Greek Bad Loans Climb To Record 25% Of Total

Tyler Durden's picture

It appears that in the past few weeks, the number 25% is strange attractor of bad luck for Greece. First, a month ago we learned that Greek unemployment has for the first time ever reached 25%. Now we get to see the income statement and balance sheet manifestation of a society in socioeconomic collapse - Kathimerini reports that Greek bad loans, or those which haven't seen a payment made in over 3 months, have hit a record €57 billion, or 25% of all bank debt. "With one in every four loans not being repaid for more than three months, the bank system is feeling the pressure, leading to additional capital requirements that are expected to aggravate the state debt further." That was Kathimerini's spin. The reality is that just like in Spain, where between bad loans and deposit outflows, the country has become a protectorate of the ECB, which is now fully in control of its banking system, so too in Greece Mario Draghi's tentacles are now in every bank office. Should Greece repeat the festivities of this summer and threaten to pull out of the Eurozone, the ECB will merely in turn threaten to push the red button and cut off all cash to terminally insolvent Greek banks, which of course would also mean a total halt of all deposit outflow activity. So instead what will happen is the ongoing rise in unemployment, and the increase in bad loans as percent of total, until one day the economy, even with all the money in the world pumped into it from Frankfurt, will no longer move. That day is getting very close.

From Kathimerini:

The greatest part of the bad loans derives from business activity, accounting for some 33 billion euros of loans that are not being repaid. Bad mortgage loans come close behind, as they are approaching a record 20 percent of all housing loans, amounting to 15 billion euros. Consumer loans and credit card bills that are not being repaid add up to 30 percent.

 

Another worrying factor is that nonperforming housing and consumer loans have reached this level despite the fact that banks have proceeded to favorable arrangements for some 665,000 loans totaling 20 billion euros.

One "solution" to dealing with untenable debt: extending debt slavery in perpetuity:

The Development Ministry is already working on changing the legislation for overindebted households. The main changes will concern the continuation of loan repayments by borrowers who seek to benefit from the legislation. Currently installment payments are frozen until borrowers’ cases are heard. The amount of the installment will be determined by the loan recipients who apply for protection according to the law. The change in legislation is aimed at borrowers avoiding accumulating more debt until their cases are heard, as well as reducing abuse of the law by borrowers.

 

Another change planned is for the extension of the repayment period of housing loans concerning main residences, which currently stands at 20 years. This could be stretched to up to 40 years, based also on the age of the borrower.

Another "solution", because there is never such a thing as a free lunch, or debt amnesty, is to have all those other people who lived prudent, and fiscally responsible financial lives, bail out the deadbeats, who after monetizing the benefits of loans they had taken out without a gun to their heads up front, have now refused to pay their contractual obligations.

In cooperation with banks, the Development Ministry is promoting a regulation for a 30 percent reduction in the monthly installment borrowers have to pay. This amendment will reach Parliament along with the withdrawal of the names of borrowers who despite being blacklisted for not having repaid their loans since 2009, have managed to pay their dues since then in spite of the crisis. This will be a form of amnesty, used as an incentive for debt payment.

Here is the problem: you don't incentivize someone to pay their debt by telling them the already massive debtload will be cut by 30% as a result of it being too great. You incentivize them to pile on even more debt!

But such is (the lack of) logic in the New Normal Insolvent world. Pick your poison.

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nasdaq99's picture

spanish protests live:

 

http://elpais.com/elpais/2012/09/28/videos/1348831929_830912.html?autoplay=1

 

they;re angry but seems they don't have the message right.  it's the banks being bailed out at taxpayer expense that's causeing most of their pain, just as in ireland & greece & portugal.  why can't they get motivated behind that message???????????

LawsofPhysics's picture

Sheeple.  No worries, taxes that can't  be paid, won't be paid.  If I were in Spain, I would be getting my tribe in order.

Greece II, bankers buy the politico, increase taxation, people ignore, black market booms, bribery booms, possession (by force or otherwise) becomes the fucking law.

Anyone who has spent any significant time in these countries knows the drill.  Wonder how this is going to go over with a significantly better-armed populace?

markmotive's picture

Are you prepared?

* Water: Filtration, transport, storage, and treatment options.
* Food Storage: How much to store, pack-it-yourself methods, storage space and rotation, countering vermin.
* Fuel and Home Power: Home heating fuels, fuel storage safety, backup generators.
* Garden, Orchard Trees, and Small Livestock: Gardening basics, non-hybrid seeds, greenhouses; choosing the right livestock.
* Medical Supplies and Training: Building a first aid kit, minor surgery, chronic health issues.
* Communications: Following international news, staying in touch with loved ones.
* Home Security: Your panic room, self-defense training and tools.
* When to Get Outta Dodge: Vehicle selection, kit packing lists, routes and planning.
* Investing and Barter: Tangibles investing, building your barter stockpile.

It goes on.

http://www.planbeconomics.com/2012/07/13/how-to-survive-the-end-of-the-w...

All Risk No Reward's picture

Debt is both a bankster's widget (it is a bank's profuct that they sell to make money) and an asymmetrical weapon of mass debt destruction.  It serves the purpose of, say, tear gas, but with the benefit that the property owners don't know they've been gassed out of their property and they leave voluntarily.

Debt Money Tyranny v. 5.0

http://www.keepandshare.com/doc/4715145/debtmoneytyranny-5-pdf-57k

My people perish for lack fo knowledge - the sheeple need a mechanism to wake up to this Acme Level Art of War being waged upon the world.

LawsofPhysics's picture

NOTHING changes until the moral hazard is addressed and real consequences  for bad behavior are enforced at all levels of society.  Sad that you have to go to the black market to get an honest deal on anything these days.

Have faith ZHers, be optimistic, turn profits into physical (revenue generating-if possible) assets and prepare for the implosion because Nature and the laws of physics will re-assert themselves and that which cannot be sustained, won't be.

A Lunatic's picture

Maybe they just need lower interest rates....................

Dr Benway's picture

Yeah. With 25% default rates the banks would have to charge stupendous interest rates just to break even. And the solution, as you say, is lower rates and more debt to those incentivized to default on it.

nasdaq99's picture

physics,

the markets & media have done a masterful job of keeping the people of greece & spain off balance and away from the central problem:  that the TAXPAYERS SHOULD NOT HAVE TO BAIL OUT PRIVATE BANKS.  

LawsofPhysics's picture

Yes, but if you think that the socialization of private losses is anything new, you are sadly mistaken.  This has been going on for decades since the creation of fractional reserve banking.  The goal has always been to have a centralized owner of everything.  the ultimate ponzi wherein even gravity itself is no match for the true wizards of eCONomics (no really the MBAs and arrogant fucks that Stanford and Harvard et al. have been turning out really believe the shit they are shoveling).  Fraud has always been "okay" if it is for the greater good.  A "successful" education in these areas has meant that a person has the ultimate ability to ignore the massive cognative dissonance in their behaviors that lead to their wealth (always exceptions, some people actually do create really useful technology, but none in the financial sector).

The only reason things are getting bad now is because of two fundamental things, i) the flux of energy required to support growth can no longer be increased to sustain the current banking/monetary/financial system and ii) the debt servicing alone is causing a massive mis-allocation and mal-investment of capital and resources.

In the real world, 7+ billion people need resources and capital to sustain a certain quality of life.  No one wants to have an adult conversation about any of this and with mainstream media controlled by the same few families that control central banking I doubt we ever will.  These families came before yours and they are demanding their rent, pay the fuck up.

In the end, I have no doubt that humanity will (once again) discover that it is no more evolved then a yeast culture or a tiger on the plains of Africa when the final outcome is upon us.  Hedge accordingly (that's all you can do anyway).

Seer's picture

From one choir member to another- spot on!

"the debt servicing alone is causing a massive mis-allocation and mal-investment of capital and resources."

Mis-allocation and mal-investment within a Ponzi Scheme.  Leads to the question: can there really be foul play in a system that's predicated on a highly flawed premise (perpetual growth on a finite planet)?

techstrategy's picture

I agree with everything you said until the last paragraph.  in the end, humans are at our best when things truly do get bad.  The "financial" phase of the global economy is coming to an end.  It will be replaced by a sustainable, more locally oriented but globally interconnected version that taps global knowledge as we come back into balance with nature.  

Having said that, the transition could be painful and possibly violent.  The thieves of Wall Street might end up as ransom/robbery/murder victims.  There is too much wealth is too close proximity to too many people with weapons and little to live for.  Do you think NYPD could stop all the gangs if they cooperated for a single day (kind of like the WS collusion that has stolen so much from so many) and decided to pillage the Upper East Side?  Or took a few hundred armed cars to the Hamptons?  Not a chance.   I pray we will never get there, but I fear we are much closer to that than most appreciate, especially those on Wall Street who are primarily responsible for the current situation because of the excessive financialization of the economy  

Wealth will be redistributed.  Long term stability depends upon and demands it.  The only question is how.  Hopefully, the parasites who have stolen from society for decades will realize that they are close to killing the host and will end the BS, refocus on INVESTING in productive people and businesses and establish private sector driven solutions to engage and employ the massive population of discouraged would be workers to rebuild this country.

LawsofPhysics's picture

Wrong on so many fronts. Redistribute all you want. The short answer is simple. If there are resources for a couple billion people, there will be a couple billion people, period.

techstrategy's picture

There are resources for plenty more than that, just not at the standard of living (consumerism) this country has come to expect.  and, the eficient frontier will be expanding outward from tech/human ingenuity.  

Offthebeach's picture

The state and it's merchants are as the always are.
The peasants too. Little more than 2 legged appetites. Something like 80% have never read a non fiction book after pubic skooling.
Economists and lawers are the priestly cast of our day, spinning justifications, few ( 5%? ) could exist without the spoil crumbs of a massive state thieft..er...."taxes".

A more real, violent, physical resistance against state power, and for liberty has been checked by unprecedented material prosperity. People had a lot to lose, materially. Now that pillow is threatened, if not gone. What do people have to lose, perpetual debt?
On the otherside the state has never been larger, more total, more clearly fraudulent and incompetent. It's choaking on its own fat.
Further, I consider myself socially, econically conservative but find many lefty lefty in agreement with me, generally, as too the size and nature of the state as a in and of its self enemy of the people. Even some old people and the poor see the "well"fare as a racket system, a trap.
The state is ever more weak, and like a obese mutant the more it takes in, the weaker it gets.
Since its reach is everywhere, it makes enemies everywhere. There is no idyllic refuge. It makes you choose. Even its minions are surly serving this monster. Many no not why. The rich elites pay false affection to sup at the states feet.
I hope I live to see a American awakening. I hate to say it but hard and harder times make people, long accustomed to not giving a moments thought, a reason to think.

All Risk No Reward's picture

D*mn tyrants.

Here are some graphs that illustrate the problems you textually addressed:

Deb Money Tyranny

http://www.keepandshare.com/doc/4715145/debtmoneytyranny-5-pdf-57k

Weapons of Mass Debt (1st chart)

http://market-ticker.org/akcs-www?post=207083

Let's not forget the derivative debacle:

Take the Weapons of Mass Debt chart's debt tidal wave and multiply it by about 20.  In other words, that tiodal wave of $53 trillion in debt is about 5% or less of the derivative debt outstanding, almost all in the TBTF&Jail Money Power bank weapons.  Compare that to about $2 trillion in American taxes, which is about 0.2% of the derivative debt outstanding.

Remember, all it takes is one domino to go...  and the whole fascist house of cards falls. 

Piranhanoia's picture

So only 25% of the loans aren't being paid back.  The money going into Greek bank/black hole goes directly to the ECB, IMF, ECS, RBS, UBS, ING and WTF etc.   No benefit to the people of the nation except the bank staff and the bribes to pimps.

damn patriots.

Seer's picture

In a way perhaps the Greeks ARE more fortunate?  Better to escape the BIG PONZI sooner rather than later.  The money changers can Want all they wish, but one cannot get a rabbit out of a rock...

asteroids's picture

Fear not, Amerikans are not stupid. They will see what smart Europeans are doing and start doing it themselves. After all, they aren't paying their mortgages. Pretty soon, they'll stop paying ALL debt contracts. You see the central banks knew about moral hazard but ignored it. Hold onto your hats, this is going to be messy.

All Risk No Reward's picture

That's all according to plan. The banksters want reality, not worhtless paper.  the whole point is to...

1. Lend money from nothing.

2. Indebt as many people as possible.

3. Declare yourself TBTF&Jail

4. Bust the debtor class and turn nothing + lent money into the ownership of the physical planet and, as an added bonus, feudal lord control over the citizenry after you offload all your debts onto the nation state governments.

5. Profit. based upon our poverty.

This con is soooooo elementary, I'm baffled as to how so few people actually "get it."

Atomizer's picture

Public servant fiduciary irresponsibility. As theft continues, no one gets arrested. The call for reform will continue. Unfortunately, that’s the grand scheme goal. Since all these crimes occur under present government guidelines, new measures will be mandated to draw more peasantry theft.  Again, lawmakers & regulators never serve prison time for their mistakes in lack of oversight. Nor are they responsible in repaying back the money pissed away. Once we stop this, fraud will begin to drop. Until then, everyone uses the elected public servant [Get out of Jail Free Card].

  • Enron
  • Leman Brother’s
  • Bear Stearns
  • MF Global
  • BIC

 

The list goes on..

LawsofPhysics's picture

I have been keeping my eye on commodity contracts.  This is the only other thing that I can think of that will force an implosion or adult conversation.  When the food, fuels, commodity chemicals, and other necessary inputs for the industrial world are not delivered, then shit gets real in a hurry.  Regardless of velocity, hyperinflation in the blink of an eye.

Atomizer's picture

If you’re a concerned US citizen, just email Queen Carpet Muncher Janet at her blocked government taxpayer funded account.

 

janet.napolitano@dhs.gov

 

Sorry, I really hate lying scumbags who waste oxygen.

http://www.nydailynews.com/news/politics/homeland-security-secretary-janet-napolitano-email-article-1.1170915

Seer's picture

Any idea on what it will take for people to finally come to terms with the SIMPLE notion that you cannot have perpetual growth on a finite planet?  All this other shit is just peanuts... (another circus will land if we don't reform our basic understanding of physical reality)

Offthebeach's picture

Materially, the billions consume little. Something like all the oil ever pumped wouldn't fill Lake Tahoe.
By custom, habit and state force, using common efficiency and no new technology at all, I wouldn't doubt material prosperity couldn't be 10 tines what it is today. Half or more of the world's population has little benefit si far. As but an example, water pumps and PVC pipes. Too bad Obama/Gore envro dreamers and rent seeking hacks blew all those solar billions. If bought from Chinese coupled with pumps massive improvement in health, drudgery, food cost decrease could of been had. Releasing sub substance billions into low trade labor and elementary literacy.

Joebloinvestor's picture

That 25% is over three months.

I would like to see the two month %.

bugs_'s picture

What do you call a Greek good loan?

orangegeek's picture

The US Dollar is 57% weighted against the Euro.  So if the Euro rises, the US Dollar falls - and vice versa of course.

 

http://bullandbearmash.com/chart/usd-index-daily-september-28-2012/

 

If the US Dollar rises, commodities and markets priced in US Dollars will fall.

 

But with Greece digging a deeper hole by the hour, the Euro will be fine, because this is bullish for the Euro, right?  *smile*

akak's picture

 

The US Dollar is 57% weighted against the Euro.  So if the Euro rises, the US Dollar falls - and vice versa of course.

Bullshit.

The so-called "US Dollar Index" is nothing but an artificial --- and outdated --- formula comparing the exchange rate of the US dollar to the simultaneously depreciating fiat currencies of only SOME of the USA's trading partners, using a weighting based on international trading patterns as they existed in the 1970s.  Note that it ridiculously does not even include the exchange rate of the currencies of the USA's #2 and #3 trading partners today, China and Mexico respectively, nor a number of others that are much more significant to the trade balance of the USA today than they were 40 years ago, such as Brazil, Taiwan, Indonesia, South Korea, etc.

And while the US Dollar Index (DXY) weights the euro as 57% of its total currency basket, US trade today with the EU is only about 17% of total US international trade.  Hardly a realistic formula.

Anyway, do I really need to point out that this artificial and outdated index is NOT the same thing, by a long shot, as the US dollar itself?

Aside from that, trying to (dishonestly, disingenuously, speciously, idiotically --- you chose the adjective) compare the actual purchasing power of the US dollar from one year to the next by using the value of the US Dollar Index is impossible, as it is not an ABSOLUTE measure, but only a relative one, inasmuch as what the US dollar is being compared to using this index is, once again, a basket of fiat currencies of which ALL are similarly, and simultaneously, always undergoing debasement as well.  Comparing DXY values from one year to another is simply comparing apples to oranges.

The DXY has meaning ONLY in the context of short-term currency daytrading, and has NO significance outside of that narrow venue.

HeliBen's picture

Kind of suprising 3 out of 4 are still paying, dumbasses.

JLee2027's picture

True. The only way out of the "system" is declare your own debt jubilee and put your money into hard assets like physical (not paper) Gold and Silver and prepare for the total ecomonic chaos path these clowns have us on.

And the best part is if you look like a deadbeat on the credit report, they won't waste the time to sue you! 

Seer's picture

"And the best part is if you look like a deadbeat on the credit report, they won't waste the time to sue you! "

BUT... they might look to make an example of you.  Big Business + Govt is known to come up with some interesting ways to "resolve" Their problems...

Also, I suspect that there will be a LOT of hungry people signing up to work for the "Pinkertons."

Urban Redneck's picture

 Greek Comedy - with only 4 to 1 leverage they would already wiped out...

q99x2's picture

Greece finds the Golden Fleece.

Ha Ha Ha German tapayers.

CaptainAmerica's picture

25%?  Really?  Is that all?!

Peter Pan's picture

This is the result of the massive miscalculation by Greece's Euro overlords. By slashing wages they not only deprived people of the means to make repayments but also destroyed real estate values because home values at the end of the day are a certain number of multiples of earnings.

Now they have a situation where the banking system is faced with insolvency due to the collapsing value of the underlying securities, failure by borrowers to service debt and of course massive withdrawls of deposits.

Had they converted to drachma up front, they would have avoided the slow motion bank run of the last two years and wages could still be set at a drachma level to service drachma denominated debt.

The losers in all this would have been savers but the reality is that they are now screwed anyway.

syntaxterror's picture

I'm shocked it's only 25%! Nice job eurocrats!

ebworthen's picture

Coming soon a the U.S.A.!

Piters's picture

this is where those money goes.. shame Greece, shame EU

Aleksandar Samardziev, an ethnic Macedonian student who was attacked in Solun by members of the Greek political neo Nazi group Golden Dawnhas died from his injuries, attacked for refusing to change his last name to a more "Greek" sounding name.

http://macedoniaonline.eu/content/view/21916/2/ Greece is not obligated to respect any international law.. 

konfan's picture

No such incident has occured in Thessaloniki mate.Sorry to burst your bubble.

Piters's picture

so.. you are going to burst His bubble too ?? you know who this guy is?? Then tell me Why he is so conserned if everythng is OK ?

 

http://images.plusinfo.mk/large_gal/2012/09/30/stefan%20filee.jpg

konfan's picture

Greece is a mess right  now and any kind of accusation of that nature must be investigated.But you are quoting an article saying somebody succumbed to his injuries.As much as i have searched all day,all i have found is denying of this incident ever having taken place.So dial down the propaganda and wait for any kind of official source of confirmation.If it proves in fact to be true,i will join you in  protesting.