Bild Warns German Govt Fears Greek Bank Runs, Financial System Collapse; Prepares For Grexit

Tyler Durden's picture

It has been a busy few days for Germany. In the space of a week, they have warned Greece "there will be no blackmail," adding that a Greek exit from the euro was "manageable," only to hours later deny (clarify) these comments. This was then followed up with beggars-are-choosers Syriza demanding any ECB QE must buy Greek bonds (or else) - which Germany has flatly ruled out - only to see today that Syriza is practically guaranteed to win a "decisive victory" at the forthcoming snap election. So it with a wry smile that we note Bild reports tonight that the German government is preparing for a possible Greek exit, warning of financial system collapse, bank runs, and huge costs for the rest of the EU.


Germany has been flip-flopping (as Reuters notes)...

Der Spiegel magazine reported on Saturday that Berlin considers a Greek exit almost unavoidable if Syriza wins, but believes the euro zone would be able to cope.


Vice Chancellor Sigmar Gabriel said on Sunday that Germany wants Greece to stay and there are no contingency plans to the contrary, while noting the euro zone has become far more stable in recent years.


As the euro zone's paymaster, Germany is insisting that Greece stick to austerity and not backtrack on its bailout commitments, especially as it does not want to open the door for other struggling members to relax reform efforts.

But now the rhetoric is heating up...

Germany is making contingency plans for the possible departure of Greece from the euro zone, including the impact of any run on a bank, tabloid newspaper Bild reported, citing unnamed government sources.


The newspaper said the government was running scenarios for the Jan. 25 Greek election in case of a victory by the leftwing Syriza party, which wants to cancel austerity measures and a part of the Greek debt.


In a report in the Wednesday issue of the paper, Bild said government experts were concerned about a possible bank collapse if customers storm Greek institutions to secure euro deposits in the event that Greece leaves the zone.


The European Union banking union would then have to intervene with a bailout worth billions, the paper said.

*  *  *
Open Europe asks has the balance of power in a Grexit shifted?

We have always argued that a Grexit would be painful for both the Eurozone and Greece, but relatively more painful for the latter. As such, it has always seemed unlikely that Greece would unilaterally seek to exit the euro. This still seems to be the case, though there have been internal shifts. As we noted in Part 1, the economic and financial contagion from a Grexit could likely now be more easily contained. This allows the Eurozone to take a harder line with Greece, not least since giving into SYRIZA, will send the message to Podemos and others that fiscal discipline etc is fair game.


So the Eurozone may be less nervous about Grexit and feel it has more reason to stick to the rules as it has laid them out, which may harden its negotiating stance. Equally though, Greece may have more reason to think a Grexit could be economically manageable, which could encourage a SYRIZA-led government to stick to its guns more firmly. This to us suggests the clash could be bigger and the negotiations more difficult this time around. Ultimately, though – with hundreds of billions of euros and the political project of the euro at stake – it still seems likely someone will blink and a fudge will be on hand as is usually the way in Europe. Allowing Greece to remain inside the euro for now.

*  *  *
Greek stocks were closed on Tuesday (but ETFs in the US were notably lower) as Greek bond prices tumbled...



And if Germany is 'preparing' for Grexit, then maybe its 5Y Greek CDS they are buying?


As we concluded previously, the consensus can certainly forget the ECB announcing public QE at its next monetary policy meeting on January 22, which will be followed just 3 days later by the Greek national elections. In fact, things in the coming weeks and months may get very ugly, fast depending on how things in Greece play out.

So after 3 years of kicking the can and pretending it is fixed, suddenly everything that is broken in the Eurozone threatens to float right back to the surface, leading to another showdown when photos such as this one become a daily occurrence.

The only question is whether this time anyone will believe the rhetorical "whatever it takes" threats uttered by the one central bank which for the past 4 years has proven it is utterly incapable of acting, instead chosing to talk each and every day, a strategy that has worked brilliantly, until now.

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Soul Glow's picture

Get your popcorn ready.

old naughty's picture

don't you get the feeling this was not unforseen?

ThroxxOfVron's picture

no shit.

Round trippin' those bonds and the CDS since June made a lot of money if you already knew who was gonna be declared the winner of the Greek elections back in May.

NoDecaf's picture

b'bye euro! don't let the door hit you on the ass.

winchester's picture
winchester (not verified) NoDecaf Jan 7, 2015 6:23 AM

nothing will happen, they cannot exit, this is open path for others and multi independence, will u fucking understand some day the system IS NOT ALLOWED TO CRASH. partial bank failure is something, but you cannot kick shitty country outside just to stay safe yourself because if you do so you have to put in your brain that EU is an accumulation of weakness that never set a strong whole. they have to support the bad ones, if they kick greece outside of euro zone they have decades of construction anihilated, this is not possible, wasn't been studied before, it has been recently, but it is not allowed.


all this is fear mongering to make movement on markets to provok some stimulus, nothing else.


panik in media is banking diesel.... no more

new game's picture

you correct-pandering for easy money underwritten by the ptb that make money from the status quo. now if greece had something to offer the world(surplus) well that would be a, opps not the case, hence this waste of time discussion. greece stays and plays the game for more easy money. this guy just needs to be paid more to shut the fuck up and flip flop...

Never One Roach's picture

I'm sure PM Papapoopolous will not miss a meal ... same with all the Oligarchs there. It's the Mildle Class people there who face the blunt reality.

max2205's picture

Grexit 1 was so bad I don't want to see Grexit 2 movie 

max2205's picture

Grexit 1 was so bad I don't want to see Grexit 2 movie 

lakecity55's picture

Are we all assuming TPTB want the Euro to succeed?

A super-crash will allow them to consolidate more countries into fewer currencies.

Contagion would spread to the US banks (Fed).

The result of a super meltdown could result in the NAU: Canada, US, Mexico under the "Amero" joined to the Euro, in order to fight off the Yuan/EEU.

the tower's picture

so, if new mexico would leave the USA the dollar would disappear and the USA would fall apart?




nothing much will happen if greece leaves

HowdyDoody's picture

The Cyprus dry run wasn't allowed to happened until fixed term bonds payable to French and German banks had exppired. Are there similar Greek bonds held by the banksters? When do they become due?

Arius's picture

thanks for the warning ... fuckers.

JohninMK's picture

Yup, bet there are not many Greeks with a positive balance in the bank. Its all safely in cash Euros.

No 500Euro notes left in the rest of the EU.

Luckhasit's picture

Is Jiffypop okay? Not a fan of the microwave shit.

Bokkenrijder's picture

Jesus Christ guys, Bild is a fucking German TABLOID! You folks are quoting tabloids now? What's next, a merger between ZH and KWN?

moonstears's picture

Didn't you see the movie "Men in Black"? You always check the tabloids.

P.S. Jesus Christ is not well represented/nor respected in these Euro affairs, JMO.

the not so mighty maximiza's picture

nein nein nein nein nein nein

Carpenter1's picture

As much as I'd like to see a grexit occur, with an EU collapse to follow, if there's one thing I've learned the past 5 years, it's that real events are not forecasted. We will not have MSM telling us all about the potential risk or covering the story like a sporting event.

When I see this, I know it's all theatre and will amount to nothing.

Haus-Targaryen's picture

Regrettably I agree.

That being said -- this could shake stuff up -- and having to guarantee Greek debt to a few key banks in France and Italy is still going to cost hundreds of billions.

Who is going to take that onto their balance sheets and who is going to provide liquidity?

Ghordius's picture

the discussion in the ZH comments regularly goes in the direction of... wishes 

"As much as I'd like to see a grexit occur, with an EU collapse to follow..."

first, as usual: GreXit would be about the eurozone, i.e. the monetary club, not the EU, the trade club. The two things are completely separate

second, as usual: a greater majority of Greeks don't ask for GreXit. The only one damn thing Greeks agree on is that they want to keep the EUR (and no, a discussion like in the UK about leaving the EU is not even contemplated, in Greece)

third, even Syriza is talking about the debt, not the currency

so let's have a look at this debt. The Hellenic Republic has a sovereign debt of somewhere around 170% of GDP. Which, if you don't look at Japan, would look quite unsustainable

who are the creditors? Well, the Troika is the major creditor, for three quarters of it. Yes, the IMF, the ECB and the the EU (via stabilization funds which are actually German, Finnish , Dutch and so on) are the creditors for a Greek sovereign debt around 130% of GDP, with many others, including banks, private investors and so on making out roughly 40% of the GDP

how much interest do the creditors charge? Well, here it starts to become interesting. The Troika charges... nothing. Until 2023. I repeat: the EU/IMF/ECB creditors bailed out Greece with a sizable package that amounts to 130% of Greek GDP and charge nothing until 2023 for it. The remaining 40% "legacy debt" is with the interest rates of the normal sovereign bonds

why is interest important? It is because it is a fact that debt breaks the debtor only when interest service is too high. I can owe one trillion, if my interest payment is zero... it does not hurt me. The generally accepted level of "too much" - for a sovereign - is around 25% of it's budget

why do you mention the budget? because it's all about the budget. And national pride, but later about that. What is the eurozone? An alliance of sovereigns that want to share a currency and agreed to have balanced budgets for that. The two things can't be disentangled, it is and always was the scope of the EUR. The request from the Troika is for Greece to balance it's budget (as per treaties of which Greece is signatory). Since Greece has only to service a debt equivalent to 40% of GDP, it was deemed as possible. In fact, the 2015 budget, for all that the Greek Parliament passed it "in defiance to the Troika", is quite balanced

why do you mention... national pride? because for many "firebrands", in Greece, in Germany and so on, all this is, increasingly, a matter of national pride. Here I leave the facts and enter personal commentary, then a story of betrayal or trust becomes quite emotional instead of factual. I maintain that there are factions among the Northern Europeans that feel repeatedly betrayed by Greece, while in Greece there is a feeling of betrayal from the political establishment, the "oligarchs" and the Troika of IMF, ECB and EU northern countries

Recently Dimitri Papadimoulis brought it to imho an excellent point: even for Syriza, the goal is/should to bring Greece back to the peerhood of the european nations, to restore Greece as a "normal member of the community, of the same standing and with the same rights as the other EU members" (my traduction). Which means an affordable debt and a balanced budget coupled with an economy that finds it's path back to competitiveness

And this is the real knot of the thing. Greece has many problems, but talking about complete fabrications, wishes and speculations don't help Greece. I find it very unfortunate that many discussions go around the above facts. We are here in the eurozone all citizens of our european sovereign nations. We want them to be proud, and be proud of them

Greece has the damn right to be part of any club we set up, as well to leave any of them if Greece wishes so. That's the spirit of both EU and eurozone

Syriza has the damn right to address the debt question during the election campaign. The creditors have an understandable irritation that this question is being addressed now, in 2015, instead of waiting for 2023, then this damn "can-kicking" exercise has some tactical merit. Samaras... well, even he has some right to put it in a GreXit manner, then there is a need for the Greek electorate to understand that the european partner's goal is to keep Greece in the alliance... sofar Greece wants it. And wanting the EUR means... wanting balanced budgets

Once Greece is on the path of balanced budgets... well, then debt would have to be addressed. No question about that. Though... well, there is again the question of interest, then it's debt interest service that makes debt sustainable or not . What kind of interest would be charged after 2023? Does that debt have to be serviced at all? Can't it be just canceled? No, the answer would be no if posed now, with the very first balanced budget not even a few months old. (Of course the IMF will want to get it's part back)

so the real question in the long run is this: balanced budgets or not. cue in the discussion about Austerity or Not

note I haven't addressed neither the damn Vampire Squid Firmly Wrapped Around The Face Of Humanity nor corruption nor anything else too controversial, or so I hope, then in the last years I've upset many proud Greeks, like Taraxias, to which this rant is dedicated

Haus-Targaryen's picture

TL:DR - 

If only Greece would balance their budgets everything would be fine.  

Ghordo -

The problem is, the monetary culture in Greece is *not* running balanced budgets.  Balancing the budget = Austerity.  Thus, the lifestyle that the Greeks got accustomed to (previous by printing Drachmas and thereafter by borrowing money) is at an end.  The Greek government must maintain a balanced budget, and the election this month is whether the Greeks, as a people and a culture are willing to accept this required change in their lifestyle (imposed on them by the EMZ) or if they would rather do their own thing.  

One thing is certain -- within the EMZ, Greece can no longer live outside its means.  The question is will Greek society accept this, and if not, which would they rather have?  The EUR or the print and spend mentality they had before.  They cannot have both. Its one or the other.  

Ghordius's picture

I was thinking that if I could go back in time I'd choose a new nick for ZH: Smaug. And then, I'd call you Bilbo Baggins ;-)

I've spent a sizable portion of this morning to write the above comment. But your theory of monetary culture has so damn few legs to stand on that I refuse to even contemplate writing a similar comment, so I'll only give you a few things you might want to research yourself

your theory goes back to the 19th Century, and it's firmly rooted in a special moment in history: the very first time northerners had the (economic) upper hand on southerners, in Europe. Max Weber and others found the source of it in Protestantism and it's industriousness, others point to coal and iron ore resource placements, and others point to inflections in the discovery/trade empires

fact is that northern europe was one the poorest, most backward regions of the whole world for most of history until the 16th Century

my point is that: when we europeans talk about cultures like the Greek... we usually don't talk only about recent history. as a reminder, Greece was under a military dictatorship until 1974. whatever you are saying about Greeks, you are talking only about something that is so recent to be in living memory (of yours truly). And this is too small a segment of time and history for us europeans. do you know how Greek bugdets and debts looked like in the 2'500 years before 1974?

Haus-Targaryen's picture

Perhaps that nick name isn't the best thing -- as I'd just shorten it to Smug.  

Ghordo, no one cares how the Greeks spent money 2500 years ago, just like no one cares how much the Prussian Monarchy spent building the tram lines in Königsberg.  Why?  Because it is completely irrelevant to today's issues. Moreover, the 16th Century ist NOT recent history.    

I have explained to you how average temperatures affects the spending and saving habits of those who are subjected to said temperatures.  (Warmer temperatures lead to less productivity, and lower temperatures make individuals more productive.)  It is not my fault you choose to ignore this to support your own conclusions.  You have made it apparent here over the years that no amount facts, and irrespective of what the circumstances may be -- you cling to the € and the Blue and Yellow flag.  You always choose ideological arguments that support these two institutions, irrespective of how financially and intellectually bankrupt they may be.  

Yes, Northern Europe was a backwater until the industrial revolution, at which point (since the 17th Century) has made the south of Europe, for the most part - irrelevant.  The industrial revolution allowed the more productive north to outcompete the less productive south.  The South then compensated by habitually devaluing their currencies.  It worked well until the Euro.  Now nothing works as it should.  

Greece has been an economic cesspit for a few thousand years now.  Shoot, even their "laziness" is in the Bible -- Old Testament mind you.  The Greeks have been managing their economic roughly the same way for quite a while now.  Shoot -- spend 30 seconds googling problems the Greeks had fighting the Italians and Germans in WWII.  The government had to buy second hand weapons that were dated for the time because they were so broke they couldn't afford the new stuff.  The idea that Greeks managed money well 2500 years ago, and thus should be a part of the EUR today is one of your more egregious arguments I've read on here in quite some time.  


AbbeBrel's picture

Most of this motion appears to be each party aiming for a different side of the can, in an attempt to push it down their road of choice.    No real reforms or overhaul of tax system are being discussed, only MOAR debt and MOAR debt haircuts.


As for Lagarge's List - 4 convictions so far.   At least that beats Wall Streets record of zero indictments for the 2006/7/8 mortgage frauds.  Well at least there are 6 !! people on audits now ; it will be a short 15 years for them to work through their caseload:

And I can't help but recall the Stiglitz (mainstream argument) vs Hendry (fraud argument) at 2:00 : "Greece is a Cheat's Charter":

fiftybagger's picture

FYI, Here's the direct quote:


12 One of themselves, even a prophet of their own, said, The Cretians are alway liars, evil beasts, slow bellies. 13 This witness is true. Wherefore rebuke them sharply, that they may be sound in the faith;

Titus 1 King James Bible

Ghordius's picture

LOL. does it matter then that the very First Seven Churches of Christianity, i.e. Ephesus, Smyrna, Pergamum, Thyatira, Sardis, Philadelphia and Laodicea... were in Greek cities? Yup, Early Christianity was a very Greek affair. Even the Book of the Apocalypse, which sometimes seems to be the only Gospel for some ZHer's, was written by a Greek, on the Greek island of Patmos

the New Testament? written in Greek, and spread chiefly by Saint Paul, who was - of course - a Greek (with Roman citizenship)

Ghordius's picture

"The industrial revolution allowed the more productive north to outcompete the less productive south"

then set up your theory on a paper and check if it's falsifiable. does your theory explain Belarus, Taiwan, Singapore, California?

winchester's picture
winchester (not verified) Ghordius Jan 7, 2015 6:23 AM

" first, as usual: GreXit would be about the eurozone, i.e. the monetary club, not the EU, the trade club. The two things are completely separate "


sure, that's explain why on the 28 the 19th came into the game.... idiot....

GCT's picture

Ghordius you make some fine points.  +1.  Having said that Greece is not the only one violating the treaty.  Why should Greece adhere to a policy of balanced bugets when other EMU countries violate the treaty as well?

Sovereign countries that are doing well in the EMU do not want to continue to send their money to those that do not want to bring their budgets inline with the treaties.  Fracturing continues to happen and the fiscal banking union proposed does not set well with these countries.  Until the EU in general has consistent goals accepted in every country not alot is going to change.  You cannot have France retiring at 60 when most of the producing countries have retirement set at 67. The problem is sovereigns want their cake and eat it too. 

Most pushing for a fiscal union are in trouble.  Germany and some others are always blamed for another countires woes because they are producing more then they consume.  The USA headed down that path of worshipping the god of money and consumption.  Im my small mind you must produce and manufacture items.  Greece will continue down this road because it is easier to make threats then actually reform their system.  Greece has not met one item they agreed to get bailed out.  Most want to remain in the Euro because they know if they go back to the drachma hyperinflation will soon follow. 

Of course Greece might well head East with the newly discovered oil and minerals discovered offshore. Hell even the USA may well bail them out for the rights to these discoveries as it is all about energy these days.  Although you blame the triorka for all of Greece's woes you need to remember it takes two to tango.  Their politicians knew what they were doing and most likely many EMU leaders knew what was going on.  Greece is not doing austerity. 

Ghordius's picture

I don't blame the Troika (to the chagrin of many, here). And I'm avoiding the theme of corruption here because I have upset too often Taraxias and other Greeks. I put a lot of blame on the damn Vampire Squid, Goldman Sachs

treaties regulating the clubs of sovereigns are, imho, like the rules of a club of gentlefolk. note I don't want a damn policemen in the club. it should be a relaxed place where things are discussed, not blindly enforced with a stick and pepper spray. so I support the treaties, I support a sensible application of the treaties, and I support even exceptions where needed as long as the general principles are followed, but I'm against the "fiscal union" talks

France's thing with the retirement age is a question of the French budget. if they prefer to spend there and spend less elsewhere... it's France's business

meanwhile, Greece has a quite balanced budget for 2015, all things considered. and it does hurt. Austerity is real, in Greece, imho (nevertheless +1)

lakecity55's picture

Some good posts here!

The Greeks wanted more socialism than northern Europe, it would seem.

Unless all these guys have the same work/social programs, somebody is always going to slack off.

The Germans figured out a way to dominate Euro-Land w/o using the Wehrmacht, but forcing Southern Europeans to adopt Northern Euro habits probably won't work, so Germany will have to bail them out again or suck it up.

It is sort of a replay of WW2. The Italians were constant screw-ups, Franco would not play the part cast for him, and then Mussolini went AWOL and invaded the Balkans requiring German backup, throwing off the Russian Invasion timetable.

Meanwhile, the Russians were adhering to the NAZi-Soviet Pact, shipping material to Germany and minding their business.

This may be the opening for Russia to enter the Balkans economically.

The Greeks should be playing off the EEU vs the EU.

I have not had my Red Bull yet, so some of this may be disjointed, but there are interesting parallels with history here.

BringOnTheAsteroid's picture

I believe the fate of the EU can be predicted using a far simpler model than the one you layed out above - as good as your posts are.

Complex systems of any nature whether biological, political, fiscal, mechanical, demand independent and autonomous segments to ensure the overall survival of the entire system. Some simple analogies are the triple redudant and independent systems on a modern jet or the sealed and isolated compartments of a large cargo carrying tanker.

You need delve no further that this. The EU will fail, it's not my guarantee, it's written into the very fabric of the universe. When once Greece's economy went to the dogs and affected only Greeks, now it risks bringing down the entire construct. There is no way of getting around this.

Europe had the right balance of culture, trade, freedom of movement, HAD being the operative word. A well engineered homogenous system will evetually fail, this is guaranteed. A complex structure like the EU which is a purely human construct and subject to all the vaguaries of human nature will be destined to spectacular failure.

The EU was a stupid idea and only possibly could have come from the mind of a true power hungry idealogical control freak.

With independent and autonomous countries Europe was always going to survive. The strong prosper, the weak fail but overall the region thrives.

This is now in peril.

GCT's picture

Ghordius sorry for the comment on the Troika.  Re-reading you did not blame them.  Many here do. 

Agree with you about France but Hollende wanted the EMU to support it originally.  Has that changed? 

I agree about the treaty thing but there does come a point in time when the adult in the room must step in.  Greece is being squeezed in my mind.  Originally they were bailed out when it was what 70 billion and now they owe 274 billion?  Correct me if I am wrong here.  I do blame this on the financiers.  You invest you take on risk of losing what you loaned.  Most of this so called money is really not there so why not just write it off. 

I do not think the debt will be paid anyway.  Just like any of our countries it will never be paid back.  Maybe it is time for a huge debt write off globally.


piratepiet's picture

Thanks Ghordius.

Those creditors in the 40 % group happen to be largely American ? 

Ghordius's picture

I don't have the data for that. I wonder, though, who holds the CDSs on this 40% of GDP debt. I suspect mostly hedgefunds on both sides of the pond

williambanzai7's picture

"The only one damn thing Greeks agree on is that they want to keep the EUR"\

When the REPO man comes calling, the poor bankrupt slob always wants to keep the car and the TV...

WTFUD's picture

William Sheep only want what the MSM tell them they should want.
The scare tactics employed ( as in Scotland ) render Syriza to go along with KEEPING the Euro when they don't really give a flying fuck.

You say anything during torture ( CIA ) to get out of JAIL.

Ghordius's picture

imho wrong narrative, WB7

poor Greeks want to keep their EUR stash. in cash. under the mattress or in Greek or even German banks

Greece, the sovereign nation called Hellenic Republic... it's demeaning to call it a "poor bankrupt slob". in fact... it isn't so

evidence: the credit it got from the Troika. or the fact that it can discuss an eventual default, pardon me, re-structuring of debt

Shropshire Lad's picture

The Greek economy has been ruined by distorted exchange rates (courtesy of the Euro) so that German manufactures can outsell locally produced goods in Greece.  It's only by re-adopting their national currency on a floating rate basis that Greeks can rediscover that most goods need to be and must be manufactured locally.  No, Globalisation doesn't work except for the banksters.

Cloud9.5's picture

I don’t know. I seem to remember some guy named Peter who was screaming about a housing collapse in the good old U.S. And then there were some guys on Zero Hedge that were talking about A.I.G. imploding.  I wish the trust fund manager had listened.  We would not have lost a little better than a million.


As far as tabloids go, Alex Jones warned us about the death of the Bill of Rights for years.  Then the ACLU came out and said the same thing.



I suspect some folks in the aft of the Titanic thought things were getting better for a moment when the stern began to rise in the water.

rsnoble's picture

Good logic, and a point I generally agree with.

However........odds dictate these morons will fuck up on accident and actually be right at one time or another and it's long overdue.


ThroxxOfVron's picture

Greece 5yr CDS will be fucking worthless is the ISDA ignores the default so that it's bankser membro'ship don't have to pay for the protection they are selling.

glenlloyd's picture

That's what I would expect too.....

Its Only Rock N Roll's picture

Its like the shady insurance company selling policies they know they will never pay out on.  Just collect the premiums and skip town.

Bennie Noakes's picture

In the end, the Germans will give in to Greek demands. They cannot risk a Grexit. Greece might default on its debts (like Iceland) and its economy might improve (like Iceland). Then other countries would be sure to follow Greece.

falconflight's picture

Not too sure that the Germans want Greece in the EU for the long term. even though the FRG would have to eat I think about 80% of the defaulted bonds.  

I think Greece if it were to exit the EU would have a better chance to climb out of their never ending depression where 30% of the population has turned to prostitution to make ends meet.  The nation has a long history of poor governance, meaning the socialist overlay over Greek society regarding work and free enterprise versus open redistributionist policies.  

drunkenlout's picture

30% are prostituting themselves?  When it goes over 50%, which party pays?