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"The Greek Endgame Is Here": Probability Of IMF Default Now 70%, Says Deutsche Bank

Tyler Durden's picture




 

As the farcical negotiations between Greece and its creditors unfold ahead of a June 5 IMF payment and as Alexis Tsipras is forced to spread false hope just to avoid a terminal bank run, a picture of the Greek endgame has emerged. 

We’ve discussed the political implications of both an agreement or a Grexit and we’ve also taken an in-depth look at what a missed IMF payment means for the country’s EU creditors. On the political front, the troika is intent on sending a strong message to leftist political parties (such as Spain’s Podemos and Portugal’s “ascendant" socialists) that using the threat of a euro exit as a way to extract austerity concessions is not a viable negotiating strategy. What this amounts to is an attempt on the part of the “institutions” to subjugate the political process to economics. In terms of skipping a payment to the IMF — who, as a reminder, effectively paid itself earlier this month by allowing Greece to tap its SDR reserves to pay the bills — there are a number of cross acceleration concerns which you can review by referring to the following graphic:

Now, amid accelerating deposit outflows and an hourly flow of conflicting headlines, Deutsche Bank is out with a fresh take on the Greek endgame including an analysis of both the political wrangling that would need to take place in order for parliamentary approval of concessions to creditors and the mechanics of a default to the IMF. 

Via Deutsche Bank:

Little has changed in terms of developments on the ground. Despite a number of reports that negotiations may be split into separate chapters and disbursements with more difficult issues left for September, this remains unlikely. The consistent European position has been that a full staff-level agreement between the institutions - inclusive of the IMF - and Greece is required to unlock funding. Talks in this direction has been progressing in stop-start fashion over the last few weeks, with the Brussels Group (former Troika) reconvening again yesterday to continue negotiations. But progress remains slow, with multiple European and IMF officials over the last twenty four hours stating that more needs to be done to reach agreement…

 

The Greek government's liquidity position will ultimately drive the timelines over the next few weeks. Close to 1.5bn EUR is due to the IMF in four instalments over the course of June, with Greek government officials repeatedly stating that there are insufficient cash buffers to satisfy these payments. Given that the last IMF payment was made by drawing down Greece's SDR reserves at the fund, an exhaustion of cash buffers is a fair assumption. The most likely catalyst in coming weeks is therefore likely to be the Greek government's ability or not to pay the IMF...

 

A number of press reports have suggested that there is a one-month grace period relating to a failure to pay the IMF. This likely confuses two issues: a non-payment and the implications this has on cross-default provisions on other loan instruments. IMF loans do not include any formally defined grace period, with fund staff required to send an urgent cable demanding payment to the Greek authorities immediately. This is then followed by a formal notification by the IMF Managing Director to the Executive Board of the failure to pay. It is this notification that is defined as an event of default in Greece's EFSF and other official-sector loans, triggering cross-default. If this materializes, European creditors then have the right (but not the obligation), to accelerate EFSF loans, causing them to be immediately payable. In turn such an acceleration event would trigger cross-default and potential acceleration in the post-PSI Greek government bonds. The timing of the IMF notification letter is itself a political decision, however, as is the decision to accelerate EFSF loans. IMF guidelines suggest the notification to the board happens in a month. Our understanding is that the notification period may be flexible, with some reports last week suggesting that the Executive Board has requested that this notification happens sooner in the event of a failure to pay from Greece.

Either way, it is important to note that it is not the response of the IMF that will matter in the event of a non-payment. It is the role of the ECB that is crucial. The funding of the Greek banking system remains highly dependent on the central bank's Emergency Liquidity Assistance, with a suspension or cap to this financing equivalent to an inability to make deposit withdrawals (or foreign transfers) from Greek banks and de facto capital controls. 

The above underscores two important points that we’ve made on any number of occasions. First, whether, when, and to whom Greece defaults is ultimately a political decision that rests in the hands of the IMF and EU creditors. Once again, it’s all about using financial leverage to influence the future course of the currency bloc’s political landscape.

Second, the ECB ultimately controls the fate of the Greek banking sector and therefore Greek depositors because without ELA, banks simply can’t keep up with withdrawals, lending the lie to Tsipras’ Wednesday contention that there is “absolutely no danger” to depositors.

Next, Deutsche takes a look at possible outcomes to the Greek tragicomedy: 

No agreement reached, followed by non-payment to the IMF (40% probability). This scenario would likely provoke the most negative reaction from the ECB. Even if cross-default provisions on Greek loans are not triggered immediately, the ECB would likely severely restrict Greek bank access to ELA financing. Rather than declaring the banks insolvent (similar to Cyprus), the most likely avenue for this would be to refuse to raise the regularly reviewed ELA financing ceiling, or more likely, to raise the haircuts required on Greek bank collateral. Our current calculations suggest that Greek banks have around 30-40bn of liquidity available to draw under existing collateral arrangements. An ECB decision to raise haircuts aggressively could leave an implicit "hard" ELA cap that is much smaller, effectively requiring the authorities to reach agreement within a matter of days depending on the pace of deposit outflows and collateral exhaustion.

Agreement reached, but no time/unable to pass through the Greek parliament before IMF payment (30% probability). European creditors will require passage of prior actions through parliament before any disbursements are made. An agreement by the government at the last minute is possible, but there may be no time to secure financing before the domestic political process plays out. The current ruling majority and/or the opposition may refuse to support an agreement requiring a change in government coalition. In this event, it is possible the ECB provides interim financing to pay back the IMF via raising the amount of treasury bills that the Greek government is allowed to issue. However, we would consider it more likely that Greece is allowed to fall into arrears at the IMF and the ECB makes a less binding increase in haircuts on ELA collateral. The latter would maintain the pressure on the Greek side to ratify an agreement, but at the same time would allow ongoing liquidity provision to the banks so long as the approval process is moving in the right direction.

Agreement reached, followed by timely passage through the Greek parliament (30% probability). This would be the most positive scenario, with the government able to quickly draw upon support from its own majority or the opposition to pass the agreement. Assuming the upcoming Friday June 5th IMF payment cannot be made, this would require a staff- level agreement 2-3 days before. In this event we would expect the ECB to tolerate an increase in t-bill financing to make whole on the IMF payment if disbursements haven't been made in time due to other national approval processes. 

In sum, there is a 40% chance that Greece simply doesn't pay the IMF next month triggering, at the very least, restrictions on ELA access and, in short order, capital controls as withdrawals could accelerate and (literally) break the bank within "a matter of days."

Alternatively, there's a 30% chance that a deal is reached but proves so politically contentious that its provisions can't be approved in time, making a payment to the IMF logistically impossible and putting the ECB in the rather unpalatable position of having to decide how lenient it wants to be based on the central bank's perception of ratification progress which, incidentally, is essentially the same position Mario Draghi has been in for quite sometime only next month, creditors stop getting paid. 

And just in case there were any lingering doubts about where talks are headed or about whether the IMF will be willing to compromise on either pension reform or its demands for the EU to writedown Greek debt in order to make the country's debt-to-GDP ratio more 'sustainable', we'll close with the following three headlines that hit the wires this morning:

  • GREECE SAID TO BE FAR APART WITH CREDITORS ON DEBT TALKS
  • IMF SAID TO INSIST ON GREEK REFORMS INCLUDING PENSION CHANGES
  • IMF SAID TO BELIEVE DEBT RELIEF FOR GREECE MAY BE NECESSARY

*  *  *

Upcoming event and payments

Thursday May 28th - Eurogroup Working Group to discuss Greece

Wednesday June 3rd - Weekly ECB review of ELA (and every Wednesday thereafter)

Monday June 1st - Bank holiday in Greece

Wednesday June 3rd - ECB monetary policy meeting Friday June 5th - 306mio EUR IMF payment

Friday June 12th - 344mio EUR IMF payment

Tuesday June 16th - 574mio EUR IMF payment Wednesday June 17th - ECB non-monetary policy meeting

Thursday June 18th - Regular Eurogroup meeting

Monday July 13th - 459mio EUR IMF payment

Monday July 20th - 3.5bn EUR maturity due to the ECB Tuesday July 14th - 87mio EUR interest payment

Thursday August 20th - 3.2bn EUR maturity due to the ECB

 

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Thu, 05/28/2015 - 10:52 | 6139916 e_u_r_o
e_u_r_o's picture

I can confidently predict that nothing will change and the show will go on.

Thu, 05/28/2015 - 11:02 | 6139938 Bokkenrijder
Bokkenrijder's picture

DB pulls a number out of their ass (*), and ZH copies it with the usual "Greek Endgame Is Here" scaremongering.

Exactly, e_u_r_o the Euro is a political project, and they (Juncker, Schulz, Draghi and Co) will continue down the road of total destruction. A partial destruction with a Grexit is not good enough, the central planners will only rest when Eurobonds have been stuffed down our throats and all the German savings have been transfered to Southern Europe. 

(*) how the fuck do you calculate the probability of a country defaulting anyway, when you have so many totally unpredicatable variables?!

Thu, 05/28/2015 - 11:03 | 6139964 Headbanger
Headbanger's picture

HAHAHAHA!!

That's fucking hilarious.

Thu, 05/28/2015 - 11:17 | 6140031 Wolferl
Wolferl's picture

Throw those pathetic Greeks out of Europe already.

Thu, 05/28/2015 - 12:06 | 6140213 THX 1178
THX 1178's picture

the probability of greece defaulting is 100% we just dont know when.

Thu, 05/28/2015 - 12:21 | 6140275 greenskeeper carl
greenskeeper carl's picture

Exactly. 100%. I would just add that means bailouts or bail ins at every big insolvent bank holding Greek debt.

Thu, 05/28/2015 - 12:24 | 6140287 green sheen
green sheen's picture

Euro denominated bank accounts aren't safe
https://youtu.be/Kk2UjixrnBg

Thu, 05/28/2015 - 12:44 | 6140361 forexskin
forexskin's picture

Greece, we'd like you to meet Iceland.

Thu, 05/28/2015 - 12:51 | 6140371 COSMOS
COSMOS's picture

https://kat.cr/patio-produce-how-to-cultivate-a-lot-of-home-grown-vegeta...

Time for Greeks to put those sunny balconies to good use.

Maybe they can graze some cows to diminish their upcoming food anxiety

https://kat.cr/bovine-medicine-3rd-edn-unitedvrg-l-pdf-t10710352.html

 

Thu, 05/28/2015 - 13:42 | 6140589 dontgoforit
dontgoforit's picture

With the yield percentages they put on those bonds a couple years ago, they have sucked dry everything the little fella has to give.  Nothing more there.  They will leave the small nation destitute until the whole thing rolls over which, IMHO, could take a generation or more.

Sun, 05/31/2015 - 07:07 | 6148788 Farqued Up
Farqued Up's picture

I'm afraid the Fed will be the exalted, unaudited, independent, deep pockets bail out specialists, courtesy of US taxpayers that will save the day for the One Worlders' experiment. I can smell that cooking 6,000 miles away.

I can see the weasels, Mickey McMouse and Crying Boner, lining up for some suction with the Snowdyke and all is well. Greece's bureaucrats enjoy their subsidized livfestyles in blissful socialistic harmony while the deep stuff gets deeper. Moar debt to cure the debt problem, it's the Keynesian way.

Thu, 05/28/2015 - 11:14 | 6139966 Bumpo
Bumpo's picture

Perhaps the EU creditors should start worrying about themselves. Soon, the ball is in your court, ECB, IMF, Deutschebank, SocGen, etc, ect, etc .. Have fun with your own credit problems.

Thu, 05/28/2015 - 11:20 | 6140041 Ghordius
Ghordius's picture

"the Euro is a political project"

ah, the old myth. swallowed whole, sinker and all, by endless commentators and even for a time by fervent EU federalists

I see even wikipedia has changed the old article about the 1979 European_Exchange_Rate_Mechanism, explaining with the "hindsight of posterity" that it was always meant to become the EUR, eventually

I'm sorry, but it is not so. we had a monetary problem. small and volatile currencies in the face of the newborn (1971) fiat King Dollar, among many other aspects

even Britons, at that time, felt that "something had to be done". but then Soros... "helped" the British Pound to fall off the Exchange Rate Mechanism

Thu, 05/28/2015 - 11:31 | 6140073 Oldwood
Oldwood's picture

So it really is all about the "good of the people" then.

I thought it was but another attempt to concentrate power within the hands of a very few, by passing all illusions of democratic choice.

Cynical me.

Thu, 05/28/2015 - 11:42 | 6140115 Ghordius
Ghordius's picture

Oldwood, you always nibble at the edges, eh? What is exactly the difference between 19 National Bank Governors in 19 National Banks and the same bunch in one ECB meeting room?

Is the Banque of France a "paragon of democracy"? Or the BundesBank, where the German Bundestag just recently reaffirmed the independence of it? BankItalia?

There is exactly one national bank in Europe that does only what the government says - the cabinet, mind you, not Parliament - and that is the Bank of England

so either you are asking to stop giving national bankers independence or you are just... nibbling at the edges of the thing. so what is it? or is it just that the ECB reminds you of the FED?

because if it's the last thing, then no. megabankers say what the FED has to do, besides two monetary goals given by law (and conflicting goals, to boot)

here, we give the ECB one goal only: price stability. a very, very difficult concept, I fear. like "political capital", it looks untranslatable in English

Thu, 05/28/2015 - 20:15 | 6140239 forexskin
forexskin's picture

BoE does what the cabinet says? Huh, i thought the megabankers in the city of london had the whip hand.

and quit with the whining and deflecting blame to 1971 - bretton woods was a stop on the way. the US has been fending off european banking intests since that bastard cuckhold Hamilton was doing their bidding at its inception. The US republic scared the hell out of the euro elite then, and they are still with their long term project to destroy the notion of the free individual - the essence of the American Project.

“If this mischievous financial policy, which has its’ origins in North America, shall be endured down to a fixture, then that government will furnish its own money without cost. It will pay off its debt and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous without precedence in the history of the world. The brains and the wealth of all countries will go to North America. That country must be destroyed or it will destroy every monarchy on the globe.” – Editorial in the Times of London, 1862

put the blame where it belongs - the elite aristocracy of euro banksters who can go to hell where THEY belong.

"We are grateful to The Washington Post, The New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But, the work is now much more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries." David Rockefeller, founder of the Trilateral Commission, in an address to a meeting of The Trilateral Commission, in June, 1991

You really think Rockefeller made that sh*t up on his own? I'm sorry, but you really come across as a eurocentric victim idiot, my friend.

 

Fri, 05/29/2015 - 02:58 | 6142830 Ghordius
Ghordius's picture

I actually have to thank you for this reply

it's an excellent example of euro-centrism versus US-centrism

"the US has been fending off european banking intests since that bastard cuckhold Hamilton was doing their bidding at its inception. The US republic scared the hell out of the euro elite then, and they are still with their long term project to destroy the notion of the free individual - the essence of the American Project. "

I would not put that in those terms, but you are basically correct. in principles, if not in details

as a reminder, that "euro elite" was the Kingdom of England. then you can't deny that France helped the young US Republic, mostly to annoy the English during wars, of course

as a further reminder, Rockefeller is an exponent of the American elite. and that is the point: what mostly English banks were then, mostly American banks are now

the big change was during both world wars. American credit was given to the UK and France in order to win them against Germany

have a look at the City of London. just read the daily recap on ZH. who writes them? an American, in London, for a theoretically German megabank, nevertheless in a country, the UK, that does not use the EUR and will possibly leave the EU

Sun, 05/31/2015 - 07:13 | 6148792 Farqued Up
Farqued Up's picture

Ah, the more I read of Hamilton the more that Aaron Burr becomes my favorite American, except for Jefferson, of course.

Thu, 05/28/2015 - 12:10 | 6140229 El Vaquero
El Vaquero's picture

You cannot seperate economics and politics.  The two can be out of touch with each other and reality, but they are inseperable.  I'm sorry, but the EU is about politics, and by relation monetary issues.  Politics boils down to who gets what.  Economics is about who gets what.

Thu, 05/28/2015 - 11:46 | 6140130 Winston Churchill
Winston Churchill's picture

Easy,its 100%.

The when is a little more problematic.

Works for any country as well.

Thu, 05/28/2015 - 12:18 | 6140244 Kirk2NCC1701
Kirk2NCC1701's picture

"(*) how the fuck do you calculate the probability of a country defaulting anyway, when you have so many totally unpredicatable variables?!"

A: PARAMETRICALLY. ID the Top 10 Variables and attach a Probability to each. Multiply the 10 Probabilities, to get 'Overall Probability'. The other Variables are 'small fry' and can be managed/contained via SOP.

QED. Don't they teach you this at Starfleet anymore? ;-)

Thu, 05/28/2015 - 11:04 | 6139972 Bangin7GramRocks
Bangin7GramRocks's picture

If, if, if it ever happens they will not call it a default. The Fed will make the banks whole and the U.S. will shower them with "aid". Unless you live in Greece, you won't even notice. When you can invent money, problems like these are easily fixed.

Party On Garth!

Thu, 05/28/2015 - 11:05 | 6139977 Urban Redneck
Urban Redneck's picture

Sounds like one of the horses had a false start out the gate.  The "Plan B" starting gun is only to be used for Friday afternoon races after post time (market close). 

Thu, 05/28/2015 - 11:33 | 6140067 Ghordius
Ghordius's picture

UR, there is no such thing as a "Plan B". Mario Draghi himself addressed ZH with the words:

"There is no such thing as Plan B" (correct) and

"Those are people that do not understand the amount of political capital that has been invested in the EUR"

(also correct, then many ZHer do not even know what to understand under "political capital")

of course, continentals don't even go to the toilet without a plan. You know it from Switzerland

they do have an understanding for the phrase "political capital" but not for "not having a plan", independently from how whacky it is

and the ECB's "official secret plan" for a possible GreXit is called... Plan Z

Thu, 05/28/2015 - 11:56 | 6140162 Urban Redneck
Urban Redneck's picture

Whether it is Plan B or Plan Z, and a GreXit or Capital Controls... The Wednesday Afternoon -Thursday Morning timing reeks of someone being caught flat footed.  Of course, I am assuming that Berlin understands that the purpose of brinkmanship is not to actually cross the line. 

Thu, 05/28/2015 - 12:04 | 6140202 Ghordius
Ghordius's picture

+1, but consider this: Berlin claims to have no idea how the Greek finances are going. Athens claims it's not telling anybody

I'd say if half of it it's true then it's Athens that knows where the line is

Thu, 05/28/2015 - 12:33 | 6140315 Urban Redneck
Urban Redneck's picture

Germany can watch a bank run in real time from a terminal in Mario's office (or anywhere else with real time SWIFT and TARGET2 access)...

In fact, given the greater depth of IT services in Germany, they might know before Athens does.  

People weren't withdrawing EUR 300M from Greek ATMs on Tuesday (and I'm assuming an escalating amount yesterday and this morning).

Of course it possible that the vast bureaucracy assigned the task of monitoring to some inbred or incompetent relative of someone important... and that no one in the German government was actually watching or coordinating with the ECB before speaking...  

Thu, 05/28/2015 - 14:35 | 6140824 FreeMoney
FreeMoney's picture

Believing Mario Dragi is the plan maker and not the muppet is a mistake.  Believing what he says is another mistake. 

Thu, 05/28/2015 - 14:42 | 6140844 Urban Redneck
Urban Redneck's picture

apparently that conversation went over your head

Thu, 05/28/2015 - 13:11 | 6140446 stilletto
stilletto's picture

They may have a plan and they may be obstinate in sticking to it, but it doesnt mean it will work or survive contact with reality. It is the arrogance of elites that they believe they can turn back the tide and control the people. Swis plan to lock their exchange rate with the euro was a classic of European arrogance that collapsed. So the ECB has no plan B until reality forces them out of their ivory tower.

Thu, 05/28/2015 - 11:07 | 6139991 unplugged
unplugged's picture

and I will bet anyone the "usual amount" that you are right

Thu, 05/28/2015 - 11:14 | 6140017 doctor10
doctor10's picture

Looking forward to a fall  trip to Santorini on the Draschma exchange rate!!!

Eff Brussels!!!

 

it'll be at least 75% less than the Euro.

Thu, 05/28/2015 - 11:45 | 6140129 tarabel
tarabel's picture

 

 

I wouldn't walk around alone at night. You might find a different kind of exchange rate transaction taking place.

Thu, 05/28/2015 - 13:23 | 6140500 nemesis2012
nemesis2012's picture

                     Be careful in rejoicing from other people's misery. Life can be a bitch during payback......................

Thu, 05/28/2015 - 10:52 | 6139918 YouSerious
YouSerious's picture

Greece is in more trouble than FIFA and Putin combined.

Thu, 05/28/2015 - 11:30 | 6140069 Wile-E-Coyote
Wile-E-Coyote's picture

Haa ha FIFA has been bent for decades, they are only taken down after they award Russia the World Cup.

Thu, 05/28/2015 - 18:51 | 6141719 MOB666
MOB666's picture

And a palestine vote agains the Joooooz

Thu, 05/28/2015 - 10:54 | 6139925 Troy Ounce
Troy Ounce's picture

 

 

I am so happy that they have everything under control!

Thu, 05/28/2015 - 12:21 | 6140278 Kirk2NCC1701
Kirk2NCC1701's picture

Troy Pounce, I'd be happier if Veryfukis had the good sense to fly to Iceland, and spend the w/e with their FinMin and PM.

He'd better brink a few cases of Ouzo with him (to drink and gift), as booze is expensive there. Maybe a bunch of Greek food to.

Opa!

Thu, 05/28/2015 - 10:57 | 6139932 Quinvarius
Quinvarius's picture

If they default now, people will start to ask why they emptied the coffers to make the last payment.  Should be interesting. 

Thu, 05/28/2015 - 10:58 | 6139942 insanelysane
insanelysane's picture

The rest of the PIIGS certainly will.

Thu, 05/28/2015 - 11:23 | 6140026 Bumpo
Bumpo's picture

I think Greece wants to be as blameless as possible when they finally default. Once every last penny is gone, they can pull out the printing press and make as many Drachma as they want. Greece is making a point. It's impossible for them to pay their debt. Once that's proven for all the World to see, the EU will look like the debt slave masters they are - who will bail out any bank any time for any reason - while making the poorest of the poor the bag holders.

Thu, 05/28/2015 - 11:37 | 6140102 Oldwood
Oldwood's picture

Who in this world will accept a drachma as payment? I would be more inclined to invest with Madoff or Corzine than accept Greek bankrupt currency, much less buy their debt. Of course nothing is out of bounds for salesmen. There are those who would sell you a fake Rolex without blinking and when confronted with the fraud, proceed to explain what an incredible opportunity he has provided the victim as now they too can resell it at a profit to an even greater fool.

Greece is the poster child of the "greater fool" theorem. Infinity may not be measurable but it sure is apparent, because we seem to have infinite greater fools.

Thu, 05/28/2015 - 12:00 | 6140185 Winston Churchill
Winston Churchill's picture

You accept USD don't you ?

The US fundamentals are worse than Greeces at this point.

Only difference is a printing press and the MIC.

Thu, 05/28/2015 - 12:23 | 6140283 El Vaquero
El Vaquero's picture

At least I could have counted on an invasion force enforcing the value of the dollar a decade ago.  I didn't understand that back then, but it was what it was.  Today, I'm not so sure.  An invasion force might kill the dollar now.  I accerpt dollars today because that's what everybody around me accepts, and they won't wake up until the dollar is imploding.  It is what it is.

Thu, 05/28/2015 - 13:35 | 6140558 Winston Churchill
Winston Churchill's picture

Watching the penny drop with a client of mine was funny.

We were talking casually about something when I said the only difference between the Zim $

and the USD was 12 carrier groups.Took a couple of minutes to sink in, then eureka.

He's a stacker now.

Thu, 05/28/2015 - 13:54 | 6140652 813kml
813kml's picture

The "S"'s in carrier names should be replaced with "$"'s for the sake of brevity.

Thu, 05/28/2015 - 14:45 | 6140855 FreeMoney
FreeMoney's picture

The same people that accept a Venezuelan Bolivar will accept a Greek Drachma.  You can expect an official exchange rate and a black market exchange rate that has a hyperinflation type rate to it.  Of course followed by import shortages, bare shelves, leftist government takeover of small and large business, lots of "evil capitalists" going to jail for selling toilet paper and tampons over the offical controlled price, and GDP implosion as the confiscations of private property accellerate.

This story has been written before and will be followed by every place that embraces leftist doctrine.   

Thu, 05/28/2015 - 14:18 | 6140746 Oldwood
Oldwood's picture

The dollar we already have, and all that comes with it. Anybody that would care to look at Greece's default history would be nuts to loan them anything...unless you are going to sell the note anyway....like they already did with the help of Goldman. Its this constant gaming of debt, of selling the fake Rolex to the greater fool that is burning this mess down.

If people would just go out and produce something rather than trying to profit from others labor, maybe...just maybe some of this fraudulent shit would end...maybe.

Sun, 05/31/2015 - 07:24 | 6148798 Farqued Up
Farqued Up's picture

The bigger fool syndrome is built into our DNA. I recall the day many moons ago that I learned that there is no Santa, and shortly thereafter, I learned that the famous Holland Tulip mania fable wasn't actually fable but fact. Hello, wake-up call. Ponzi is KING!!! The bigger fool is the foundation.

Thu, 05/28/2015 - 12:23 | 6140282 samjam7
samjam7's picture

I assure you, as long as the interest rate is in order there WILL be bankers willing to lend in Drachma again! Do not fear.

Thu, 05/28/2015 - 12:24 | 6140286 El Vaquero
El Vaquero's picture

If the Greeks unleash a new Drachma, you want to be short on day one. 

Thu, 05/28/2015 - 12:25 | 6140289 samjam7
samjam7's picture

Haha I wasn't saying the lending would start on day one. 

Thu, 05/28/2015 - 13:46 | 6140607 Bumpo
Bumpo's picture

Who? Those who work for the Government of Greece. The Greeks.

Fri, 05/29/2015 - 08:29 | 6143239 nicxios
nicxios's picture

Who in this world will accept a drachma as payment? BRICS.

 

Thu, 05/28/2015 - 11:03 | 6139939 JustObserving
JustObserving's picture

After Greece, who is next?

"Our country is broke. It's not broke in 75 years or 50 years or 25 years or 10 years. It's broke today," he told the Senate Budget Committee. "Indeed, it may well be in worse fiscal shape than any developed country, including Greece."

http://www.newsmax.com/Finance/StreetTalk/Kotlikoff-GDP-debt-deficit/201...

US debt and unfunded liabilities per taxpayer are now $1,400,000 per taxpayer (over $170 trillion over 122 million taxpayers)

Greek debt is about $70,000 per taxpayer ($352 billion over about 5 million taxpayers).

Thu, 05/28/2015 - 11:04 | 6139970 Osmium
Osmium's picture

To those who say that U.S. government debt is easily manageable, Boston University economist Laurence Kotlikoff has a sobering reply.

Boston University?  If he was from Princeton maybe someone would listen to him.

</sarc>

Thu, 05/28/2015 - 10:58 | 6139940 NoDebt
NoDebt's picture

"IMF SAID TO INSIST ON GREEK REFORMS INCLUDING PENSION CHANGES"

Don't read too much into this.  It could never happen in the US.  Detroit recently being just the exception that proves the rule.  All promises will be kept.  Promise.

Thu, 05/28/2015 - 11:07 | 6139989 NoDebt
NoDebt's picture

Good article.  Like a microcosm of what's going to be happening a lot of places over the next couple decades.

And here's the best line of the article:  "It’s painful to do this, but when you have to make hard choices like that, the choice is always going to be in favor of current services opposed to past obligations."

That's it in a nutshell.  When your choice is pay retirees or pay to keep current services going, the retirees are going to take the hit.  Every time.  Period, end of sentence.

Thu, 05/28/2015 - 12:00 | 6140182 Money Boo Boo
Money Boo Boo's picture

banksters need to get paid, period, end of sentence.

Thu, 05/28/2015 - 12:45 | 6140362 WillyGroper
WillyGroper's picture

Paging Meridith Whitney, to the white courtesy phone. Paging Meridith Whitney.

Thu, 05/28/2015 - 10:59 | 6139947 sudzee
sudzee's picture

Greece will force both the EU and IMF stand down. If "the institutions" had any credibility this fiasco would have been decided a long time ago. 

Thu, 05/28/2015 - 11:00 | 6139954 foodstampbarry
foodstampbarry's picture

Reeeelllllaaaaxxx! Steve LIESman says the fundamentals look good.

Thu, 05/28/2015 - 11:14 | 6140015 Stoploss
Stoploss's picture

Plenty of cash on the sidelines too...

Thu, 05/28/2015 - 11:02 | 6139963 sodbuster
sodbuster's picture

Greece is like a 5th generation welfaree- they have gotten the money so long, they have no idea how they will get along without it. I think they will sell their soul to the devil, again and again, to keep getting it.

Thu, 05/28/2015 - 11:02 | 6139965 stormsailor
stormsailor's picture

so back up the truck and short it with everthing so they can skin your ass again. lol

Thu, 05/28/2015 - 11:03 | 6139968 Kirk2NCC1701
Kirk2NCC1701's picture

So, 30% of Agreement?

At those odds, I'll buy Lottery tickets all day long.

Keep huffing, puffing and bluffing, EU and Greece. I got your number. Got it on a washroom wall; For a good time call... 867-5309.

Thu, 05/28/2015 - 11:06 | 6139986 sodbuster
sodbuster's picture

Or.... In Hooterville- BR-549

Thu, 05/28/2015 - 11:12 | 6139973 Bob
Bob's picture

Be careful of falling into easy yet badly skewed perpectives:

On the political front, the troika is intent on sending a strong message to leftist political parties (such as Spain’s Podemos and Portugal’s “ascendant" socialists) that using the threat of a euro exit as a way to extract austerity concessions is not a viable negotiating strategy. What this amounts to is an attempt on the part of the “institutions” to subjugate the political process to economics.

Recall that in "economics" writing off bad debt is appropriate.  This is nothing but political here . . . with the wealthy and their institutions siding against the bankrupt poor in each and every case, worldwide, nation by nation.  Same as it ever was. 

But now that the debt servitude clocks are running down worldwide, the bare ugly reality of it is becoming starkly visible.

It's nothing less that financial war, the wealthy against the rest of humanity.  Let's not lose sight of that larger reality. 

The fuckers should have had at least the political good sense to write-down debts as real businessmen would. 

Thu, 05/28/2015 - 11:04 | 6139975 Bill of Rights
Bill of Rights's picture

We need to give them a loan so they can pay back the loan and then loan them some more so they can pay it back.

Lunacy...

 

Still looking for the missing Pentagon $2 trillion Donald.

Thu, 05/28/2015 - 11:12 | 6140006 SheepDog-One
SheepDog-One's picture

Yea whatever happened to all that money? Lost in basement of WTC 7?

Thu, 05/28/2015 - 11:25 | 6140057 sodbuster
sodbuster's picture

Alex- Fuckin' Criminals for $200- Who is Haliburton????

Thu, 05/28/2015 - 11:36 | 6140090 Savyindallas
Savyindallas's picture

I think Iran stole it. When we prove it, lights out for them. I'm pretty sure they did 911 too- with Russian help, of course. Putin is ex-KGB -knows a lot about controlled demolitions.  Iran no doubt consulted Putin on how to wire the buildings with explosives and disable Norad. 

Thu, 05/28/2015 - 12:08 | 6140216 seataka
seataka's picture

You guys are brilliant, for an example of how brilliant consider the guy that came with the idea:

"Let's create a drug that turns people into psychopaths, and then blame their conduct on Islam?"

(we can put their stuff on youtube!!)

^^^ THAT is the kind of brilliance I'm talking about. google CAPTAGON

http://www.kurdishinfo.com/the-drug-of-isis-and-al-nusra-captagon
http://www.sott.net/article/296955-Two-tons-of-IS-drugs-including-Captag...
also see
http://www.voltairenet.org/article183125.html

brilliant!

Thu, 05/28/2015 - 11:13 | 6140013 Bryan
Bryan's picture

Who cares?  Smoke and mirrors to cover other smoke and mirrors.  Come on and implode already.

Thu, 05/28/2015 - 11:16 | 6140028 Wolferl
Wolferl's picture

Throw those pathetic Greeks out of Europe already.

Thu, 05/28/2015 - 13:13 | 6140457 nemesis2012
nemesis2012's picture
  • Be careful what you wish for....
Thu, 05/28/2015 - 11:19 | 6140039 CHC
CHC's picture

Actually, if you run this out the n'th degree - the probability of default is exactly 100%.

Thu, 05/28/2015 - 11:27 | 6140062 zrussell
zrussell's picture

Tyler be jellin like Yellen!!

 

YESNOYESNOYESNOYESNOYESNOYESNOYES

NOYESNOYESNOYESNOYESNOYESNOYESNO

YESNOYESNOYESNOYESNOYESNOYESNOYES

NOYESNOYESNOYESNOYESNOYESNOYESNO

YESNOYESNOYESNOYESNOYESNOYESNOYES

NOYESNOYESNOYESNO

Thu, 05/28/2015 - 11:27 | 6140063 desirdavenir
desirdavenir's picture

Greece must replenish its SDR account at IMF within 1 month counting from 05/12. So On 06/12 they have effectively to disburse 994mm€. 

Thu, 05/28/2015 - 11:28 | 6140065 youngman
youngman's picture

Next year its all Red Cross and Bono concerts to save the Greeks....

Thu, 05/28/2015 - 11:33 | 6140081 ANestIOS
ANestIOS's picture

Is this meant as the "institutions" don't want to reach a deal? I don't think so, that's the ONLY game they have, i.e. kick that can down the road. Does the greek goverment want a deal? Yes they do. It is simply a different kind of deal (and they know they will get it)

Thu, 05/28/2015 - 11:42 | 6140107 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Nash or any equilibrium game theory game = kick the can down the road/groundhog day until the machines break or the humans devolve beyond their ability to service the machines once the machines start to break down.

The only out for humanity is to deconstruct the machines now and flood the airwaves with white noise so total takeover can never happen again....

Thu, 05/28/2015 - 11:34 | 6140087 Chuck Knoblauch
Chuck Knoblauch's picture

Is Germany the EU bagholder?

Germany fucked after WW I and II.

And now left holding an empty bag or worthless Euros.

When are the German people going to wake up?

Thu, 05/28/2015 - 11:36 | 6140097 DontFollowMyAdv...
DontFollowMyAdviceImaDummy's picture

wrong, THE ODDS OF A GREEK DEFAULT ARE 100%! The only thing you can bet on now is when will they stop being allowed to kick the can down the road.

Thu, 05/28/2015 - 11:38 | 6140104 Chuck Knoblauch
Chuck Knoblauch's picture

When is Germany going to leave the EU asylum?

Thu, 05/28/2015 - 11:42 | 6140117 tarabel
tarabel's picture

 

 

Next month?

This is about next week, no matter where it breaks on the calendar.

Thu, 05/28/2015 - 16:13 | 6141174 bid the soldier...
bid the soldiers shoot's picture

tarabel

Thanks for your invitation to the Russophobe Retreat you're holding in Key West next month.  

The photo of you leading your pack to hear Viedoklis read the Preamble of our Constitution in Latvian last year in Provincetown is quite impressive.

God Bless

http://www.nydailynews.com/news/world/crime-drops-business-booms-british...

Thu, 05/28/2015 - 16:14 | 6141176 bid the soldier...
bid the soldiers shoot's picture

.

Thu, 05/28/2015 - 11:44 | 6140124 SantaClaws
SantaClaws's picture

I recall some time ago suggestions that Greece might sell off some of its territory to satisfy some of its debt.  Is that idea off the table?

Thu, 05/28/2015 - 11:53 | 6140144 Maximus Failius
Maximus Failius's picture

I'm a simple wage slave and not a princeton economist, so perhaps i just dont get it.  But isnt the real point for the common wage slave:

The funding of the Greek banking system remains highly dependent on the central bank's Emergency Liquidity Assistance

 

I.E.  the greek banks are empty, broke, insolvent, etc......  So what they are saying is that the greek banks are empty, insolvent and can only pay out withdrawals by borrowing money.  For a simple wage slave the first question that popes into my head is, if I handed the bank my money, why are the banks empty?

Yes, this wage slave realizes that all modern banks are fractional reserve institutions and that us common wage slave depositors are simply unsecured creditors (is this where the buy gold add goes?).  BUT!!!!!  How many of the wage slaves realize this?

Wage slaves dont care who is holding the reigns of power so much as they care about their little pittance that they are allowed by the oligarchs.  Once the fact that Mr and Mrs wage slave are unsecured creditors and their (debt based fiat) "money" ( pittance of crumbs left be hind by the oligarchs) was magically evaporated by the banks, things get interesting and quickly.  That is usually when major wars just happen to start up.

Thu, 05/28/2015 - 12:00 | 6140186 Ghordius
Ghordius's picture

Max, a simple explanation: modern banks are designed to be nearly to fully broke while staying "liquid", meaning that yes, they have money, but never enough to pay it to all

the design works. most of the time, at least. except if people get nervous, that is. then it's called a bank run

compare it with a bridge. "it's a sham" says the dam. "it has a huge hole under it. empty. It should be solid, like me"

to which the bridge replies: "I can hold my weight and some more, as long as nobody abuses me"

hope it helps

Thu, 05/28/2015 - 12:07 | 6140215 Maximus Failius
Maximus Failius's picture

I get it.  But the majority of wage slaves around the world don't, even though they have all signed the fine print agreements for their deposit accounts.  Billion dollar loan payments are not "real" for the little wage slave trying to keep his and his family's belly full.  what is a billion dollars when you lay awake at night over a $200 car payment?  billions might as well be quintillions for all the wage slave cares, both are meaningless.

But when it is made crystal clear to the wage slave that "his" money was evaporated, rehypothecated, collaterolized, etc.  the wage slave then has personal skin in the game.  Unless you are warren buffet or a big dog banker the average Joe doesn't perceive themselves in having any skin in the game when billions and trillions are being tossed about.

Fri, 05/29/2015 - 03:01 | 6142832 Ghordius
Ghordius's picture

I fully agree. what can I say? imho, all debt is damn dangerous. we label tobacco products as if they would kill you immediately, but we don't put similar warnings near the dotted line

Thu, 05/28/2015 - 13:07 | 6140428 Johnny_is_alrea...
Johnny_is_already_taken's picture

I will explain:

 

You are not a wage slave, you in the modern western europe produce nothing. You work in worthless services sector.

You real economic level is eating grass in the fied like a sheep

Because the products that make our world diferent from the bronze age are produced in china, and the raw materials come from africa, australia, midle east etc

The only reason you have shoes and put midle east petrol in your car is because your gov. is borrowing train loads of cash to pay you.

But banks are the ones issuing the debs and buying the gov bonds one of anothers.

So you understand ? You voted on politics that created this fantasy western society

Since the factories started packing to go east your living standard should imediatly start falling

 

 

 

 

Thu, 05/28/2015 - 13:04 | 6140159 Chuck Knoblauch
Chuck Knoblauch's picture

There is bad blood between the Germans and Russians, no doubt.

All the raping after WW II has left a bad taste in the mouth.

But there comes a time when enemies should unite against the Bolsheviks in the West.

The same Bolsheviks who were responsible for the wars and the rapings in the first place.

Think about it.

You're common enemy is still, and always was, the Non-Semetic Crypto Jew.

The crypto changes its spots frequently.

Thu, 05/28/2015 - 12:16 | 6140199 silver surfer
silver surfer's picture

Meet the Tax Anticipation Note (TAN) proposed by new-world economists for Greece!

From the real-world economics review:

A program proposal for creating a complementary currency in Greece

Trond Andresen and Robert W. Parenteau 

 

"2. How does a complementary electronic currency (to the euro) work?

Policy proposals for Greece similar to what follows have been put forth earlier by this author, for instance in (Andresen, 2010 and 2012). The additional complementary (also called “parallel”) circulating medium of exchange and means of settlement to be proposed will be designated a Tax Anticipation Note (TAN), a term introduced in (Parenteau, 2015). The TANs are used by the government to partly pay wages, pensions and for domestic purchases. The TAN enjoys confidence since anyone can use it to pay taxes – more on this below. Transactions are done via encrypted entries through the instrument of mobile phone/SMS. These transactions are automatically received, accounted for and settled on a server with ample capacity at the country’s Central Bank. Or perhaps preferably – for political or legal reasons – at a bank-like facility established for this purpose outside the government, from now on just called the TD: “TAN Depository”.

Such a mobile-based transaction system may be implemented through one of the technically proven schemes already in successful operation in some developing countries," 

Thu, 05/28/2015 - 12:04 | 6140203 q99x2
q99x2's picture

There's an increased chance Greece might default. Well if that don't beat all hell.

Thu, 05/28/2015 - 12:06 | 6140212 Panic Mode
Panic Mode's picture

I will only believe it when I see the new drachma.

Thu, 05/28/2015 - 12:09 | 6140228 Peter Pan
Peter Pan's picture

Anyone who is predicting that Greece has only a 70% chance of defaulting is definitely playing with their old fellow 30% of the time.

Thu, 05/28/2015 - 12:21 | 6140276 yogibear
yogibear's picture

A while longer for the US currency crisis. It's coming.

Thu, 05/28/2015 - 12:24 | 6140284 Monty Burns
Monty Burns's picture

"The Greek Endgame Is Here"

Been reading that every day for the last 3 months.

Thu, 05/28/2015 - 12:58 | 6140399 Johnny_is_alrea...
Johnny_is_already_taken's picture

I've been reading about the greek colapse for 6 years

 

everything is BS and it is all politicly driven

Thu, 05/28/2015 - 13:02 | 6140410 El Vaquero
El Vaquero's picture

Collapses don't happen overnight.  The US has been in a state of collapse for 15 years or more.  This is a process, not an event.

Thu, 05/28/2015 - 13:51 | 6140633 Winston Churchill
Winston Churchill's picture

Since 1971 really.Funny how the stats for all sorts of things are going back to the 70's levels.

The bill is just coming due for that 45 year party.

Thu, 05/28/2015 - 12:27 | 6140295 RevIdahoSpud3
RevIdahoSpud3's picture

Why would Greece not consider leasing everything it owns to Russia and or China? In addition become a haven for offshore banking?

Thu, 05/28/2015 - 12:35 | 6140321 yogibear
yogibear's picture

Greek default's been going on for a while. No surpise.

Constant EU bailouts getting boring.

Thu, 05/28/2015 - 12:41 | 6140347 B2u
B2u's picture

The headline says "...IMF default...".  Them too?

Thu, 05/28/2015 - 13:04 | 6140415 walküre
walküre's picture

Well someone just tripped up the USDJPY bulls HARD.

Thu, 05/28/2015 - 13:04 | 6140416 falak pema
falak pema's picture

Schauble vs Mutti who will win?

Thu, 05/28/2015 - 13:05 | 6140423 zeronero
zeronero's picture

Anyone looking for an edgy take on the world of business and finance- without the horrid racism, anti semitism, bigotry and jealousy that pervades this wasteland- check out

businessinsider.com

Hopefully it can put this cesspool of waste out of business.

Thu, 05/28/2015 - 16:19 | 6141220 wendigo
wendigo's picture

I owe ZH my sanity. Can Business Insider provide that? Probably not. 

Thu, 05/28/2015 - 13:09 | 6140425 nemesis2012
nemesis2012's picture

                                The descendants of Aristotle, Plato,Socrates,Dyonisos,Archimides,Achilles,Hercules,Pericles,Leonidis and on and on will be blamed by the Zionists for the largest financial crisis in world history. 

Thu, 05/28/2015 - 13:29 | 6140534 zeronero
zeronero's picture

This is exactly the kind of wimpy, pathetic anonymous hatred that should be made illegal.

Why don't you go run into a synagogue and shout those obscenities you dickless coward?

Thu, 05/28/2015 - 13:39 | 6140577 nemesis2012
nemesis2012's picture

Where's the hatred?

Thu, 05/28/2015 - 13:46 | 6140609 bourbondave
bourbondave's picture

What he said is obviously stupid but illegal?  We want to trust our worthless govt leaders to decide what people can say and what they can't?

Thu, 05/28/2015 - 13:10 | 6140443 smacker
smacker's picture

"What this amounts to is an attempt on the part of the “institutions” to subjugate the political process to economics."

More correctly said: "What this amounts to is an attempt on the part of the "Troika" to subjugate Greek democracy."

European Democracy: RIP.

"Brussels Rools"

Thu, 05/28/2015 - 13:27 | 6140523 CaptainMoonlight
CaptainMoonlight's picture

Please put these Greeks out of their fn misery already.

Thu, 05/28/2015 - 13:32 | 6140546 nemesis2012
nemesis2012's picture

Unfortunately,you will be next, once there done with Greece as the scapegoat..............

Thu, 05/28/2015 - 13:45 | 6140603 bourbondave
bourbondave's picture

The greeks bear no responsibility?  Just an innocent party?

Thu, 05/28/2015 - 13:27 | 6140526 Jack Burton
Jack Burton's picture

"As the farcical negotiations between Greece and its creditors unfold"

The tactic of choice for everyone since 2008 has been extend and pretend, money print and buy bad assets. Create stock market bubbles and lie about economic growth and jobs.

Greece sadly can not money print and that cuts her out of extend and pretend. Whereas the UK and USA print money like mad, Greece can not. All they can do is seek new loans to pay existing interest payments, and renegotiate the time and rates of it's existing obligations. But Greece owes too much for that to work. Over 350 billion euros, for a pathetic economy like Greece! That can never be paid back, never, ever!  A large nation like Russia with around 48 billion in outstanding foreign debts and 350 billion in foreign currency reserves and a positive trade balance causing accumulation of more reserves every day, THEY have had their debt downgraded! While Greece, is still seen as a viable nation to loan more money to.

Think about that for a moment and tell me international finance is not madness.

Thu, 05/28/2015 - 13:28 | 6140527 Archetype
Archetype's picture

100% probability that DB are betting against greek credit default swaps.

Thu, 05/28/2015 - 13:43 | 6140598 bourbondave
bourbondave's picture

I keep reading that they are trying to avoid a bank run.  At this point, who in their right mind still has their life savings in a greek bank?  Their govt has basically told them they are going to take it.

Thu, 05/28/2015 - 16:38 | 6141305 hendrik1730
hendrik1730's picture

THAT, my dear, applies to ALL western countries. The question is only : when.

Thu, 05/28/2015 - 13:52 | 6140638 MansaMusa
MansaMusa's picture

Why can't Greece just sell it's barbarous metal to pay off it's debt?

Thu, 05/28/2015 - 14:04 | 6140685 robertocarlos
robertocarlos's picture

No worries. The Haldon Collider starts up again on Wednesday. There might not be another Thursday. Here's hoping.

Thu, 05/28/2015 - 16:37 | 6141299 hendrik1730
hendrik1730's picture

It's "large hadron" collider.

Thu, 05/28/2015 - 20:01 | 6141901 Bazza McKenzie
Bazza McKenzie's picture

Yeah. but does that mean there will or will not be another Thursday?

Thu, 05/28/2015 - 14:19 | 6140751 Meatballs
Meatballs's picture

I'll believe it when I see it.

Fri, 05/29/2015 - 08:36 | 6143247 nicxios
nicxios's picture

If Dumbtsche Bank is giving 70% chance of Grexit, it's 90% it won't happen.

Must feel good to have dumped their Greek holdings on citizen suckers though.

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