Shots Fired: ECB Again 'Threatens' To Collapse Greek Bank System

Tyler Durden's picture

Given the self-admitted lack of 'rules' around emergency funding from The ECB, today's (latest) threats to withhold Greek funding "due to politicial events" are perhaps the most ominous non-blackmail warning yet by the entirely independent Mario Draghi and his henchmen...

 

After 2 days of not increasing the ELA limit for Greece:

  • Feb. 5 Set at EU59.5b
  • Feb. 12 Raised to EU65b
  • Feb. 18 Raised to EU68.3b
  • March 5 Raised to EU68.8b
  • March 12 Raised by EU600m
  • March 18 Raised by EU400m
  • March 25 Raised to just over EU71b
  • April 1 Raised by EU700m
  • April 9 Raised to EU73.2b
  • April 14 Raised to EU74b
  • April 22 Raised to EU75.5b
  • April 29 Raised to EU76.9b
  • May 6 Raised by EU2b to EU78.9b
  • May 12 Raised by EU1.1b to EU80b
  • May 20 Raised by EU200m to EU80.2b
  • May 27 Unchanged at EU80.2b
  • June 2 Raised by EU500m to EU80.7b
  • June 10 Raised by EU2.3b to EU83b
  • June 17 Raised by EU1.1b to EU84.1b
  • June 19 Raised by ~EU1.8b to ~EU85.9b
  • June 22 Raised by ~EU1.9b to EU87.8b

...and following today's total farce in Brussels, ECB Governing Council member Luc Coene warned today that The ECB stood ready to reassess its decision to continue providing liquidity assistance to Greek banks.

"If for any reason market conditions and more let's say political events would have to lead to a reassessment of this, the governing council will do so," he told reporters at the central bank in Brussels Thursday.

Which perhaps explains why amid all the exuberance, Greek bank bonds are not recovering...

 

As Reuters reports, this comes on the heels of general disgust at The ECB funding insolvent Greek banks via their taxpayers...

Bundesbank President Jens Weidmann on Thursday gave his strongest criticism yet of the use of emergency credit to prop up Greece's banks. Weidmann said those banks should not continue to buy the short-term debt of their government.

 

"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, dubbed Emergency Liquidity Assistance (ELA).

 

"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 at a conference in Frankfurt.

 

Earlier this week, politicians in Ireland and Germany voiced similar concerns.

*  *  *

Which should be no surprise given that The ECB basically now owns The Greek banks...

 

As we warned previously:

Why is this important? 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. 

Will the ECB use such a scorched earth approach, one which could potentially wipe out virtually all Greek deposits in the biggest "bail in" in history? For the sake of the Greek people, we certainly hope not but then again there are those record Goldman bonuses to think of, and remember: the ECB does not a catalyst to boost QE even more...

 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
InsurgoCasca's picture

Steps:
1) Give middle finger to EU
2) Setup gold-backed Drachma
3) Exchange Euros for Drachma and sell Euros for gold
4) Liberate government regulations to enhance business competitiveness, slash taxes, cut government spending

Take that Krugman!

redpill's picture

You realize they are socialists, right?

Actual steps:

1) ECB gets them to default and make it look like Tsipras' fault

2) Greece gets kicked out of EU

3) Greece reintroduces Drachma

4) Greece starts printing like crazy to cover "pensions"

5) Greece effectively cuts spending by devauling their currency and thus reducing the real value obligation to the pensioners

6) Inflation spirals out of control

7) Government gets overthrown

8) Greek economy languishes for a decade or longer

9) Eventual recovery

10) Apply for EU membership

11) Rinse and repeat

skistroni's picture

Funny how that looks like a good scenario right now...

HenryHall's picture

>> 2) Greece gets kicked out of EU

 

Just how do you propose to do that?

Renegotiate and pass a new version of the Maastrict Treaty?

eforce's picture

I think he means Eurozone.

SHEEPFUKKER's picture

Isn't this really about the banksters getting their hands on Greece's 112 tons of AU?

Know shit's picture

Now that would be a final wakeup calll.
The world would see:
1) the real nature of those in power as all greeks officials involved would jump of roofs, buy nailguns, or be murdred in plain sight in no time (if greek would not be nuked straight away)
2) for a short time, what the real value of gold is

But who am I kidding?
Most would still not be able to see......

Take care..

Kaiser Sousa's picture

blah, blah, blah....

just sayin - same shit different day...

keep stackin...at least i am...

101 years and counting's picture

5 years later, the greek depression is worse than ever.  so, they can either tell the EU/ECB/IMF to fuck off and face a year or 2 of pain, or they can bend over to their overlords and let the depression run for at least another 5-10 years. 

MarxFelix's picture
  Guys, you haven't figured out the situation yet. The Greeks want to stay inside the euro-zone !! So, there are no other solutions; they must pay back their debt up to the last euro !! 
detached.amusement's picture

5-10?  You need to go take another look at their payoff sheet. 

behind the curtain's picture

Man .. deutsche bank must be sweating bullets.  Stay the course, Greeks .. you are doing the rest of the world a great service, even if the Stockholm Syndrome prevents most from realizing it.

DetectiveStern's picture

I fucking hate Deutsche. Work related and the general fact they're crooked as fuck. The quicker they fuck off the better.

Tall Tom's picture

You have that right. Fuck Douchebunk

 

Headline needs to read "Greek Decision Threatens To Topple the Derivative Markets, Threatens Existence of the European Central Bank, Federal Reserve, and the IMF...Again".

agstacks's picture

"Will the ECB use such a scorched earth approach, one which could potentially wipe out virtually all Greek deposits in the biggest "bail in" in history?"

No. No they will not. 

SpanishGoop's picture

Act of aggression/war.

Greece to declare war on Europe, doesn't pay anything anymore.

 

RaceToTheBottom's picture

Douche Bank gets Santorini?

 

Last of the Middle Class's picture

WTF everything was hunkey dory yesterday. Jeez.

Fun Facts's picture

The ECB and IMF are criminal organizations.

Unfortunately they are at the top of the org chart in Europe.

scubapro's picture

 

'for the sake of the Greek people' ??   how bout for the sake of the italian and spanish?

 

whatever occurs will be applicable to italy and spain, since they are in the same position really.  capital controls and de facto control of pension and other govt dispursements will force reductions in pensions etc.   they probably will get cyprus'd to some extent.  

...to some extent, b/c the Plan will need to be applicable to italy and spain.  

chisler's picture

The Greek disaster is the result of "predator lenders". A lender has the burden of lending responsibily. If there is any indication that a loans is beyond the capability of a borrower,  then the lender is the scum bag and the loss is the result of some other agenda. We all know whta the other agenda was. To entrap Greece in the EU so the "Bilderbergs could control them". Fuck Merkel and the EU - collpase sooner rather than later, they screwed other nations before and now they are predators again.

 

 

chisler's picture

Merkel looks like she will open financial gas chambers, this time its Greeks and their money.

jmc8888's picture

Funny that she let her* feelings be known after a little talk with the Queen of England on their boat tour together.

jmc8888's picture

Be careful what you wish for troika, Deutschebank might just get it.

 

Glass-Steagall

ramgold2206's picture

The whole project is ego driven... no different to every war (hot, cold or financial) that has ever been fought... what amazes me is how the bullshit continues on in this Fiat currency, nothing is as it seems, upside down world.. Maybe the whole thing is a game/matrix of deception and the people are in a deeper sleep that we on ZH realise.

Regardless, I believe I woke from that sleep a year ago, got an alternative education on ZH and consequently got into gold bullion and now I want to give something back.

 

For those of you not actually in the physical metal .. I can highly recommend it.. because no matter what goes on in the EU Punch and Judy show... my stress levels reduced 90% knowing I have some bullion.

 

You might think I'm just spamming, but I'm not... I'm deadly serious!  I got involved in a German company called Karatbars International who produce Gold Bullion in small weights and boy am I glad on various levels.

 

They developed an incredibly lucrative affiliate marketing system to get their product to market... Its free to join at the basic level although if you decided to go all in to earn the highest commissions the buy in price is essentially peanuts... FFS my day job Personal Indemnity insurance costs more per month!!

 

The downside is it's more a mass education programme than marketing,,, because aside from ZeroHedgers the financial IQ out there is well down the trickle down economic cascade and those people need to be educated to get some AU!

 

I know there are lots of you out there that would love to get your hands on bullion and get the money to acquire it from actually helping some of the lambs lined up for the slaughter - We could actually be doing something worthwhile.

 

Check out my website www.teamramgold.com its only a simple website to give a snapshot of the programme, but feel free to get in contact with me and I'll show you an incredible system. It could be the most lucrative email you will ever write..   

 

And yes OK I am pitching (a bit) but if you get the programme you will understand why.. I'm a capitalist but with a social conscience.

DaddyO's picture

Quit the spammin, ya douche'

DaddyO

sudzee's picture

This entire situation is NOT about a Greek collapse but the collapse of the EU experiment. All the kings horses........

Demdere's picture

What prevents Greece from simply printing more EU bank notes?