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S&P Downgrades Greece, Suggests Worst Case Scenario With Bank Runs And "Capital Controls": Full Report
And the hits keep coming. On the heels of a demand for repayment of ECB's profits from GGB bond gains and to extend the T-Bill limit to give the nation time to negotiate with EU leaders (i.e. a Bridge Loan) which Jeroen Dijsselbloem already dismissed earlier in the day, S&P just piled on...
- GREECE RATINGS CUT TO B- FROM B BY S&P; MAY BE CUT FURTHER
This downgrade comes just 5 months after upgrading Greece because "risks to fiscal consolidation in Greece have abated." EURUSD is not moving much (having already cratered after US payrolls) but Greek stock ETFs are sliding once again.
What is scariest, is that a day after we first noted the increasing whsipers of capital controls and bank runs, S&P itself mentions this!
In our view, a prolongation of talks with official creditors could also lead to further pressure on financial stability in the form of deposit withdrawals and, in a worst-case scenario, the imposition of capital controls and a loss of access to lender-of-last-resort financing, potentially resulting in Greece's exclusion from the Economic and Monetary Union.
This means that now not only the ECB but the rating agencies are doing everything in their power to institute a Greek bank run in order to either make the government withdraw its demands, or, if that doesn't work, lead to a new government.
This follow the news from earlier in the day:
- `WE DON'T DO' BRIDGE LOANS, DIJSSELBLOEM SAYS ABOUT GREECE
and now this:
- GREEK GOVT SEES IT NECESSARY TO INCREASE T-BILL LIMIT: OFFICIAL
- GREEK GOVT GOAL IS FOR BRIDGE PROGRAM WITH CREDITORS: OFFICIAL
As Bloomberg reports,
Greece doesn’t want more funds from its bailout program, apart from return of EU1.9b of ECB profits on GGBs, govt official says in e-mailed statement. Official also says:
Greek govt goal is a bridge program, to give time for negotiations with creditors
As govt doesn’t want more bailout loans, considers it necessary to be granted ability to issue T-bills beyond current EU15b limit
After bridge program granted, Greek govt will formulate fiscal strategy for next 4-5 yrs and national reform plan
Official asked not to be named in line with policy
and then this...
- GREECE RATINGS CUT TO B- FROM B BY S&P; MAY BE CUT FURTHER
And the reaction...
* * *
This is what S&P said just 5 months ago...
Standard & Poor's Ratings Services upgraded its debt rating for Greece, citing progress in the nation's fiscal reform efforts and its potential return to economic growth.
The firm now puts its long-term sovereign credit rating for Greece at B - five notches into junk territory - up from B-minus. The outlook for the rating is stable, S&P added Friday.
"The upgrade reflects our view that risks to fiscal consolidation in Greece have abated," the firm said.
S&P said it believes Greece will begin to emerge from seven straight years of economic shrinkage next year, calling the country's recovery "gradual but weak." The firm also said it thinks the country has enough funds to cover future bank recapitalizations.
And now, time for S&P, which after the DOJ settlement has become nothing more than a political errand boy, to completely reverse everything it said because the Greek economy, which has been improving in the past 6 months if one is to believe the data, actually wasn't improving at all.
OVERVIEW
- Liquidity constraints have narrowed the timeframe during which Greece's new government can reach an agreement with its official creditors on a financing programme, in our view.
- We believe the potential uncertainties surrounding the timing and success of such an agreement risk exacerbating deposit outflows, depressing investment, and weakening tax compliance.
- As a result, we have lowered our long-term rating on Greece to 'B-' from 'B'.
- The long- and short-term ratings remain on CreditWatch negative.
RATING ACTION
On Feb. 6, 2015, Standard & Poor's Ratings Services lowered its long-term sovereign credit rating on the Hellenic Republic (Greece) to 'B-' from 'B'. The long- and short-term ratings on Greece remain on CreditWatch with negative implications.
As defined in EU CRA Regulation 1060/2009 (EU CRA Regulation), the ratings on Greece are subject to certain publication restrictions set out in Art 8a of the EU CRA Regulation, including publication in accordance with a pre-established calendar (see "Calendar Of 2015 EMEA Sovereign, Regional, And Local Government Rating Publication Dates," published Dec. 30, 2014). Under the EU CRA Regulation, deviations from the announced calendar are allowed only in limited circumstances and must be accompanied by a detailed explanation of the reasons for the deviation. In this case, the deviation has been caused by the European Central Bank's decision to lift the waiver on the eligibility of Greek government and government-guaranteed bonds in Eurosystem operations and the absence so far of an agreement to extend Greece's European Financial Stability Facility program beyond its expected expiration date on Feb. 28, 2015.
RATIONALE
The downgrade reflects our view that the liquidity constraints weighing on Greece's banks and its economy have narrowed the timeframe during which the new government can reach an agreement on a financing programme with its official creditors: EU member states, the EFSF, the ECB, and the IMF. Although the newly elected Greek government has been in power for less than two weeks, we believe its limited cash buffers and approaching debt redemptions to official preferred creditors constrain its negotiating flexibility. In our view, a prolongation of talks with official creditors could also lead to further pressure on financial stability in the form of deposit withdrawals and, in a worst-case scenario, the imposition of capital controls and a loss of access to lender-of-last-resort financing, potentially resulting in Greece's exclusion from the Economic and Monetary Union.
On this issue, the Feb. 4 decision by the ECB to lift the waiver on the eligibility of Greek government and government-guaranteed bonds in Eurosystem operations has transferred the responsibility of lender-of-last-resort financing from the European Central Bank to the Bank of Greece, Greece's national central bank, via its Emergency Liquidity Assistance (ELA) facility. It is our understanding that the Greek banks will be able to switch their current ECB funding toward ELA facilities, though the continuity and level of ELA financing to Greek banks--including the acceptability of Greek government Treasury Bills--remains subject to ECB approval. We would expect the ECB to curtail the liquidity provision to the Greek banking system (and, therefore, to its economy) if the two-month technical extension of the EFSF programme is not extended beyond its current expiration date of Feb. 28, 2015.
In its Feb. 4 press release announcing the suspension of Greek collateral eligibility, the ECB stated that "it is currently not possible to assume a successful conclusion of the programme review." We see the uncertainties connected to the provision of liquidity to Greek banks as potentially exacerbating deposit outflows, depressing investment, and weakening tax compliance, which are already deteriorating Greece's economic and fiscal profile.
In Greece's case, we do not consider the ratio of general government debt to GDP to be the sole metric for assessing the sustainability of public debt. Although this ratio was a very high 178% at year-end 2014, other features of Greece's public debt profile are less onerous, in our view. These include its unusually long debt maturities--16.5 years for the total stock and 30 years on official bilateral and EFSF financing--and the very low effective interest rate. Including concessional interest rates, Eurosystem retroceded interest earnings, and the interest rate grace period on official debt, we estimate Greece's general government interest to GDP at year-end 2014 at less than 3% of GDP. We would also note that our sovereign ratings pertain to a central government's ability and willingness to service financial obligations to commercial creditors, which in Greece's case hold an estimated 17% of the sovereign's debt stock excluding ECB and other official creditor holdings of bonded debt. Debt redemptions owed to the private sector this year and next total EUR510 million and EUR1,090 million, equivalent to 0.3% and 0.6% of GDP respectively, well below redemptions owed to official creditors. The Greek government has repeatedly committed itself not to involve private-sector creditors in any further debt re-profiling.
CREDITWATCH
We aim to update or resolve the CreditWatch status of the rating by the next scheduled publication date for Greece, which is on March 13, 2015. At that time, we could maintain the ratings on CreditWatch or we could remove them from CreditWatch after affirming them or lowering them again.
We could affirm our ratings on Greece if we anticipate that the government's negotiations with official creditors will conclude, with sufficient official funding flows to meet financial obligations.
Conversely, we could lower our ratings on Greece if we perceive that the likelihood of a distressed exchange of Greece's commercial debt has increased further because official funding has been curtailed, government borrowing requirements have deteriorated beyond our expectations, or Greece's external financing has come under greater stress.
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S&P?
LOLOLOLOL!!!!!!!!!!!!!!!!
Russia and now Greece. S&P learned how to "play ball" after the fines
Still pre-flop... in poker terms. Long way to go.
Too funny that Greece is rated higher than Russia.
Shhhh.. We're supposed to pretend that the sanctions are really hurting them.
Shrinkage Bitchezzz...
Greece is on ... a slippery slope.
First exits quickly and best.
S&P
The new Clinton in law hedge fund killer
S&P has no credibility. They bent over and took it Greek style when Uncle Sam got angry. I suspect the Greek Finmin will have to replace the boards of all the banks that are in the pocket of the Troika.
Just emailed to the Greek ambassador to the US:
His Excellency, Ambassador Christos Panagopoulos
Your Excellency:
Never have I read in times of peace the issuance such as the insane ultimatum of war as that issued by the Eurogroup Chairperson Jeroen Dijsselbloem against Greece: It is no less than the threat of unlimited warfare to destroy the Greek nation, if not by munitions, then by money.
The quote attributed to the Greek Finance Minister, Yanis Varoufakis, could not possibly be more true: "A clueless political personnel, in denial of the systemic nature of the crisis, is pursuing policies akin to carpet-bombing the economy of proud European nations in order to save them."
Many unenlightened Americans will fail to understand the reasons the Greek nation has declared its freedom from the extortion, and debt slavery, imposed on it by the psychotic sociopaths of the ECB, the IMF, and various European central banks, manipulating the financial machinery of the EU.
Unlike them, I do not fail to understand that this so-called austerity is nothing more than economic warfare designed to rape the nation of its assets, and the people of their survival, by creating an endless series of faux "bailouts" which have the real purpose of draining the nation of all its pride, dignity, and future.
When I read of the unemployment rate, the poverty level, the share of unemployed youth without hope, of female physicians reduced to prostitution to feed their children, of individuals who set themselves ablaze publicly because they are so beaten down by this war against the Greek nation, of these actions by the Troika which constitute nothing less than Crimes Against Humanity, my soul cries out in horror, and unimaginable pain, for the Greek nation.
There comes a time in history when a nation has no choice left but to put its destiny on the line, and be willing to sacrifice everything to throw off the chains, and regain its freedom, no matter what those sacrifices entail.
Because of what amounts to no less than a Declaration of War against Greece by the Eurogroup's chairperson, you are now at that point.
It is time for the world's first democracy to reclaim its heritage, and once again teach the world that remaining free sometimes requires that men and women fight for it. Whatever comes, the Greek people will adapt themselves and overcome it, just as they have overcome every other attempt by others to bury them.
Thucydides wrote, "The secret of happiness is freedom. The secret of freedom is courage."
Now is the time when the courage of the Greek nation must rise up, and face down the forces that would continue to enslave it.
Meet the ultimatum with 3,000 years of freedom, and shatter the predatory, criminal, strangle-hold of the EU on your people.
-30-
OT- Hey, Tylers, when are we gonna get a ZH Brian Williams article? Stuff's been out there 2 days already. We're all about sniffing out bullshit around here and Brian's the #1 network news (MSM) andchor in the country. A mantle he gained by succeeding Tom Brokaw, due in no small part to his reporting on the Iraq war and Katrina. He's been telling his "my chopper got shot down in a fire fight" for TEN YEARS. Lies. All lies.
I understand he's also told Katrina stories about dead bodies floating down the street in front of his hotel in the French Quarter. Which would be a neat trick since the French Quarter didn't flood.
Now I'm hearing his NBC execs have known these were lies all along. The topper, of course- not only won't he lose his job, but he's not even likely to reprimanded.
C'mon. Lay it out there already. ZH-style. This pig deserves to be stuck.
(I'm assuming ZH isn't owned by NBC Universal so this should be fair game for you. Right? RIGHT??)
isnt ZH owned by ABC ???
brian williams will be okay ... he got a few millions stashed away...
Not that ABC.
Edit: Why the down vote? It's obviously not the same ABC that employs Diane Fucking Sawyer. Do you really think they'd want to be associated with a website where, for instance, we call Hitlery a cunt on a daily basis?
Absolutely No Fucking idea... but I just went online and found 99 "ABC's" in the local Cantonal corporate registry. Included were: ABC - Propaganda GmbH, ABC Broker, ABC Finance & Investment AG, ABC Media GmbH, ABC New Media AG, ABC Trading, and ABC-Invest AG, but there was no ABC Media, LTD.
When it comes to "corporate persons" in organic documents and contracts -- the capitalization and punctuation are actually important, much moreso than a lot of people seem to think the capitalization and punctuation of "The United States of America" is, ipso facto, in US statutory and administrative law.
And now I'll be down voted too, for the ugly truthiness that can actually save someone here the expense of some absurd minimum one-hour charge from a local shyster for 10 seconds of work.
(Full disclosure: I only spank and smurf practicing shysters in conference rooms, not court rooms)
That funny - I used to own 100% of the common equity of ABC.
But the company I owned wasn't
ABC Media LTD, PO Box 3, Sofia Bulgaria 1784, or
The Walt Disney Company, 500 South Buena Vista ST, Burbank, CA 91521
Perhaps you can crack open the local White Pages and find Tyler Durden - there should be a shit-ton of ABC's listed right after a bunch of AAA's.
ABC is great for both attracting lazy customers and maintaining pseudonymity in the Google era.
Other than the comedy value, no one cares.
I'm sorry, were you talking about the comedy value of reporting on the "markets" or of the Brian Williams story? Apologies, but hopefully you can understand my confusion.
I'll testify to that. It only makes him more like every other public figure.
some people may believe its not "news" because nbc lies everyday
Lester Holt has "I'm smart now" glasses like Rick Perry, so maybe he's being groomed to take over for Williams.
They should just put John Stewart in and call it a day.
Don't you (or anybody else here) find it disturbing that many people consider a comedy show to be the best source of news available?
Those bastards grade easier than the Ivy League schools! How broke does a country need to be to get a failing grade?
Irrelevant player now in the global market.
Like anything they say matters anyway. Greece got somebody in there that actually gives a shit about the country, and appears to be a grown up to boot.
Pretty good combination. The smartest thing they could do now is take the Russian offer. If that happens, we should see a Greek recovery materialize pretty quickly thus exposing the utter failure of Euro / Western policies.
Which would be the time to install riot cams on every corner, for when it gets jiggy.
That would be the smart play for Greece. Maybe ask the Chinese for some help too. Diversification is good.
BRIC Loan to Aegean Sub Port....Come in BRIC Loan....
Only the R wants a sub port. The C is frantically making sure that the Greeks hold up their end of the deal on the Piraeus shipping port. Of the two, China is probably Greece's better bet for getting more funding and real support. Working with Russia would damage Greek-EU relations, especially with the Germans. For all of Tsipras' bluster, I doubt he'd go that far. Russia's a political distraction: China is the real behind-the-curtain player that the Greeks should be courting.
In terms of actual power, China's shipping is more important than a Russian sub base anyway. Subs are cute for posturing but can't actually fire a shot without causing a massively devastating war, and that leads to mutual economic disaster. Naval warfare is bad news for everyone. Chinese trade, on the other hand, has already done far more damage to European manufacturing, with concomitant benefits to the Chinese economy, than any Russian weapons since WW2. Owning a major European port is likely to be far more powerful for the Chinese than any Russian weaponry. If I were the Chinese, I'd also be looking to invest in rail infrastructure in Greece and beyond as well; I'm sure the Greek rail system could use the cash, although the current government is against its privitization as it is with the ports.
If Russia and China have subs that can surface undetected in the middle of a US carrier fleet, I am sure they are capable of using the same technology for torpedos - slow and silent rather than fast and noisy. The USN is going to be spending a lot more on TP and cleaning bills for their Full Dress Whites.
No problem:
http://x2t.com/CinoRussian
They are going to have to leave the mafia-led eurozone and the EU.
BTW, the whole of the EU countries should do likewise.
Prolly get their $1.5B back from the ECB for that...
BULLISH!!!
Downgrade Greece ?
You can't go lower than the bottom of the well.
fuck Standard & CockSuckers....
its all bullshit....
how ya'll enjoying the smash on the only 2 forms of real money today????
who could have seen that coming????
Puffery.
I've got a bridge for you...
These ratings mean nothing these days. S&P got fined for downgrading US! So S&P and other rating agencies will not downgrade the US anymore. They don’t want to pay the fines. It’s just more market manipulation. Take advantage of the market manipulation. Buy silver while they are manipulating it downward!
A great way to get someone started with silver is giving them a candle with a silver coin: https://www.etsy.com/shop/ScentSavers?ref=hdr_shop_menu They will enjoy their high quality hand-made candle while it burns. Then they will be left with an economics lesson. One silver coin is worth 12-17 times its face value in metal value alone!
I'm thinking, some how, Greece really doesn't give shit
Opa !!
maybe if Greece sues S&P they can get the money they need...
S&P downgraded US debt in 2011 and it caused a brief panic and an epic buying opportunity that has lasted 3 years and still going. It's probably getting close to a great time to buy Greece on this news.
Greece should sue S&P....maybe they can get a bunch of money from them like the US Government did
my, my.. arent they scared that greece will sue them for 400billion or what ever they are hooked on..
He committed suicide a former financial director of Siemens, Heinz-Joachim Neubürger. The Neubürger found dead in Munich, where he lived, according to information from ilektornikis version of the German Manager Magazin.
The erstwhile top executive of the German company was accused of involvement in the scandal with the "slush funds" with which Siemens bribe Greek officials.
O former CFO of Siemens and denied his guilt, was compromised by paying 2.5 million euros.
Among the witnesses who had shown him Neubürger, was Michael Christoforakos.
The Heinz-Joachim Neubürger served as CFO of Siemens Group from 1998 until April 2006.
Mystery prevails around the suicide of former CFO of Siemens, Heinz-Joachim Neubürger.
The former top executive of the German company was accused of involvement in the scandal with the "slush funds" and then had litigation and with the same Siemens.
The Heinz-Joachim Neubürger lost in court and fined million. Until last December was in litigation with Siemens to reduce the fine had been imposed did.
Today it became known that Neubürger found dead in Munich where he was staying.
The Heinz-Joachim Neubürger served as CFO of Siemens Group from 1998 until April 2006.
"kiev natz" merkel is willing to help greece and shes promising finance from All the eu countries.. just little notice in a fine print... must buy 400 leopard tanks
NO MORE BUSH and CLINTON
NO MORE US DOLLAR fakery and foolery
So does V accept a loan at the last minute?
Russia and Greece can create their own rating agency.
Greece is going to be treated like Ving Rhames over the barrel in Pulp Fiction.
I find it odd, funny, enticing....... that despite this MASSIVE runup all week long, the vix has barely moved. All week long a massive rally in stocks yet the vix isn't buying it. Sure, we were due for a nice pop and everyone pretty much saw that this week and went long, or at least the people i talk to. UVXY looks very tempting on this Friday afternoon going into next week. Plenty of blowup catalysts.
Long oil
Get ready to trade the Drachma again. Greek needs to default and exit the EC. Print Greece print!!!!
S&P ratings - do they have any credibility at all after sub-prime?
China has got its own rating agency as the US ones are so bad.
China rating on Russia - A
US rating on Russia - Junk
We all know S&P are in bed with the governments etc.
so this is a clear push to force Greece's hand. However what they are doing is forcing Greece to see they have only one option, to exit and align with Russia.
Epic fail for ECB on the very near horizon :))))
When you consider the manifest hoax that is US credit worthiness based upon the Fed buying over half of UST, it seems a "downgrade" might be considered a badge of honor in terms of real price discovery and the painful march back to reality. When you consider the rating agencies to be a farce in and of themselves why not price risk in terms of bottle caps or hooters.
Like Iceland, Greece need only default, tell the bankers to take a back seat for a while and move forward.
While the concept of selling Greek Islands to oligarchs is a clever road-map to more debt serfdom, a more handsome and ruthless endeavor for Greece and anti-austerity is to simply re-open Greece for business.
Sun, fun, getting laid, decent food, cool Roman ruins and pre-911 offshore banking-a-go-go.
All that need happen is for Greece to adopt some bank secrecy laws a la the good ol' days in the Caribbean, Switzerland, etc. Over night you would see every billionaire and their special purpose vehicles dock their yachts and off load bags of money to be washed through for worldwide usage. Compete with Panama and you either win big or join Noriega.
If Greece simply told the world it would not honor IRS, DOJ, China/Russian subpoenas and asset searches every American, Israeli, Chinese, Russian and UK 'garch would line up to pay a $5MM fee for citizenship to open accounts, buy real estate and otherwise reinvent Greece.
All this "world control" stuff is fun right up until you realize you are not invited to the party. Safe to say only the top 10% of billionaires going forward want to share their vision and compete with their peers. 200 billionaire Singularity control freaks and their minions up against 7.3 billion raging hungry human spirits. Place your bets.
Another non-SWIFT customer in the making.
If you build it they will cum.
I've had the same thought pop into my head from time to time. If you're gonna get tossed out/leave the club, REALLY leave the club. Turn Greece into part real privacy haven part vacation Las Vegas. What Lebenon used to be before the civil war.
S&P probably has AAA ratings on most of the oil fracking loans too!
LOLOLOLOLOLOL!!!!!!!!!!!!!!!!!!!!!!
These rating agencies are brilliant at looking at your watch and charging to tell you the time. They keep saying the blindingly bloody obvious after it becomes blindingly bloody obvious.
They're paid to tell you the train left the station ten minutes ago.
Where's Fitch and Moody's?? They must be hiding.
Are they hiding under the Just-Us department's quiet plan?
No wonder Mark Zandi is the way he is.
im sorry, did S&P say bank runs & capital controls are worst case in greece OR in greece, italy, france, russia ......
bullish
Hello Vlad, about that loan offer.
Greece is one of the most beautiful countries in the world isn't it? And now that they have grabbed my respect and attention throughout this, I am going to visit there soon. I'd better make that trip before the US does a Kiev on them though. Maybe with my military background though(ex marine sniper) I'll go help Greece fight off the "terrorists."
Russia's debt is very good. S&P did not consider the Russia-China alliance. So, that makes S&P negligent.
These are all the levers the status quo pulls when trying to intimidate those that would blow it up. When they employee these tactics you know you're on the right track.
These are all the levers the status quo pulls when trying to intimidate those that would blow it up. When they employee these tactics you know you're on the right track.
Black Sabbath - Electric Funeral: http://youtu.be/tsLkL8DTHeg
I always did better all by my lonesome, execute all the weasels and start over.
, and particularly vicious, no quarter. Great example.
"worst-case scenario" = hurting the banking sector?
The worst-case scenario is resorting to eating their young. A few banks going under is well deserved and overdue.
There is an easy fix, print a bunch of drachmas and repay the loan. What's good for the goose is good for the gander.
Socialism Kills!
the sooner europe kicks out these welfare queens the better, getting tired of all the intentional chaos these greek fuckers have been wreaking..from day one, they shamelessly keep threatening the stability of markets to get what they want...13th free month of salary 55 year retirement? comeon kick out the fuckers and let them starve already.
EU wouid be so much better without these cheats who lied to get into the EU and then lied to get all the loans they could, which they stole and then defaulted.
ha ha the finance minister of greece said they are bankrupt and s&p downgrades them to B-
if B- is bankrupt what the hell is C, country literally on fire?
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