditor for the first time in history, with both nations holdings $1.239 trillion in US TSYs.
Deputy Riksbank Governor Per Jansson "doesn't know why" Paul Krugman insists on equating Sweden with Japan but thinks "mystery" may be related to Krugman doing too much writing and not enough reading.
The Greek media is ablaze with just what Europe's proposed solution to this issue may be. As Protothema and Capital report, the Troika proposed that Athens halt the payment of salaries and pensions for one to two months. This, according to Europe, would promptly tackle the problem of liquidity and find a solution to Greek problem of how to pay back bailout loan tranches to creditors when suffering from liquidity problems.