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ECB Prepares For Grexit, Anticipates 95% Loss On Greek Debt
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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Good. Although if the Greeks actually leave I'll be surprised.
Grexit + Rate hikes= No risk here
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.
Vatzufakis Goinkonakis ???
***BREAKING*** …meanwhile Frankfurt:
http://www.spiegel.de/video/blockupy-ezb-proteste-polizeirevier-angegrif...
Blockupy demonstration against opening of new ECB HQ got out of hand, a dozen of police officers injured, more than 300 protestors detained.
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.
Greece just paid 588 million Euro in interest on an IMF loan two days ago.
http://www.theguardian.com/business/live/2015/mar/16/greece-imf-repaymen...
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.
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).
"European Solidarity" is such a joke.
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.
http://www.theguardian.com/world/2015/mar/17/deadlock-over-greek-debt-cr...
What could possibly go wrong?
Europe is Endless
https://www.youtube.com/watch?v=gDKiPtBbBQY
The song that never seems to end... sound familiar?
Kraftwerk was genius. Well ahead of their time.
and you all still think this grexit will happen...?
mouhahahahahahaha....hmm hmm
hope are the weaks's cancer.
period.
Stressing contingency plans for Grexit openly + When it gets serious, you have to lie = No Grexit
Right?
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.
Look, you stupid bastards, you've got no arms left!
The only solidarity in the EU is Banker Solidarity.
*** violence in the streets, attacks on police station and barricades, cars burning…
http://www.spiegel.de/video/video-blockupy-protest-in-frankfurt-eskalati...
Calm down, Draghi got some party.
Gonococcus?
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.
Great overview of the mess we're in, and how we got here. Starts slow but a great read:
http://debtcrash.report/entry/history-and-introduction
Did you pen it, by any chance? You certainly push it enough.
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?
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!
.........To put a russian naval base on !
The title is wrong ! That 95% loss on Greek debt is in fact a 5% profit, if it materializes...
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.
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?????
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.
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.
They'll pay everybody in their own new currency. No need for foreign currency. That's the whole point...
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.
euro will stay the same in Greece it is in Montenegro
"Paying bureaucrats is job 1 for every government."
paying bureaucrats is paying corporations is paying nwo
>>> http://corporateeurope.org/revolvingdoorwatch
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.
"... 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!
Counterfeit? DUUUUUDE just WHAT do you think the Euro and he US Dollar and the Yuan are?
"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!!
Bend over, European taxpayers. Prepare to raped yet again as you bail out all your big banks who gorged on Greek debt.
It's only 300 billion, Carl. It's not the end of the world. ;)
Nigel Farage summarizes this pretty well in under 3 minutes - https://www.youtube.com/watch?v=f8jawbGHHw4&feature=youtu.be
And don't forget this classic:
A Few Words On Europe's Financial Woes
https://www.youtube.com/watch?v=E_R6hSNUZJ8
+1000
this is like Abbott & Costello "Who's on First" meets Monty Python meets CNBC.... or something.
http://finance.yahoo.com/news/jim-grant-heres-why-fed-120146777.html
Another fun video.
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.
All those Yankee bonds ticking in your money market funds will go poof!
Hard to believe when you only get 0.001%....right
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...
I love the last shot of the clueless Eurocrats after Farage is done.
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 ?
They've already paid them more than they're owed.
Grexit is 100% SAVINGS on future losses.
I wonder if Mr. Johl is modeling for this.
Even if it would cost 30 billion E to keep Greece in the Euro for
another year or two, that's over a 90% savings for the ECB as
they will have to bail out the banks if Greece exits, are they (ECB)
really going to let that happen because of some Greek name-calling?
The derivitives in the EU banking system very likely make the Grexit
scenario much much worse.
Please, all derivatives will be "forgiven". easy peasy.
The bankers will always forgive their own debt, not yours.
Exactly correct. derivatives, CDS, etc. don't mean shit because the Rule of Law don't mean shit to bankers and politicians who are nothing but sociopaths. First to go was Mark to Market, in favor of Mark to Fantasy. Then TARP was a violation of the rule of law over and over. First in how it was passed. Second in how it was enforced. It was intended to recapitalize the banks, but instead it was used by the Fed to buy worthless bank assets. The S&L bailout of the 90's all over again, only this time the Fed is the "bad bank". Then TARP was fraudulently applied to bailout non-bank companies that were deemed TBTF (AIG). And lastly, the biggest vioation of the rule of law was the screwing of GM bondholders. So the die has been cast. the derivative and CDS black hole will NEVER materialize because the sociopaths will just change the law to benefit themselves at the expense of the sheeple. Same as it ever was. Revolution is the only way this will ever end, and that won't happen until the masses are literally starving in the streets.
Blah, blah, blah...your just trying to entice everyone on ZH to short so they can get squeezed again... I ain't falling for it. Thier is always a save at the 24th hour
"Hey, guys, how's the default going?"
"Taking forever."
Could we drop-kick this bitch into the dumpster already? I've waited since.... whatever year it was. Now I find I just can't wait 2 more weeks to see some poo finally hit the fan.
Like UFO disclosure, this has been going on so long everyone is just ho-hum about it. Whatevah.
If you've been following the story though its been hell of a ride.
I understand what you're saying though. If I'm an American who cares?
Certainly if you're a voter you don't.
Indeed you have been rewarded by annihilating the entirety of of it..."just to show in fact you do care."
And where is Goldman Sachs you ask?
Amazing how long the creditors take to send in the bailiffs to take walking posession of
your physical assets, then bam, or at once.l
Yup. And if u havent prepared for a greek exit yet, well, its a lil late. Gold- its amazing how well you will sleep at night. Its the ultimate sleeng pill
yep - I will only beleive it after it has happened - until then its business as usual
So, will a Grexit result in Merkel receiving a creampie, or will it be a money shot?
I think the logical reply to your query is would me want to see either one involving Bundeskanzerlin Merkel?
@Sisyphus
Miffed Micro's hubby will not have a clue what you're talking about ~ lol
Someone should tell Varoufakis that he should be careful with showing single fingers to Germany. German porn producers would laugh and show him their large collection of popular (in Germany) anal fisting scenes. "Zis iz how ve do it here, ser"
She'll get a Pearl Necklace. From somebody.
If all central bank issued money is based on the creation of debt then what's the big deal?
Would suprise me too because I don't know if Draghi also calculated in NATO's potential weakening southern flank if the Greeks are driven into Russian's camp not to mention the blowing up of the 3.4 to 4 trillion derivatives book which we aren't told about.
There is always the possibility of the Vicki Nuland fuck the EU option making the US looking like bumbling destablizing idiots so NATO can slide on in to stabilize the place, including hand placing their own political meat puppets into an interm government keeping the extend and pretend shitshow going. If Putin is stupid enough to step in directly should that happen they will just try to stick the bill for Greek debt on Russia afterwards. Syriza has to drop out of NATO asap if Brussels tries to play that card or else they are fucked by their own alliances.
Only the Greeks can save themselves at this point but that doesn't happen until they can honestly admit to themselves they have a free shit problem.
Missiles! Someone has to deploy missiles and go on "nuclear alert!"
Man, I hate laughing at my own stuff but I find missile porn hilarious !
Iceland has a pretty good blueprint in a drawer somewhere for how to get things done.
Iceland is also only a tiny Island and not systematically important to the Euro or Eurozone. The amount of time and energy to occupy that place for the ROI on said occupation is not worth it financially. That is why they were allowed to leave. It is always harder to conquer Islands outright, just look at Britain.
Shit, I just bought 2k in Euro for my trip to Greece is 29 days. Forsight is 20/20. Does this mean I need to convert to Drachma's????
Cue my own *deer in the headlights*
It's looking grim for the Greeks either way. Stay, and they'll be forced to better balance their budget (auesterity) by the EU. Leave, and they'll be forced to better balance their budget (austerity) by the market. You're not going to have people inexplicably falling over themselves to accumulate Greek debt like they do US debt.
So how many European banks will suddenly fail? What about options losees? They can be much larger than the principal amount.
Absolutely. The "domino" bankruptcies are teh REAL story, and not the 320 billion going away overnight.
Bok bok bok bok bok.
Maybe?
none will fail - in fact their year end bonus checks will be bigger
Who takes the loss? The banks, the taxpayers, or both?
Everybody!
But I can't quantify that just yet because my paper napkin is too small & cannot, therefore, calculate the exponential coefficient of pricing the building of a DEATH STAR [in Drachmas].
see that? It's such a complicated algo that it fucked up the ZH servers!
Robust EU stress tests have confirmed over and again that EU Banks are in no danger and are completely capitalized...
/sarc off
How does a money printer go about losing money?
Slowly at first, then all at once.
There will be blood.
like more banksters falling out of windows ?
This time I think they'll be more prone to nailgun accidents
How does the ecb expect to get the 5%? I can't wait to see their contingency plans for when parts of Austria go belly up
That's what I was wondering, too. 5%? What is that? Some kind of "we just can't say 0% because it would look bad" kind of number?
5% is likely to be the estimated market value of recovered assets (probably Greek "manure").
EBay collectors will buy up the bonds for history..that is the 5% value..
Yes like those enterprising geniuses that now sell Zimbabwe 100 Trillion notes for $5.
More like $15 to $25 for uncirculated Zimbabwe 100 Trillion notes.
you can't rehypothecate then lever up on a zero
So are we talking a month a year? Friday? Don't get me wrong I love my share of doom,
but at least some sort of timeframe would be nice
It's immenent----so within a couple of decades give or take a decade.
Like Mr. Yellen says...patience.
Fearporn has a life expectancy roughly the same as the twinkie...wait, the twinkie died, resurrected, then died again didn't it?
They can start by taking Kramer off their 10G note.
Booyah! I'm 10 thousand Drachmas, bitch!
Hot damn! I will be a Millionaire (in Drachmas).
Krugman's mug on the New Drachma 1,000,000,000,000,000...
Which will buy you a slightly used condom..???
For the life of me I can't figure out why these billionaire oligarchs wouldn't be 'secretly' wanting a Grexit...
FFS, just think of how many islands could be bought with a [insert your favorite Rothschild Central bank confetti here] vs. a Greek drachma printing machine currency swap.
FFS2 ~ I mean, if I had billions of _ _ _ bux sitting there with nothing better to do, I'd jump at the chance. After all, My hooker & blow tab is already a fixed cost, & I can only waterski behind one yacht at a time.
exactly. especially the greek oligarchs. just get your euros out of the bank (only a fool hasn't done that yet), wait a little and just go on a shopping spree after everybody else with fresh new drachmas has 10-20% of purchasing power left compared to the euro.
i suspect they will convert euros to drachmas at 1 to 1 ratio, that would explain the new 10 000 note.
of course assuming that euro itself is still worth the paper it's printed on after the grexit.
Here we go !!!
Hold tightly onto your balls or your nipples.
We are going through little turbulences.
Everithing is OK.
Cheers.
If you look to the left of the aircraft you will see 6 parachutes.Please wave to your crew.
This is a recording.
Thank you for flying Malaysia Airlines.
Well if Goldman says Greece can't go back to a New Drachma, then that's that. Unless it isn't.
Time to go back and read old GS research on why Citibank will will not cut their dividend...time to buy Icelandic Banks...etc...
My Fat Greek Divorce. In theaters, summer 2015.
Starring: Merkel, Vora-fuck-is, Vova Putin
The Greeks have dealt with much worse. It will suck, a lot, for a few years (as if the last 5 years haven't) but they will come out of it free of their wall street, central bank imposed debt shackles
The new Greek currency: the Verufuckis
The new Greek currency: The Ruble.
"Russian FM Lavrov today announced a bailout of Greece and exit from the Euro. Greece will be joining the EEU."
"The Greek PM said the Ruble would be used until a new currency is developed. Russia will get use of the old ZATO bases, since we obviously no longer wish to be a part of the Imperialist Warmongers in Brussels."
And the savings account interest rates have a 15%+ ROI in Rubles?
Give it up people. The Soviet European Union will never "allow" a member state to exit. Either everyone gets in line, or the whole monetary-union-sans-political-union experiment will fall apart.
Why wouldn't Zee Germans just buy up all the land in Greece? Any hint of state sovereignty would then be gone, which has been the goal all along!
Looks like Russia is now Soviet European Union's worst enemy. What better than to give your worst enemy a country called Greece, for free? Let's see how the Greeks destroy the next bailout program .. Good bye, Russia!
The inevitable...
Like I've said before, Draghi has been foaming the runways and all these BS antics since are Kabuki Theatre.
The smart money is already out of Greece (transfer 2 for the past 3 years).
Deflation and devaluation would continue for Greece under the current euro regime. Yes,this will be an initial free fall and a sharp one, but it is going to happen now. At least they will no longer be slaves to the fascist Brussels technocrats.
There's been plenty of time to reposition derivatives and how the hell would we know what those positions are in that murky market anyway?
Drachma, here we come...
Wait a minute I'm confused, I thought Greece was fixed and Europe was hunky dory. I thought that Greece was going to payoff all their debt with the newest of loans to payback the new loans that paid back the old loans.
Maybe with just a few more loans from Italy, Portugal and Spain, they can fix it all up.
So, HB 37, relieving the US bankers of their derivative debt passed in January. It has now been introduced in the Senate.
What will THAT morning after look like?
https://www.congress.gov/bill/114th-congress/senate-bill/576/related-bills
SirBarksAlot
A Debt Jubilee bill for the banksters?
I glanced thru HB 37 but did not find specific section / language that transfers derivatives from Banks onto US Taxpayer. Can someone elaborate / point to it?
Good. The ECB, and other central banks, should take major hits for enabling (and profiting) governments to behave like fiduciary terrorists for countless decades. FUCK YOU CENTRAL BANKS! You're not innocent here!
Ask to see what political hack signed the dotted line for the formation of earlier Greek debt. Follow the money.
Greece is Lehman and the ECB is AIG
So .... a 95% FU haircut .... and they don't have to declare bankruptcy ? No one will notice after Bibi's election ? BTFW congratulations Bibi !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
"...the repayment to watch is a 3.5 billion euro bond expiring in July [2015] which is held by the ECB. As part of a deal to avoid losses on its Greek debt holdings, the ECB swapped in March 2012 the Greek bonds it then held for new ones that were not part of the restructuring."
http://www.reuters.com/article/2015/02/12/markets-greece-cds-idUSL5N0VL2...
Whatever. The only thing for sure is that both the EU elites, and the Greek elites, will each in their own way seek to avoid responsibility and make a bucket of loot off their decisions.
Everything else is smoke, mirrors, and flashing lights.
Everything is fixed......until it isn't. Time doesn't result in a solution when the problems are systemic. Greece is just one of the first few dominoes.
Overnight new Greek currency will be the Olive Pit with a conversion rate of 1 Greek pit to 1 Euro. Pits must be grown over time, but Euros can be printed and therefore worthless as is a pit.
Is it a green or black olive? Seeded or unseeded? Peeps have preferences in tastes. Do you like your martini shaken or stirred? Get the picture?
The news bulletins, Obama asks for war retribution on ISIS for political correct harm in Islamic expansion in United States of America.
Hands up in the air, woOOAAaa....woOOAAaaa!!! This is fun, people that do nothing and print out of thin air pretending like they can't do more of the same or it'll ruin the intergrity of the scam. Goyim are dumb as shit for hanging on the words of these crooks.
Will she or won't she remove the word 'patient' at 2 pm today? I feel like a dick just for asking.
Greece is not Lehman.
It's 10x bigger.
Why all the fuss over bond spreads?
The new ECB two-tier system will fix that:
Spread widen = Bad Banken. Ze transfer along with ze bond austerity measures vil be automatic.
I think this is around the point where Goldman steps in with a double-twist triple-back flip derivative agreement of some kind to save the day, funded by Buffett of course.
And then guaranteed by the US government. What's a few more tr - er, billions. Chicken feed.
you got me by two minutes BK!
...with Buffett and GS having secured secret US Govt guaranteed paybacks...
Greece wins. The EU would collapse overnight if Grexit. Yanis and Vlad must be smilling.
Wow. I'd better cash in my Greek olives and souvlaki before it's too late.
The whole Eurozone will burn in this though.
I wonder if souvlaki goes well with vodka?
Bring it on that should be 150 handles on the SPX.
How can I pass a new US bank stress test? Invoke common core math skills.
At least with bankruptcy Greece will start with a clean slate, it's much worse to keep pandering to the EU.
...and that, my friends, is what QE/Euro-style is for. It's not for European bond buying. Don't mistake evil for stupid. They know there's no supply. It's to shore up all the fucking trading companies and IB's that will have mucho-mucho collateral vaporize. And the sad part is...it just might work!
The whole system is fiendishly delusional. Okay, so Greece is in debt to a system that uses fiat (fake) "money"...logic dictates that said debt is fiat.
And when Greece is done, which EU country will be next. Then we'll all be posting the same messages except changing the name of the country from Greece to _______ .
Manager Magazin talks of 3 examined alternatives by Mr Miranda - 1. chaotic grexit 2. consensual and orderly 3. negotiated haicut (-75%!) without grexit. Now the news in this story is the 3rd option because it was NEVER considered officially before!!!