In the final act of what has become a modern Greek tragedy, lawmakers will now be forced to choose between "approving" what is effectively a German overthrow of the Greek government, or face the collapse of the banking system and an economic depression of unimaginable propotions.
The latest BofA Fund Managers Survey has left the report authors stumped: on one hand fund managers have the highest cash levels since Lehman at 5.5% (most since December 2008 and prior to that November 2001), which combined with a capitulation in risk appetite due to ongoing stress in Greece and China would suggest a screaming buy signal... but there is one problem: the same fund managers refuse to actually capitulate and sell, and as a result not only are bank longs at record highs, but equities remains solidly overowned but the group, offset by "protection" levels which are the highest since February 2008. In short, the current positioning is a "complete contrast to 2008."
While Greek PM Alexis Tsipras is busy figuring out how best to go about pushing the "deal" he reached on Monday morning in Brussels through parliament, EU finance ministers are scrambling to put together billions in bridge financing that will hold Athens over until the activation of the ESM program which is likely at least four months away. Although it's as yet unclear which "least bad" option is preferable for Greece's external debt, Wolfgang Schaeuble has an idea for how the country might pay public sector employees.
- Greek lawmakers split over bailout as vote looms (Reuters)
- Greek Bailout Rests on Asset Sale Plan That Already Failed (BBG)
- Greece Needs $25 Billion to Get Through August, Scicluna Says (BBG)
- Tsipras Enters Parliament Den to Sell Aid Deal to Greeks (BBG)
- Greece makes samurai bond repayment (FT)
- Iran, World Powers Have Reached Nuclear Agreement (BBG)
- Janet Yellen’s Fed Flounders in Political Arena (WSJ)
"Sorry, but there is no way you are leaving this room"...
Similar to the US banks who funded home owners that shouldn’t have received mortgages and made a fortune doing so – at least initially, the Germans funded the periphery nations in an effort to drive output growth domestically. However, financing a large portion of ones’ customer purchases is a high risk endeavour. And the Germans are in the midst of this hard lesson.
"The idea was that with Greece out, Germany would be more likely to provide the financial support the eurozone needed because the German people would no longer perceive aid to Europe as a bailout for the Greeks. At the same time, a Grexit would be traumatic enough that it would help scare the rest of Europe into giving up more sovereignty to a stronger banking and fiscal union."
The new Greek deal is "absolutely impossible, totally non-viable and toxic …[they were] the kind of proposals you present to another side when you don’t want an agreement." Speaking with The New Statesman, former Greek FinMin Yanis Varoufakis blasts Wolfgang Schaeuble's position which will lead to "a humanitarian crisis" for Greece and warns, regarding this latest creditors' proposal, "if anything it will be worse [for the Greeks]." His conclusion is succinct, "we were set up...," Merkel and Schäuble’s control over the Eurogroup is absolute, and that the group itself is beyond the law.
"In our view, there are two main factors keeping investors sidelined. One is the residual implementation risks involved in the latest arrangements... The second, of much broader importance, is the accumulated evidence of the inadequacy of the Euro area's present fiscal governance, which takes up too many resources and exposes the whole system to collapse."
Despite the euphoria in global equity markets, The FT's Wolfgang Munchau - once one of the keenest euro enthusiasts - warns regime change is coming in Europe. The actions of the creditors has "destroyed the eurozone as we know it and demolished the idea of a monetary union as a step towards a democratic political union," Munchau exclaims, fearing they have "demoted the eurozone into a toxic fixed exchange-rate system, with a shared single currency, run in the interests of Germany, held together by the threat of absolute destitution for those who challenge the prevailing order." He concludes rather ominously, "we will soon be asking ourselves whether this new eurozone, in which the strong push around the weak, can be sustainable."
"Greece will continue to fight, and we will continue to fight, so that we can return to growth, regain our lost national sovereignty"
- Greece Capitulates to Creditors’ Demands to Cling to Euro (BBG)
- Euro zone strikes deal with Greece after all-night struggle (Reuters)
- Tsipras Moves From Predator to Prey at Euro 'Torture' Summit (BBG)
- Euro’s Greek Boost Evaporates as Analysts Predict Losses to Come (BBG)
- Greek Fury Meets Resignation at Demands for Concessions (BBG)
- Poland Blames ‘Carefree’ Greek Populists for Tough EU Aid Deal (BBG)
- Europeans Press for Iran Nuclear Deal on Monday (WSJ)
- Iran nuclear talks: Deal 'near completion' (BBC)
- In speech, Clinton to put wages at heart of economic policy (Reuters)
- China’s Incendiary Market Is Fanned by Borrowers and Manipulation (NYT)
Deal Struck Following Total Capitulation By Tsipras: Market Awaits Greek Reaction To Draconian Deal TermsSubmitted by Tyler Durden on 07/13/2015 06:16 -0400
Just around 9am CET, after a 17-hour mammoth all-night session, Greece did manage to cobble together a "deal" if one may call this latest embarrassing can-kicking that, which was nothing short of total capitulation by Tsipras. As part of the deal, Greece "surrendered to European demands for immediate action to qualify for up to 86 billion euros ($95 billion) of aid Greece needs to stay in the euro" in the words of Bloomberg.
Me: How are the talks going?
EU source: "Shitty."
Me: "Getting more shitty or less?"
Source: "Pretty steady level of shittiness
As far as transatlantic security is concerned, the danger posed by the Grexit is not confined to the questions it raises over Greece's NATO membership, or the security ripple effects caused by the Greek economy's collapse. Grexit's danger lies in the fact that it serves as a symbol of the reversal of transatlantic institutions' fortunes in their attempts to build and maintain a hegemonic political, economic and military order in Europe.