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Desperately Seeking BTFDers: Greek Bank Bonds Plummet As ECB Decision Looms
UPDATE: The FT article on the non-haircut haircut for Greece printed before the European close but did not become widespread until the afternoon in the US when a catalysts for a technical ramp was required... simply put - Greek bank bonds suggest a haircut is coming at a minimum.
Despite Greek Government Bonds bouncing modestly higher (and marginal improvement in Greek stocks) today, the epicenter of the Greek crisis - their banking system - appears to continue crashing. As the ECB's decision to accept junk Greek collateral (as it does now) for ELA funding or not - a purely political decision - looms, the message from the Greek bank bond market is "nein nein nein." As Professor Karl Whelan exclaims, don’t believe for a minute that this is a technocratic thing to do with "the ECB having to follow its rules." And it has almost nothing to do with Greek government bonds being junk-rated. All of the issues come down to discretionary decisions by the ECB and there is plenty of wiggle room for them to allow Greek banks to continue receiving various sources of funding next month in the absence of an EU-IMF program agreement.
Greek bank bonds are flashing red-est that ECB's decision may be a troubling one...
As University College Dublin professor Karl Whelan concludes,
One of the key uncertainties surrounding the situation in Greece is the relationship between the Greek banks and the ECB. Lots of press coverage is suggesting the ECB has a set of well-established rules that mean it will not be able to lend to Greek banks in March unless the government negotiates a new EU-IMF program to replace the one expiring at the end of this month.
Well the ECB has almost complete discretion over which banks it lends to. I have written about the ECB’s Risk Control Framework before and it’s been rolled out regularly in the years since I wrote that post. The bottom line is that the ECB can single out specific institutions and decide to not lend to them for pretty much whatever “risk-related” reason they feel like putting forward.
...
The ECB is pretty clearly playing from its tried and tested playbook in their current stand-off with the Greek government. Governing Council members know they can cut off lots of credit from the Greek banks in March and many of them are happy to tell the world they are thinking about doing this. As a result, they hope to get Greece’s new government to sign a new deal with the EU and IMF.
But don’t believe for a minute that this is a technocratic thing to do with “the ECB having to follow its rules.” And it has almost nothing to do with Greek government bonds being junk-rated. All of the issues discussed above come down to discretionary decisions by the ECB Governing Council (restrictions on T-bills, waivers on junk-rated government bonds, arbitrary lines-in-the-sand on government guaranteed bonds and the mysterious rules of ELA) and there is plenty of wiggle room for them to allow Greek banks to continue receiving various sources of funding next month in the absence of an EU-IMF program agreement.
I fully expect the ECB-as-heavy-hearted-technocrat angle to dominate press coverage of this story this month. That’s a pity because the “ECB in politicised mission creep while helping trigger a bank run” story is more interesting and closer to the truth.
Charts: Bloomberg
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Leave the gun... Take the baklava...
So US stocks should NOT have rallied, are we reading this correctly?
yes, you are
Well, there is always tomorrow...
But..but...but Bloomtard said the rally was energy driven.
It was. Those algos run on computers which suck energy like you won't believe it...
The old tricks still work! And who knew anyone still reads FT?
Rand Paul in EPIC on-air tirade against CNBC:
http://tinyurl.com/ov46ttr
The old tricks certainly still do work.
The Greeks sold EUD 1.5 Billion in bonds in July 2014. 3.5% rate for three years.
Wanted to get the max money out of investors before declaring another round of haircut seven months later.
Had to put some bait out there for the ECB to enjoy while doing more QE.
Now these screwups want the Eurozone to lend more to the certain to default banks that are loaded up with the Greek Govt. debt and will also get the haircut. Please, Please, Please make more loans to our banks to allow Greeks more time to transfer money out before the inevitable bail-in. Don't make the good communist citizens suffer any financial pain.
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The fat lady has not yet sung.
Just say no, Angela, to Greeks bearing tin cups.
Did she sing the lesbian national anthem????
http://www.infowars.com/feminist-music-is-the-funniest-thing-ever/
Broken arrow people!
we are fucked!
That video was hilarious ... in a sad-clown sort of way ... cheers.
Actually Angela's problem is the reverse of that. The Greeks are not after new German money they are the ones saying no about repaying unrepayable loans and how is Angela going to alter that?
Greek bonds are a great investment...let's see...they are debt that the Greeks can not repay
and they don't want to repay. Sounds good to me..let's back up the truck.
A Greek, a Spaniard and a Portugese go into a bar and order a drink. Who picks up the bill ... ? The German .
https://www.youtube.com/watch?v=Z_JOGmXpe5I
... the ECB will blackmail the government by threatening that will not purchase government bonds, therefore cut liquidity, in case that Greece choose a different path towards the reconstruction of the social state and labor rights, bringing minimum wage at pre-crisis levels, etc.
9/11 Truth: The NIST “no molten metal” guy posing by steel with unexplained melting (PHOTOS)
I still think Greece is being railroaded here and the market rallies because financially speaking the country is being "rubbed out" so to speak.
In my view they have to nationalize the banks immediately....instead they're taking over industries and going to the troika folks to keep the money flooding to "make it legal."
Just what the market is looking for.
Interesting chess match. Chuck the Greeks out on the street and risk a chain reaction in the PIGS politically. Possible meltdown in Euro banks - especially French ones whom are up to the eyeballs in Sud Med garbage loans.
Keep them in and the ECB loses all credibility and Angie takes it up the ass from the Greek Commies, than the Spanish, than the Itatians, the French....
Fascinating.
You'd almost think it was planned...
Can't the Greeks sell off some of those nice islands they have for some cold hard Euros?
It actually makes more sense than prostituting their women, doesn't it?
There are some wealthy northern european countries that would certainly buy a nice island winter getwaway for their peeps.
Not to mention Russia and Canada...
Wouldn't it be preferable than dealing with the ECU paycheck loan sharks?
And the northerners are such nice peeps to party with, eh?
And if Greece could get enough countries to buy an island or two they could start their own mini-ECU, bankrupt the member islanders and then the Greek banks could become the loan sharks and suck its member countries dry. Touche!
The new version of communist government just stopped asset sales and privatizations, declared pay raises and pension increases. while blowing the FU trumpet. Now they want taxpayers from other nations to advance more money to support their banks under some Emergency Liquidity Assistance funding. How good can it get for the Greeks? They move their money to Germany for safety and expect the Germans and ECB to fund the liquidity for the transfer out.
The Greeks are going to suffer greatly from the long period of Communist and Socialist rule. Good to see that it is the election of fully avowed communists that will be in control when the country goes over the cliff. Europe can observe it as a Learning Experience.
The EU ponzi-scheme acts aggressively if threatened. GREXIT is a super threat and anything will be done to overthrow the new government. Berlusconi did receive that lesson. Cyprus did receive the lesson (no surprise Tsipras went their first for consultation). And the Greece are next. But as they true nature of the EU beast becomes more obvious the people will turn away from Bruxelles.
European Central Bank Predicts Debt 'Meteor' To Hit EU
http://thestuffing-it-to-empost.blogspot.co.uk/2014/12/economic-hyperdum...