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Forget "Grexit", "Grimbo" Has Arrived
If you didn’t know any better you might think “Grimbo” was a new Sesame Street character. Far from being the name of something that brings smiles to the faces of young children however, it’s actually the latest one-word take on the likely outcome of Greece’s protracted, painful negotiations with creditors, which will continue tomorrow in Riga where progress is, according to pretty much everyone that will be involved, unlikely. The new term follows in the footsteps of the classic (but now tired) “Grexit” and its underrated predecessor “Graccident,” and refers to two of the four outcomes Citi imagines are possible in the unfolding Greek drama. Here, via Citi, are the scenarios that would constitute Grimbo:
A new programme agreed, but only after capital controls were imposed and/or a Greek government default
In this scenario, current negotiations would fail to produce an agreement until a major event (or shock) occurs. Such an event could be that i) the ECB limits access for Greek banks to ELA (as it either runs out of patience about the lack of negotiations, or Greek banks face a large increase in funding outflows), ii) PM Tsipras calls a referendum (on the new programme or Eurozone membership) or snap elections, or iii) the Greek government misses a payment/defaults. In these cases, the shock could provide an extra push on both sides to conclude the negotiations and encourage leaders to take on potential domestic detractors and opponents to push through a deal. The timing of such a shock is uncertain and hard to predict. In theory a run on banks could trigger capital controls tomorrow. Equally, the government may not run out of money or the ECB out of patience until the summer…
No new programme, government default, capital controls and yet no Grexit.
In our view, it is by no means certain that the two sides can agree on a new programme in the coming months, even with capital controls in place, given the wide gap between the negotiating positions, the mutual lack of trust and the undercurrent of personal animosity. Without a new agreement, a Greek government default at some point is very likely, in our view, due to the shortage of other funding options. The lack of an agreement would also at some point be associated with capital controls and binding limits on ELA access. Compared to the previous scenario, the capital controls (a mix of bank holidays, deposit withdrawal restrictions, restrictions on external transactions) are likely to be more extensive and longer-lived...
The lack of liquidity for the sovereign would induce it to issue more IOUs (scrip) in lieu of payments in euro, increasingly for salaries and pensions in addition to payments to suppliers. Such IOUs are likely to gradually be traded and thereby develop into a parallel currency.
This scenario may well be triggered by a negative outcome to a referendum on a proposed bailout agreement without necessarily providing a mandate to exit the Eurozone. Over time, the stressed liquidity situation, and notably deposit withdrawal restrictions for banks, would significantly increase pressure on the Greek government, making fresh elections likely.
Those could produce a mandate for a new bailout agreement with the Eurozone or pave the way for an eventual Grexit, but this could still leave Greece in limbo for an extended period of time - Such a ‘Grimbo’ scenario can, but need not end in, Grexit. Grexit is not a well-defined legal or Treaty base step.
Meanwhile, the doublespeak continues from all sides and it’s starting to appear as though no one really has a good read on what’s going on even as the situation in Greece has grown increasingly desperate and now includes the seizure of local government deposits by the central bank (which claims it needs the cash to pay salaries and pensions) and rumors that Greece may need to tap Gazprom for an advance on the Turkish Stream pipeline project in order to stay afloat.
The good (via Bloomberg)...
Agreement on whole reform package needs to be reached first, Dutch Finance Minister Jeroen Dijsselbloem tells lawmakers in The Hague. Says payments in tranches after partial implementation of reforms “imaginable”
"I’m very opposed to a Grexit,” European Union Economic and Monetary Commissioner Pierre Moscovici says.
“Greece has its place within the euro. And it’s what the Greek people want,” Moscovici says at conference in Brussels
GREEK GOVT OFFICIAL SAYS DEAL WITH CREDITORS VERY CLOSE
Provided “Brussels Group” of officials keeps pace of progress, an agreement for bailout disbursement is possible by end-April
Greek govt expects a positive signal at Friday’s Eurogroup so that a deal can be reached by end-April
Creditors haven’t discussed any sort of plan B with Greek govt, including default, arrears on IMF payments, or exit from euro area
Greece wants a solution, not a rupture
The bad...
“The Greek government has got to show some backbone in its reform efforts,” Moscovici says
Need to “make Greece more attractive to investors. Investors have to come back to Greece. What Greece really needs is growth and employment creation,” Moscovici says
Pacific Investment Management Co. sees 30% chance of an accident that would force Greece to leave the euro, says Mihir Worah, Co.’s chief investment officer of asset allocation and real return, at briefing Thursday in Sydney.
European Commission Vice President Valdis Dombrovskis says “we do not expect any major breakthroughs” on Greece at Riga meeting starting Friday “because technical negotiations are ongoing.”
“These technical negotiations will need to continue after tomorrow because progress so far is not sufficient. There is still a lot of work to be done”
And the Schaeuble…
German Finance Minister Wolfgang Schaeuble to attend informal EU finance ministers’s meeting in Riga, Latvia, with “very limited expectations,” spokesman Martin Jaeger tells reporters at govt press conference in Berlin.
Germany doesn’t expect a comprehensive package of reform measures can be agreed on in Riga
Germany sees stock-taking of progress toward reform list
Not easy to imagine what new facts Greece will present
Germany seeks Greek explanation of lack of progress on a comprehensive reform list
Can’t say whether Greek govt will submit such a list by end of April
There’s also some hope that sideline talks between Tsipras and Merkel at today’s EU Summit will bear some fruit. Here’s kathimerini:
Prime Minister Alexis Tsipras is to meet with German Chancellor Angela Merkel Thursday in Brussels in a bid to secure a statement of political support from Berlin amid tough negotiations with creditors and dwindling finances.
The meeting, which is to take place on the sidelines of a European Union leaders’ emergency meeting on immigration, was announced in a brief statement from Tsipras’s office. The move came amid reports that negotiations taking place in Paris between Greek government officials and representatives of the creditors had made some small progress but remained far from securing a deal that could unlock crucial rescue funding.
The arrival:
Against this backdrop the market is still struggling to determine the extent of the contagion risk to the EU periphery should Grexit or Grimbo become reality. While we contend that redenomination risk will ultimately be the deciding factor when it comes to whether events in Greece cause crises in the likes of Spain, Italy, or Portugal, focus has shifted to sovereign spreads over the past week despite the fact that ECB asset purchases make it difficult to determine exactly what’s being priced in. Here’s Citi with a bit of color on contagion via EGBs:
As shown in Figure 1, (severe) corrections in Greece to higher yields have also tended to coincide with periphery sell-offs within the general bullish trend. We would also note that although 10yr Portugal, Spain and Italy are 10bp-30bp wider over April, contagion remains relatively limited and spreads remain near historic tights when considering a longer-term context (Figure 2).
We think the level of near-term event risk and the pick-up in volatility in Greece is such that further episodes of periphery spread weakness cannot be ruled out. Although spreads are likely ultimately to end the year tighter largely thanks to QE, near-term headline risk is likely to weigh on market sentiment and with it, the EMU spread environment. This may dominate otherwise supportive technicals such as the net cash flows.
* * *
Finally, here’s a table from Bloomberg which outlines the list of reforms and where negotiations currently stand (for our part, we think this is a bit optimistic):
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Zzzzzzzzzzzz. Just default already.
Just another name for can-kicking.
And they'll kick the can again.
Which is good. Gives me more time for emergency stacking.
I don't know about y'all, but I'm Grexasperated. Shit or get off the pot.
This is like a slow motion video of a python suffocating a rabbit, where the fuckhead narrating keeps rewinding the scene. We know what happens.
Anyone associated with this answer me this question:
If Greece cannot afford the debts it has now, how the fuck is more loans going to fix this?
pods
Notice how happy he was delivering his speech to the media?
Grullshit!
Nope, Greecovery Summer 7
Throw the Greeks out of Europe already. It´s just a worthless third world country that doesn´t belong to Europe.
There will be no capital controls. For the same reasons that Russia did not impose capital controls a few months back, which reasons include:
1. They don't work because money you might want to stop from leaving has already left.
2. They don't work because people find ways around them.
3. They have lots of disadvantages.
4. The US and EU want capital controls to be imposed.
A consequence is that banks will fail - so let them fail, this is raw capitalism.
"Throw the Greeks out of Europe already. It´s just a worthless third world country that doesn´t belong to Europe."
Not so simple. Greece's Financial troubles were caused by Bankers (aka a Mario Draghi Pres of Goldman Saks), and corrupt Greek politicians. Not all Greeks are bad people, there are a lot of hardworking people that try their best to be productive. Consider that the US has far bigger debt and far more liabilities than Greece does.
when the greeks punt, it is called a Grunt ... so in effect the greeks are continually shitting, but failing to get off the pot, because the EU is so full of shit that there is always more to flow.
greece it's not going to and you know that pods, you have to realize that this shit is purely theater. the BIS, IMF, WB, and EU CB know what they are going to do with greece, the issue is making it palatable.
this is them making it palatable.
That's the entire point, waylay the inevitible until they are ready to collapse the whole shebang (Read currencies & markets), and then of course we will move into cashless societies where the elite can manipulate everything with even greater ease (Algos FTW?), for they won't have to pay the useless banking employees (& many other jobs will go away as well)... If you think the end isn't near, then your understanding isn't clear, and those "In the know" definitely understand what I'm talking about here.
Oh aren't you the poet?
They aren't ready for that yet. And this whole Greece thing has popped up at an inopportune time for them.
Controlling the entire world is messy business sometimes.
Yeah but who runs bartertown?
Master-Blaster run Bartertown.
Janet Yellen is "Master"- the little troll who rides on top of "Blaster".
Please don't start me on Mad Max movie quotes. Once I start, I find it difficult to stop.
berg-stein-man last I checked
You can draw all the funny memes you want williambanzai, but it looks like Eur is not going to reach parity any time soon.
Schumann: They make Europe look like a financial dictatorship
Talking of dictatorship....
DOD has released videos of marines training in the US....
Welcome to America! Where you can be tasered, kicked, or killed! and now you have the 4th option....face the marines on the civilian streets of ....Philadelphia!
After 154 years of relative peace.....Back to 1861? Are we?
DOD Releases Footage Of Marines Preparing for Riot Control in America
Soon in Europe too ...
I would be ok with it if they were headed to the NYTimes, the IRS, Hollywood and congress to arrest the traitors to the republic.
oh well, a man can dream......
Wow LVD, you're not such a bad guy after all. You did leave off the Fed though.
Of course no mention of all the bastards starving to death.
Naturally, the MSM would never talk about reality under the weight of all this austerity being imposed, and that's so that their plans aren't laid bare to the masses...
They forgot to metion higher US equity prices after default!
They know what will result... (Clearly)
http://www.politico.com/story/2015/04/wall-street-washington-greece-euro...
This is basically the story of Happy Gilmore trying to figure out a way to get his Grandmother's house back.
Easy there. I don't think all Sesame Street characters bring smiles to children's faces. Pedophilia and all.
Love your handle, sentiments too, and the sarcasm to boot. ^.^
Did those puppets wake those kids up?
the pic kind of looks like the volcano that blew its load last night in my back yard ',, again " fuck!
of course if i move to yucatan form patagonia i'll first hit by a hurricane and then a shit loads of americans running away when TSHTF.
what to do....?
Planks and ships come to mind.
I'm just trying to figure out how they will spin that this is bad for Gold.
they don't have to
Love the Dealer "analysis", which boils down to "here are some of the ways that this could be bad, but ultimately at the end of the year, things will be better". So buy credit, buy equities? Thanks.
And leave it to the Dealers to create a new scenario (Limbo!) to try to keep people in the game just...a...little..bit...longer.
There is still too much on the plate for a Grexit at this point. We are still in GREBIAS (not to be confused with grabass) - Greek bail ins and asset stripping.
Graccident
Grexit
Grimbo
Gumbo
Rambo
Rimjob
who cares anymore?
fEUdalism is what it is and will be for a long time - done deal - the new middle ages
can we get on with something new ?
Waiting to exhale are we?
https://youtu.be/ZGwV4mrOCJo
I completely agree with your sentiment but it matters who pays and how it unfolds because eventually you and I are going to pay since the banks refuse to take their lumps from their bad bets and the Greeks, and everybody else, are broke and don't have it.
The most funny part, in this tragedy, is how the FinMins of other states that are as indebted as Greece or even more feel like they can give advices or guidance to Greece.
Jimmy the Chooch's loansharking business has it's share of unhappy customers too.
"We know they're friggin' bums...That's why they come to see Jimmy".
Greece is bankrupt for good. NOW. It seems, some people still cannot face this reality and try to talk more lipstick onto this piG. No easy out from here, at the end of the road.
So, Greek Gov't IOU's are now a new de facto derivative on a derivative and thus traded? By fucking who? Let me guess; The Squid & JPM make a "clean and honest" market for everyone who wants to play. Yes, by all means. let's have the assholes that did everything they could to create the problem be the ones who are delegated by Draghi et al to solve the problem. What a fucking joke.
www.traderzoo.mobi
Skonto Riga, Paris, Brussels , meetings about possible future meetings and tax-payer money well spent.
Greek limbo? Ah.
Pity. I hoped it meant Greek bimbo and I would get cheesecake for breakfast.
Speaking of, what are the last known co-ordinates of Danae Stratou? Nowhere in Greece, I hope.
wtf is so hard to understand? THEY AINT GOTS NO MONEY HONEY! if you are holding collateral greece gave you for a loan you made them, SELL THAT COLLATERAL NOW... lolz @ those who gave those chronic collective tax cheaters a loan without taking any collateral that you can liquidate.
These idiots are like Gross, they keep needing to invent things, to make themselves seem relevant.
Banker giving free information. Something doesn't sound right.
The Grexit won't happen until the Red Shield owned banks have left Greece. When the Bankers run it's time to take notice.
So many distractions that clearly show Grexit is simply impossible.
It's all just a drama.
Hey, Greece. You wanna exit? You really wanna? Then I DARE YOU! I FUCKING DARE YOU!!!
one thing is for sure:
the IMF wants to be paid and they don't care where the money comes from:
Hospitals, Pensions, Kindergardens, Childcare, Education, Health....
never mind all that!
Christine Lagarde is a fucking big WHORE !
so pay up !
Begging/wanting a grexit is like saying/wanting Detroit to leave the US and people living there must stop using the US dollar.
IMF needs to correct its big Greek bailout mistake (By Ashoka Mody)
Instead of demanding repayment and further austerity, the IMF should recognize its responsibility for Greece's predicament and forgive much of the debt.
Greece's onerous obligations to the IMF, the European Central Bank and European governments can be traced back to April 2010, when they made a fateful mistake.
Instead of allowing Greece to default on its insurmountable debts to private creditors, they chose to lend it the money to pay in full.
At the time, many called for immediately restructuring privately held debt, thus imposing losses on the banks and investors who had lent money to Greece. Among them were several members of the IMF’s board and Karl Otto Pohl, a former president of the Bundesbank and a key architect of the euro. The IMF and European authorities responded that restructuring would cause global financial mayhem. As Pohl candidly noted, that was merely a cover for bailing out German and French banks, which had been among the largest enablers of Greek profligacy.
Ultimately, the authorities' approach merely replaced one problem with another: IMF and official European loans were used to repay private creditors.
Thus, despite a belated restructuring in 2012, Greece's obligations remain unbearable -- only now they are owed almost entirely to official creditors.
Five years after the crisis started, government debt has jumped from 130 percent of gross domestic product to almost 180 percent. Meanwhile, a deep economic slump and deflation have severely impaired the government's ability to repay.
Almost everyone now agrees that pushing Greece to pay its private creditors was a bad idea. The required fiscal austerity was simply too great, causing the economy to collapse. The IMF acknowledged the error in a 2013 report on Greece. In a recent staff paper, the fund said that when a crisis threatens to spread, it should seek a collective global solution rather than forcing the distressed economy to bear the entire burden. The IMF’s chief economist, Olivier Blanchard, has warned that more austerity will crush growth.
Oddly, the IMF’s proposed way forward for Greece remains unchanged:
Borrow more money (this time from the European authorities) to repay one group of creditors (the IMF) and stay focused on austerity.
[Bloomberg]
http://www.ekathimerini.com/4dcgi/_w_articles_wsite3_1_21/04/2015_549287
WR;)
Is 'Grimbo' a new Sesame Street character? Sorry, but I don't read past the headlines in these 'Greek tragedy' posts anymore.
Grexodus-Movement of Capital Flow.
and let us not forget the Sirens (Gol Sac) steering committee that put the grease in monetary policy.
Gringolimbo - Argentina default?
YES! We can!
All the socialist coercive-collectivist government-entitlement parasites and thieves worldwide
should look closely at the well-deserved misery and despair that the hyper-corrupt decadent failed greek society/culture has brought down upon itself
because
the same fate awaits all of you.
Gruster Fuk!