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Germany Prepares For "Plan B", Says Greece Would "Need Not Only A Third Bailout, But Fourth, Fifth Or Even More"
It has been a very disturbing 24 hours for Greece.
It all started during yesterday's surprisingly short, just one hour long Eurozone finmin meeting in Riga, where Yanis Varoufakis not only got the most "hostile" reception yet being called "a time-waster, gambler, and amateur", but for the first time one minister openly said that maybe it was time governments prepared for the plan B of a Greek default. This happened after Jeroen Dijsselbloem slammed the door on Varoufakis' proposal for early cash after partial reforms.
"A comprehensive and detailed list of reforms is needed," Dijsselbloem told a news conference following a meeting in Riga. "A comprehensive deal is necessary before any disbursement can take place ... We are all aware that time is running out."
And so, what was once anathema, namely the official hints that a Grexit is being contemplated at the highest ranks, has now become almost commonplace, courtesy of the backstop provided by the ECB's QE, which has lulled everyone into a sense of calm because somehow the hope has been kindled that the ECB (which is rapidly running out of government bonds to buy) can offset the realization that what was once an "unbreakable union" is suddenly not only breakable, but no longer a union. As such the trillions in deposit outflows that will sweep the periphery are somehow to be ignored because, well, "Draghi."
This continued earlier today, when none other than German Finance Minister Schaeuble hinted that Berlin was preparing for a possible Greek default, drawing a parallel with the secrecy of German reunification plans in 1989.
As Reuters reports, at a briefing with reporters after a tense meeting of euro zone finance ministers on Greece on Friday, Schaeuble was asked if euro zone finance ministers were working on a "Plan B" in case negotiations on funding with cash-strapped Athens fail.
"You shouldn't ask responsible politicians about alternatives," Schaeuble answered, adding one only need to use one's imagination to envisage what could happen.
He indicated that if he were to answer in the affirmative that ministers were working on a Plan B -- what to do when Greece runs out of money and cannot pay back its debt -- he could trigger panic.
To explain his position, he drew a parallel with the secrecy that was necessary during the initial stage of planning for German reunification in 1989.
"If back then a minister in charge -- I was one of them -- would have said beforehand, we have a plan for reunification, then the whole world probably would have said: 'The Germans have gone completely crazy.'"
He is correct, but what is left unsaid is that the mere suggestion that Grexit no longer not being contemplated is a major escalation in Europe's attempts to launch a bank run, which they have done an admirable job at so far, leading to more than half of total Greek deposits being funded by the ECB's ELA as of this moment.
In other words, should the ECB boost the haircut on Greek bank collateral, and both a depositor bail-in and capital controls become inevitable.
Which incidentally, is what was also touched upon today, when the head of the Bundesbank and ECB governing council member Jens Weidmann said at a press conference in Riga, Latvia, that officials will discuss haircuts on collateral for emergency funding for Greek banks.
"As you know I have doubts about the provision of this emergency liquidity, because the banks are not doing all they can to improve their liquidity position, which I would expect from banks that avail of this assistance."
"Instead, they are extending their loans -- so-called T-bills -- to the Greek state, which is each time a new credit decision. As these T-bills aren’t liquid, this means that in comparision with the alternatives, this is a deterioration of the liquidity situation which I find unacceptable."
“The haircuts are designed according to the quality of the collateral -- which in this case is mostly government debt securities -- and that depends on the outlook for debt sustainability which is connected to a successful conclusion of the aid program.”
“From my point of view it is clear: time is running out, the solution cannot come from the central banks, we have a clearly limited task, a clearly limited mandate, and must abide by our rules.”
He, too, is of course correct, and yet his statement is also quite hypocritical, considering it is precisely the check-kiting scheme that Greek banks are engaged in and which the ECB "suddenly" finds objectionably, that has been the norm across Italy, Spain and Portugal for years: all countries whose reform efforst are laughable, and the only reason they haven't imploded in the same pile of rubble as Greece is because the ECB has remained ss a buyer of last resort of their sovereign debt.
For now: because should Podemos or Beppe Grillo take chart in Spain or Italy, all bets are off, and the Greek "contagion", which is really just the realization that there is no ECB bid into insolvent paper, will spread overnight.
Which brings us to the final reason why it has been a very nerve-wracking 24 hours for Greece.
In an interview with Bild, Mark Hauptmann, a lawmaker from German Chancellor Angela Merkel’s political party said that "if Greece stays in the euro, it will need not only a third bailout, but also a fourth, fifth or even more."
He added that a Greek euro exit would be good in the long term because European contracts would regain their validity and Greece could regain its competitiveness.
He, too is correct.
Still, even with three "correct" statements laying out clearly why Greece should Grexit, somehow we doubt that anything will happen even as the posturing on all sides reaches a fever pitch, because while Europe may have Q€ as recourse to a Greek contagion, Greece now has a Putin threat as its final trump card. Because the second Greece is kicked out (or is forced to leave), the construction of the Turkish Stream begins, and with it the cementing of Russian energy dominance for the next decade, as well as the collapse of Ukraine (and the billions of western aid flowing into Kiev over the past year) into irrelevance.
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""You shouldn't ask responsible politicians about alternatives," Schaeuble answered"
responsible? to whom?
And the "responsible" politicians keep giving irresponsible comments. Europe- The Clusterfuck Part III
It was KNOWN in the highest circles in Europe, as far back as 2010, that Greece would never be able to repay the level of debt the European banks happily handed over to them. The solution hit upon was ONE massive new bailout loan. This cemented Greece as a debt slave nation, who would never be able to repay, but they might be able to strip the people of savings and the nation of assets in attempts to pay each coming payment. Thus Greece and it's people could and would be stripped of everything. This was a deliberate.
Greece played a big part in it's own doom, but they also let themselves be played, just like an sucker going into a "Payday Loan" shop and borrowing.
# 29 .... Unexpected consequences of Keynesian socialism = Jack Burtons !
Those well-known socialists (for the 1% anyway): Golden Flacks.
" they also let themselves be played,"
Exactly who is( or was) this "they " you are talking about Jack?
And who should be held responsible?
Greek government leades at all levels. The people followed the lead of their leaders. Greeks happily took the money, but Banks also have a duty to make secured loans with a high payback probability. Who should pay. Default it all. Banks who mae stupid loans go out of business, they PAY. Greeks at most levels are forced to start from nothing and rebuild on a debt free starting level. They would suffer until the economy turnd.
Both suffer. The EU should have known what was being done. Bad loans made to a huge risk. Germany was vendor financing large exports to Greece. Do you know how stupid Vendor Financing is. Who rules the EU, the ECB. They should all be sacked!
Hillary and Merkel .... seeeeexxxxy babies !
<<< Grexit
<<< Contr + P
" Yawn "
.
Go Greece Go!
Stick it to the NWO bankster c**ts and the other wealth sucking leeches!
I still maintain all this is Grecian Kick-The-Can. Every payment deadline will magically be met by this or that maneuver. Eventually Greece will meet all its payments, leaving thousands of shorts broke and wondering how so many sure things could fail at the last minute.
Easy: Germany needs NO Merkel.
Merkel: GOTO Paraguay NOW.
Be Honecker 2.0.
You already made us GDR 2.0 / Stasi 2.0.
Reuters:
Germany, others ready to let Greece leave euro zone - Malta finminIf Maltese Finance Minister Edward Scicluna were yapping anymore, EURUSD would have already hit parity. What a prick.
It took this long for the stOOpid Germans to realize that Greece would need a 4th and 5th bailout? They must have been duped by the French and the Italians.
Fucking pathetic. Get it over with, and send in the fucking Wermacht while you're at it.
They are nothing but BIS bootlickers anyway.
Looks like the next stop for Greece is up there with Iceland at the top of the happiness index. Maybe they should issue some arrest warrents straight away: one for a Mr. Lloyd Blankfein and another for a Mr. Jamie Dimon.
WHAT? You mean an infusion of "cash" in the form of more debt into a profoundly bankrupt system with massively unpayable debt won't solve the problem? WTF? Have I entered the Twilight Zone?
Love,
P. Krugman
So they admit Varoufakis is right the debt is unpayable? LOL that amatuer time waster.
EU bankers be thinking: How we gonna wrap this smelly turd up and sell it as fresh as a daisy one more time.
Greece should just default on the whole of it's EU debt, don't pay them a cent. A 3rd,4th,5th, bailout is like pumping more water into the Titanic, Greece should take back all the assets seized by the EU loan sharks then draw a line under it, FINISHED !!!.
I am sure Greece will be bailed out by BRICS in the form of investment from China, India, and Russia. That will provide a soft landing for greece and I am sure that Putin will take great pleasure in sticking it up the arse of the EU in retaliation for Ukraine and the failed attempted isolation of Russia by the EU.
I told Greece to call Iceland from the beginning.
No one listens to me.
I added my voice to yours.
..........................From the very begining.
Germany is breaking up the EU via Greece!
EU’s bad faith in Greek talks exposes true motives
24 April 2015, by Darrell Delamaide - Washington (MarketWatch)
http://www.marketwatch.com/story/eus-bad-faith-in-greek-talks-exposes-true-motives-2015-04-24
As a payments squeeze slowly crushes Greece, it is becoming increasingly apparent that its foreign lenders, led by an unbending European Union, are negotiating in bad faith.
In fact, they are not negotiating at all, but simply insisting that an agenda of destructive policies rejected by Greek voters nonetheless be adhered to.
...
Everybody, all together now, 'Deutschland, Deutschland, uber alles....' Fuck you, NSA and your Deutsch counterparts.
The reunification of Germany almost bankrupted that nation and almost took the rest of Europe down with it. The Germans thought that the reunification would cost them 75 billion Mark but in fact it cost them 10 times as much. They paid for that by imposing a reunification tax on people and by the people agreeing with lower wage increases. As an effect of this, Germany postponed investments in infrastructure for example which lead to crumbling Autobahns that they are finally upgrading since a few years.
But when the reunification was paid for, these taxes and low wage increases continued, flooding the German banks with cheap Euro that they loaned whomever wanted to borrow. This had several advantages for Germany. First the low wage increases made German products more competetive. Next, the loaned money functioned as an export subsidy and third, the loaned money came back with interest. And when the SHTF the German banks were bailed out by the European tax payers while Germany backed austerity killed competition in Europe.
The reunification of Germany was the best thing that happened to Germany but the worst thing that happened to Europe. Cause it gave Germany the chance to create 'Germany's Europe' (as envisaged by Helmut Kohl who called Europe 'his Europe' and as feared by Thatcher).
It does not suprise me to see that Schauble was active back then as well.
whole-ly eff... Why does anyone believe that a Greek exit would EVER be tolerated? It's akin to admitting failure on a global scale, and the EU socialists will NEVER admit that. Even the soviets NEVER admitted defeat, it took widespread revolution to do that (and even then, the parties changed, but the oligarchs stayed the same). Either Greece is forever supported as a welfare state, or THE EUROPEAN UNION GOES AWAY. PERIOD.
So in the photo did Merkel just fart?