European Central Bank
"We Greeks have voted 'No' to slavery -- but 'Yes' to our chains... What's simply whack-o is that, while voting "No" to austerity, many Greeks wish to remain shackled to the euro, the very cause of our miseries."
For every loser there is a winner, and in the case of Greece and its tragedy, just as millions are about to lose everything, a few not only made billions but quietly, under the guise of "sovereign bailouts" transferred their entire risk onto the taxpaying public.
- A new program requiring very major structural reforms of the Greek side, and much larger than the last Juncker proposal.
- Introduction of parallel currency, primarily through promissory IOU.
- Controlled bankruptcy and leaving the euro
Today's "final" Eurogroup meeting is yet another "last" chance for Greece to stay in the Euro according to Greek headlines. The meeeting begins in minutes, at 12:30pm CET/7:30am Eastern so expect the usual torrent of "Greek deal" headlines which send the S&P surging followed by prompt denials which the S&P algo soundly ignore. By now the game is quite familiar to everyone.
Earlier today we reported that as Bloomberg correctly leaked, the ECB would keep its ELA frozen for Greek banks at its ceiling level disclosed two weeks ago. However we did not know what the ECB would do with Greek ELA haircuts, assuming that the ECB would not dare risk contagion and the collapse of the Greek banking system by triggering a collapse in Greek banks if and when it boosts ELA haircuts. Turns out we were wrong, and as the ECB just announced "the Governing Council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for ELA."
According to Colin Lancaster, senior managing director with Balyasny "we now have another 48 hours of calm before things really start happening", and the punchline: "situation could then break down as banks stay closed, ATMs will run out of cash Tuesday or Wednesday, uncertainty grows and rioting possible."
"After the Greeks voted against accepting the latest demands from its creditors, Merkel is facing her worst nightmare: a possible Greek exit from the euro, a possible exit from the EU completely and loss of confidence in the currency itself. Half of her was Merkel — the pragmatic economist, the other was Merkel — the great European. She has now discovered, in her vacillation, she has not shown the leadership expected of the most powerful woman in the European Union."
- Greece Bailout Referendum: They Voted ‘No’. Now What? (BBG)
- Varoufakis Quits as Greece Enters New Showdown With Europe (BBG)
- Merkel to Meet Hollande as Greece Told to Make Next Move (BBG)
- German line hardens after Greek referendum 'No' (Reuters)
- BOJ keeps rosy view of regional Japan, watching markets after Greek upset (Reuters)
- Oil falls on Greece vote, China stock market turmoil (Reuters)
- China Urges U.S.-Iran Compromise 36 Hours to Nuclear Deadline (BBG)
- U.S. and Iran: the unbearable awkwardness of defending your enemy (Reuters)
With the only thing that matters in the hours ahead, at least until China reopens and the Pandamonium repeats, is the sheer chaos out of Greece which now literally changes the narrative by the minute, here is a convenient timeline of everything that has happened so far this morning starting with Varoufakis' unexpected resignation and going from there.
The Greek default is a forcible contraction of credit, and bound to be negative for the prices of ordinary assets. But something extraordinary happened to silver this week.
Congratulations Greece: for the first time you had the chance to tell the Troika, the unelected eurocrats, and the entire status quo establishment, not to mention all the banks, how you really felt and based on the most recent results, some 61% of you told it to go fuck itself. Now comes the hard part.
Global central banks are afraid. Before Greece tried to stand up to the Troika, they were merely worried. Now it’s clear that no matter what they tell themselves and the world about the necessity or even righteousness of their monetary policies, liquidity can still disappear in an instant. Or at least, that’s what they should be thinking. The problem is that central banks have no plan B in the event of a massive liquidity event. In this cauldron of instability and lack of leadership, cash is the one remaining financial possession that Main Street can translate into goods, services and security. That’s why private banks want more control over it.
Prime Minister Alexis Tsipras allows the Greek people to decide their own fate via a democratic referendum. That’s enough to send the troika – the European Central Bank (ECB), the European Commission (EC), and the International Monetary Fund (IMF) - into a paroxysm of rage. Here, in a nutshell, is everything one needs to know about the EU “dream”.
"Greek banks are preparing contingency plans for a possible “bail-in” of depositors amid fears. The plans, which call for a “haircut” of at least 30 per cent on deposits above €8,000, sketch out an increasingly likely scenario for at least one bank, the sources said."
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.