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The "Nightmare Of The Euro-Architects" Is Coming True: JPM Now Sees Grexit, Eurogroup "Split In Coming Days"
Perhaps the best summary - or epitaph, some would say - of the shocking events that took place in Greece this afternoon, and the resultant falling dominoes that are about to be unleashed, was given by Slovakia's finance minister Peter Kazimir, who summarized events as follows:
The nightmare of the 'euro-architects' that a country could leave the club seems like a realistic scenario after #Greece voted No today
— Peter Kažimír (@KazimirPeter) July 5, 2015
He followed it up with a Dylan Thomas quote:
We will not go gently into this good night. We stand united and we need to respond to this situation as soon as possible
— Peter Kažimír (@KazimirPeter) July 5, 2015
We assume the next lines goes as follows:
"Rage, rage against the dying of the "irreversible" currency"
And while we laid out what Deutsche Bank's 4 possible scenarios are in the case of the now confirmed "No" vote, here is JPM's Malcom Barr with the bank's latest take on Greece which is that at this point, a Grexit is JPM's "base case"... and it only
goes downhill from there.
After the "big no", euro exit is our base case
- After the “big no” it is now a race between two forces: political pressure for a deal, versus the impact of banking dysfunction within Greece
- Although the situation is fluid, at this point Greek exit from the euro appears more likely than not
Early indications of the official result suggest the result is a “No” by a comfortable margin. What happens next?
First, it will be important to see the tone of the immediate political responses both within Greece and outside. We would expect the tone to be somewhat more conciliatory on both sides. Hollande and Merkel are to meet tomorrow night to discuss the issue, and as we understand it, the Eurogroup is scheduled to meet on Tuesday. We expect that a split is likely to emerge in the coming days. The Commission and France (and possibly others) will argue that negotiations should resume immediately with an aim of finding agreement. Others will find it more difficult to return to negotiations with a newly emboldened Tsipras in short order.
In the German case, for example, the Bundestag has to be consulted before Mr Schauble can enter into discussions about a new program for Greece (as requested on 30th June). However, the Bundestag has just broken for summer recess, so any such vote will require a recall. We have seen reports that talks at a technical level between Greece and the creditors may restart tomorrow (Monday), but we can imagine that the Bundestag will express its displeasure if it feels those discussions are in-progress without their express consent.
Second, there are reports of an emergency meeting between the ECB, Bank of Greece and Finance Ministry tonight, and at the latest the ECB will likely have to take a decision about ELA support tomorrow (if not tonight). Our base case is that the ELA total will simply be rolled on a day-to-day basis for now. It is extremely difficult for the ECB to justify increasing the region's exposure to Greece at this point. That effectively means that the Greek banks are likely to run increasingly short of cash, and the acceptability of electronic forms of payments will diminish rapidly.
The Bank of Greece and Finance Ministry has a joint committee working to prioritize payments out of Greece for essential imports. There are reports, however, that suggest the logistical problems arising from these procedures are biting. Importers are facing delays in seeing their requests to make purchases processed. And Greek exporters are finding it hard to get payment in euros from those they sell to, as their customers do not want to hold any euro balances within the Greek banking system. It is difficult to get a sense of the scale of these issues at this point. But our best guess is that these issues will multiply in the days ahead.
This suggests that what we see next will be a race between two forces: political pressure to move toward an agreement despite resistance from a number of northern European parliaments, versus the increasingly unpleasant implications of a dysfunctional banking system on the other. This latter force is unpredictable: it may manifest itself in pressure on the government to stand down, or it may generate a more unified “siege mentality” within Greece. The July 20th payment of €3.5bn to the ECB as Greek bonds mature creates one possibly fixed point as we look forward, but our sense is that could be dealt with via a number of mechanisms if political talks are progressing (transfer of SMP profits, short-term ESM loan, for example).
Our base case is that the pressures coming from a dysfunctional banking system in Greece will shorten the time horizon to negotiate a deal to a handful of weeks. As that pressure builds, there is likely to be a temptation to call a referendum in Greece on euro membership, and for the state to begin issuing I-O-Us or similar and giving these some status as legal tender. To the extent that pensioners and public sector employees find themselves being paid with such instruments, it takes the banks further away from solvency (they have liabilities in euros, but will have loans to individuals being paid or receiving “i-o-u” s which will be worth a lot less). Meanwhile, we expect at least some countries in the rest of the region (not least Germany) will not hurry over the design of a new program, and will find it difficult to get parliamentary assent for any such program.
This is a path that suggests to us that there is now a high likelihood of Greek exit from the euro, and possibly under chaotic circumstances. Perhaps the rest of the region will agree to a reasonably quick deal, or the ECB will raise ELA enough to retain minimal viability in the payments system. Perhaps the pressures of dysfunctional banks will force Mr Tsipras to stand down, and a deal is subsequently made. But for now, we would view a Greek exit from the euro as more likely than not.
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I thought you died
the meme lives on!
These modern Templars are stunned! They should have studied why the Medicis got out from banking business!
That is what you get for thinking. That bastard is still alive. The blood of innocent virgins that were sacrificed, transfused into his veins, does wonders.
Here is his bio from wiki...
https://en.wikipedia.org/wiki/David_Rockefeller
Mr. Rock, good on ya for a fine early post, all y'all gotta' love the broad perspective.
Apparently the only thing left to do now to prevent a complete euro meltdown is to start a war somewhere?
Dont we have enough wars already? Some fairly close ro Greece. Just rename one of those.
dedicated to Frau Merkel
Well, apparently, Greece reached the tipping point where Greece no longer has a debt problem, but the bank now has a debt problem.
Got leverage?
So I guess 401K holders in the US will find out if it's true that Greece doesn't matter. Well, in their case, it's actually the US that matters. We just aren't that far along. Yet. LOL.
Please check in with New School's Very Own Dr. Ghilarducci (qwm) and see what her professional view on this matter is.
Say goodbye and goodnight to the Greek banks and the old older, something comes next , all depends on the level of support the country gets from Russia and China. If the eurozone has any sense they'll make this easy and help with the process, if not Greece will make the Eurozone hurt. Biggest issue for the Eu is the Spanish, French and rest will be holding referendums like tomorrow.
Now comes the standoff between the IMF (& ECB) & a rogue nation (Greece) https://www.youtube.com/watch?v=4yZjLYb3hdM
Greece.... Italy... Spain... Ireland... boom boom boom... get into the phyzz while you still can
www.teamramgold.com
P is for Portugal!
Likely!?!?
That’s like standing in front of a running train and saying "THIS MIHT LIKELY HURT"!
I wouldn’t mind a total euro collapse either :)
Varoufakis just mentioned the possibility of "California-style" IOUs as an emergency.
The word he wants is "drachmae"--- which he now plans to print by the metric wheelbarrow-ful.
There is ALWAYS THE POSSIBILITY of A GREEK Cypriot Pound or Lira as they called it.
Cyprus Pound WAS THE MOST STABLE AND SUCCESSFUL CURRENCY till they pushed them in the Euro.
Don't take it from me, LOOK IT UP.
Good. Heck, I'll buy a few of those and spend 'em in Santorini.
Lets hope so, but I dont see it, yet.
Hey EU banksters, they told ya they ain't got the money for the mortgage on the farm; tying 'em to the railroad tracks was never gonna work.
Italy, France, Portugal on deck....
They will take wait & see approach, if Greece leave and start recovering it will inspire them, but if things get terrible there it will scare them off such move - IMO.
don't worry there will be a deal, for sure, because Syriza is part of the system pro UE-Euro
"the Eurogroup is scheduled to meet on Tuesday"
So, now it's Eurogroup instead of European Union is it?
Does that mean Greece was vital to it ever being The European Union?
Or, was it just a Eurogroup all along and they were just pulling our leg about the The and Union thing??????
One large step for man, one giant leap for mankind.
where is Ghordius to shut these guys up !
he's getting the inside story on how the Eurogroup collectively confessed - to the Pope and the media - that greek bailout is a misnomer for EU banking sector bailout
when you're bankrupt just say it
SAY IT! SAY IT! [/Sam Kinison (0:30)]
https://www.youtube.com/watch?v=nbdnH0J6jw0
http://www.theguardian.com/world/ng-interactive/2015/jul/05/live-results...
Ok I think it should be sure by now.
What about the debt relief part of the story ( Grexit or not ) for Greece? The IMF has already conceeded this necessity. And Spain, and Italy, and Portugal and Ireland?
The ELA may restore bank relief and confidence in Greece for the short term but a landslide has been unleashed against the holders of the debt of all of the PIIGS.
My weather forecast? Ugly with a strong likelyhood of shitstorm.
"Perhaps the pressures of dysfunctional banks will force Mr Tsipras to stand down" gives away the usual solution of the elites. After this election Mr Tsipras will weather the strorm.
calm down, boys and girls
Tomorrow Tsipras will take to the airwaves and announce his plans, including the deals offered by Russia and China.
He is silent today because the results of the referendum are not yet official. (and may be to give some of the the EU officials in Brussels a good bout of the runs.)
There will be no deal. Batshit Betty now has a mandate from the FSA to turn Greece into a communist state with herself as Big Sister, and Yanis can now print drachmae by the metric wheelbarrow, excusing his old man from paying a lifetime's worth of taxes on Yanis's hard-currency inheritance. Nothing short of violent overthrow will stop them now.
You can rest assured the only merchants to be henceforth granted hard currency to import goods will be those willing to hand over most or all of the profits to Batshit Betty and her goons, in euros. Meanwhile, the actual working class will be paid in worthless drachmae, if at all.
If Syriza are not overthrown soon, Greece has nothing to look forward to but mass expropriations, score-settling, and open terrorism by Democratic Hellas against its own people, without the pretense of a false flag.
Now let's vote on whether we get to have our cake, and eat it too...
You mean baklava and eat it too.
those innumerable greek islands...splendid locations for russian and chinese submarine bases. perhaps even some ballistic missile launch sites. good issues to think about were i ZATO/ZU.
The ECB will take over Greece and mandate changes. Boots on the ground. They will not allow this. The PM and Finance minister will be arrested and strung up for terrorism.
You don't fuck with other banks money and walk away. Never. There will be a take over of Greek gov.
I have a feeling that might set off a leftist revolution throughout southern Europe. Probably not a good idea.
I am with the Greeks on this but I don't think that this is over. The ECB will not just walk away.
And the ECB has what army? To invade Greece, they need to muster troops from somewhere. Or else send in CIA assassins. If the EU calls up German and French troops, then you know they are serious, but until then it is not a concern.
Up yours, brussel EU jerks.
nothing happened, just a new round of negotiations possible
https://www.youtube.com/watch?v=n4Qcm24dxaA
What happens when Madam Frexit Marine Le Pen wins the French presidential election in two years? All this is moot anyway as the Euro can't survive without France.
Do whatever you want, just do it with your own money
Greece to China and Russia: "I will gladly give you a seaport and pipeline for some cash now and a toll booth on the silk highway.
Threaten the peasant so the banking bet will be matched. Then shoot the banking fucker. We can find who gave a insurance policy. Focus on these fucking muts.
Here's how propaganda works
All morning long the Greek referendum was the first story at google news, world section.
After a while the Noes had won 60% and the Yeses 40%. 90 % of the vote has been counted.
What does a true propagandist do when that happens?
The Greek Referendum dropped from first story in world to eighth story, behind the christening of Princess Charlotte.
Google's guys had lost, so google pretended it wasn't important.
So the entire world is drowned in debt. Let's abolish it and have the 0,01% lose some money. I am nor worry about them, they still will have plenty and the world will be able to go back on the credit binge.
The continued parroting of the same thing over & over only proves to illustrate again & again the stupidity, gullibleness of humans & whom they elect. Devolving over & over into neo-Fuedalism.
Lendng people money to pay debt on money they couldn't originally pay back to begin is beyond stupid. Bankruptcy & should have left long ago. The game is rigged & we all know it.
NATO (EUC / US Cabal) = Nazi American Terrorist Organization.
This victory for freedom and democracy is incredibly valuable for everyone, not just Greece.
I somehow had a feeling this would go this way, since the Greek govt picked the best day of the year to hold the referendum :)
The world stands with Greece and in my view the EU needs to plan their next steps very carefully, as they are getting increasingly more unpopular.
Denmark and Sweden have their own currencies and peg them to the euro.
I guess if Greece had its own currency and it was considerably lower in value than the euro, then it would help getting the tourist business up and running at full speed.
That and a huge debt reduction.
If Greece and other countries had their own currency, perhaps the value of the Euro would be the one suffering. There is a blanket assumption that the supra-national fiat currency is always going to be superior, but it crumbles like any other fiat when exposed to the light of day.
It's about the monopoly on who gets to print money.
What was the purpose of the "EuroGroup" in the first place? Something about trade something something?
Now they are exposed for the controllers they are, and they don't like that the jig is up.
LOL...JPM twisting the knives at DB. They including GS are probably hedged against the meltdown or benefiting from their shorts.
May the cannibalism escalate in the weeks ahead. C'mon Draghi, we await the liquidity bazooka.
The real problem is that - All money is debt in the new world economy.
Money is supposed to be a medium for exchange of good and services. Everyone seems to have forgotten this simple requirement.
The Greeks had borrowed a lot of money. But, instead of asking Greeks to produce something that others needed, the EU and American Banks gave Greece "swaps" (debts of course) to cover the debts. Funny is it not?
The previous Greek Government, EMU officials, International Banksters were all complicit in the cover up. This was supposedly to allow Greece to enter the EMU. Which basically means, to enter EMU Euro zone you have to lie and add more debt to your people. Nobody who did this is in prison. Instead the EU is fighting hard to keep this idocity to continue.