European Central Bank

today is Friday taken to the n^th 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.

As we move toward the second half of 2015, signs of financial turmoil are appearing all over the globe. Slowly but surely, we are starting to see the smart money head for the exits. As one Swedish fund manager put it recently, everyone wants “to avoid being caught on the wrong side of markets once the herd realizes stocks are over-valued“.

A Greek exit from the euro would change everything. The greatest change being simply doubt and fear regarding the outlook for other vulnerable EU nations, EU banks and the EU banking and financial system. We discuss short and long term considerations, best and case outcomes, and wealth preservation strategies.

The economic hitmen have honed their skills among the poor and relatively defenseless, and have been coming closer to home in search of new hunting grounds and fatter spoils. There is nothing 'new' or 'modern' about this. The only difference is that it is not happening in the past or in a book, it is happening here and now. "Economic powers continue to justify the current global system where priority tends to be given to speculation and the pursuit of financial gain. As a result, whatever is fragile is defenseless before the interests of the deified market, which becomes the only rule."

Having vehemently denied teh rumor that Benoit Coeure specifically said he questioned whether Greek banks will open on Monday, The ECB has, rather awkwardly, admitted that:

*ECB SAID TO HOLD UNSCHEDULED CALL ON GREECE ELA ON FRIDAY

Given the accelerating outflows and implicit bank run today's comments will create, if The ECB does not re-up the ELA, it is indeed over for Greek banks (unless Russia or China step in over the weekend) come Monday morning.

Just minutes after Greek FinMin Varoufakis warned people were trying to "incite capital flight" from Greece and Dijsselbloem stated that "capital outflows from Greece are worrying," Reuters is reporting that The ECB dropped the bank run hammer:

ECB TOLD EURO ZONE FINANCE MINISTERS IT WAS NOT SURE IF GREEK BANKS WOULD BE ABLE TO OPEN ON MONDAY- OFFICIALS

Friday sees Russia-Greece meetings and Euro area leaders are supposedly meeting on Monday evening due to the seriousness of the situation so it appears the endgame is looming large one way or another.

"The time it takes for the global regulatory community and central banking world to find a solution this time may be longer than the time where one episode of big illiquidity happens. Then the question is what to do. In my view the only thing that can be done at that time is that central banks should become again market makers of last resort."

Believe it or not: GREECE AID TO BE EXTENDED UNTIL YR-END W/O IMF: DIE ZEIT

... NOT! GERMAN NEWSPAPER ZEIT REPORT ABOUT CONCESSIONS MADE TO GREECE BY CREDITORS HAS NOTHING TO DO WITH REALITY, SUCH A PROPOSAL WOULD DEFINITELY NOT FLY - EU DIPLOMATS

European creditors will reportedly consider writing down their Greek debt in order to get the IMF back to the table and make the country's long-term prospects more sustainable. Meanwhile, Greeks are taking to the streets and one portfolio manager warns of anarchy. 

"Greece not only does not have the ability to pay this debt, but also should not pay this debt first and foremost because the debt emerging from the Troika’s arrangements is a direct infringement on the fundamental human rights of the residents of Greece. Hence, we came to the conclusion that Greece should not pay this debt because it is illegal, illegitimate, and odious."

The tension in the Eurosystem is getting unbearable...

Greek 10Y yields are breaking back above 13%, bonds ar trading at 50 cents on the dollar, Greek stocks are near multi-decade lows, and Greek bank bonds have collapsed amid the ever-more-likely Grexit (or at least redenomination amid capital controls). But, there are some very smart chaps who must know something Tsipras, Merkel, and the rest of the world does not... because they are spending "Other People's Money" to buy the dip in Greek stocks and bonds. From Allianz and PIMCO (the world's lagest Greek bondholder ex-ECB) to Putnam and Wilbur Ross, it seems more than a few American investors will be impacted should Greece really implode.

"Forget the 1930s; inflation is different this time," says Saxobank's Steen Jakobsen, warning that while there may be a summer of growth in Europe, hell will come afterwards, "European 'cost advantage' is disappearing fast and furiously – enjoy the summer of growth – afterwards, you can expect: zero growth, zero reform and higher inflation 'expectations'... The credit cycle has peaked... and Gold will be the best performer in commodity-led rally - we see 1425/35 by year-end."

With both sides digging in and unwilling to budge, will Europe revert back to its strategy from day 1, namely creating a slow initially, then fast bank run in Greece, one which leads to gradual then sudden capital controls, resulting in civil discontent and disobedience and ultimately, a violent overthrow of the Greek government.