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ECB Prepares For Grexit, Anticipates 95% Loss On Greek Debt

Tyler Durden's picture


Dear Greek readers: the writing is now on the wall, and it is in very clear 48-point, double bold, and underlined font: when the ECB "leaks" that it is modelling a Grexit, something Draghi lied about over and over in 2012 and directly in our face too, take it seriously, because it is time to start planning about what happens on "the day after." And incidentally to all those curious what the fair value of peripheral European bonds is excluding ECB backstops, the ECB has a handy back of the envelope calculation: a 95% loss.

Which also is the punchline, because while the ECB is making it very clear what happens next in the case of a "Graccident", it has yet to provide an explanation how it will resolve the billions of Greek debt held on its own balance sheet which are about to be "marked-to-default"...

... and on which it is prohibited from suffering a loss, or else Draghi will have to fabricate even more on the run rules about how the ECB balance sheet is loss-proof... expect in this case, or that, or the other.

From Manager Magazin, google-translated:

The European Central Bank (ECB) is preparing for a possible Greek exit from the euro zone. In internal model calculations, the central bank has already calculated the consequences of different scenarios on the prices of Greek government bonds.


Fernando González Miranda, head of risk analysis of the ECB, assumed for his model calculations three different developments of the Greek crisis, the magazine reports. These variants have also been presented to our colleagues from the Bundesbank few days ago.


Under this method, the value of Greek government debt - currently around € 320 billion - in the event of a sudden, "accident-like" Farewell to the Greeks from the Euro-zone ("Graccident") shrink to around 5 percent of the principal amount. If it were the Greek Government, however, to complete the withdrawal on the basis of ordered negotiations ("Grexit"), the ECB expects a residual value of government bonds by nearly 14 percent. And should it even create the country to negotiate a recent haircut, without having to give up the single currency, the government securities could keep at least a quarter of its original value.


A central bankers feared compared with manager magazin especially the "Graccident". The risk is high that the Greek government members "lose track and suddenly unable to settle their bills." In such a case, the rating agencies Greece would classify as necessarily insolvent, with the result that the central bank should have stopped emergency loans.

Or summarized :

Take this opportunity to reread the Goldman piece on whether Greece "can just print Drachmas" because it is about to be revised by the author.

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Wed, 03/18/2015 - 09:58 | 5901792 Haus-Targaryen
Haus-Targaryen's picture

Good.  Although if the Greeks actually leave I'll be surprised.

Wed, 03/18/2015 - 10:01 | 5901803 Carpenter1
Carpenter1's picture

Grexit + Rate hikes= No risk here

Wed, 03/18/2015 - 10:08 | 5901837 Stuck on Zero
Stuck on Zero's picture

It's a big myth that Greece needs to print its own currency.  That's an open invitation to counterfeit.  Greece doesn't need to do anything.  Greek countrymen will take up whatever currency is available and put it to use.  Computers can give exchange rates to the micro-cent instantly. 

Wed, 03/18/2015 - 10:17 | 5901876 BaBaBouy
BaBaBouy's picture

Vatzufakis Goinkonakis ???

Wed, 03/18/2015 - 11:16 | 5902129 Muessin
Muessin's picture

***BREAKING*** …meanwhile Frankfurt:


Blockupy demonstration against opening of new ECB HQ got out of hand, a dozen of police officers injured, more than 300 protestors detained.

Wed, 03/18/2015 - 11:18 | 5902134 ParkAveFlasher
ParkAveFlasher's picture

I hope the new 50-drachma note will have a picture of a souvlaki on it, and will be redeemable in souvlaki.  That would be way cool.

Wed, 03/18/2015 - 11:31 | 5902191 walküre
walküre's picture

Greece just paid 588 million Euro in interest on an IMF loan two days ago.


Where did Greece get the funds from? Was this a bailout payment from Germany?

Were all the negotiations these past few weeks just to rob Peter to pay Paul?

Follow the money, folks.

Wed, 03/18/2015 - 11:34 | 5902213 BigJim
BigJim's picture

If there is a Grexit, the Eurocrats will do their damndest to make sure the Greeks suffer big time; can't have th other PIIGS get any ideas, can we?

If Putin has any sense, he'll step in and do his best to make sure Greece dos better out of the EZ than in, to encourage the others to get out too.

Unravelling the Eurozone would be a major step in unravelling European 'solidarity' (ie, the Angloquislings ability to sanction Russia).

Wed, 03/18/2015 - 11:43 | 5902251 Haus-Targaryen
Haus-Targaryen's picture

"European Solidarity" is such a joke. 

Wed, 03/18/2015 - 11:48 | 5902277 Bunga Bunga
Bunga Bunga's picture

Nuland in Athens, talks to Tsipras.... Nato’s south-eastern flank would be immeasurably weakened at a time of mounting global security worries over Islamic fundamentalists in the Middle East.

Grexit - no way.


Wed, 03/18/2015 - 11:57 | 5902297 Manthong
Wed, 03/18/2015 - 12:06 | 5902335 walküre
walküre's picture

Europe is Endless


The song that never seems to end... sound familiar?

Kraftwerk was genius. Well ahead of their time.

Wed, 03/18/2015 - 12:22 | 5902419 winchester
winchester's picture

and you all still think this grexit will happen...?

mouhahahahahahaha....hmm hmm


hope are the weaks's cancer.




Wed, 03/18/2015 - 14:32 | 5903033 Newsboy
Newsboy's picture

Stressing contingency plans for Grexit openly  +  When it gets serious, you have to lie  =  No Grexit


Wed, 03/18/2015 - 15:12 | 5903228 winchester
winchester's picture

way more simple, if  A exit euro zone, then B, then C then D then..... then what remain ?.... when you have a front line to defend at all cost  ....

war posture....


euro currencies is a tool to enslave the populations of europe and take control over politics.


as simple as that, if you flee from the tool, it is considered as a riot, a rebellion, a revolution, they will never ever let it happen, a WW3 will happen before europ explode.

Wed, 03/18/2015 - 12:09 | 5902347 Richard Chesler
Richard Chesler's picture

Look, you stupid bastards, you've got no arms left!

Wed, 03/18/2015 - 16:26 | 5903585 SDShack
SDShack's picture

The only solidarity in the EU is Banker Solidarity.

Wed, 03/18/2015 - 11:31 | 5902193 Muessin
Muessin's picture

*** violence in the streets, attacks on police station and barricades, cars burning…


Wed, 03/18/2015 - 13:22 | 5902666 Bunga Bunga
Bunga Bunga's picture

Calm down, Draghi got some party.

Wed, 03/18/2015 - 14:26 | 5902991 Simple J. Malarky
Simple J. Malarky's picture


Wed, 03/18/2015 - 10:18 | 5901878 The Black Bishop
The Black Bishop's picture

I've started wondering if the Greeks are trying to mess so much with the Germans that they are thrown out instead of voluntarily leaving. Who knows what clauses are in the Euro cooperation agreement?


For the Greeks themselves I really hope they leave the Euro.

Wed, 03/18/2015 - 10:40 | 5901976 bwh1214
bwh1214's picture

Great overview of the mess we're in, and how we got here. Starts slow but a great read:

Wed, 03/18/2015 - 11:31 | 5902197 BigJim
BigJim's picture

Did you pen it, by any chance? You certainly push it enough.

Wed, 03/18/2015 - 10:52 | 5902018 Temporalist
Temporalist's picture

The Real REAL problem is that the Greeks don't trust the Greeks to pay the Greeks what the Greeks owe the Greeks (whether in salary, pension, debt, taxes or graft) so why would anyone else trust the Greeks to pay them back when they can't trust themselves?

Wed, 03/18/2015 - 10:57 | 5902049 new game
new game's picture

when trust and faith is gone expect some blood. calling russia? help, our country is broke, we need some loans to restore order. we can pledge some gas and oil reserves off the coast. also we have some beautiful islands to enjoy!

Wed, 03/18/2015 - 12:55 | 5902565 eurogold
eurogold's picture

.........To put a russian naval base on !

Wed, 03/18/2015 - 11:37 | 5902221 angel_of_joy
angel_of_joy's picture

The title is wrong ! That 95% loss on Greek debt is in fact a 5% profit, if it materializes...

Wed, 03/18/2015 - 11:09 | 5902096 luckylongshot
luckylongshot's picture

It seems noone wants to be the one responsible for detroying the Euro. Yes the Greeks seem to be asking to be thrown out but it could also be argued that Germany wants to see the Euro collapse and taking a hard line with Greece is how they do this without being held responsible. Watch what follows the Grexit...the Italexit, Spexit, Irexit, Portuexit and Frexit are on the way.

Wed, 03/18/2015 - 12:58 | 5902570 eurogold
eurogold's picture

I really hate being put in a position to defend the Germans but lets just consider this:

Who of the other EU pussies ever defended EU policy, yes EU policy not german policy?????

Wed, 03/18/2015 - 16:15 | 5903523 elvy
elvy's picture

But Germany's ultra-high trade surplus also ignores EU policy. As did Germany's budgets throughout the 90s, courtesy of reuinification and the need to prop up an ailing economy which somehow this reminds me of the current situation.

Can't have it both ways.

Wed, 03/18/2015 - 10:47 | 5902011 tarabel
tarabel's picture



Yes, so far as it goes, but first they will have to earn some of that fx in order to use it to pay their bureaucrats with.

Paying bureaucrats is job 1 for every government.

Wed, 03/18/2015 - 11:39 | 5902230 angel_of_joy
angel_of_joy's picture

They'll pay everybody in their own new currency. No need for foreign currency. That's the whole point...

Wed, 03/18/2015 - 12:27 | 5902439 winchester
winchester's picture

totally agree,  if they think they gonna be better shape with a 0.00001 ratio currencie, they must prior anything contact H.P or epson to get serious stock of ink because  printers gonna heat like fuck.

compared, fed will be a joke.


Wed, 03/18/2015 - 16:42 | 5903672 123dobryden
123dobryden's picture

euro will stay the same in Greece it is in Montenegro

Wed, 03/18/2015 - 19:16 | 5904173 unicorn
unicorn's picture

"Paying bureaucrats is job 1 for every government."

paying bureaucrats is paying corporations is paying nwo

>>> http://corporateeurope.org/revolvingdoorwatch

Wed, 03/18/2015 - 11:29 | 5902188 ATM
ATM's picture

Greek countrymen wil take up whatever currency that is available? That means they need to acquire this currency, but with what exactly? The banks will be shuttered and capital controls slapped on them. The countrymen will be stuck andforced to pay up leving hem pennyless or in this case Euroless.

If they do move to their own currency they will at least be abelt buy all those wonderful Greek manufactured goods, olives, fish and lemons.

Wed, 03/18/2015 - 13:16 | 5902649 orez65
orez65's picture

"... will take up whatever currency that is available?"

Whatever Euros they have in their banks they better withdraw.

The ones that don't have Euros or any other savings would have to barter.

Tourism, shipping and whatever they can export would bring in whatever currency: Yuan, Dollars, Rubles ...

But the point is that they are BROKE!

It is not a currency issue!

Wed, 03/18/2015 - 11:42 | 5902248 redd_green
redd_green's picture

Counterfeit? DUUUUUDE just WHAT do  you think the Euro and he US Dollar and the Yuan are?

Wed, 03/18/2015 - 13:05 | 5902596 orez65
orez65's picture

"It's a big myth that Greece Needs to print it's own currency"

Why would anyone down vote that post?

Are you so brainwashed that you can't accept that a Goverment monopoly of money is not necessary?

It is, actually, harmful.

Just look at the financial Frankestein that the Federal Reserve has created!!

Wed, 03/18/2015 - 10:08 | 5901840 Greenskeeper_Carl
Greenskeeper_Carl's picture

Bend over, European taxpayers. Prepare to raped yet again as you bail out all your big banks who gorged on Greek debt.

Wed, 03/18/2015 - 10:10 | 5901845 NoDebt
NoDebt's picture

It's only 300 billion, Carl.  It's not the end of the world.  ;)

Wed, 03/18/2015 - 10:14 | 5901862 Dr. Richard Head
Dr. Richard Head's picture

Nigel Farage summarizes this pretty well in under 3 minutes - https://www.youtube.com/watch?v=f8jawbGHHw4&feature=youtu.be

Wed, 03/18/2015 - 10:17 | 5901873 Temporalist
Temporalist's picture

And don't forget this classic:

A Few Words On Europe's Financial Woes


Wed, 03/18/2015 - 10:31 | 5901940 ersatz007
ersatz007's picture


this is like Abbott & Costello "Who's on First" meets Monty Python meets CNBC.... or something.  

Wed, 03/18/2015 - 10:33 | 5901950 BandGap
Wed, 03/18/2015 - 10:46 | 5902009 Save_America1st
Save_America1st's picture

But of course it doesn't stop with Greece, right? 


They then have to deal with Italy, Spain, Portugal, etc. etc. etc. and not to forget the big Euro banks who are up to their tits in Trillions of derivative debt obligations that will all start to collapse like dominoes.

And don't think just because you live in America that you're safe from any fallout from this shit. 

Silver phyzz is on sale still, bitchez.  Trade in a big chunk of that worthless fiat and go get you some phyzz.


Wed, 03/18/2015 - 10:59 | 5902062 max2205
max2205's picture

All those Yankee bonds ticking in your money market funds will go poof!

Hard to believe when you only get 0.001%....right 

Wed, 03/18/2015 - 12:37 | 5902485 joak
joak's picture

According to Kotlikoff, the fiscal gap of the US is the worse in the world. This is what he said to the budget comittee of the Senate. http://www.cnsnews.com/sites/default/files/documents/PDF.Kotlikoff---Tes...

Wed, 03/18/2015 - 13:08 | 5902612 thamnosma
thamnosma's picture

I love the last shot of the clueless Eurocrats after Farage is done.

Wed, 03/18/2015 - 10:26 | 5901919 HardAssets
HardAssets's picture

Ya mean 'Germany' and the kraut banksters aren't the same thing ?

And if the bad bets of banksters aren't put on the backs if those who didn't take part in the deals, - it's not a bad thing?

Who woulda thunk it ?

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