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Greek Deal "Unlikely" Friday Night, EU Official

Tyler Durden's picture




 

While markets remain in "well it is Europe and it's OPEX so BTFD" mode, entirely ignorant of what Goldman describes as the risk of a systemic shock, the EU-Greece negotiations continue... to go badly. As Bloomberg reports:

  • *EU OFFICIAL SAYS GREECE DEAL FRIDAY NIGHT LOOKING UNLIKELY

In fact, the official dropped his expectations so low as to say "it is possible that they could agree on progress." Which at least is one better than the no-progress meeting last week.

 

As Bloomberg reports,

It’s looking unlikely that euro-area finance ministers will be able to reach a deal Friday night on extending Greece’s bailout program, EU official says.

 

Euro-area ministers may have long meeting that isn’t conclusive

 

Ministers might be able to agree on statement of progress, with some commitments from Greece

 

Progress statement could pave way for more technical work and ministers could, if needed, have conference call on Sunday or Monday

 

EU official comments in Brussels, asking not to be named because talks are private

*  *  *

It seems suddenly markets have awoken...

 

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Fri, 02/20/2015 - 09:11 | 5807364 SickDollar
SickDollar's picture

Good that is what we the awaken want

 

Fri, 02/20/2015 - 09:12 | 5807368 Haus-Targaryen
Haus-Targaryen's picture

Ok Mr. Yellen, hike that deposit rate now.  

Fri, 02/20/2015 - 09:15 | 5807384 Wolferl
Wolferl's picture

Yeah, i put on some shorts this week.

Fri, 02/20/2015 - 09:17 | 5807391 TahoeBilly2012
TahoeBilly2012's picture

GermExit!

Fri, 02/20/2015 - 09:44 | 5807495 cifo
cifo's picture

Do these people get paid for overtime?

Fri, 02/20/2015 - 10:01 | 5807561 Nussi34
Nussi34's picture

No, because they focus all their time on a small irrelevant "country" that will never produce something meaningful other than fraud!

Fri, 02/20/2015 - 09:21 | 5807404 PartysOver
PartysOver's picture

I am thinking the US indices will continue to range trade in bassically  the same range as the previous 5 sessions.  I will be looking for probes outside this range to trade against.   Hopefully making some coin to buy some PM's.  Market is still in a holding pattern until Greece is resolved.  Then it is on to the next geopolitical issue. 

And the wheels on the bus go round and round, everybody sing along....  The wheels on the bus go round and round.

Fri, 02/20/2015 - 09:31 | 5807448 johngaltfla
johngaltfla's picture

I wish they would make their minds up. It's tough resetting stop positions while shorting the Euro with this much bs happening.

Fri, 02/20/2015 - 09:16 | 5807387 GetZeeGold
GetZeeGold's picture

 

 

Dammit......get back in there.....turn those machines back on!

Fri, 02/20/2015 - 09:56 | 5807542 Anasteus
Anasteus's picture

This situation is extremely bullish for Euro...

Go, JP Morgan, go! I wanna see EURUSD 1.35 by tomorrow!

Fri, 02/20/2015 - 09:13 | 5807375 PartysOver
PartysOver's picture

All theater, we still have another week to 10 days to go before it gets serious.

Fri, 02/20/2015 - 09:29 | 5807390 GetZeeGold
GetZeeGold's picture

 

 

That's why I'm pacing myself.

 

Figure there's no point in getting worked up......just yet.

Fri, 02/20/2015 - 09:14 | 5807377 Lotionboy
Lotionboy's picture

the only viable solution for Greece is to leave the Euro and give them the finger.....let Europe swim in their own sesspool of defaulted debt

Fri, 02/20/2015 - 09:17 | 5807393 Oldballplayer
Oldballplayer's picture

They made me read Greek Tragedies in College. I did not like them ten. I don't like them now. This is playing out like a reality show.

We know that the EU will cave. Just get it over with.

Fri, 02/20/2015 - 09:19 | 5807397 wmbz
wmbz's picture

The NAS will blast through 5000, the DOW will soar past 18,000 today because it's fabulous  Friday and it's all very awesome!

Can't you just feel it! Embrace the awesome-ness.

Fri, 02/20/2015 - 09:19 | 5807398 papaswamp
papaswamp's picture

Oh come the fuck off it. Its on its off its on its off...... Bourbon going into the morning coffee...

Fri, 02/20/2015 - 09:21 | 5807399 youngman
youngman's picture

I would think that if you are Greece ..you have to be making plans....you cant turn overnight....it will take weeks to print a currency...and to plan out the changeover.....I would think..but maybe these guys are not thinking that far ahead...they seem to belive that they are going to get more billions for nothing...at least that is what they are asking for...pretty aggressive to me....the We want to keep our Socialism but you have to pay for it...is not going to fly anymore...

Fri, 02/20/2015 - 09:27 | 5807433 Monetas
Monetas's picture

They could just retouch their Euros .... change the E to a G .... and call it the new "Gyro" ?  JE SUIS JUIF

Fri, 02/20/2015 - 09:38 | 5807476 papaswamp
papaswamp's picture

Im sure they could get an ample supply of Rubles or yuan.

Fri, 02/20/2015 - 09:21 | 5807402 You Mad Bro
You Mad Bro's picture

Hallo

Is this the website were whitey's discuss mo money less money?

Very happy to be here.

Fri, 02/20/2015 - 09:23 | 5807414 Dungholio
Dungholio's picture

No we crackers just come here to masturbate.  Glad to have you aboard!

Fri, 02/20/2015 - 10:07 | 5807584 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

As far as I can tell, these boards are primarily populated by (formerly) upper-middle class American whites, who are disgruntled about... well, just about everything apparently.

Fri, 02/20/2015 - 09:21 | 5807403 no more banksters
no more banksters's picture

Good news. Grexit now. Freedom for the European neoliberal jail called euro.

Fri, 02/20/2015 - 09:22 | 5807412 Dungholio
Dungholio's picture

So, a GREXIT should likely cause a relief rally and new all time highs?

Fri, 02/20/2015 - 09:25 | 5807420 NoWayJose
NoWayJose's picture

The EU is masterful at kicking the can down the road. I suspect that they will come up with a couple billion to tide Greece over for six months or so. That will give Goldman enough time to 'influence' the elected Greek officials such that the current leaders are tossed out in a 'no confidence' vote this summer.

Fri, 02/20/2015 - 09:26 | 5807425 Ban KKiller
Ban KKiller's picture

The fear is that ALL the Greeks will be using barter or other "black" market methodologies. 

REAL fear is decentralization of any power.

Fri, 02/20/2015 - 09:27 | 5807430 imaginalis
imaginalis's picture

Grecking ball to the Euro's nads

Fri, 02/20/2015 - 09:27 | 5807431 nathan1234
nathan1234's picture

Germany on Monday shocks the EU

Guten Tag Deutsche Mark

Euro , Auf nimmer wiedersehen

Fri, 02/20/2015 - 09:31 | 5807449 WTFUD
WTFUD's picture

Good then let's have a circle-jerk conference-call. Make sure Vichy DC are PLUGGED IN.

Fri, 02/20/2015 - 09:31 | 5807452 ANestIOS
ANestIOS's picture

the eurocrats will be trying to save face in the short term (after they agree to the Greek request for the 6month bridge) but medium term they'll start leaving the stage for a new breed crew - don't expect Grexit / EE implosion but a subtle defeat of the status quo

Fri, 02/20/2015 - 09:32 | 5807455 adr
adr's picture

So remind me again what this means to my business?

So stocks will fall because of banks losing money that they won't be able to plow into equities? 

Maybe TBTF just needs to fail. If stocks fall it is because they deserve to fall. There isn't a single person out there that believes stock indexes would have got to where they are if it wasn't for central banks printing trillions.

 

Fri, 02/20/2015 - 13:34 | 5808393 gcjohns1971
gcjohns1971's picture

The answer is 'Contagion'.

Research 'Fractional Reserve Banking' to learn how this affects you.  But I'll give you a quick primer.

Only one in about fourteen currency units (whether $USD or Euros, or whatever) are real in the sense that they were produced by a central bank.  These original 'real' dollars are called 'Monetary Base Money'.  'Real' is in quotes because we're using a fiat currency system where the central bank is fractionally reserving its assets to produce dollars, the same as commercial banks do.  The only difference is that the Federal reserve banks (private) are secretive, such that we don't really know what they own, plus they broker the sales of US Treasuries...  meaning Treasuries have endless support, and are the real basis for the US Dollar.   The rest of the Dollars in existence - 13 out of 14 - are just accounting entries at banks.

No one knows who owns a 'real' dollar and who just has an accounting entry.  The process of making that discovery is called 'contagion'.  I'll explain it in a moment.

When someone deposits $100 in a savings account at a bank, the bank makes an accounting entry of the deposit, and promises to return 100% of your money on demand.   But the promise is a lie.

The bank actually only 'deposits' 10% of that under US reserve ratios set in law - $10.  The other $90 get loaned out.  Note that there are only $100 'real' dollars.  But there are now $190 worth of accounting entries that can be spent as though they are real.

The person who received the loan for $90 with either deposit it at another bank, or exchange it with someone who will deposit it at a bank.  That new $90 bank deposit repeats the process.  The bank loans out 90%, keeping $9 and loaning out $81.  Now there are $261 accounting dollars being traded as though real, all based on the original $100 deposit.

The process will continue until there is a little more than $13 accounting dollars for every 'real' dollar.  So from that original $100 deposit, there will be about $1,433 dollars in accounting entries.

These numbers represent a "10% reserve requirement" as is Law in the US.  In much of Europe the reserve requirement was MUCH, MUCH lower until very recently.  Over the last 30+ or so years Europe has been trying to standardize reserve requirements as part of the Euro project.

Now, CONTAGION:

Only $100 of the $1433 are 'real'.  Who owns them?  Let's say someone near the end of the process who received a small loan of $1.33, refuses to pay it back.  Let's call this guy Mr Deadbeat.  Remember that Mr. Deadbeat's loan, is 90% of someone else's deposit.  We'll call him Mr Average Greek.  When Deadbeat doesn't pay, then Mr Average Greek,whose deposit was carved up to make Deadbeat's loan, can't get his money back.  That process will follow all the way back to Mr Original's $100 deposit.

Along the way, at some point all 14 of them try to withdraw 'their' money. But there was only $100 ever actually deposited out of the $1433.   This is called a bank run.

But who is to say that Mr Deadbeat's loan came from the same bank as Mr Original's deposit?  There is no such guarantee.  So when the bank run proceeds from one bank to another we call it 'Contagion'.

If one of those people who received a loan fails to pay it back 100%, then it will be impossible for the original depositor, who deposited $100, to get all his money back.  

So does this matter to you?

Would you know if your client took out a loan to pay you? Or your employer?  How do you know that the paycheck you deposited was 'real' money?

You don't. 

No one does.

You have a 1-in-14 chance of getting the real money...  Whoever withdraws it from the bank first gets to keep it.

Fri, 02/20/2015 - 09:44 | 5807499 AbbeBrel
AbbeBrel's picture

Release the Bernanken!!   They will crush the Bonds that Bind their Confused and Deranged Spirits (CDS'es)!

Fri, 02/20/2015 - 10:02 | 5807563 Mr. Bones
Mr. Bones's picture

This can't be right, you're supposed to say a deal is imminent before the market opens and then release "no deal" after the US market closes.  I was just getting the hang of this and now they're changing the rules again.

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