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As IMF Default Looms & Tax Revenues Plunge, Greek Stocks & Bonds Tumble

Tyler Durden's picture




 

As the rest of the world appears happy to assume everything is fixed in Europe (and if it's not, Draghi will buy it back to being awesome), Greece is looking unwell once again. Initial exuberance has faded dramatically in the last 3 days as IMF default warnings and a 22.5% plunge in tax revenues has sparked concerns about Greece's sustainability once again. Default (or restructuring) risk is soaring, Greek bond yields are surging, stocks sliding, and Greek banks (bonds and stocks) are getting hammered. As The Guardian's Helena Smith notes, "the country is in a strategic vacuum," and next week's T-Bill auction could be a major catalyst.

 

Greek Stocks and Bonds Ugly...

 

Greek Banks even worse...

 

 

As The Guardian's Helena Smith reports,

Angst over the pending funding gap is VERY real. Government figures show that tax revenues have dropped precipitously (22.5%) as a result of the political turmoil gripping the country. Greeks have simply stopped paying. The country’s former deputy premier Evangelos Venizelos has just made a statement saying rather than conducting real negotiations, the new leftist-led government is waging a “war of impressions,”

 

The country is in a strategic vacuum. Just one month after the election everything is in the air. Revenues, cash requirements, fiscal targets. How will the fiscal gap that exists be plugged? Where are we going regarding the debt? Sadly our array of negotiating mistakes has taken us way off from the point we were when the parliament was dissolved,” he said referring to the day snap polls were called in December.

 

Everything is being enthusiastically projected as a triumph, but as soon as you scratch the surface, you see that there is no plan, or result, or security or prospect. The country has to find its goals.

Next week will be interesting given the weakness into the weekend, as The Guardian notes,

In a closely watched auction, Greece plans to sell €875m of six-month treasury bills next Wednesday to refinance a maturing issue. Greek banks use T-bills as collateral to borrow from the ECB’s emergency liquidity line and then invest the money in more T-bills. This helps the government, which is frozen out of the bond markets, to cover its short-term needs.

 

Foreign investors have shied away from T-bill sales in recent months. They are the only source of commercial borrowing for Tsipras’ government.

*  *  *

Greek CDS still indicate a 75% probability of restructuring (assuming 'norm' recovery rates).

 

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Fri, 02/27/2015 - 12:59 | 5835758 Headbanger
Headbanger's picture

Real?   What's this REAL shit?

Fri, 02/27/2015 - 14:33 | 5836123 KnuckleDragger-X
KnuckleDragger-X's picture

Real is when the turd is too big to bury and this one is likely to be EU sized complete with a very foul odor. Time to buy stock in air freshener.

Fri, 02/27/2015 - 13:00 | 5835761 Never One Roach
Never One Roach's picture
China plans yuan-denominated gold fix this year -sources

 

SINGAPORE, Feb 27 (Reuters) - China plans to launch a yuan-denominated gold fix this year to be set through trading on an exchange, sources familiar with the matter said, as the world's second-biggest bullion consumer seeks to gain more say over the pricing of the precious metal.

The Chinese benchmark would be derived from a new 1 kg contract to be launched on the state-run Shanghai Gold Exchange, a senior source directly involved in the process told Reuters.

 

http://www.cnbc.com/id/102461888

Fri, 02/27/2015 - 13:16 | 5835819 LawsofPhysics
LawsofPhysics's picture

Remember, the Chinese invented  paper money...

 

that is all...

Fri, 02/27/2015 - 13:20 | 5835838 maskone909
maskone909's picture

https://www.youtube.com/watch?v=VrdS8mYtEh4

 

obey my dog

on the runway you have one objective

do not be distracted by the beautiful celebrities

the economy is gooooood

 

Fri, 02/27/2015 - 13:38 | 5835908 hendrik1730
hendrik1730's picture

Yep, they know what one should NOT do ....

Fri, 02/27/2015 - 16:13 | 5836018 giovanni_f
giovanni_f's picture

At _some_ point the Chinese will not only degenerate but the corruption in the US  as of now will then pale in comparison to what the Chinese will bring up - although I admit this is difficult to imagine. The next 50 years are safe, however. This does not hold for industrial commodities. Why? This is reserved for subscribers....klick here: https://www.nsa.gov/

Fri, 02/27/2015 - 13:40 | 5835914 papaswamp
papaswamp's picture

Bet there will be re-re-re-rehypothecation of some gold.

Fri, 02/27/2015 - 13:03 | 5835769 sudzee
sudzee's picture

Taxes like alimony. The screwing you get for the screwing someone else got.

Fri, 02/27/2015 - 13:05 | 5835779 Dr. Engali
Dr. Engali's picture

No matter what happens, it will not be called a default.

Fri, 02/27/2015 - 13:56 | 5835988 disabledvet
disabledvet's picture

I say again...

Anything denominated in euros can go to ZERO.

The Treasury Department I would imagine is prepared. The Pentagon will need to be briefed as well should such a contingency be realized in say...the next few days.

This is what a debt jubilee looks like folks...and the inflation in Europe is already MASSIVE.

Fri, 02/27/2015 - 13:06 | 5835784 f16hoser
f16hoser's picture

No worries. The Krauts just voted to throw Good money after Bad. (Dumb Asses)

P.s. Schauble Rocks!

Fri, 02/27/2015 - 13:59 | 5835996 disabledvet
disabledvet's picture

A russo-turkic war could be just hours away...

Fri, 02/27/2015 - 13:08 | 5835791 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

March 10th 2008<------------------------->March 10th 2015

 

NOTE: 11 days to APOCALYPSE hour @ 11:00am

 

:|

Fri, 02/27/2015 - 16:16 | 5836465 giggler321
giggler321's picture

Well I'm going to have my birthday party now because going by your figures - I ant gonna get another one

Fri, 02/27/2015 - 13:09 | 5835794 NoDebt
NoDebt's picture

"22.5% plunge in tax revenueshas sparked concerns about Greece's sustainability once again"

God bless the Greek people.  Their new government might have caved in, but they haven't.  Government can promise payment as much as they want.  But if nobody pays their taxes, there will be no money to make the payment with.

 

Fri, 02/27/2015 - 13:14 | 5835812 LawsofPhysics
LawsofPhysics's picture

...unless one has a printing press of course...

 

What part of all fiat will die don't people understand?

Fri, 02/27/2015 - 13:48 | 5835947 glenlloyd
glenlloyd's picture

Yes, the only way to rid themselves of a government that now clearly didn't want to toe the line on what they pledged to do for Greek people.

Don't know what went on with the negoitiations or what was promised to whom but non-collection of tax revenue is clearly a sign that the people want to bring down the government.

This is really the only way, you have to starve the beast to bring it down...

Fri, 02/27/2015 - 13:10 | 5835796 jump_mutha_fukah
jump_mutha_fukah's picture

Meanwhile here at Team Merica Basecamp, the giddy worshipers of the golden calf are tripping over themselves to stroke its snarling nostriles or

cup its swollen testicles in ever growing alegienance to their material god.

Babylon 2.0

 

Fri, 02/27/2015 - 13:38 | 5835894 LawsofPhysics
LawsofPhysics's picture

really?  Last time I looked, Americans were the last people on earth to actually hold any physical PMs on a per-capital basis.   What's the deal with the 2-methyl-1,3,5-trinitrobenzene anyway?  Terrorist!!!

Fri, 02/27/2015 - 13:35 | 5835897 hendrik1730
hendrik1730's picture

You seem to be an adept of high explosives, TNT.

Fri, 02/27/2015 - 13:15 | 5835798 Soul Glow
Soul Glow's picture

The greeks are going to end up with euros while the other people in the rest of the EU are going to bail theirs in when this shitshow all comes crashing down.  I guess it wasn't the meek but the greek that inheret the euro.

Fri, 02/27/2015 - 13:11 | 5835801 Yen Cross
Yen Cross's picture

 As much as I would love to see the Greeks tell Nowotny and the EU to go walk off a short pier, there's no way the Greeks are going to be allowed to default. This thing is going to drag out until the Greeks are so destitute that they take to the streets and burn everything in sight.

Fri, 02/27/2015 - 13:19 | 5835833 Watson
Watson's picture

I agree, as far as the Germans are concerned (a German vote against is a vote against Merkel, who is very popular).
Plus, 5 year yields would not be 12% if default considered imminent.

However, could get a vote against from The Netherlands.

Watson

Fri, 02/27/2015 - 15:12 | 5835915 sessinpo
sessinpo's picture

My opinion on this is mixed. You may be right. But keep in mind that Greeks already did the burn shit. That caused another government change which did nothing.

I still think the problem is with the Greek politicians. Everytime we get a new Greek government that gets a "real" look at the books, they realize they can't keep the promises they made to get elected. So they cave because they are to cowardly to tell the public the truth which is: The government sold the public out and there is no money. No matter what choice the government makes means more suffering for the public. And the politicians view caving in as less painful then full outright default. (kicking the can down the road as long as they can).

The politicians are playing musical chairs. While they realize how dire the situation is, they end up choosing to kick the can down the road if they can with the hope that when the music ends, they have a chair to sit on. Either way, the public pays. And most politicians don't want to give that bad news to its consituents.

Fri, 02/27/2015 - 13:13 | 5835807 LawsofPhysics
LawsofPhysics's picture

The first country to clear their bad debt...       ...wins?!?!?

 

Help me out here.... 

Fri, 02/27/2015 - 13:17 | 5835826 Soul Glow
Soul Glow's picture

The first state to pull out all the euros in cash wins.

Fri, 02/27/2015 - 13:13 | 5835809 The Bell Rang
The Bell Rang's picture

This should spread to the rest of the euro zone. As the E.C.B. starts their ( junk) bond purchase program, everyone that frount ran this garbage, should start to sell. Yeilds will rise, the Germans will be pissed, seeing their money flow to this crap. Things are getting real, finally. Watch our 10 year rally, watch our fix market, sorry, stock market tank. 

 

Fri, 02/27/2015 - 13:17 | 5835824 LawsofPhysics
LawsofPhysics's picture

optimist.

Fri, 02/27/2015 - 13:52 | 5835966 The Bell Rang
The Bell Rang's picture

Naw, just a bit Bi-Polar.....

Fri, 02/27/2015 - 13:25 | 5835862 Osmium
Osmium's picture

I am SHOCKED.  Greece has a stock market?  Who knew.

Fri, 02/27/2015 - 13:23 | 5835853 Madcow
Madcow's picture

Can't the IMF send Dominique Strauss-Kahn down there to rape the poplulation into submission? 

 

Fri, 02/27/2015 - 13:27 | 5835867 cwsuisse
cwsuisse's picture

The mentality is the problem! If you charge a German with 50% income tax, 19% VAT and 30% inheritance tax he is still spinning the treadmill like a brain dead and producing taxes until he drops dead. If you do it to an Italian or a Spanish guy he is taking his towel and he is going to the beach. If you do it to a Greek person he is setting up a scheme to wring the last EURO from your purse. Who could blame him? All talk about increasing tax income in Greece is nothing but smoke and mirrors. It is never ever going to work.

Fri, 02/27/2015 - 13:39 | 5835912 insanelysane
insanelysane's picture

As I keep saying.  The Greeks finances were never good enough to join the EU in the first place and that was during the global boom times.  How the hell does anyone expect the Greek finances to be better now???

Fri, 02/27/2015 - 13:47 | 5835943 hotrod
hotrod's picture

That is why I think GREECE has a lot of leverage and Germany must talk tough to maintain ORDER.  EU/Draghi wanted GREECE in due to the risk they would align with Russian alliance.  That risk still exists.  The EU is at fault as well as Greece.  I dont think we are seeing/hearing all that is on the table.  Germans like to maintain ORDER.

Fri, 02/27/2015 - 13:43 | 5835928 hotrod
hotrod's picture

United States likes to hide our TAX INCREASES,     ACA, FCC, Carbon Tax,   I would love to see the day when US citizens in mass withhold paying taxes in order to gain a voice in Congress.  Imagine US revenues dropping that hard.  CAN YOU HEAR US NOW!

Fri, 02/27/2015 - 13:56 | 5835984 buzzsaw99
buzzsaw99's picture

no problem. the fed will gladly finance the budget deficit no matter how large it becomes.

Fri, 02/27/2015 - 13:50 | 5835956 Smuckers
Smuckers's picture

Greece is the herd.

Fri, 02/27/2015 - 13:55 | 5835980 venturen
venturen's picture

875 Million heck that isn't even a Goldman bonus basket. Chump change! 

Fri, 02/27/2015 - 14:31 | 5836113 dearth vader
dearth vader's picture

Default is part of the Grand Scheme of Syriza's top brass. Tsipras and V. have known for years Greece's only way out of its misery is leaving the euro, but the Greek people, for the greater part, still want to stay in. By letting fiscal chaos grow and reneging on their obligations to IMF there'll be no alternative but leave. They're only waiting for zee Jermen to kick them out while they, apparently, keep trying "honestly" to renegotiate their unserviceable debts. Haha. When the Germans keep saying 9-9-9, Syriza will be excused in the eyes of the Greek people and, finally, can pull the plug and drop its shackles, poor but free.

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