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Greek Debt Will Not Be Included In Bond-Buying Plan; ECB's Knot Warns QE "Distorts Markets"

Tyler Durden's picture




 

DRAGHI PRESENTED QE PLAN TO SCHAEUBLE, MERKEL, SPIEGEL SAYS

Once again the clear preference for holding Swiss Francs over Euros was evident today as EURCHF re-collapsed from over 1.02 to under 0.9750 now. Overnight news from Greece suggesting bank runs are under way was then added to as Bloomberg reports, Greece is set to run out of cash by mid-year if it can’t break the deadlock over its rescue program, according to two international officials. Now, in the final "FU" to Greece, following Wolfgang Schaeuble's earlier comments that Greece does not have a debt problem, Der Spiegel reports after the European close that ECB QE will not include Greek bonds due to their low rating... but will see national central banks buying own-country debt.

 

Overnight we reported on the Greek bank runs...

Two Greek systemic banks reportedly submitted the first requests to the Bank of Greece for cash via the emergency liquidity assistance (ELA) system on Thursday, in response to the pressing liquidity conditions resulting from the growing outflow of deposits as well as the acquisition of treasury bills forced onto them by the state.

 

Banks usually resort to ELA when they face a cash crunch and do not have adequate collateral to draw liquidity from the European Central Bank, their main funding tool. ELA is particularly costly as it carries an interest rate of 1.55 percent, against just 0.05 percent for ECB funding.

 

The requests by the two lenders will be discussed by the ECB next Wednesday.

 

Bank officials commented that lenders are resorting to ELA earlier than expected, which reflects the deteriorating liquidity conditions in the credit sector.

 

Besides the decline in deposits, banks were dealt another blow on Thursday with the scrapping of the euro cap on the Swiss franc. Bank estimates put the impact of the euro’s drop on the local system’s cash flow at between 1.5 and 2 billion euros.

 

Deposits recorded a decline of 3 billion euros in December – a month when they traditionally expand – while in the first couple of weeks of January the outflow continued, although banks say it is under control.

 

A major blow to the system’s liquidity has come from the repeated issue of T-bills: In November the state drew 2.75 billion euros in this way, in December it secured 3.25 billion euros, and it has already tapped another 2.7 billion in January. Of the above amounts, a significant share – amounting to 3 billion euros according to bank estimates – was in the hands of foreign investors who will not renew them, so they have to be bought by the Greek banks.

 

Local lenders had also resorted to ELA in 2011 to cope with the outflow of deposits and consecutive credit rating downgrades of the state (and the banks) that made Greek paper insufficient for the supply of liquidity by the Eurosystem. In May 2012, due to the uncertainty of the twin elections at the time, local banks drew 124 billion euros in ELA to handle the unprecedented outflow of deposits.

Then this morning Bloomberg reports... Greece is screwed...

Greece is set to run out of cash by mid-year if it can’t break the deadlock over its rescue program, two international officials with knowledge of the matter tell Bloomberg’s Nikos Chrysoloras and Rebecca Christie.

 

Nation could probably stretch past the end of Feb. -- as far as PM Antonis Samaras has assured his nation’s financing -- if tax flows continue and there’s no disruption to emergency liquidity support for Greek lenders, said the officials, who spoke on condition of anonymity

 

In July and August, two bond repayments to ECB totaling EU6.7b ($7.7b), probably would overwhelm available buffers, they said

 

Greek FinMin spokesman declined to comment; European Commission declined to comment

But Germany's Schaeuble says... s'all good

  • *SCHAEUBLE SAYS GREECE DOESN'T HAVE DEBT PROBLEM NOW: SPIEGEL
  • *SCHAEUBLE SAYS HONORING ACCORDS IN GREECE'S INTEREST: SPIEGEL
  • *SCHAEUBLE SAYS GREEK DEBT CUT NOT ON THE TABLE, SPIEGEL REPORTS

However... Europe appears to be telling Greece to get lost...

  • *ECB QE WON'T INCLUDE GREEK BONDS DUE TO RATING, SPIEGEL SAYS
  • *GERMANY'S SPIEGEL MAGAZINE DOESN'T CITE SOURCES ON ECB QE PLAN

Greek bonds are re-tumbling.

And there is apparently one sane voice left on the ECB Council:

  • *ECB'S KNOT SAYS HE SEES NO SIGNS HOUSEHOLDS POSTPONING SPENDING
  • *ECB'S KNOT SEES RISKS QE DISTORTS MARKET PRICES: SPIEGEL

But seems to confirm it's coming...

  • *KNOT: ECB MUST AVOID DECISIONS RESERVED FOR ELECTED OFFICIALS
  • *ECB QE PLANS SEE NATIONAL CENTRAL BANKS BUYING OWN-COUNTRY DEBT
  • *ECB TO SET 20%-25% PURCHASE LIMIT FOR COUNTRIES' DEBT: SPIEGEL

Sigh...

*  *  *

It appears the run for CHF 'safety' is re-picking up...

 

We suspect more to come...

 

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Fri, 01/16/2015 - 13:38 | 5670868 SpanishGoop
SpanishGoop's picture

This means war.

We can call it EUWI.

*KNOT: ECB MUST AVOID DECISIONS RESERVED FOR ELECTED OFFICIALS

 

Or EUB(anksters)WI.

 

Fri, 01/16/2015 - 13:42 | 5670894 Truther
Truther's picture

Fuck the EU and Draghi as well. That cunt can't tell whether his ass hole is on his face or between his legs.

Fri, 01/16/2015 - 13:44 | 5670903 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

The Suiss will be able to buy all of Europe while inable to sell anything in Euroland.

Fri, 01/16/2015 - 21:22 | 5672602 sun tzu
sun tzu's picture

No doubt more shit comes from the hole in his face

Fri, 01/16/2015 - 13:42 | 5670897 no more banksters
Fri, 01/16/2015 - 14:01 | 5670998 farmboy
farmboy's picture

Knot is the mouthpiece for the Germans because if the Germans say that the euro is ended. It is a grave warning for Draghi not to overplay his hand so by definition the ECB QE will disappoint markets.

Fri, 01/16/2015 - 13:35 | 5670871 q99x2
q99x2's picture

Well if the Greeks couldn't afford to buy bitcoin a few weeks back at $300 now's there fucking chance to get it at $200.

Fri, 01/16/2015 - 13:46 | 5670916 ThroxxOfVron
ThroxxOfVron's picture

"Well if the Greeks couldn't afford to buy bitcoin a few weeks back at $300 now's there fucking chance to get it at $200. "

Teh LULZ are on Sale!

Fri, 01/16/2015 - 14:09 | 5671035 MarketAnarchist
MarketAnarchist's picture

What good will their bitcoins be if they have no electricity?

Fri, 01/16/2015 - 18:14 | 5672125 Citium
Citium's picture

Paging Fonestar... Paging Fonestar... Someone call the opium den.

Fri, 01/16/2015 - 13:34 | 5670872 linniepar
linniepar's picture

Juncker says Greece won't leave euro and won't be kicked out. He also said "when it gets serious you have to lie."

Fri, 01/16/2015 - 13:39 | 5670885 franzpick
franzpick's picture

To tell you the truth, when it gets serious, don't tell the truth.

Fri, 01/16/2015 - 13:48 | 5670921 KnuckleDragger-X
KnuckleDragger-X's picture

The ECB is trying to force Greece back into line with cattle prods but the Greeks tend to be damned stubborn and might decide it's time to go full retard. Meanwhile it doesn't seem to occur to the ECB mafia that a lot of the borderline countries are watching this little rape and might just decide they don't want to play anymore. Unintended consequences are a bitch...

Fri, 01/16/2015 - 18:03 | 5672100 Greenskeeper_Carl
Greenskeeper_Carl's picture

Doesn't Greece have many big European banks by the balls though? All of their already structurally insolvent banks hold Greek debt. If they default, all those Greek bonds are worthless, and that would wipe out their balance sheets and with it any illusion of solvency. Because of that, I think they will still end up getting bailed out in one way or another, because the banks always get what they want. All of this QE talk and Greek bailout talk is really just another bank bailout to keep those institutions from going under, that is all.

Fri, 01/16/2015 - 14:11 | 5671046 HardlyZero
HardlyZero's picture

Maybe it's mobspeak...we just don't have the right translator.

"Greece won't leave euro and won't be kicked out" - mobspeak...simple, Greece is made.

You can't leave the mob....you can die (off) but that is the only way out.

Fri, 01/16/2015 - 13:35 | 5670874 Spitzer
Spitzer's picture

The Krauts aren't this dumb. They WILL NOT ALLOW QE.

So Draghi can shut his WOP mouth and resign.

Fri, 01/16/2015 - 14:12 | 5671044 El Vaquero
El Vaquero's picture

The spice must flow.

Fri, 01/16/2015 - 15:20 | 5671418 ThirdWorldDude
ThirdWorldDude's picture

Yes, and I doubt Krautland has much of a say in any matter ultimately decided by dual-citizenship money changers ever since it was occupied by Imperial forces, just like Arrakis.

Fri, 01/16/2015 - 17:30 | 5671977 malek
malek's picture

But Angela Merkel and a bunch of sold-out parliamentarians might allow it.

Fri, 01/16/2015 - 13:36 | 5670875 buzzsaw99
buzzsaw99's picture

gimme $2 on the swissy across the board and a fiddy cent draghi, yellen, kuroda trifecta box in the third

Fri, 01/16/2015 - 13:35 | 5670877 falak pema
falak pema's picture

Can somebody explain this...some gordian knot. A QE with a greek twist to it! 

As I said tht Grexit now has Mutti feeling the same panic buttons that SNB started ringing.

Am I wrong ?

What is Draghi selling and what will Syriza' probable win do to the Euro ? 

Fri, 01/16/2015 - 13:36 | 5670879 tommylicious
tommylicious's picture

fuck balls here we go again...

Fri, 01/16/2015 - 14:06 | 5671010 HardlyZero
HardlyZero's picture

If Greece can stretch it out a few years they can freeload and black market some cheap Turkish Natty provided by NewSouthStream Russian pipeline.   Italy might be into their NewLira by then.

Fri, 01/16/2015 - 13:38 | 5670880 Bunga Bunga
Bunga Bunga's picture

...blackmailing Syriza voters.

Fri, 01/16/2015 - 13:40 | 5670886 LawsofPhysics
LawsofPhysics's picture

So, a combination of "C" and "F" then.  The SNB said "fine" to the ECB but then said "only if you cut the greek fucks loose from the E.Z."

 

Makes some sense.

Fri, 01/16/2015 - 13:40 | 5670892 williambanzai7
williambanzai7's picture

Fri, 01/16/2015 - 13:47 | 5670923 ThroxxOfVron
ThroxxOfVron's picture

Only five stars on that pitchfork.  Somehow I think it ....prophetic.

Fri, 01/16/2015 - 13:42 | 5670899 PoorMan429
PoorMan429's picture

EZ is net exporter. Weak EUR is all they need, the SNB gave it to them for free. All they had to do was threaten QE and losses on SNB FX positions. The Swiss fell for the trap. No QE announcment next week. The EUR shorts are going to get burned again!

Fri, 01/16/2015 - 13:45 | 5670913 LawsofPhysics
LawsofPhysics's picture

Yep, I bet the Swiss people have a couple things to say about all this.  Time for another referendum...

Fri, 01/16/2015 - 13:46 | 5670912 Joebloinvestor
Joebloinvestor's picture

The Ponzi inflates.

Bought debt will be shown as an asset.

Stroke of a pen!

Fri, 01/16/2015 - 13:48 | 5670931 adr
adr's picture

SO everyone rushed to buy European bonds because they expected a QE program that would buy them off. Everyone is also rushing to buy European stocks at any price because they believe the money the brokers get from selling bonds will be used to buy stocks. Just like buying commodity contracts because someone using QE money will always be there to buy at a higher price. Essentially the definition of blowing bubbles.

Yes, I believe QE does distort markets.

So what is the point of a QE program where individual country's central banks will buy their own country's debt? How does this help Italy, Portugal, etc when they all have massive debt problems. The entire point of the Draghi Bazooka Euro QE program was for the countries with strong economies to finance the debt of the struggling ones, was it not?

Won't Italy monetizing its own debt further exacerbate the problems there?

Fri, 01/16/2015 - 13:56 | 5670967 LawsofPhysics
LawsofPhysics's picture

Stop it.  Using logic and technical analysis in a fully manipulated market where "mark to fantasy" is very much in play will just drive you mad.  Trust me on this.

Fri, 01/16/2015 - 17:53 | 5672079 Ghordius
Ghordius's picture

the balance sheets of the national banks of the EuroSystem are the other, until now not used part of it

with a different composition the that of the ECB. it's like activating a secondary point defense instead of using the big guns

the Aegis of the EUR, lent by Athené

Fri, 01/16/2015 - 13:50 | 5670938 new game
new game's picture

hmmm, honey-should i pay the gas bill, the car payment, or the mortgage this month?

honey, are the credit cards maxed? reply:i sent in another cc app in and i'm waiting for the cards, then we should be good for another month or so. hey hubby, i bought ten powerballs. we will be ok, i feel lucky...

no good options - damn the torpedos; print dat shit-my guess, they are desparate...

ELA=25 percent cc....

nobody talking about spain. italy or france. distracted by greece...

what a fucking mess.

now for fun take the 50 states of usa and look into their budgets. bonding baby bonding. same game...

Fri, 01/16/2015 - 13:53 | 5670951 besnook
besnook's picture

and the market ramps up again in a confirmation that equities are the real value measure of currency and the currency is worth less and less raising the nominal value of stocks. in other words, is the sp500 a proxy for the first stages of inflation in a world awash in money for the .1%.

Fri, 01/16/2015 - 13:58 | 5670973 LawsofPhysics
LawsofPhysics's picture

Whether or not all of the paper claims on real goods and services, that have been created out of thin air over the last 6 years, actually start seeking out those goods and services is the quadrillion dollar question.

Fri, 01/16/2015 - 16:27 | 5671708 besnook
besnook's picture

we all keep expecting all that money to trickle down into an inflating inferno knowing it is inevitable. they have done a brilliant job of containing the inevitability but it is inevitable......isn't it?

Fri, 01/16/2015 - 14:23 | 5670955 ThroxxOfVron
ThroxxOfVron's picture

We'll counterfeit our mutual currency, then sell/buy our local debt with the counterfeit currency to ourselves, then we will loan the counterfeit mutual currency we sold/bought our local debt with to you so you can pay us back for the last time we countefeited our mutual currency and sold/bought our own local debt with the counterfeit currency and made you a loan with the same counterfeit mutual currency so you could buy our locally produced products...

Don't try to understand high finance.  Just take the new loan so you can pay us back for the previous loan ya dead-beat!

Fri, 01/16/2015 - 13:59 | 5670979 new game
new game's picture

recycling garbage, cherry pick the aluminum, then plastic and eventually someone has to land fill the rest for the bagholders, ha...

when is the faith gone? correct question for europeans...

Fri, 01/16/2015 - 14:02 | 5671006 yogibear
yogibear's picture

A little dog and pony show saying your tough and Greece is not going to give them another bailout.......

Weeks/Days later the Greeks get the bailout.

This is like Groundhog day.

What a show.

Fri, 01/16/2015 - 14:10 | 5671021 Panic Mode
Panic Mode's picture

Yeah, right. Somehow the bond buying will end up including the Greek bond. "Oh, how did it get there?" -- kind of drama. Remember, mortgage backed securities (MBS) - the good and bad shit all mixed together so well that no one can figure out what shit is in it.

This goes to show how much panic this central bank assholes are.

Fri, 01/16/2015 - 14:14 | 5671057 LawsofPhysics
LawsofPhysics's picture

The Greeks have nothing to lose by tellig the E.Z. to go fuck themselves.  All those Greek resorts need to be more expensive anyway.

Fuck the rich banker fucks and the real estate in Greece.  Guess what motherfucker?  Property taxes just went up.

Fri, 01/16/2015 - 14:20 | 5671081 Joe A
Joe A's picture

The EU is a bit like the Titanic and that Billy Joel song: "and we will all go down together". Sing along now.

Fri, 01/16/2015 - 14:23 | 5671097 sudzee
sudzee's picture

Greek gov debt is only 370,000 euros per person. Don't see a problem with that.

Fri, 01/16/2015 - 15:00 | 5671321 PTR
PTR's picture

I believe we have gone way past "full retard."

 

Ramming speed.

Fri, 01/16/2015 - 15:14 | 5671382 Banker Buster
Banker Buster's picture

Greece just got dissed hard.  Greece, be sure to light a match on your way out.

Fri, 01/16/2015 - 15:46 | 5671512 ThroxxOfVron
ThroxxOfVron's picture

"WE WILL MONETIZE OUR DEBT BUT WE WILL NOT MONETIZE YOUR DEBT, YOU SECOND CLASS GREEK DOGS!"

What kind of fucking Federal Union are you assholes pushing?

...& by the way, we already have a solid defensable patent on this kind of Federalized Union bullshit in the USA where Bankster Debts are monetized and the Citizenry are told to pay up and eat shit.  

You think we won't send drones, impose sanctions -worse??!?

Do NOT fuck with Us or we'll send an army of our most repulsive bureaucrats over there to fuck your shit up even worse than it already is!

Fri, 01/16/2015 - 16:41 | 5671748 Banker Buster
Banker Buster's picture

This just in, Draghi is not answering phone calls from Greece nor replying to texts.  The last text from Greece was "you jerk, we were just trying to play hard to get!  Now I'm going to tell everyone you had a threesome with bernanke and greenspan... FUK OFFFFF"  

 

Bunch of teenage school girls the lot of them.

Sat, 01/17/2015 - 00:22 | 5671972 Youri Carma
Youri Carma's picture

A “Conditional Bazooka”: European Top Court Finds ECB’s OMT “May Be Legal” But Must Meet Conditions

http://www.zerohedge.com/news/2015-01-14/european-top-court-finds-ecbs-omt-may-be-legal-must-meet-conditions

Like said before:

It’s like a street of houses on fire (each house representing one EU nation country) and the fireman can only engage in fighting this fire when they are sure that the house will not collapse after they have engaged in their fire fighting.

To know this they have to apply certain technical conditions in order to know if they have to engage in fire fighting or not. If it’s sure the house will collapse anyways they are not allowed to engage in it. Understanding that they never can be an 100% sure.

They NEVER are allowed to rebuild (fund bailouts) the house after the fire.

So if, for example, it’s clear that Greek will collapse they are not allowed to buy up Greek bonds while that is exactly what the Greek asked for. This will be a clear signal for the hyena hedge funds to attack Greece and make sure it will default.

And now: Greek Debt Will Not Be Included In Bond-Buying Plan; ECB’s Knot Warns QE “Distorts Markets”

That doesn’t bode well for Greece. It certainly is going to be attacked by the hedge fund hyenas and be forced out of the zone that way.

Greek leftist Tsipras says ECB cannot shut Greece out of stimulus
3 January 2015
, by George Georgiopoulos - Athens (Reuters)
http://www.reuters.com/article/2015/01/03/us-greece-politics-idUSKBN0KC0IK20150103

So this discussion is borne …

Tsipras ambitions are not about getting out of the Euro, as he has stated very clearly many times, he simply wants to discuss the elephant in the room, the ‘everybody knows’ but dare not talk about, unpayable debt that never can and thus will be repaid.

Germany understands that the Greek people are fond of the Euro and that’s also why it’s not so much an issue for Tsipras but they make it an issue, a bargaining chip if you will. He knows his people. Still discussing what eventually has to be discussed anyways, is not a stupid thingy to ask for.

And as it always does, at some point,’The monkey must show it’s ugly face from the sleeve’ :Dutch Proverb: http://menneweblog.nl/wp-content/uploads/2013/04/aap.png

Greece May Get Debt Extension, Rehn Says in Urging Unity
14 January 2015
, by Jonathan Stearns (Bloomberg)
http://www.bloomberg.com/news/print/2015-01-14/greece-may-get-debt-extension-rehn-says-in-urging-unity.html

ECB says will adjust ‘haircut’ on Greek bonds for bank funding
16 October 2014
, Frankfurt (Reuters)
http://www.reuters.com/article/2014/10/16/us-ecb-greece-bonds-idUSKCN0I51OV20141016

Greece Needs Another €10 Billion Bailout; Syriza Leader Prepares for Power
2 December 2014
, by Mike Shedlock (MISH’S Global Economic Trend Analysis)
http://globaleconomicanalysis.blogspot.nl/2014/12/greece-needs-another-10-billion-bailout.html

Greek euro exit would be ‘Lehman Brothers squared’: economist
3 January 2015
, by Greg Robb – Washington (MarketWatch)
http://www.marketwatch.com/story/greek-euro-exit-would-be-lehman-brothers-squared-economist-2015-01-03

German bank exposure to Greece around $28 billion: banks
6 January 2015
, Frankfurt (Reuters)
http://www.reuters.com/article/2015/01/06/us-eurozone-greece-banking-exposure-idUSKBN0KE16H20150106 

Greek Government Struggles to Stay in Power https://www.youtube.com/watch?v=3xFXNRiTqM4  Jan 16, 2015 TheRealNews

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