Euro Slides After Reports Troika Is Preparing Greek Plan B, C, & D Including Parallel Currency

Tyler Durden's picture

Earlier we detailed reports that The IMF was preparing a contingency plan in the event of a Greek default, and furthermore that Andrea Merkel was under increasing pressure to "let Greece go," and now, as Eurogroup ministers begin to gather for today's crucial 'deal-or-no-deal' meeting, Die Welt reports The Troika has 4 scenarios for Greece  - one positive and three increasingly negative ranging from the need for further bailouts to paying staff in IOUs and issuing a parallel currency.

 

While Austria's Hans Jorg Schelling sticks to his statement that:

"There's nothing to it The Plan B was not discussed.."

It appears, yet again, another European elite was lying (because it was important), as now, as Die Welt reports (via Google Translate), hope is fading fast for a deal...

Shortly before the meeting of euro zone finance ministers in Brussels an agreement of Greece's creditors is obviously further out of reach,with the danger of national bankruptcy looming.

 

Although the new negotiator from Athens is more "human pleasant" than the former team including the Greek Finance Minister Yannis Varoufakis said one of the negotiators of the creditors, "in terms of content but does not go ahead."

And as Bloomberg headlines suggest, all is not well...

  • *TROIKA GREEK PLANS INCL 1 POSITIVE, 3 NEGATIVE SCENARIOS: WELT
  • *ONE TROIKA SCENATIO INCLUDES GREECE PAYING STAFF IN IOUS: WELT
  • *WELT NEWSPAPER CITES PARTICIPANT IN NEGOTIATIONS WITH GREECE

And here is Die Welt explaining the scenarios (via HuffPo)...

Only one of four scenarios expects a success of the talks

 

One of the negotiators said the "world": "The Greeks have just passed a law called 'democratization of the public service', which decides on the reinstatement of 13,000 civil servants." This is clearly against the spirit of reform agreements with the troika of the IMF, European Central Bank (ECB) and European Commission.

 

Given the difficult situation planning IMF, European Central Bank (ECB) and the European Commission with a positive and three negative scenarios, told the daily newspaper of negotiation circles.

 

Only the Positive provides that Greece complies with all its obligations, so that Athens receives money until the end of the second auxiliary program.

 

"Almost all of Greece would be poorer than they are today"

 

The three other scenarios currently being discussed are negative from the perspective of all negotiators in gradations.

 

Scenario 1 assumes that a reform-minded government actually presents substantial proposals today, but the Greeks have thereby overestimated their financial reserves. The most important prerequisite for possible assistance to the ECB: "The Greeks really show good faith at the negotiating table," it says in Brussels.

 

Scenario 2 assumes that half-hearted proposals the Greeks will not be accepted. Sometime during the next few weeks, Greece will be the debt with the IMF and the ECB can no longer pay off. If the Greek Government then willingly shows the further course of the crisis, when it quickly closes reform agreements with the Europeans and then turns on its debt, the whole thing could not get a grip, so the scenario of the Troika experts.

 

In Scenario 3, the troika of a completely uncooperative Greek government estimates. She begins to pay its employees and retirees in government IOUs known as IOUs, the beginning of the introduction of a parallel currency.

 

...

 

Three, four very hard years could come to Greece, puts it in Brussels. And almost all in Greece would then poorer than they are today.

 

Also in the CDU is now open talk about the "Plan B": Compared with "image" said the CDU chairman in the Bundestag Budget Committee, Norbert Brackmann: "Of course, we play the various alternatives for Greece by. For this purpose a part, Grexit 'as well as a third aid package. "

 

"Plan B" assumes more and more shape.

*  *  *

As we noted previuously, The Greeks have already drawn up the "New Drachma" notes... just in case...

As News247 reported in 2013, the
6 banknotes (designed by Paul Vatikioti) of 50, 100, 200, 500, 1000 and
10,000 drachmas have pictures of Cornelius Castoriadis, Odysseus
Elytis, Yiannis Moralis, Georgios Papanikolaou, Melina Mercouri and
Maria Callas...

*  *  *

Good luck

*  *  *

The result, for now, is some weakness in EURUSD - which we assume will be bid away gently as Europe opens to 'prove' that Grexit is nothing to worry about...

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Seasmoke's picture

1 out 4 positive scenario. So that's 97% bullish.

junction's picture

The ECB and IMF bank robbers made their decision a long time ago.  They are keeping all the money for themselves.  The smart Greeks who ran the government took their ill-gotten gains from political graft and put the money overseas, some funds in Cayman Island bank accounts, some in Swiss accounts and some to pay for an Upper Manhattan condo (Manhattan real estate functions as a superb money laudromat).  Those civil servants in Greece who depended on their government pension are now finding out that pensions provide no income security when the cupboard is bare.  Greece is a warm-up for the NWO's plans for American public pensions and then Medicare and Social Security.  When you see the total silence from the corporate press over Senator Mitch McConnell's father-in-law using his shipping line to smuggle hundreds of pounds of cocaine from Columbia, and the silence from the press over Senator Reid's being beaten up so bad he lost the sight in one eye, you know the USA is run by criminal fascists who won't stop their looting and murdering ways. 

Fish Gone Bad's picture

you know the USA is run by criminal fascists

Honestly, you did not think the country is run by its elected officials? 

rocker's picture

Elections are a Joke, only the rich vote as the Kock Bros. dictatate.

Greek, get some new news. Have we not done this since ring of fire  since 2002.

mygameon's picture

Down vote for you. Red vs blue does not work on this site. Both sides fuck me equally here in the USA.

Haus-Targaryen's picture

Lets try and assume what these four scenarios are; 

1) Positive -- Greece agrees to "reforms" (aka the reneging of SYRIZA's campaign promises) and pays all its bills with new loans.  The population gets the shaft, and the bankers get the cash.  This will effectively end SYRIZA'S mandate.  If this is the path chosen, then Syriza should call new elections as they just stabbed their electorate in the bank. 

2) Negative 1 -- Greece doesn't agree to reforms, but still pays its bills in EUROS to the Banks, while the population gets IOUS, redeemable whenever the government has cash.  Here, like 1, the population gets the shaft, as the IOUs essentially place the population in the place as an unsecured creditor without insurance from the government (aka worse than having cash in the bank).  If Syriza has any belief in their neo-Marxist ideologies, they would have to call a new election requiring the population to confirm this is the price they are willing to pay to stay in the EUR.

3) Negative 2 -- Greece doesn't agree to reforms, but still pays its bills in EURS to the Banks, while the population gets the new Drachma.  The New Drachma will quickly inflate against the EUR.  It will destroy the population'S purchasing power when it comes to imported goods, and the economy will effectively split in half.  Half the economy is in EUR which is mostly import & exports, while the other half is in Drachmas.  This is probably the worst of all 4 scenarios, as as the tax revenue in EUR collapses as the population switches over to DRM the Bank of Greece will have to print a fuckton of DRM to purchase EUR to pay its bills to the bankers as EUR tax revenues continue to collapse.  Greece would still need another bailout with more "reforms" which would piss everyone off, and the DRM would experience hyper-inflation quite quickly as the Greek government is forced to convert DRM into EUR.  The population would get double-shafted with this scenario as the government still uses much of the tax revenue to pay the bills -- e.g., shipping it out of the country -- just to get it back with interest, while the population's purchasing power has been crushed.  QOL would collapse in Greece and it would become very dangerous as people become increasingly desperate.  I expect that if the Troika cannot get solution #1 they'll opt for this as they still get their cash (as long as the government stays in place and isn't replaced with Golden Dawn) & the hell hole that Greece turns into will scare the shit out of the Spanish.  

4) GREXIT.  Probably the best solution for the Greek population long-term.  Doubt it would happen, and would fully expect UN Peace Keepers or other such nonsesne to pop up in Greece before it got to this point.  

Whenever someone says GREXIT is contained, are so full of shit it is unbelievable.  First, a GREXIT is an implicit default on EUR denominated debt.  No one knows how much outstanding CDS based liability has been insured on Greek debt, both sovereign and banking.  I have hundreds of billions in liabilities in my mind, but have no earthly idea -- because -- no one really knows.  Next, Lehman Bros was $19 billion in debt wiped out.  Greek debt (just sovereign) stands at $380 billion, that is before its banks debts, its central banks debts within the Target 2 system, etc., etc.,  

 

If these Euro-fascists believe in God, I am sure they pray constantly that this never happens.  Containment is a lulzy word until the end of the following quarter when banks start booking CDS losses, assuming they actually have enough cash on hand to pay out their liabilitys.  

If banks/insurers start defaulting due to CDS payouts, thus trigger more "default" level events, then Christ Jesus, hold onto your ankels & grab some KY jelly as we're all about to get fucked.   

macholatte's picture

 

Well done.

  Thanks

 

Here’s an improbable solution told to me by my attorney while he was on peyote.

In this order:

1. Germany agrees to pay Greece a gazilliom space bucks from WWII… in gold.

2. Germany orders JPM to transfer x-tons of its fictitious gold held in its nonexistent vault drawer to the fictitious drawer of Greece.

3.  The ECB crashes the Euro on the exact day Greece turns over the fictitious gold to the ECB thus reaping an enormous windfall and is now able to pay all of its debts in Euros.

4.  Greece exists the EU debt free.

5. The ECB inflates the Euro and prints enough electronic money to pay-off all the banks holding Greek debt.

 

Now you see it – Now you don’t.

 

 

Adios Motherfuckers!

        --  Yanis Varoufakis

 

 

COSMOS's picture

Agree, excellent analysis.

Guess only way to stop CDS contagion is to declare contracts null and void in one fell swoop.

Haus-Targaryen's picture

Biggest winners from that move -- attorneys.  

The litigation would drag on for years, and depending on the pay outs, would cause people to setup shop in jurisdictions that don't recognize the write-off.  

Eliminating all CDS contracts seems like a great idea, in the same sense that the Treasury writing off all debt held by the Fed is a great idea.   

EDIT - Don't forget, these CDS are seen as assets on many funds/banks/investment entities balance sheets.  Nuking hundreds of billions in assets is going to cause havoc across the spectrum.  

Hope Janet yellen is ordering a new keyboard;

 

http://pad1.whstatic.com/images/thumb/4/4e/Rip-an-Audio-CD-Using-Winamp-...

DutchR's picture

Or the Eurogroup gives Greeks the 7Billion today, with a lot of blablabla conditions, so it can pay off the 6.6Billion they owe (http://www.zerohedge.com/news/2015-05-10/imf-preparing-greek-default-con...) kicking the can till the end of summer.

 

Problem solved and have a nice summer        /s

 

anonymice's picture

 

For Christs' sake, the pictures of the "New Drachma" are from an article written two years ago, in 2013.

By all means, inform us when something happens - Greece leaves, goes bankrupt, or even - gasp - if the Greeks decide to pay taxes. But this kind of articles is worse than useless. It's a waste of time. 17561 people spent five minutes each reading this article.  That's two man-months of time wasted, just to come to the conclusion that a) nothing happened b) no-one knows..

 

ThirdWorldDude's picture

Great analysis, now let's put it into perspective with regards to the geopolitical plays in the background: now that Blue Stream is in the workings with its projected route through Greece, Macedonia & Serbia, one major prerequisite for the pipeline to come to fruition is either Greece's blessing from the Brussels sprouts or a 'Grexit' wih a subsequent freedom to decide in their own best interests.

Well, a few days ago Tsipras received a yellow card from Vichy DC alongside a stern warning to back off cooperation efforts with Russia on the planned gas pipeline which makes a blessing doutful... On the contrary, one can bet that the EU fascist cunts will add that demand to the blackmail list with things Greece has to do before receiving the next Troika tranche. Alas, since relationships between Russia and Greece have been leveled-up and, unlike Bulgaria, the latter has been pushing a hard stance towards Blue Stream, the writing's on the wall for all to see.

One way or another, Greece will get ditched from the EU. One thing I'm certain of is that in practice 'Grexit' will be of the kind that is worst for ordinary people and most enriching for banksters and buruaecra(p)ts. As a side dish, I wouldn't exclude the possibility of a serious destabilization in the region as a part of al-ciaduh's efforts to stop the pipeline at any costs. Operations are currently under way, with this weekend's Syrian-inspired and Kosovo-exported terror attacks in Macedonia with the aim of starting a widespread civil war acting as an appetizer. The Balkans is such an appropriate place for the Black Swan to flap it's wings, confirming the regions's status of Europe's powder keg.

smukster's picture
smukster (not verified) ThirdWorldDude May 11, 2015 6:09 AM

Good thing you point that out.

But there will certainly be no exit from the EU, and very unlikely so from the Euro. Please understand: This is not economy, this is politics. The numbers don't matter that much. Come on, the ECB is right now printing 1 trillion and you tell me the EU will disintegrate bc of 300 billion Greek debt? That's ridiculous.

ThirdWorldDude's picture

I never claimed that EU will desintegrate, just that Greece is a done deal.

According to the EU Treaties there's no existing mechanisms to expell a member-state from the EZ or EU and Greece isn't that dumb to say goodbye to Europe and cut it's own lifesupport alongside taking the whole blame for the dystopian scenario.

Hence, one should count the ongoing 'negotiations' between the Troika and Greece for what they really are - catholic divorce proceedings. 

Haus-Targaryen's picture

I would imagine that Putin has placed some conditions on EUR membership. 

While keeping the EU intact is good for Russia-- bankrupting the block as a whole would be even better.  Because the only thing that is sold to Rainbow land is essentially gas from Russia -- demand will be constant irrespective of economic conditions.   

Ghordius's picture

"...a GREXIT is an implicit default on EUR denominated debt.  No one knows how much outstanding CDS based liability has been insured on Greek debt, both sovereign and banking.  I have hundreds of billions in liabilities in my mind, but have no earthly idea -- because -- no one really knows."

two points regarding CDSs on Greek Debt

1) most of the Greek Debt CDSs have been issued by... Greek Banks. Which, if you read further, is "normal"

2) three quarters of the Greek Debt is EFSF/IMF/ECB loans. on which, in theory, no bank would issue CDSs if not as a pure outsider speculation

the very simplified "theory" about CDSs is still that you own the stuff, for example bonds, or you are involved in their issuance, and hedge your position by issuing CDSs. that's also the reason why there are differences like "backed" and "unbacked", or "physical settlement" and "cash settlement"

in short... CDSs might matter, in this discussion, but there should not be that many CDSs around in the first place... because the whole market-based Greek debt is not that large

Haus-Targaryen's picture

While you might think so, lets take a block of Greek debt. 

That one block of debt can be insured, 1, 5, 10, 400 times.  It doesn't really matter.  

However, once that block is considered in "default" or by that matter -- and depending on how the CDS is written -- if the issuer, or the seller of the CDS goes into default -- the CDS is subsequently called.  

So if you have 200 Billion in CDS which insures against a "Greek Sovereign Default" -- which then get called due to a default level event, then the CDS' which are tied to the issuing institutions which are now insolvent, we have a whole world of shit on our hands.  

The problem with the CDS market is no one really knows how much is owed to who.  

Calmyourself's picture

Thats why they are declared null and void and replaced on balance sheets by yellen bucks...

Haus-Targaryen's picture

So all CSD' just got swapped out for Draghi/Yellen Bucks.  Congrats, they just printed trillions (maybe more) in fiat to cover not only the original premiums paid which were not redeemed, but reedemed contracts as well. 

I mean, I guess it could happen, but Christ almighty, what would that do to other asset classes?  AG and AU?  

Lux Fiat's picture

Very nice. My Cliff Notes version - Greece is screwed any way it goes.  But if t they want anything approaching self-sovreignty in the future, go 4.  Meanwhile, watch the Troika play "bad cop, worse cop", and try to put someone else in front of the fan before something stinky hits it.

smukster's picture
smukster (not verified) Seasmoke May 11, 2015 6:06 AM

None of these scenarios is in any way realistic.

For Americans: BILD = Die Welt = German Fox News

Wile-E-Coyote's picture

Can you eat an IOU? Would it have to be made from rice paper?

Debugas's picture

you can not eat government IOU but the government can force the shops all around the country to accept them as payment

DIgnified's picture

According to The Simpsons you can make energy bars from old Chinese newspapers.  

Soul Glow's picture

There is no logic behind thinking the dollar is strong because the euro is weak.  Both fiat currencies are shit stains on white underwear!

Debugas's picture

what is likely to happen (these things happened in former soviet union republics soon after USSR collapse) is that greece will introduce new drachmas that willl hyperinflate very rapidly. After that in two-three years time one more new drachma will be introduced which will be more or less stable (slowly devaluing against euro and usd)

DIgnified's picture

Hmmm.  Interesting.  Anyone else hear the scuttlebutt about some bond snafu coming up on the eleventh? 

HYMN's picture

It's all Greek to me.

HenryHall's picture

Let me try to simplify:

1. Without default Greece goes nowhere. The pretend/extend discussion is like discussing how many angels dance on the head of a pin.

2. With default it no longer matters whether Greece stays in the Eurozone (one country, two currencies) or doesn't (one country, one currency which is not the Euro). What matters is whether the Drachma is backed (eg exchangeable at par with the Russian Ruble) or is not backed (floating and hyperinflating).

And since, in the long term, default is inescapable, the question of substance is: When? Sooner or later?

RaceToTheBottom's picture

If fiat money is fake, then are all discussions about fake money really fake too?

 

smukster's picture
smukster (not verified) RaceToTheBottom May 11, 2015 6:11 AM

You got it. All this is just meant to keep you occupied with senseless discussions about numbers. The usual diversion tactics.

besnook's picture

the euros are bluffing. the usa just pressured greece to forget the russian pipeline in exchange for a bailout. the russian pipeleine is the eurasian link the eurozone is masturbating all over each other about. greece has to stay in the club. there is a bidding war for its sweet olives(because they remind the pedokings of young boys balls in a historically apprpriate place).

henry chucho's picture

The new Greek currency will make fine looking shit paper,however,it's rumored that wiping you ass with the new Melina Mercouri $500 note will give you a bad dose of the crabs

ThroxxOfVron's picture

IF the currency depicted is genuine then at least one choice has already been made: apparently a new and/or dual currency regime is already a fait acompli.

The situation is about to become very much more complicated -and not just for Greece.  The Euro denominated government debt of Greece is one thing; but, the entire nation's accounting public and private, trade agreements, etc. still pose enormous challenges.

 

Now, about the derviatives stacks and counterparty risks built into the international banking system...  

Well...  This is going to get very interesting.

Arius.'s picture
Arius. (not verified) ThroxxOfVron May 11, 2015 3:47 AM

lets not panic ... they will fix it ... they always do.

Bazza McKenzie's picture

So "three, four very hard years could come to Greece" if it does not kneel before the troika.  That would be in contrast to the burgeoning economy Greece has enjoyed while it has been strip-mined by the troika.

ted41776's picture

greece should pay back the EU in derivitives or some other worthless financial instrument only criminals can get away with selling

Arius.'s picture
Arius. (not verified) ted41776 May 11, 2015 4:05 AM

thats how they got into the debt hole ... cant get out the same way ...

 

if you really think about it, greeks should thank God for losing this way ... the same result could have been achieved through much more difficult ways such as wars  ... you know turks, germans etc.  not saying they are out of the woods yet, and there might be some skirmishes here and there but the big things has been done through financial engineering, and derivatives ... the same goes for the World ... so far...

Global Observer's picture

The IOU route is quite silly. If the IOUs have a redemption date, that would be the equivalent of forcibly selling government debt to employees and suppliers and will only be postponing the problem. If they don't, then they must be declared as acceptable for taxes and payment for government services on par with the euro, in which case it is a parallel currency.

winchester's picture
winchester (not verified) May 11, 2015 3:49 AM

i bet 1 beer to anyone that a solution will be found hours before timeline of the monthly payback and we gonna make it again next month, and next month, and next month....

 

who want to bet with me ?

Mr_Rog's picture

Russian Deputy Minister 'Sergei Storchak'

Has invited Greece to be part of the BRICS Investment Bank and could be entitled for $50B as a first time Full member applicant.

Also, Greek PM is set to meet Putin begining of June.

 

Herodotus's picture

That's better than the toaster they got from the European Central Bank.

CHC's picture
CHC (not verified) May 11, 2015 7:12 AM

Twenty three years ago I lent some money to a 'friend' - to this day, I'm still holding that IOU.  IOUs are the only way to go - they never expire.

rsnoble's picture

Parallel currency?  So more shit created out of thin air?  So monopoly money isn't just a joke anymore.

Anything to hold that mess of shit union together.

andrewp111's picture

California issued IOUs back in 2009, so why not?

moratar's picture
moratar (not verified) May 11, 2015 7:51 AM

Euro slides!

Hmm i though that must be something, i went to check current eur exchange rate. Suprisingly i noticed euro is 2% STRONGER than last time like 2 weeks ago i checked.

Why zeroheadge says it slides while it got stronger? :(

Does zeroheadge writes only lies/propaganda? Who tells ZH what to write? Putin, china? Who has interest in spreading propaganda about Euro/USD collapse, silver/gold rush, and fail of modern economy.

I used to trust ZH, but every day i see more and more failed/lied/propaganda/manipulation articles.