After Pillaging Pensions, Greece Raids Utilities To Repay Troika; Bonds Plunge As Bank Run Accelerates

Tyler Durden's picture

Following yesterday's news that the ECB is now running simulations on what a Grexit would mean for Greek bond prices (spoiler alert:
"fundamentals" suggest a 95% loss), overnight we got more confirmation that Mario Draghi continues to tighten the screws on the Greek sovereign corpse, when Bloomberg reported that the ECB once again raised the maximum amount of emergency liquidity available to Greek lenders by €400 million, but less than the Greek central bank requested, people familiar with the decision said.

The increase was approved by the ECB’s Governing Council on Wednesday, the people said, asking not to be identified as the council meeting was private. Greece requested about 900 million euros, one of the people said. The increase should take ELA to about 70 billion euros. Policy makers raised the limit by 600 million euros on March 12, after a boost by 500 million euros to 68.8 billion euros on March 5. Greek banks haven’t used all their ELA and have a total of about 3 billion euros in liquidity available, one of the people said.

However, not a single penny from this additional emergency "liquidity" would enter the economy, as all of it was merely provided to offset the ever faster Greek bank run because as Reuters reported, on Wednesday Greek banks saw deposit outflows of €300 million, the highest in a single day since a February deal with the euro zone that staved off a banking collapse, two senior Greek bankers familiar with the matter said on Thursday.

"The uncertainty over the lack of progress in negotiations and the negative newsflow has affected sentiment," one banker told Reuters. "It's not a huge amount but the worry is whether this is the start of a trend that could get worse."

 

"Under the current climate, with worries of a 'Grexident', savers are unlikely to return cash to the banking system soon," said another banker. "Outflows may continue ahead of this weekend."

Congratulations to those who were among the Greeks who successfully withdrew the €300 million: this is probably one of the last batches of capital permitted to be pulled from Greek banks. For now the ECB has granted Greece a few more days (hours) in which deposit withdrawals are permitted. However, all that will cease and Greece will be "blueprinted" the moment the ECB announces that there will be no more ELA boosts and it's all over.

Meanwhile, the Greek government, instead of seriously contemplating a Plan B outside of the Eurozone, was busy thinking of new ways to raid its own population just to repay the "loathed" Troika.

 In the latest sad indication of just how truly insolvent Greece is, Reuters also reported that days after raiding its own Pension funds to repay the IMF (which in turn lent the cash to Ukraine so it could repay Ukraine's obligations to Gazprom and thus Putin), the Syriza government is now raiding the major state utility firms to lend the government cash through short-term repo transactions as it scrambles to avoid running out of cash.

Prime Minister Alexis Tsipras's government has already resorted to dipping into the cash reserves of pension funds through such transactions, officials told Reuters earlier this month.

 

Kathimerini, citing unnamed sources, said the government was calling on the main utilities, such as the Athens Water Co (EYDAP) and the Public Power Company, to undertake repo transactions in which state entities lend money to the Greek debt agency through a short-term repurchase agreement.

 

Kathimerini also named the telecoms company OTE as on of those that Athens could look to for cash, though the Greek state only holds a 10 percent stake in OTE. The company is 40 percent-owned and managed by the German telecoms giant Deutsche Telekom. PPC, EYDAP and OTE had no immediate comment.

This is how the market assessed the latest batch of Greek developments: Greek bond yields just soared to the highest in two years!

Needless to say, unless Greece is actively negotiating right now, not only how to implement the current bailout, but the terms of the third Greek bailout as well (which will likely demand a left kidney from every Greek citizen as collateral), it is all over.

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pachanguero's picture

"At this point what does it matter?

HRC

Smegley Wanxalot's picture

HRC is our Mutti.  Germany's Mutti thinks this matters very much, as do the Über-mutti's banks.  Jaaaa!

Haus-Targaryen's picture

Germany will cough up the cash.  Yawn.  Move on. 

pods's picture

6 months from now I would not be surprised if the government is coming for people's first born to sell to Brussels as house servants.

When this one blows, a LOT of people are going to die in very nasty ways.

pods

Creepy A. Cracker's picture

Welcome to leftist/socialist government.  The U.S. is heading there full speed ahead and is already there in many instances.

spend, Spend, SPEND!!! 

buy votes, Buy Votes, BUY VOTES!!!! 

screw future generations, Screw Future Generations, SCREW FUTURE GENERATIONS!!!

Thirst Mutilator's picture

This is FARTA!

 

Note to Greeks: It does no good to fart in someones general direction if said direction stands in 180 degrees in contrast to the direction of the prevailing wind.

msamour's picture

Had to login to give you a +1 for the Monthy Python reference.

Greenskeeper_Carl's picture

between these shenanigans in greece, and the negative interest rates elsewhere, under the mattress has to be looking more and more attractive. Why people would leave large ammounts of money in any of these banks is a mystery to me. Better get that money out while you can, otherwise you will be lining up to withdraw your 100 euros a day like cyprus a while back

Haus-Targaryen's picture

Be careful with this in the United States.  Look up the crime of "structuring."  

Paveway IV's picture

"...Be careful with this in the United States..."

There's few in the U.S. - in relative terms - that can even do this, HT. The U.S. baby-boom generation is approaching peak retirement. It began in 2011 and will end by 2029 assuming age 65 retirement. The peak will be sometime around 2020, meaning we're not even there yet. You're talking about the savings of 20% of the population of the U.S. here. The bulk of those 'savings' are already in restricted accounts, like tax-sheltered retirement accounts (IRAs, 401Ks or the few pensions left). The other smaller, but significant chunk is in their house. There is an astounding number of blue-collar and white-collar millionaires out there, dutifully saving their money for decades to provide what they assume will be a comfortable retirement. 

There is no simple way to 'be careful' with a 401K, and IRA or your house. You can't just withdraw three-quarters of a million in cash WHILE you're still working. You can't do it right after you retire without getting screwed with taxes. There's little protection from simply moving it because banks are going down the sewer, bonds are crashing or the stock market is imploding. Most retirement plans have some kind of money market option - you can temporarily isolate your money from stocks and bonds without draining your investments, but baby-boomers are all lined up for the most colossal screwing on earth. They have no concept of what happens when a money market fund breaks a buck. The vast majority just figure the money will be there and will be available when and as they need it. In other words, they might as well paint a huge target on their back and walk around with a sign that says "Screw me, PLEASE."

U.S. Baby-boomers will be competing with 64 million of their fellow baby-boomers to get at their cash in a financial collapse. If even a fraction of them panicked - say five million - and tired to pull their money out at the same time somehow, it would cause a financial collapse. Worst case they can sell their house, right? Except there will be twenty million other people with the same idea at the same time. I don't think they're going to find many eager Student Loan indentured servants or bartender/waitresses eligible for a mortgage or willing to buy. Second-ring suburbs will start to look like Detroit in a few years. So much for that 'investment'.

There are plenty of strategies for protecting those savings (creating your own IRA with phyz. gold, for example) but that's for ZH doom-and-gloomers or conspiracy theorists. Most of them won't bother, and will simply trust the system to protect their savings. Why? Because that's what people always do. They'll look at Greece and figure that could never happen here. CNN and the NYT will reinforce that notion. Nobody is ever going to steal your life savings - until they do.

Structuring won't be necessary - they'll be lucky to get much of anything out at some point. Most people are just going to be screwed out of the bulk of their retirement savings, deer-in-the-headlights style, in some future financial crisis. Then they can sit around co-miserating with other broke baby-boomer retirees how unfair everything was. Just like their crazy depression-era grandmas that saved old glass jars and used paper bags and never trusted banks again. 

Solar's picture

You nailed it.  The quandry is how to protect the money in a 401K.  Withdraw it all as cash?  Loose a 1/3 to taxes, then where do you store it (beyond the unfortunate boating accident).  Creating an IRA with phyz gold?  The feds will know about that too and come knocking.  A bank in another county?  They will send you a thank you card after they seize it.  Pay off the mortgage?  I think even fully owned property just may be confiscated if times get really bad.  And then of course the currency is probably doomed too.

You said "There are plenty of straregies for protecting those savings...".  Other suggestions please!!

Paveway IV's picture

I got nothing for ya, Solar - I plan on dying broke. The only two that ever sounded good to me were non-gold PMs (less confiscation risk than gold but potentially illiquid in an emergency) or land/property (which can also be confiscated by the state if things get really bad). There's some way to move all or a portion of your 401K at retirement into a kind of a self-managed IRA trust you create that owns land or property instead of stocks or bonds.

Lawyerly types can chime in here - I have only the vaguest understanding of it. Farm land to lease out for income or timber land to harvest for cash - both minimal income and taxes but 'easy'. Rental property if you want to manage it and have a fair amount of income. Income to the trust, not to you. The trust also pays the property taxes. You still withdraw cash from the trust over time like you would from a 401K or IRA. Alternatively, just big chunks of decent, low-tax land for preserving your wealth for the kids (and potentially feeding you and yours when the SHTF). You have to get lawyers and accountants involved to make damn sure that it meets the IRA requirements for the gov., but I understand that it's really not that big of a deal. Probably not practical for someone with small 401Ks that will depend on the income to eat, but '401K millionaires' might find this far less risky than what passes for low-risk investments in mutual funds or - heaven forbid - banks.

Not for everybody of course, but you have the comfort of owning something physical for your life's work that's a little more difficult to take away from you than digital 1's and 0's at a financial institution. More difficult, of course, does not mean impossible

Kirk2NCC1701's picture

Good one! What does a Greek shrubbery go for these days?

Greece reminds me of a certain American city that's older now, but keeps running against the wind.

jakesdad's picture

Weird Al could do a Notoriuos B.I.G. parody:  "f--- savers, print money!  f--- savers, print money!"

Vullsain's picture

Agreed as long as you include in socialist our crony capitalisim including military industrial complex/wall street etc.

manich's picture

@CreepyCracker says "Welcome to leftist/socialist government.  The U.S. is heading there full speed ahead and is already there in many instances."

No, when it is the biggest corporations buying the votes, it is closer to Fascism.

HowdyDoody's picture

It is amazing how deeply The Left has infiltrated the US government.

"You know, Paul, Reagan proved that deficits don't matter. We won the mid-term elections, this is our due." Dick Cheney (2004)

Both Cheney and Reagan are actually of The Left. Amazing.

 

Dewey Cheatum Howe's picture

Derivatives exposure aside it is also about German pride. Someone will use that against the Germans to take down the whole EU sooner or later.

 

Muddy1's picture

"I did not have an inappropriate relationship with that woman."

there, fixed it

Dewey Cheatum Howe's picture

I didn't not have a relationship with a woman is more like it for this day and age. It was a guy in drag Michelle.

orez65's picture

"At this point what does it matter?"

It matters if you have any deposits in Greek banks.

sessinpo's picture

And if you have deposits in Greek banks after years of this nonsense. aren't you asking for it?

HenryHall's picture

There is absolutely no benefit in imposing capital controls, none whatsoever.

Those who have any significant amount of money and want to remove it will find a way around the controls.

Meanwhile you only hurt those who would not have wanted to remove their money but for the imposition of capital controls.

Germany's motive in suggesting capital controls is to hurt Greece, no more and no less.

glenlloyd's picture

The problem is that like all failed states they will do a tremendous amount of damage in the final stages of their predicament.

How they can believe that Brussels will continue on this path of endless bailouts or why Greece would even want this is beyond me.

Forget it and move on...it's over.

Seize Mars's picture

LOL remember this the next time you think electing a certain "government" is a solution to "banking."

HenryHall's picture

I Lenin veliky nam put' ozaril, (a line from the Soviet Union national anthem)

Translates as Lenin cast light on the way forward

Creepy A. Cracker's picture

FORWARD!!!! 

(over the cliff)

HardAssets's picture

Time to Vote the Bastards Out !

Heh . . . . wait a minute . . . .

WTF ?

Didn't they vote for a 'rebel' ?

After all, he didn't tuck in his shirt, didn't wear a tie, and rode a motorcycle

in4mayshun's picture

And he probably thought that he was going to Govern like one until it occurred to him that they would kill him and/or his family if he did.

HardAssets's picture

" Political power grows out of the barrel of a gun. " - Mao, psychopath

That ole psychopath Mao was correct with that quote.

The Greeks may only have a chance if they ally themselves with someone who also has lotsa Big Guns (nukes) - Russia and China.
Pick an ally whose best interests are served by keeping you alive.

It seems that all the 'legality' and election talk is just a story for the masses. The world is ruled by raw violent power.

Sigh.

jarana's picture

lol!!

In Europe, there's no representation. State has the legislative, executive and judicial power.

The law is made, applied and executed by the same entity. Vote for the face of that entity.

THERE IS NO DEMOCRACY IN EUROPE.

Cheers from southern Europe.

ThirteenthFloor's picture

Only solution to banking cartel is through international financial markets as the BRICS are attempting. Only time will tell.

sessinpo's picture

Government is NEVER the solution to anything, which has been my point for years now. Government is most often the problem.

However, we cannot elect bankers, we can elect people that want to reduced government.

So what is your solution?

lunaticfringe's picture

Are you delusonal? Hitting the chiva early?

Who are these nefarious people that want to "reduce" government- will they be presented by the two headed hydra at the next election?

It is because sheep, precisely such as you, still believe that "voting" matters. It's a scam, an illusion. I don't care how many tricks David Copperfield does, I'll be damned f the majorty of dumb mf ers don't in fact believe just as you do. That the trick is real.

Show me your vast army of "reductionists" outside the two headed hydra and I'l be the first in line to kiss your ass. 

2handband's picture

Dumb ass. You can't elect anyone. Unless you really think the elections aren't rigged... in that case excuse me while I laugh in your face.

_SILENCER's picture

You're insane if you let your money out of your sight.

Smegley Wanxalot's picture

Money? .... ohhhh, you mean EBT card.

BandGap's picture

Insane or just plain stupid? Why would you "loan" money when there is virtually no chance of getting it back?

Stop the bullshit.

agstacks's picture

nevermind a rate of return on it..

juantrades's picture

They enjoy giving $$$ away of course

Kaiser Wilhelm II's picture

This is the real money - and it will always be : http://www.achat-or-et-argent.fr/ressources/images/pieces/Maple-Leaf-arg...

 

This is ... absolutely worthless and useless in case of any kind of crisis : http://peopleactmagazine.fr/site/wp-content/uploads/2014/07/2PBRiWOx906k...

And of course : http://i.telegraph.co.uk/multimedia/archive/02222/cards_2222752a.jpg

 

Gold - or Silver, Gun and Food

Chuck Knoblauch's picture

Let's shift attention overseas today.

 

Which is worse - bankers or terrorists's picture

Titanic....deck chairs....re-arranging....

serotonindumptruck's picture

And the band is playing the PT Barnum circus theme.