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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Haus-Targaryen's picture

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

Carpenter1's picture

Grexit + Rate hikes= No risk here

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. 

BaBaBouy's picture

Vatzufakis Goinkonakis ???

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.

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.

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.

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).

Haus-Targaryen's picture

"European Solidarity" is such a joke. 

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.

walküre's picture

Europe is Endless

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

Kraftwerk was genius. Well ahead of their time.

winchester's picture
winchester (not verified) walküre Mar 18, 2015 11:22 AM

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

mouhahahahahahaha....hmm hmm


hope are the weaks's cancer.




Newsboy's picture

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


winchester's picture
winchester (not verified) Newsboy Mar 18, 2015 2:12 PM

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.

Richard Chesler's picture

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

SDShack's picture

The only solidarity in the EU is Banker Solidarity.

Muessin's picture

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

Bunga Bunga's picture

Calm down, Draghi got some party.

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.

bwh1214's picture

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

BigJim's picture

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

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?

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!

eurogold's picture

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

angel_of_joy's picture

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

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.

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?????

elvy's picture
elvy (not verified) eurogold Mar 18, 2015 3:15 PM

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.

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.

angel_of_joy's picture

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

winchester's picture
winchester (not verified) angel_of_joy Mar 18, 2015 11:27 AM

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.


123dobryden's picture

euro will stay the same in Greece it is in Montenegro

unicorn's picture

"Paying bureaucrats is job 1 for every government."

paying bureaucrats is paying corporations is paying nwo


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.

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!

redd_green's picture

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

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!!

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.

NoDebt's picture

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

Temporalist's picture

And don't forget this classic:

A Few Words On Europe's Financial Woes

ersatz007's picture


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

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.


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 

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.

thamnosma's picture

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

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 ?