Just over a week ago, Yanis Varoufakis would have crushed and mangled anyone who would dare suggest that Greece would extend its current bailout program, because, the myth went, the new Syriza government had a mandate to end the Troika (since renamed to "Institutions") and to crush the Memorandum (aka "existing bailout programme"). Since then much has changed, and confirming that the new government is really the old government, Europe can now rejoice, because as Bloomberg blasted moments ago:
- GREEK BAILOUT EXTENSION SAID TO BE APPROVED BY EURO AREA
Which means that as the "valiant" in words, if not deeds, new Greek government rolls over, the DAX is about to jump to new all time highs making rich Germans even richer. As for Greeks, not so much.
What happened over the past week to the Syriza "mandate" is that the new government's list of unfulfillable promises to the Greek people has been replaced with a new list of unfulfillable promises to the Troika.
Update: EU COMMISSION SAYS GREEK LIST `SUFFICIENTLY COMPREHENSIVE'
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There was an expectation that today's receipt by the Troika of the revised Greek "reform proposal" would send risk and the EUR higher, which is probably precisely why nothing has happened so far, and US equity futures are unchanged ahead of what the HFT algos' new attention focus is today, namely Yellen's semi-annual testimony to Congress. As a result, the only thing that has seen notable strength this morning is the USD, which has surged to 119.50 against the Yen, and briefly pushed the EURUSD under 1.1300. which also means that WTI has also gone nowhere overnight and remains under $50. One wonders just what OPEC "rumor" those long crude will leak today.
When the German/Eurogroup decision came to throw either their own biggest banks, or the grandmas of a co-member nation of the currency union under the bus, they didn't even hesitate since they have control over the perfect vehicle for such tasks: the ECB (an allegedly neutral institution that in reality peddles political influence in a way that guarantees the poorer countries will always wind up footing the bill). For those of you who don’t want to wake up one day to find their own grandmas crushed under the same bus the Greek yiayia’s are under as we speak, it would be beneficial to ponder how perverse this all is, not just the isolated events but the entire underlying system that produces them. Banks are more important than people, certainly grandmas.
We may all be witnessing the beginning of the end of the European Union. For years, experts have stated that it is unsustainable for Greece to stay in the European Union. For years, those experts have been proven wrong.
The political-financial drama Grexit was greenlighted for a 5th season, as new characters and new narratives have reinvigorated a series that was clearly flagging in mid-2014. Given the sleepy subplots that dominated the 2014 series, industry insiders were anticipating a cancellation. Insiders would neither confirm nor deny the rumor, but they promised a "show unlike any other" this season.
The Eurogroup's apparent 'non-negotiation' stance with Greece reflects one main worry we suspect - conceding to Greece would increase rather than reduce political risk, emboldening the resurgent anti-austerity and anti-euor extremist parties across Europe. With Spain and France seeing 'extremist' parties in the lead, the following chart is likely the one that keeps Dijsselbloem up at night...
So, while the markets have surged to "all-time highs," the majority of Americans who have little, or no, vested interest in the financial markets have a markedly different view. Currently, mainstream analysts and economists keep hoping with each passing year that this will be the year the economy comes roaring back but each passing year has only led to disappointment. Like Humpty Dumpty, all the Fed stimulus and government support has failed to put the broken financial transmission system back together again. Eventually, the current disconnect between the economy and the markets will merge. Our bet is that such a convergence is not likely to be a pleasant one.
While the tone may not be as vociferous as historic Syriza MEP Manolis Glezos' recent statements over the Greek 'new deal', the rhetoric of Costas Lapavitsas (newly-elected Syriza MP) blog post is clearly questioning the decision-making of his party's leadership. With regards "our commitment to the Greek people, we have deep concerns," he begins, detailing five major questions that must be answered, perhaps most importantly, "What exactly will change in the next four months of 'extension', so that the new negotiation with our partners to become of better places? What will prevent the deterioration of the political, economic and social situation of the country?"
Well that didn't take long...
*GREECE TO SUBMIT LIST OF REFORM COMMITMENTS TO EU TOMORROW: OFFICIAL
So we are less than 3 days into the 'new deal' and Greece has missed its first deadline. We can't help but wonder if the initial draft, just as we warned, was thrown up all over by the Germans.
Oh, you didn’t notice that World War Three is underway, actually has been for more than year? Well, that’s because most of it has been taking place in the banking sector, which for most people is just an alternative universe of math. The catch, which many people either miss or don’t care about, is that the math doesn’t add up.
Why Germany Will Throw Up On The Greek "Reform Proposals": Wage Hikes, Foreclosure Protection, "Red Lines"Submitted by Tyler Durden on 02/23/2015 11:54 -0500
While Friday's 'agreement' to agree to agreeing a deal that would be agreeable between The Eurogroup (and its 'Institutions') and Greece was heralded by the markets as a success for avoiding a Greek Exit (Grexit), there are numerous hurdles left in the next few months that could derail this process and bring about the re-introduction of the Drachma. As Deutsche Bank concludes, Greece’s (reluctant) request for a bailout extension is the first step in what is likely to be a difficult path to compromise...