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Bundesbank Slams ECB's "Bridge Financing" To Greece
On Monday we reported something history: as a result of the relentless increase in Greek ELA usage (which if there is no deal today is set to surge yet again as the Greek bank run returns with a vengeance) in addition to the €38 billion in other claims the ECB has on Greece, for the first time ever the amount of ECB claims (i.e., implicit funding) on the Greek banking system surpassed total Greek deposits.
We asked rhetorically why this is important, to which we answered "because if overnight the ECB says "no more", and pulls a Cyprus, forcing Greek banks to procure liquidity in other ways, those Greek "assets" which have collateral value only because the ECB is backstopping them (and which would fetch at most pennies on the dollar once all Greeks stop paying their interest expense on outstanding debt in a default situation), then suddenly the reality of a Greek bail-in which could amount to up to 100% of total Greek deposits, becomes all too real."
In other words, this is the biggest leverage the ECB has over Greece. It also is a prima facie example of monetary financing of a state by keeping its insolvent banking system "solvent" but only as long as the ECB maintains the ELA.
This is also the criticism Bundesbank's Jens Weidmann unleashed on the Eurosystem (read the ECB) when he said that Greek banks should not continue to buy the short-term debt of their government, which is then repoed back to the ECB in exchange for precious cash.
"The Eurosystem must not provide bridge financing to Greece even in anticipation of later disbursements," said Weidmann, who also sits on the European Central Bank's Governing Council, which approves such funding to Greece.
"When banks without access to the markets buy debt of a sovereign which is likewise locked out of the market, taking recourse to ELA raises serious monetary financing concerns," he said in a speech to be delivered at a conference in Frankfurt.
"This casts doubt on their financial solidity," Weidmann asserted. "The latter is especially undermined by Greek policy decisions that have sparked capital flight and large-scale cash withdrawals."
Some other headlines from MNI:
- WEIDMANN: GREECE HAS ERODED SUPPORT FOR TRANSFER OF SOVEREIGNTY
- WEDIMANN: GREEK GOV POLICIES HAVE SPARKED CAPITAL FLIGHT
- WEIDMANN: ELA RAISES SERIOUS CONCERNS IF BANKS LEND TO STATE
- WEIDMANN: PROLONGED ELA FOR GREECE CASTS DOUBT ON BANK SOLIDITY
Weidmann is not the first to demand that the ELA be halted: on Monday we reported that the finance ministers of Germany (naturally) and Ireland (surprisingly) had voiced a strong opinion against extending Greek ELA if there was no capital controls to make sure that the ECB isn't merely funding the Greek bank run... which it is.
So is anything changing? Well, earlier today the ECB did not increase the Greek ELA. This was the second day the ECB kept its ELA unchanged according to Reuters citing a source familiar with their talks said, having previously increased it steadily over many weeks.
So is this just the ECB turning the screws on Athens in hopes of scaring Tsirpas into a quick deal, who should know by now that without the ECB's backstop, Greek banks will fail overnight, or did Jens Weidmann just do the Greeks the biggest favor possible - after all the animosity between him and Draghi is no secret. If there is anything the former Goldman partner would love it is to spite the Bundesbank head even more. As such, is it possible that the ECB would continue funding Greece even after June 30? Even after Greece defaults to the ECB on July 19?
We will know the answer very soon although when central banks abdicate their primary objective and commit fully to playing puppetmaster in regional and global politics, everything is possible.
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Dice is at it again
Selling a 10 oz Silver Bar for $10 (When It's Worth $160) -no takershttps://www.youtube.com/watch?v=RJm3cRRvPoM
Nuclear war with Russia.....where do I sign?
https://www.youtube.com/watch?v=CNr5czZKEdk
People are fucking stupid.
THEY MAY ARREST YOU
for engaging in “Wikileaks”!
In this IMF-ECB version of "Let's Make A Deal," behind every door is the same thing: CHAOS.
The ECB will NEVER get that money. Greece would nationalize its banks and tell them to go fuck off. At least I hope they would do that.
really? Well then, I am your huckleberry, put it on E-bay and send me the link motherfucker.
No one playing nicely together
https://www.youtube.com/watch?v=kZ3aROBqU-E
I think it is more about not knowing who and what you are really buying than the actual value.
The threat to end Emergency Liquidity Assistance to local banks is what ultimately forced Ireland and Cyprus to capitulate to the EU's demands for austerity. Similar threats have not been explicitely leveraged against Greece thus far, indicating a change in tactics on the part of the ECB under mister Draghi, but mister Weidmann's comments frankly leave little room for misinterpretation here.
"As such, is it possible that the ECB would continue funding Greece even after June 30? Even after Greece defaults to the ECB on July 19?"
Ah, so now the REAL date is July 19.
I feel a micro-aggression coming on.
Micro-aggression, nice. That's where this country's headed.
WeLL FUCK YOU BUNDESBANK......................................from PANOS
Fastest to get to the checkbook is to yell at them.
You've done this before haven't you?
"This casts doubt on their financial solidity," - LMFAO!!! Hey Weidmann, finance and financial solidity became irrelevant the day money creation no longer required any real collateral you stupid fuck!!!
Is this the same Bundesbank Weidmann that gave Draghi carte blanche to print ad infinitum?
(how dare the coward speak about his financial beliefs?!)
I've been long Greek donkey carts for years now. Maybe I'll collect on that bet soon?
hairball
Talking of Donkey Carts . Here is Greece's debt load https://blackdog.co/images/debtload.jpg
Priceless!!!!!!!!!!!!!!!!!!!!!!!!!!!
This whole edifice of FIAT money was conjured up as a manipulative tool of subjugation.
yes, "full faith and credit"...
hedge accordingly...
Does Jens think that there are no manipulating banksters in Greek banks? Doesn't he know that EU banksters wrote the laws so that they could bypass any regulations and get access to free money? Does he expect Greek banks to not use the same tricks as Deutsch Bank does?
Sounds like a back door funding operation to me.....they will steal all they can get their hands on now...they are drowning rats....
Suck that German taxpayer dry.
Isn't that how we got Adolf Hitler.....and boy wasn't that a bunch of fun?
For whom? The rothschilds seem to have done pretty well, so has soros...
Tsipras has actually I think in part of the game play given the Greek people every opportunity to get their money out of the banks, knowing all too well that Greece is toast, either in the short term or in some inevitable future bail-in.
If people still have savings in a bank in Greece......
Kina, I have to agree with you at this point. First I thought Tspiras was for the people and was going to facew the music for the people. Then I though he was an inside pawn troll working for the cabal. Now Im coming around to thinking this is a stall to get the people to focus on their reality because that takes time. Now the people have most (not all) money out of the system and the printing presses are rolling out Dracmas in the back room.
Greece is bankrupt and in a depression. The people are watching, unlike here in the US. Our people wont get this kind of heads up from our leaders. They wouldnt understand it anyway. Most Americans are mid-level retarded from govt breain washing for decades and they are so scatter brained they may never understand. Thats "mission Accomplished.
In the words of the infamous CIA head William J. Casey, "We'll know our disinformation program is complete when everything the American public believes is false."
Bundesbank's Jens Weidmann -- doesn't Greece yet understand they are our bitch. Now STFU and lay on your back, bitch.
I was wondering where all that ATM $$$ was coming from, now I know.
Thanks Tyler!
this is now a "damned if you do and damned if you don't" situation.
Calling Mr Draghi...It seems like "whatever it takes" is now a badly baked cake.
In fact its not a cake its a fake!
Can you puleese tell us what your TRUE back-up is ?
If Germany says we don't want to back you and Deutsche Bank screams : "I'm gonna burn unless someone stops the bank runs that brings down the derivative web (on which I am a BIG WINNER until Greece says to me: "phukk u Deutsche; if Schauble pulls the rug so do you fall with us")..." than Weidmann better learn to clean his ass in the Deutsch toilet when the flush says "Nein, I can't function no moar, no water in the tank!"...What a stink!
the Titans is Fiteins..nice to see discord at this level. its easier to pick off the evil geniuses one by one
Weidmann should stop with the crazy talk (keep printing ECB so there can be a real disaster later, the more debt the better)
Bridge financing assumes you have something of "value" to sell and the lender has collateral to fall back on. Greece is getting "life support" financing.