Greece Gambles On "Catastrophic Armageddon" For Europe, Warns It "Only Has Weeks Of Cash Left"

Tyler Durden's picture

One of the bigger problems facing the new, upstart Greek government, which has set before itself the lofty goal of overturning 6 years of oppressive European policies and countless generations of Greek cronyism, corruption and tax-evasion is not so much the concern about deposit outflows and bank runs - even though it most certainly will be in the next few days unless the Tsipras government finds some resolution to the dramatic standoff with Merkel and the ECB - but something far more trivial: running out of money.

Recall that two weeks into the Greek elections, Greece was rocked by a dire, if entirely underappreciated development, when its already "tax-paying challenged" population decided to completely hold off paying any taxes in advance hopes that the Tsipras government will "overturn" austerity. We wrote:

... while there will be no official confirmation whether Greece did or did not have a bank run for months, unless of course some bank keels over and dies in the interim, one thing is certain: with an increasing probability they may not have a "continuity-promoting" government in less than two weeks, Greeks tax remittances to the government, which were almost non-existent to begin with, have ground to a halt!


According to a second Kathimerini report, budget revenues have slumped over the last few days as a result of the upcoming elections and taxpayers’ uncertainty about the future: "Most taxpayers have chosen to delay their payments, given that the positions of the two main parties leading the election polls are diametrically opposite: Poll leader SYRIZA promises to cancel the ENFIA and even write off bad loans, while ruling New Democracy acknowledges the difficulties but is avoiding raising issues that would generate problems and fiscal consequences.


The dwindling state revenues will not only hamper the next government’s fiscal moves, but, given that the fiscal gap will expand, also negotiations with the country’s creditors.


The tax collection mechanism appears to be largely out of action while expired debts are swelling due to taxpayers’ wait-and-see tactics and the reduction in inspections.

So for battered, depressed Europe "austerity" really meant "taxation" - it is no surprise then why so many in peripheral Europe, who for the past 7 years have not seen any benefits from Germany's delay in reintroducing the Deutsche Mark (and keeping its export industry humming, and Deutsche Bank solvent, courtesy of the much lower Euro), hate "austerity" so much: after all there really should be no "austerity" without representation and most European voices hardly matter in a monetary "Union" where only bankers and unelected eurocrats are heard.

But going back to the main topic, namely the Greek liquidity situation, it was none other than the Eurogroup which late on Friday gave Greece a 10 day ultimatum to cede all demands and resume work under the Bailout program, or face a liquidity collapse and effective expulsion from the Eurozone. Which means suddenly Europe is engaged in the biggest bluff since 2012, as Greece and Europe both desperately try to outbluff each other that the "adversary" need it more than vice versa.

The problem is that Greece may not even have 10 days. As the WSJ reports, "Greece warned it was on course to run out of money within weeks if it doesn’t gain access to additional funds, effectively daring Germany and its other European creditors to let it fail and stumble out of the euro."

Greek Economy Minister George Stathakis said in an interview with The Wall Street Journal that a recent drop in tax revenue and other government income had pushed the country’s finances to the brink of collapse.


“We will have liquidity problems in March if taxes don’t improve,” Mr. Stathakis said. “Then we’ll see how harsh Europe is.

As we reported last month, "Government revenue has declined sharply in recent weeks, as Greeks with unpaid tax bills hold back from settling arrears, hoping the new leftist government will cut them a better deal. Many also aren’t paying an unpopular property tax that their new leaders campaigned against. Tax revenue dropped 7%, or about €1.5 billion ($1.7 billion), in December from November and likely fell by a similar percentage in January, the minister said. Other senior Greek officials said the country would have trouble paying pensions and other charges beyond February."

Said otherwise, when Yanis Varoufakis responded to Europe that "Greece already is bankrupt" he knew exactly what he was talking about.

And as the WSJ further details, this means that the infamous ultimatum on Greece may have been set by none other than Greece itself!

Greece has made no secret of its precarious financial position, but the minister’s comments suggest the country has even less time than many policy makers thought to resolve its standoff with Europe.


Eurozone officials have asked Greece to come up with a specific funding plan by Wednesday, when finance ministers have called a special meeting to discuss the country’s financial situation.


The country needs €4 billion to €5 billion to tide it over until June, by which time it hopes to negotiate a broader deal with creditors, Mr. Stathakis said, adding that he believes “logic will prevail.” If it doesn’t, he warned, Greece “will be the first country to go bankrupt over €5 billion.”

What happens then: "If the Greek government runs out of cash, the country would be forced to default on its debts and reintroduce its own currency, thus abandoning the euro. Most of the €240 billion in aid that Europe and the International Monetary Fund have pumped into the country would be lost."

Of course, Greece knows all this. The bigger question is what does a Grexit mean for Europe. Recall it was in May 2012, just around the time of the second Greek bailout, that Charles Dallara, who as head of the International Institute of Finance (IIF) spent months in Athens negotiating the largest ever sovereign debt restructuring, said that "the damage to the rest of Europe from Greece leaving the euro would be "somewhere between catastrophic and Armageddon."

"I think that it (a Greek exit) is possible, but I wouldn't call it inevitable and I wouldn't even call it likely because the costs for Greece, for Europe and for the global economy are likely each in their own way to be immense."


"The pressures on Spain, Portugal, even Italy and conceivably Ireland could be immense and the need for Europe to step up with much greater support for the banking systems would be substantial."

If that isn't enough here is what Willem Buiter predicted:

As soon as Greece has exited, we expect the markets will focus on the country or countries most likely to exit next from the euro area. Any non-captive/financially sophisticated owner of a deposit account in that country (or in those countries) will withdraw his deposits from banks in countries deemed at risk - even a small risk - of exit.  Any non-captive depositor who fears a non-zero risk of the future introduction of a New Escudo, a New Punt, a New Peseta or a New Lira (to name but the most obvious candidates) would withdraw his deposits from the countries involved at the drop of a hat and deposit them in the handful of countries likely to remain in the euro area no matter what - Germany, Luxembourg, the Netherlands, Austria and Finland.


The funding strike and deposit run out of the periphery euro area member states (defined very broadly), would create financial havoc and mostly like cause a financial crisis followed by a deep recession in the euro area broad periphery.


A banking crisis in the euro area and in the EU would most likely result from an exit by Greece from the euro area. The fundamental financial and real economy linkages from the rest of the world to the euro area and the rest of the EU are strong enough to make this a global concern.

And of course, there was Carmel's presentation from the summer of 2012, comparing the costs to Germany from a Euro staying together versus falling apart:


That is precisely the gambit the Greece is playing right now: in fact, that is the only gambit it has left - one final gamble that kicking Greece out of the Eurozone will have far more devastating consequences on the Eurozone, where not only is the ever-persistent threat of deposit bank run from the periphery one flashing red headline away, but where one after another anti-European party, from Spain's Podemos to Marine Le Pen's surge in France, are ascendent and may seek to recreate the Greek example unless Germany steps in in the last minute and concedes the Greek demands.

The problem is that as Merkel understands very well, should she concede to Greece, then she would be expected to concede to Italy, and Spain, and Portugal, and Ireland, and anyone else who came knocking at her door with a loaded gun and threatening to commit suicide. The WSJ picks up on this as well:

Europe wants Athens to commit to further labor-market and other reforms as a precondition for more money. The new government is refusing, arguing that it was elected to turn back many of the painful measures Europe and other creditors have demanded of it. 


Berlin worries that the eurozone would lose leverage over Athens if it gives into its request for an interim loan. Without a binding agreement from Greece to continue its reform program, officials say Germany is unlikely to back down.


Berlin, which is counting on financial pressures to force the Greek government’s hand, believes time is on Germany’s side.

And for now, it is correct: "Those pressures are being felt across Greece’s economy. Its banks lost €8 billion to €10 billion in deposits in January alone, government officials say. The banking system’s woes were exacerbated by the ECB’s decision earlier in the week to no longer accept Greek government bonds as collateral from banks seeking funds."

As Zero Hedge pointed out several times last week, both the ECB, the Eurogroup and even S&P, are no longer concerned about starting a bank run in Greece, as this would be the surest way to crush support for the new Greek government and force it to the negotiating table with its tale between its legs. Furthermore, in order to avoid giving the Greeks the satisfaction that their strong-arm policy is working, the central banks have done everything in their power to keep stock markets afloat and levitating this week, to avoid giving the impression that anyone in the world is concerned about contagion side-effects should Greece in fact exit the Eurozone. Or as we put it:

This strategy may, however, backfire and result in even more support for the government which unlike its predecessors who were perceived merely as Europe's lackey muppets, refuses to concede to Merkel, which is a distinct risk for the German chancellor:

Germany’s strong-arm strategy carries substantial risk. In addition to possibly triggering Greece’s exit from the euro, it carries political overtones.


Many Europeans already view Germany as the continent’s unyielding paymaster. Refusing to compromise with Greece’s new government over a few billion euros would further cement that image and open Berlin to accusations that it is ignoring Greece’s plight and riding roughshod over the democratic process.


Such resentments could fuel Europe’s other ascendant anti-austerity movements, particularly in Spain, where the Podemos party, modeled on Greece’s governing leftists, has recently surged in the polls.

And that's the gamble in a nutshell: Greece has already bluffed with everything it has (even raising the specter that it will cooperate with Russia if Europe kicks it out, giving Putin a foothold on the continent) while Europe desperately pretends that Charles Dallara's warning from less than three years ago is no longer relevant and that a Grexit is not only neither "catastrophic" nor "Armageddon", but instead is welcome and perfectly normal.

We should know who will crack first as soon as this week, just before or during the Eurogroup emergency meeting on February 11, although Greece already appears to be regretting its liquidity shortfall threat, as Reuters reported earlier today it "will not face any cash crunch while negotiations with its euro zone partners on a new programme to roll back austerity take place, its deputy finance minister said on Saturday. "During the time span of the negotiations there is no problem (of liquidity). This does not mean that there will be a problem afterwards," Deputy Finance Minister Dimitris Mardas said on Mega TV. "Asked whether state coffers may encounter a cash crunch if talks drag on until May, the minister said he did not expect the negotiations over a new deal to last that long."

Indeed, if Greek negotiations fail, read if the bluff does not succeed, by May Greek state coffers will likely be getting funding from Beijing and or Moscow. Which then begs the question: has Greece indeed lost everything, allowing it to be finally free to do anything?

Additional reading: Game theory and euro breakup risk premium

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boogerbently's picture

Good luck with that socialism thing.

knukles's picture

Run outta money, can't pay the bankers back.... Banker's to the rescue!
Er wait.... if they can't pay and ya' gotta give them money to pay back what they can't pay back then the loans really are no good, right?
Fraudulent Conveyance thingamajiggie. 

Stuck on Zero's picture

The best thing that could happen to Greece is to make the government disappear altogether for a year or two.  Everyone would be forced into free enterprise and the economy would boom.  Foreign currencies would become the wallet fillers and transaction notes. 

ZerOhead's picture

This apocalyptic clusterfuck was created for your viewing enjoyment courtesy of the friendly bankers at Goldman Sachs...

brooklynlou's picture

Which means Uncle Sam okayed it.

Goldman Sachs. More deadly than the 82nd Airborne.

MontgomeryScott's picture


Just today, Brian Williams reported that the Geek economic situation looked about as bad as his false-flaggish reporting about being shot down down in a helicopter! For a further update, here's PNSNBC's Andrea Mitchell...


'Andrea, are you there?' (GAGGJHGHGHGHHHHAUGHHHH)

It seems that we have lost the Andrea Mitchell 'live feed'. Let's switch to the Jamie Dimon 'helmet-cam'. Jamie, do we have you?

'Oh, fuck yeah, it's gonna happen right now...'

(White noise)

Hmmm.. for further updating, let's ask former Treasury Secretary Jack Lew about this turn of events. Jack? Is JACK there? Wait a minute... it seems that Jack's off.

Publicus's picture

Greeks have the Right to Print Euro. It will never run out of money.

MontgomeryScott's picture

Everything is AWESOME!

Everything is COOL when you're a part of the TEAM!

(Don't forget the obigatory <sarc> tag when posting)


COSMOS's picture

Andrea Mitchell has gotta be the ugliest dude that had a sex change.

Richard Chesler's picture
But debt is just money we owe to ourselves right?




MontgomeryScott's picture

Jim Cramer is looking for posters, just like You, to 'like' him, right now.

Sign up for free, on 'face-books' dot com. A representative is waiting.

Make sure to tell him/her/it that Tyler sent you (for 'extra-double-plus special' treatments).



Self-enslavement's picture
Self-enslavement (not verified) MontgomeryScott Feb 7, 2015 10:39 PM

Why don't the Greeks just do as WE do and print itself a shipload of GLD. They could lend it to Germany with interest. Germany would not be able to pay the interest and would need Greece to bail them out. End game. Check mate.

Self-enslavement's picture
Self-enslavement (not verified) Self-enslavement Feb 7, 2015 11:09 PM

I'm a Banker. For those of you that haven't yet figured out the (entire worlds governments) scam, let me explain it to you.

Let's say I have some sand I can loan you with interest. But I won't accept the interest payments (sand) from any other source than mine, because all other sand is counterfeit under my laws. Only my sand will be acceptable as interest payment. Which means you will have to borrow even more of my sand, in order to pay me back the interest (in sand) you don't have to be a genius to figure out that basically it means you will never be able to get out of debt, unless of course, you forfeit something of value of yours in exchange for my sand.

Which is my intention all along - to steal your land, resources, your labor, your flesh and all your assets. Oh, and to pay me rent. And taxes.

I laugh at your willingness to obey me, to conform and to raise your children to become cops and soldiers, because they will kill you to protect me.

Are you starting to get it yet?

UselessEater's picture

and sand pits that want to remain independent are bombed -with the glorification of Hollywood.

What's not to get?

Lore's picture

The estimated German losses in that Carmel slide ("Euro Stays Together" vs. "Euro Breaks Apart") pale beside the stark fact that Germany wouldn't have suffered ANY losses if it hadn't gotten suckered into this quagmire in the first place.  How embarrassing for the German people.  Conned again!

Oracle 911's picture




The new currency of Greece? Because nobody will trust the new Drachma.


BTW I agree with you. The Germans always ended up as bagholders or suckers in the last 100. I bet, it is not a coincidence.

Self-enslavement's picture
Self-enslavement (not verified) Oracle 911 Feb 8, 2015 8:02 AM

The Drachma, like the Dollar, does not derive it's value based on "trust". The value of the paper is derived by the necessity of using it.

Let's return to the analogy of using sand as a currency.

I'm the Federal Reserve/IRS, and I require you to pay me property taxes every year. But I insist that you can't pay me with tomatoes or eggs. Instead, I require you to pay me those property taxes in the form of sand.



Let's say, for the sake of argument, that the "dollar" and the "drachma" are interchangeable. the laws of physics are the same in Greece as they are in America.

Property tax gives a paper currency value. It also enslaves us to the Oligarchs who rule by fraud.


The Greece conundrum s especially sticky for the CHOSENITES because it exposes the PARELLEL BETWEEN UNPAYABLE USURY LOANS AND UNPAYABLE PROPERTY TAXES.

You don't need an Einstein I.Q. to understand this now do you?

Self-enslavement's picture
Self-enslavement (not verified) Self-enslavement Feb 8, 2015 8:59 AM

Globally the Chosenites, as predicted, are getting fricking hysterical again.

They tend to do that when YOU STOP THEM FROM STEALING.

eatthebanksters's picture

It will be incredibly painful for everyone if Greece pulls the rug out of under the EU, but it will be good for everyone.  In ways it will be much more painful for the elite becuase the dissatisfied masses with rise up and the elites will take their losses and seek refuge.  Then the good people on Main Street can seek to rebuild with a new set of rules, many of which will be promulgated as a result of lessons learned in world corrupt politicians and banksters. Its time for change and any Mainstreeter will agree.

Nussi34's picture

"giving Putin a foothold on the continent"


Last time I looked a part of Russia several times the size of EU countries was still on the continent called Europe!

zhandax's picture

When you are dead-assed broke, the two choices are get back to work or find a sugar daddy.  Wonder what these clowns are looking for?  I will give you a hint; it rhymes with ass, keeps Europe warm, and comes from Russia (assuming the newly-elected 'officials' have a dozen neurons that still function and don't immediately think of hookers).

Dugald's picture

Are you starting to get it yet?

Yes indeed,

Now,  can we look forward to your early suicide! 

Self-enslavement's picture
Self-enslavement (not verified) Dugald Feb 8, 2015 8:08 AM

You are stupid enough to raise your children to be cops and soldiers. They, also being stupid, are easily brainwashed into protecting me from you. I could easily have you arrested or make you disappear. I'm your captor. The earth is your prison. I use little pieces of green paper to enslave you. You're so stupid that you actually believe I'm governing you in your best interests.

Unix's picture

self-enslaved, the idiot, on one hand says Americans should not raise their children to be cops or soldiers, yet praises the anti-Christ hilter for doing the same thing.

Amoeba's are a higher life from than this silver tongued devil

Unix's picture

If you are a banker, then you are part of the problem, a disinformation agent, and thus my enemy, are YOU starting to get it it yet?

Signs of the end's picture

Well said. Structure of society is Pyramidal. While everyone is busy trying to figure out who's at the apex, they forget to see that it is the huge base that supports the apex. And what is the base? Soldiers, cops, teachers, lawyers, clerks, bus drivers, the pizza delivery man, apple pie baking granny....they are all supoorting the apex, and will fight against you to uphold the apex. So who are the enemies? As Jesus said the enemies of a man shall be they of his own household. He didn't say to worry about the Caesars in Rome but those much closer to home, even in the home. These are the folks that will be the first to toss you overboard to get into the lifeboats when the ship begins to sink. Ignorant masses are the enemy more than the Illuminati banksters.

Jafo's picture

"There is a lot of money to be made in the sestruction of a country." - Rhett Butler (Gone with the Wind)

MontgomeryScott's picture

His name isn't 'Andrea'!

Her name is 'Andy'!

That's a MAN, baby!

ZerOhead's picture

They don't really but that gives me another idea...

First we get Tsipras to give the Hedge the keys to the Greek Central Bank which latest reports tell us... still has a couple of billion euros to play with.

Next we buy a bank.

Then we buy several hundred trillion dollars worth of currency swaps... interest rate swaps... and maybe even some credit default swaps just to balance the portfolio out. Make sure to spread the love around to every systemic TBTF bank.

Then we give them our answer and end up owning all europe.

willwork4food's picture

Excellent. I've been roof is over 15 years old and is showing signs of water damage due to age, tree limbs etc. I might approach Wells Fargo and say..look dude, our house is appraised at $230K, BUT IF YOU DO NOT GIVE ME $15K @ -interest to make the necessary roof repairs your valued security will plumet to about $150k and you still have to have to pay to haul away the crap.

Please sign here...


mkkby's picture

Don't over think this.  Greece can just STOP PAYING.  They don't have to leave the euro.  The 2 ideas have no connection.  If the money is running out THEY SHOULD stop paying.  You'd have to be an idiot to spend down to your last dime.

If the Greeks exit, nothing terrible will happen.  The TBTF banks will be bailed out.  This has all been discussed for like 8 years now.  It is expected at some point.

stoneworker's picture

There is a difference between you and a sovereign country though...unless the Germans are planning to invade and force the Greeks into concentration camps to take their stuff....where have I heard this before.

Self-enslavement's picture
Self-enslavement (not verified) stoneworker Feb 8, 2015 8:16 AM

Unfair analogy. The Greeks did not go to Germany and steal their "stuff" like the Jews did. The Germans that are doing this to Greece ARE Jewish. In case you haven't noticed.

weburke's picture

get a tube of exterior 50 year silicone caulk and just smear it on whatever roof tiles look like they need it. Roof fixed.

ATM's picture

Better yet just use duct tape.

The Navigator's picture

If you owe the bank $100, you have a problem. If you owe the bank $100 million, the bank has a problem.

J. Paul Getty


I think Tsipras understands the leverage he has - which is really greater than the quote above.

If Greece bails, Spain, Portugal, and Italy go - then EuroLand is done - a week later, the contagion will have spread like the measles but be as deadly as Ebola for the banksters.


Still prepping, stacking, and collecting my favorites: Ag/Au/Pb.

Self-enslavement's picture
Self-enslavement (not verified) The Navigator Feb 8, 2015 8:18 AM

The Chosenites from Germany will wage war before they will let that happen.

ATM's picture

Euroland is done if Greece leaves. They don;t need to worry about Italy, Spain or Portugal. 

The euro banks can;t handle a Grexit because they are so poorly capitalized. They financial system will implode. The ECBs only hope at that point will be the printing of trillions of euros from thin air to try to stem the tide. But it probably won't avoid a depression.

This fear is what isgoing to be used to force the Federalization of Europe.

Just watch.


ThirteenthFloor's picture

Navigator good point. Tsipras also can turn to the BRICS. He has two cards to play. Germans pre-announced few weeks back Greece leaving EU would be okay - liars poker. Problem for EU is if Greece leaves and survives, others follow. Turkey looks ready to move east as well.

Russia tells Tsipras you must leave EU to join BRICS since they will not invest in anything still connected to ECB western banker interest. Quite logical -> no good money for bad. BRICS have far better debt to income ratio and net assets.

Anyone invested in specifically Greek debt, is playing both sides to protect what interests they have. If Greeks turn east a Greek investor may actually see less loss or a even some ROI, so some IBs will push for Greek exit.

amadeus39's picture

they can print it, but who will accept it? And at what exchange rate?


lpierre1955's picture

and how did they do before when they had their own money ? 

they were much better than th euro crap...

Self-enslavement's picture
Self-enslavement (not verified) lpierre1955 Feb 8, 2015 8:21 AM

Hitler printed paper money and became the most powerful nation in the world in a matter of years.




Unix's picture

bwahahahaahhahhahaaaaaaaaarg! So that is why the coward offed himself in his little bunker. Scared shitless to hang for his atrocities, dream on amoeba!

ThirteenthFloor's picture

If the Greeks write off EU debt, they take a 47% Gorilla off their back. With some decent BRIC development monies aka south steam Gasprom pipeline they may find break even in a decade. I find it ironic the Greeks maybe in the oil transportation bus. again (aka Onassis).

Yes Short term imports will be high, but that looks better than going down in debt flames.

cheech_wizard's picture

Yes, they do.

If I were them I'd starting printing up enough trillion dollar euro notes to not only settle their debts but buy up the rest of the EU as well.

James-Morrison's picture

Dream on.

Here's what will happen...

The current Greek government, mistakenly believes they have the Greek sheeple's backing. So they default.

Whoops! The leaders are run out of Greece.

New election is held.

Euro-centric, bank-friendly group reinstalled. Back to Austerity.


new game's picture

who is pulling the wagon? cause i see a hellova lot of greeks sittin on da wagon with that wtf look  "i want free shit cause we are greek-we deserve better than this".

i would sy "wake the fuck up and smell some good old fashon belt tightening and get creative and produce something of value". wait, that is right someone said we are fucked,ha maybe we are... thanks mom, it's your fault.

merica has the same fucking problem brewing, thanks LBJ for your "great society" called the free shit army. wait til the free aint so free. katrina will be holiday compared to what will unfold. fucking war zone of fat HFCS fucks that will become looting, rioting angry mericans that burn the village. marschall law and lock down. humvees in the street and deer rifles come out for an open season of winner take all. so fucking predictable. watch with eyes wide open, cause this IS EXACTLY what will be happening around the globe cause "life aint a free ride" muth fuckers and BITCHEZAZZ, HA...

Self-enslavement's picture
Self-enslavement (not verified) new game Feb 8, 2015 8:23 AM

You shameless troll. Or are you just plain stupid?