Cyprus Contagion Spreading: Greek Bonds Plunge Most Since Bailout

Tyler Durden's picture

The no-brainer trade of the year is hitting a wall of reality in the last few days. Greek government bonds (GGBs), levitated on a sea of central bank excess and a plethora of promises, are coming back to earth rapidly as the fears of their Mediterranean brethren spreads contagiously to other bond markets. Spain and Italy are suffering notably today also but it is the almost 7% drop in the price of GGBs instantly removing all 2013 gains that is the most worrisome... This is the largest price drop since the March 2012 bailout 'success'.



Charts: Bloomberg

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Croesus's picture

Happiness returns to the world when bankers jump (or are pushed) off the fucking rooftops.

The Juggernaut's picture

imagine if the EU said, "aaaaahh well... since you don't have the money to pay let's just settle on your land.  We'll just own your land.  See... we now own it.  Have a great day."

Zer0head's picture

as long as it keeps us safe

NYC police to record every visitor's license plate

Cdad's picture

If the NYPD really wanted to keep us safe, they would just issue Visitor Friendship Bracelets.  Just cuff 'em on the way in.

pods's picture

They just want to be sure to ID all the collateral damage when they get their rocks off.


DrDinkus's picture


McMolotov's picture

That game was great.



(and my favorite) TERRRRRIBLE SHOT!!!

machineh's picture

Way to go, Olli!

You're a freakin' genius.

Curtis LeMay's picture

This is going from bad to worse to farce...

"The president of the European Parliament Martin Schulz suggested that deposits under €25,000 could be left untouched."

Here is the President of the European Parliament HIMSELF, OPENLY advocating the theft of people's savings.

McMolotov's picture

As with taxes, the bar will be lowered until everyone is "rich" and no one is exempt from theft by the state. And the class warfare tards will buy the argument all the way up until the time they're forced to "donate."

machineh's picture

and Christine Lagarde calls it 'more progressive.'

'Progressive' has become synonymous with theft.

Bernie Madoff must be the most progressive guy on the planet.


jeebus's picture

It's a Haircut. God, that word pisses the Hell out of me.

madcows's picture

Why not consider letting the banks fail?  Long Live Iceland and Morality!  JUSTICE!!!

news printer's picture

The "Ministry of Finance" of the U.S. talks with the Europeans for Cyprus

In a written statement, the U.S. Treasury says closely monitoring the situation in Cyprus and the Minister of Finance USA, Jack Lew, talks with his European counterparts.

Emphasizes that "it is important for Cyprus and its partners in the eurozone to work to resolve the situation in a responsible and equitable, ensuring financial stability," the statement of the U.S. Treasury.

Google translation :)

web bot's picture

You got the wrong translation program...


Google translation  :)


There, fixed it.

overmedicatedundersexed's picture

park in jersey ride a bus into the cess pool now called New York city. bring your own big glup. were only criminals and criminal police , police hah, thugs in blue,have guns.

ZeroPower's picture

Euribor and euro$ curves sold heavy right across. Watch the CDS of EU banks which are starting to pick up as well, albeit not as much as rates yet. GGBs are important yes but even more crucial is how bigger periphery bonds react to this big risk-off move. Bund and schatz are telling the story all day (higher).


Spa 10yr > 5%; ITA > 5.5%

Cognitive Dissonance's picture

Many miles to go before Greece sleeps.

Kinskian's picture

Anybody see Rand Paul's statement on immigration reform this morning? We are living under global government and Rand Paul is on their team.

Nothing makes sense in European or US politics unless viewed from the perspective of what's best for the globalists.

madcows's picture

Yup, they lost the latin vote and the elections, so now they need to pander... he's no different than the other corrupticians.  It's all about elections, not the good of the country.  hang him too.

ilovemilken's picture

Why wont the EU just fund the entire bailout?

Schmuck Raker's picture

1. German elections right around the corner

ShortTheUS's picture

And after Cyprus, it would behuve the Greeks to start their own bank run...

Fix-ItSilly's picture

ECB should purchase Turkish held Cyprus, merge with bankrupt Greek part, flip the whole to Greece for some never to be haircutted Greek bonds.  Greece should then grant limited sovereignty to a few islands, a la the US Puerto Rico model, along with licenses to explore for gas and auction whole to a Russian oligarch who will take loans direct from ECB to fund his sovereignty.  Toss in some derivative structures if you like, but just the value of "sovereignty" will bail this whole mess out.

Schmuck Raker's picture

"The value of 'sovereignty'"

LOL - you slay me

Smuckers's picture

I envision many George Castanza wallets in the near future...and a run on King Size mattresses.


madcows's picture

New Zealand is also considering confiscating private bank deposits for a bank bailout.  I say revolt.  There is no Fucking way the government can confiscate personal posessions to fund private bank collapses.  That's theft to support criminal bankers.  I say start shooting.  Really, this is beyond unbelievable.  To all american politicians an bankers, if you take the peoples private property, you will start a civil war.

scatterbrains's picture

They know that all they have to do is offer 2 for the price of one  .99 cents burgers and a big gulp  Limited one per customer, once a day blah blah...  indefinitely and it will buy enough votes to lock in power and even turn the big gulp nation into a brown shirt army.  Civil war ?


WTF_247's picture

Just remember they are still in massive BTFD mode - any and all news is discounted no matter how bad. Eventually we will get the panic selling but for now basically any news = buy dips (what little dips appear).  A 2% dip is now considered a correction by many.

I am amazed at the seemingly stupid buying again and again in the face of uncertainty, especially when many stocks are up 20%+ already from Jan.  You would figure at some point the funds would think twice about continuing to add positions up that much without waiting for a correction to buy cheaper.  I guess when you keep getting free money from Uncle Ben it is easy to just gamble with it.

Dareconomics's picture

Cyprus Contagion Spreading: Greek Bonds Plunge Most Since Bailout | Zero Hedge.

The markets' reaction to the Cyprus crisis was a big yawn.  Moves were adverse but slight.  Today, Greek bonds dropped the most since everything was fixed back in July, and this is a taste of the future.  Each crisis country has a potential confiscation waiting to happen, and this factor will cause a run in this sector.

For example, n Greece, there is always the potential for yet another voluntary buyback or some other euphemism masking a default causing the Greek bond yields to rise.  As investors wake up to which instrument is likely to bear the brunt of the confiscation, more runs will happen.

Cyprus Bank-Levy Passage in Doubt as EU Shows Flexibility - Bloomberg.

Cyprus aims to let small savers out of deposit tax; veto still likely | Reuters.

Cyprus is delaying the confiscation vote yet again.  The deposit confiscation does not have enough support in the Cypriot Parliament even when exempting small savers.  This has set up yet another round of eurocrisis brinkmanship.  The troika can cut off ELA and allow the Cypriot banks to fail, but that action will probably force Cyprus to exit the euro and default on its debts.  The fear is that a Cyprexit would lead to other countries leaving the Eurozone, a.k.a the dreaded domino effect.

Will Cyprus or the troika blink first, or will another solution materialize?

Former Cyprus Central Bank Head Slams 'Blackmailing' European Leaders | Zero Hedge.

Cyprus is rallying its surrogates to argue against the troika deposit heist.  Ex-CCB head Anthanasios Orphanides characterizes the troika's actions as blackmail.  The troika issued an ultimatum to Cyprus early Saturday morning demanding the government to implement the deposit tax or suffer the consequences of the ECB removing ELA from Cyprus' two largest banks.  This action would have pushed Cyprus into immediate insolvency.

While the troika is blackmailing Cyprus, it would be improper for its top government officials to state this publicly; hence, the former central bank head is trotted out to make the point.

A Cypriot Nobelist Is 'Appalled' by the Proposed Bailout Bank Tax - Businessweek.

Another distinguised Cypriot, Nobel prize winning economist Christopher Pissarides opposes the deposit confiscation.  He claims that Germany is bullying the smaller members of the Eurozone and that Germany wants all of the Eurozone members to behave like Germany.  These claims are true to an extent.  The problem with the euro is that smaller members unwittingly accept a monetary policy fit for the eurozone's largest member.

Pissarides also points out that Cyprus is in crisis in part due to the ill-conceived bailouts forced on Greece.  The bulk of Cypriot bank losses are from Greek debt, both public and private.  Greek sovereign bonds have been written down by the troika, while the Greeks are defaulting on the private loans due to the ongoing depression.  In essence, the Greek bailouts forced Cyprus to request its own.

Cyprus braces for defeat on deposit levy -

This article is a little stale as the vote has been pushed back yet again.  All financial services are on holiday in Cyprus for at least another day with another extension likely.

The Russians are protesting the troika's deposit confiscation.  Will they use a natural gas embargo, implicit or explicit, as leverage? Will they wind up bailing out Cyprus? No one knows what the riddle, wrapped in a mystery, inside an enigma will do.  The key is Russia's national interest.  Moving Cyprus away from NATO's influence may be worth a few billion dollars or so.

Schaeuble says Cyprus, depositors must take responsibility | Reuters.

There is an upcoming election in Germany, and Schaeuble does not want his party to take the political fall-out for yet another bailout.  While Cyprus will receive assistance, it also must be punished and humiliated to assuage the resentment of German voters.

Cyprus is the victim of circumstances beyond its control, but Schaeuble spins the story into a morality tale:

    Whoever deposits their money in a country because it will be taxed less and controlled less runs a risks when the banks in these countries are no longer solvent. That is what happened in Iceland and in Ireland some years ago. European taxpayers should not be made responsible for this risk.

This characterization ignores the role the troika has played in causing Cyprus' woes.  Schaeuble is talking tough, but the question remains, will Germany or Cyprus blink first?

lolmao500's picture

Still way too high for what they are really worth.