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It Begins: ECB Hikes Greek ELA Haircuts; Full "Depositor Bail-In" Sensitivity Analysis
Earlier today we reported that as Bloomberg correctly leaked, the ECB would keep its ELA frozen for Greek banks at its ?89 billion ceiling level last increased two weeks ago. However we did not know what the ECB would do with Greek ELA haircuts, assuming that the ECB would not dare risk contagion and the collapse of the Greek banking system by triggering a waterfall solvency rush in Greek banks if and when it boosts ELA haircuts. Turns out we were wrong, and as the ECB just announced "the Governing Council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for ELA."
Full Press Release:
ELA to Greek banks maintained
- Emergency liquidity assistance maintained at 26 June 2015 level
- Haircuts on collateral for ELA adjusted
- Governing Council closely monitoring situation in financial markets
The Governing Council of the European Central Bank decided today to maintain the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on 26 June 2015 after discussing a proposal from the Bank of Greece.
ELA can only be provided against sufficient collateral.
The financial situation of the Hellenic Republic has an impact on Greek banks since the collateral they use in ELA relies to a significant extent on government-linked assets.
In this context, the Governing Council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for ELA.
The Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area. The Governing Council is determined to use all the instruments available within its mandate.
What does this mean? Since it is almost certain that the haircut is being increased (as decreasing the ELA haircut makes no sense since Greek banks still have about €20 billion in ELA collateral buffer and instead the ECB would have simply raised the total ELA amount), it means that the ECB just took its first practove step toward launching a Greek bank bail in. [ZH: it has since been confirmed that haircuts are being raised].
And for the convenience of our readers, previously we prepared precisely the sensitivity analysis showing what ELA haircut results in what depositor bail-in.
Here is the summary sensitivity analysis indicating what a specific ELA haircut translates to in terms of deposit haircut. Basically what the ECB just did is to increase the haircut from the existing level of about 50% which was unusable anyway due to the freezing of total amount of ELA at €89 billion, to 60% at which point the collateral buffer - unusable as it may be - was entirely eliminated from €24 billion to virtually nothing.
Another way of showing this dynamic is presenting the ELA haircut on the X-axis and the corresponding deposit haircut on the Y-axis once the critical "haircut" threshold of 60% in ELA haircuts is crossed.
Further confirmation that this was a haircut increase comes from Reuters reporting that the ECB will hike the haircut just enough to reduce the collateral on Greek banks to slighly above the current level of use which is about €90 billion. In other words, the ECB increased its haircut from roughly 50% to just about 60% above which level depositor bail ins begin.
Needless to say, this decision makes it quite clear that it was not Greece, but the ECB pushing all along for "burning the Greek bridges" - just as we warned in "Goldman's "Conspiracy Theory" Stunner: A Greek Default Is Precisely What The ECB Wants" - and as a result any chance of a compromise resolution with Greece may have just been, well, burned
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molon labe
"Burning Greek bridges"
You say that like it's a BAD thing!
Good stuff ZH.
Note to self: Another conspiracy fact confirmed and bankers and bureaucrats are still all sociopaths.
I know, lets lease some of our gold from ft Knox to the Greek government! No wait,,, ahh, fuck it. Lets start hangin' banksters from the light posts instead.
The earth is cooling.
The sun is powering down.
Excellent times for revolutions.
Russia is really going to need another southern port soon.
Sun better power down quick. Temps hit 104.5 F in Bavaria yesterday
Few weeks of hit summer doesn't make it global warming.
If that's true, that's crazy hot. Must be the remedial actions they're engaged in, like the NE Pacific heat blob.
Thanks to modern finance and "mark to model" accounting, anything real or imaginary can be now considered as collateral....
LMFAO!!!
Seeds are going to be collateral very soon.
Non-GMO that grow in cool climates.
Only 10,000 humams walked out of the last ice age.
You want sensitivity analysis?
Anyone who keeps any amount of money in a bank needs their head examined.
This will have 1929 like, depression babies, generational, implications on the willingness of the public to use ANY Bankstering products in the future.
Stick that in your spreadsheet and smoke it, you Banksters.
I wonder where bankers keep their money?
Works of art is one.
Ok Racetothebottom; I have heard dozens of people say the same thing. Where would you stash, say, $100k? And not in PMs, not in overinflated RE or 'land' I cannot work. What would you suggest.
Tulips
So PM's and RE are overinflated..at least you own them. If these bank bail ins come to your country, you will outright lose at least some of the funds in your bank accounts.
RE you don't own. At least not in the US you don't. You pay for the priviledge of leasing it from the tax authorities at whatever rate they can get away with and if you fail to pay, its gone, gone gone.
No haircut on the bank of mattress or gold. Look to bankruns in Spain , Portugal and Italy. Maybe the world will wake up to the dangers of having ones assets in someone else's hands. If its not in your hands you don't own it.
Stick with metal. When TSHTF, they will devalue the dollar right out of your hand. See 1933 for a similar move. 75% overnight by the bankster FDR. Jim Willie calls it the Scheiss Dollar.
A flat 1% interest rate all loans.
Cut out the banks.
^^^This is what happens when you know enough to hate the existing system without knowing why it doesn't work.
John Wilmot definitely works for a bank.
vasectomy
Take one for the gene pool.
I just thumbed up all of your comments on this page except for the "bail-in" one - it shouldn't be called a "bank" if you put your money in it and you just end up in a line of creditors.
Then again, it shouldn't pay interest in my world either ... oh wait ... :-)
Depositors may not understand the legal technicalities (that they are unsecured creditors), but they know for damn sure that the bank is not just storing their cash safely in a vault. They are all aware that there have historically been these things called bank runs, yes? If so, then they understand that they're taking a risk. And, regardless, the taxpayer and/or currency holder who sure as shit did not invest a fucking penny in the bank should not be looted to make the depositors whole in the event of bankruptcy.
Anyway, thanks for the upvotes, we evidently agree on something....
... and again, I agree. I just think there SHOULD be "utility banks" that are effectively vaults. ... I guess I'll just need to stick with risk-free treasuries. :-)
Yeeeees and no. Yes, the average person totally understands that the bank does not simply hold their cash in a special vault with their name on it. However the average person is absolutely NOT fully aware of how imperiled their money actually is.
Banks love their FDIC signage. Everyone knows their accounts are insured against a bank failure. We all have $250k FDIC insurance per account holder. Have more than 250k? Just have an additional account at a different FDIC insured bank! So easy!
But do you think Mr and Mrs Average Person knows the FDIC insures over $4.7 TRILLION in deposits but only has $13.6 billion available? (#s from mybudget360 posted December 2014)
Think about how pathetic that is for a second. Really try and picture how disgustingly, ridiculously, criminally inadequate that coverage is. You heard there weren't near enough lifeboats on the Titanic.... now remove them ALL and replace them with a single Camp Chippewa canoe.
Also an average bank customer may assume that the bank would of course be required by law to have their cash available for a timely withdraw. Again many would be shocked to know the truth.
Effective January 23, 2014, institutions with net transactions accounts:
Ten percent! Does that cover the bank's employees?! What about the other 90%?!
And how do you think customers would feel if they were to discover how reckless banks are when investing their hard earned deposits. I imagine most would be horrified!
I'm not saying it's impossible for customers to learn these facts, I'm just saying banks DO NOT make the information readily available. We all know the Federal Reserve Bank is not a federal institution ('bout as legit as FedEx) but they CLEARLY choose the name to obscure the truth. Banks fib and fabricate to instill confidence and project authority.
Anyway I posted a lot of words just to say, I do not agree that "They are all aware... that they're taking a risk". Most people don't have any idea how exposed their wealth is.
Kevin H. doesn't want S&P breaking 2058...
stopped it here last week, this morning and just now....
wonder why 2058?
anyway, thru there and flood gates open up I'lll bet.....
So the shit is starting to hit the fan. Thank you Greek people to show the rest of the world that we still can find some balls leftover.
If they'd have balls then they would cut government pensions in half. The government acted irresponsibly, and they should pay for it. Instead, they punish everyone outside of their circle of friends in the government. Pensions should be the first to go. Let the government taxation thieves starve, or god forbid, actually do something productive for once, if that is what it takes to learn responsibility. Of course in Greece no goverment worker has ever known what it means to be productive.
US Preparing Coup to Prevent Greece from Falling Under Russian Influence
Always possible. Anyone think Alex Jones is credible?
Yes, because he's probably a See Eye A asset.
https://mackquigley.wordpress.com/2014/07/26/11616/
I said this four days ago. What matters is NATO: not ELR, IMF, EU, Euro, Drachma, Europeans, Greeks, or FU.
There comes Mr Template.
... here's a good read ... >>> Greece — The One Biggest Lie You Are Being Told By The Media >>> http://www.globalresearch.ca/greece-the-one-biggest-lie-you-are-being-told-by-the-media/5460508
... it begins with ... "Every single mainstream media has the following narrative for the economic crisis in Greece: the government spent too much money and went broke; the generous banks gave them money, but Greece still can’t pay the bills because it mismanaged the money that was given. It sounds quite reasonable, right? Except that it is a big fat lie … not only about Greece, but about other European countries such as Spain, Portugal, Italy and Ireland who are all experiencing various degrees of austerity. It was also the same big, fat lie that was used by banks and corporations to exploit many Latin American, Asian and African countries for many decades. Greece did not fail on its own. It was made to fail."
... or how the Hellenic Republic experienced hell ...
They never learn do they. Not only they failed to even acknowledge the result of the referendum (that moved the rest of the greek political parties to support the government's position), not only did they brushed aside the IMF's study re debt sustainability/restructuring/forgiveness (and the USA's continuous "encouragement" to close the issue) but they also "leak" to the press notions like "trying to find the way to expel a country from the eurozone" while at the same time "arranging humanitarian help" for the devastation they (say they) are prepared to initiate. Can only think of one greek word: HYBRIS
Where is the capital of Greece??
(In the banks.)
Ask any Greek if they think this election will fix their broken and corrupt system.
I think they were actually foolish enough to believe rejecting the referendum would force the EU to give them a better deal. What people on Zero Hedge understand is that they are fucked either way and need to get out of the EU to give themselves a better chance for thriving economy when an actual recovery takes place.
" Konstantine Aristole Bendoveropoulos could not be reached for comment. "
... referred to un educated Greeks voting no as... wait for it... OXIMORONS.;)
Yanis knew; Out at the top.
Your analysis is cool, but it isn't right. Greece has virtually every remaining account insured by the government, those under 100k E. Any bail-in wouldh have to be made up.
Putin is planning something. He just called Lagarde at the IMF. Whatever the timing, I suspect the "something" will come after Greece leaves the EU.
http://en.kremlin.ru/events/president/news/49874
Vote up! 0
Vote down! 0
One interesting point is that Greece is still sitting on $6,236,288,773 in gold reserves I wonder how they can bring this into play in the very near future.
Both Russia and China would love to get their hands on that. maybe they will sell euro hard currency in exchange for gold? That would enable them to keep filling up the cash machines and thus stmying the euro blackmail squad.
Have You seen it?
You forgot Nuland was in Athen.
Don't tell me you think the Gold is still there.
Fire up the money press, Greece.
Make it rain up in there.
What about the Greeks that kept their cash in German banks?
Do the Greeks allow foreign banks in Greece? What stopped everybody from switching banks?
The folly of national debts within a borderless union, what stops Greeks or Puerto Ricans from leaving?
What's next national liability taxes? Isn't that racist?
I have been commenting on financial and political views for years on ZH, but in the last year my comment historic logs have been purged several times. If I was paranoid I would think that zh Purges members historical logs if ZH or tyler thinking policy is discussed too much. If so this comment may not last very long. I have been commenting on ZH for over 3 years but all my comments are errased now several times.
no need to be paranoid, the truth is all your comments sucked, that's all, and they were taking up cyberspace so they got zapped. No biggie.
Don't take it personally. Everyone's comments are gone. Some people surmise its being done for your own good. Some people surmise thst the ZH infrastructure can not handle an infinite load.
Somebody put up a link to an independent site, in addition to the NSA, that remembers everything.
How computer and internet illiterate are ZHers?
Many are like 1st graders.
ZH has limited indexing for searching all of the (mostly) inane comments here.
All your comments are still there, and can be searched by using Google, Yahoo, etc.
Try a websearch- you'll see:
(Nah- it's actually the interwebz boogieman hooz ta blame.)
Need a tissue? Seriously :)
90% robbing of greek savers = 1y cost of keeping over 2m oUS citizens in jail , most of them for drug related or non-violent crimes
The ECB is printing 60 Billions of euro every month, free money for the wealthy countries in the EU. Non of that goes to Greece!
It's not like it will cause stagflation in Greece, Spain, Italy and Portugal..oh wait it definitely will.
Buy DAX30 for a fly to the all time high
You know what?!? FUCK the EU/ECB/IMF and every other son of a bitch that lent Greece money. THEY FUCKING CHARGED INTEREST RIGHT?!?? That's why you charge interest - for the damn RISK of lending money. You want to be in the business of lending others money - you charge them interest for the risk you're taking. If they don't pay you back - you LOST the bet - you're still getting interest from the ones that are paying you. SO ALL BANKS CAN GO STRAIGHT TO HELL - FUCK YOU!!
That is not how greed and corruption for the "jollies" of controlling others look like. These people are sick as are all human beings; just a matter of degree. How far from perfection are each of us? For "perfection" is the standard by which all will be judged and that is the reason people must be in Christ and it is no longer "you" that live, but Christ that lives in "you", for He is perfection...the requirement for the entrance into His Kingdom...He offers it freely and paid the ultimate price that makes a soldiers ultimate sacrifice, often without real purpose (i.e. defending bankers indirectly) look like nothing. Not saying the soldiers are worthless; only by comparison to the One who give humans any value.
Greece gave Europe its name after Europa . it's taking it back
`americans will dream of a 60% haircut, after their 90% fdic haircut.
... and the market yawns Same apocalypse, different day. Meanwhile, USA will have to choose between Evil and Evil-er. Some crisis is urgently needed to distract the masses from the absolutely incompetent evil that is the 1% and their political pets.
The Greeks have been deadbeats and spendthrifts from time immemorial. So the European Union comes along and decides, "If we can just loan these deadbeats and spendthrifts enough money, they'll decide not to be deadbeats and spendthrifts anymore." IOW a strategy that no one in their right mind would try on their deadbeat and spendthrift brother-in-law is supposed to work on a deadbeat and spendthrift country.
It would be funny if this weren't the Lehman Moment of Bubble Number Three. I hope you've got your seatbelt fastened and your tray table in its upright and locked position. The ride from here is gonna be fucking epic.
If not for the providence of God, you may have very well been born a Greek and then you view would be different...given you had no say in your birth..when, where, who would be your parents etc.
So it's God's fault I'm not a deadbeat and spendthrift? Bull. It's not in the DNA, it's in people's decisions. There are plenty of Greeks who are not deadbeats and spendthrifts. Unfortunately there aren't enough of them. The USA is no better either, we're just crashing from a higher plane, so hitting the bottom is taking a bit longer.
Are you a creature or aren't you? If you say no, then you are very stupid. If you say yes, then you have a Creator. It is not really very complicated unless you believe the theory of "the goo to you via the zoo" and that takes great faith.
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Like taking all the parts necessary for a F-250 and dumping it into an endless hole and by chance all the parts come together in such as way as to have an F-250...only a fool would believe that was possible. Now take that example and add a multiple of a quadrillion and you have the "theory" or "lie" taught as fact & believed by stupid people called macro-evolution.
--------------------------
Do you believe people have real freedom? If you say yes, then you show you have never looked up the definition. WOuld you claim to be enslaved or a salve? If you say no, then you have never looked at the definition or the mirror of your life. God has told us, in His word, that all are slaves either to the world, self and Satan or to Him. The burden of responsibility is always on the slave-master, but in human terms that is abusive and from heaven's perspective it is perfection. Why choose darkness over light? Foolish isn't it?
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I am not saying you are a fool, for I do not know where you stand before a Holy God, who is Jesus Christ.
Well, I'm not saying your arguments are incoherent. It may be that they just appear that way to my limited mind.
You missed the point. You could have been born in the inner city of Chicago to a crack mother and been part of a gang as many have been or born in south Sudan; would you be a deadbeat? Not likely, but your opportunities would be severely limited. You should be thanking God that He has not yet dealt with you as you are...true for all of us. Cheers!
https://www.youtube.com/watch?v=NMlv21zGARM (What is salvation in 2 minutes)
A lot of people are born to crack mothers on the south side of Chicago and end up doing quite well. Specifically, the ones who don't blame their problems on being born to a crack mother south side of Chicago. Sudan is a different story, of course, but the topic at hand is Greece, and Greece is not Sudan. Duh.
So which is it? Are the Greeks deadbeats and spendthrifts or not?
How much time have you spent in Greece?
Great opportunity for Russia and particularly China to use Greece as a US Treasury dumping ground as was what happened in Cyprus, which is why the West intervened. Will get interesting as Financial wars really heat up and all of us will be the lessor for it, for we, Americans in general, did nothing but argue over things that do not matter and voted for two parties that are one in the same. Rejected divine providence in favor of things that perish, oh well; great to be a Christian, for even when I die (and all do) yet I will live with my Lord, who is Jesus and unlike man; His love is an everlasting love and His ways are Holy, Just and very good!
ELA = "European Liquidation Association".
Whatever happens the Banking cartel will come out on top. If nothing else, you can at least count on that.
The Great Depression produced Glass-Steagall, which kept the banksters in their box pretty well for a couple of generations in the USA. What we're feeling now are the effects of the rollback of banking regulation, begun under Reagan and finalized under Clinton, then adopted worldwide. Bad idea.
What do we need governments for if they cannot protect us from banker theft???????
Man without restraint is a murderous and lethal creature by nature.
As foretold, This is the result of mankind rejecting God as King and demanding a human King:
"But when they said, “Give us a king to lead us,” this displeased Samuel; so he prayed to the Lord. And the Lord told him: “Listen to all that the people are saying to you; it is not you they have rejected, but they have rejected me as their king. As they have done from the day I brought them up out of Egypt until this day, forsaking me and serving other gods, so they are doing to you. Now listen to them; but warn them solemnly and let them know what the king who will reign over them will claim as his rights.” - 1 Samuel 8:6-8
http://biblehub.com/niv/1_samuel/8.htm
Again, as foretold, this is the result of the Great Whore of Babylon (the Global financial system), riding those same Kings of the Earth:
"And there came one of the seven angels which had the seven vials, and talked with me, saying unto me, Come hither; I will shew unto thee the judgment of the great whore that sitteth upon many waters: With whom the kings of the earth have committed fornication, and the inhabitants of the earth have been made drunk with the wine of her fornication. So he carried me away in the spirit into the wilderness: and I saw a woman sit upon a scarlet coloured beast, full of names of blasphemy, having seven heads and ten horns. And the woman was arrayed in purple and scarlet colour, and decked with gold and precious stones and pearls, having a golden cup in her hand full of abominations and filthiness of her fornication: And upon her forehead was a name written, Mystery, Babylon The Great, The Mother Of Harlots And Abominations Of The Earth." - Revelation 17:1-5
https://www.biblegateway.com/passage/?search=Revelation+17&version=KJV
Anyone who thinks Greece's Gold is safely stored away in GREECE, is out of their mind. It's long gone by now...Basically, they are finishing off the looting and getting every last ounce of change off the greeks.
The thing I don't quite understand how the Greek government has no money since they were supposed to pay 1.55 billion euros the other day. I'm sure they didn't have all 1.55 billion but they must have something.
you do realize that is about 140 euros per person. right?
This reminds me of this scene from Goodfellas:
https://www.youtube.com/watch?v=ZPtjyqgZAUk
Plenty of time have been given for exits. Still a small window left to squeeze out. The game in saving the banks outside Europe is getting desperate that Greece can be a wasteland.
Forget abotu fears that Greece leave EU..their immediate task is to calm markets.
Greek People..follow up on your OXI and if you have to go down, bring them down too.
Depositor: Give me my money.
Bankster: We stole your money.
Depositor: Why my money?
Bankster: Because you have money.
Depositor: So you're stealing my money because I have money, and not stealing money from others who have no money?
Bankster: That's correct.
Depositor: Are you kidding? So you're just like any thief on the street... you only steal from people who have money.
Bankster: Well, I suppose. Except we wear coats and ties.
Depositor: Well, I know how to respond to thieves.
Bankster: Put that gun down.
Depositor: My money or your life.
Bankster: I can't.
Depositor: (bang, bang).
Depositor: Give me my money...
Next Bankster: ?????
-----
All Greece needs is a lot of sane humans (depositors).
Aaaaaand......Its gone!
If the ECB wants to avoid instability they should try to avoid a depositor bail-in. The mere fact that the EU has pushed for legislation allowing depositor bail-ins in member countries makes no sense to me if stability is what they are looking for. If the general public feels that there is a risk for a Cyprus style depositor bail-in it is more likely that we will see bank runs in countries like Italy, Spain and Portugal.
I also think that it should be possible to create solutions which seem fair to both the Greek general public and to the electorate in other countries which are subsidizing Greece. Why not confiscate all subsidies Greece now receives from the EU and use that for gradually shrinking the part of their debt which exceeds 100 % of GDP and let them use their own revenues from tourism, shipping etc for pensions, schools and public health care? Aren´t those revenues sufficient? Is it really that bad? Is the solution to give Greece another haircut and then continue to subsidize a lifestyle which they can not really afford?
Furthermore, you don´t have to be a genius to understand how a haircut may affect the fiscal responsibility in Italy, Spain and Portugal. “If Greece can get a haircut, then we can also get one.” Italy must shrink its government debt to less than 100 % before Greece can get a haircut. So to me it seems quite irresponsible by the IMF to say that Greece must have a haircut. It´s possible that Greece needs a haircut. But as long the PIIGS countries refuse to raise their taxes to Scandinavian levels it seems quite risky to give Greece a haircut. Perhaps it is also risky to let net subsidies from the EU pay for parts of the debt and thereby reduce the debt-to-GDP ratio to manageable levels. But it should be less risky than a haircut. Moreover, Italy seems to be a net contributor to the EU.
this is starting like a tiny snowball rolling down a very long, snowy incline.....
It is the Thelma and Louise moment of the Global Economy. Unfortunately some idiot banker or politician will come along and throw the dead ho's out of the demolished car and build a new car and move it on down the road. Meet the new boss same as the old boss.
Greece's debt is not serviceable/repayable in relation to its real current and possible GDP and revenue collection.
First steop must be to reduce debt to a level that is Genuinely serviceable and that does not shrink GDP and its growth. If this cannot be done then it becomes total default because things will simply cascade downwards.
Second step must be to trade with a currency that is competitive, or Greece get compensated through regular Transfer Payments for its losses in using a currency too strong. BUT the truth is the nature of the Greek economy is that it should never be using the same currency as Germany.
It has to sort out its debt problem first. Either there is a significant restructure that makes it possible to service and repay using real world scenarios, or if the Troika wont come to the party, the only option is nuclear default, else permanent debt poverty continues.
If it can restrucutre debt to a rational level, then it can look at currencies and or import Tariffs to make local business competitive with imports.
simple solution...own some physical gold in small weights, outside of the banking system, so when the TBTF fail and drag the fiat with them.. you might actualy have something to trade....
www.teamramgold.com
Take the beautiful Greek island of Zakynthos, where almost 2 percent of the population was registered as blind and thus entitled to $400-a-month disability pensions and other charity perks.
That’s a blindness rate some nine times higher than elsewhere in Europe.
Trouble is, the island’s supposedly vision-impaired residents included a taxi driver and a man whom one official described to Angelos as “a bird hunter.”
USSA - Looks like this is part of the global playbook? Every month, 14 million people now get a disability check from the government. The federal government spends more money each year on cash payments for disabled former workers than it spends on food stamps and welfare combined. Yet people relying on disability payments are often overlooked in discussions of the social safety net. The vast majority of people on federal disability do not work.[1] Yet because they are not technically part of the labor force, they are not counted among the unemployed.
In other words, people on disability don't show up in any of the places we usually look to see how the economy is doing. But the story of these programs -- who goes on them, and why, and what happens after that -- is, to a large extent, the story of the U.S. economy. It's the story not only of an aging workforce, but also of a hidden, increasingly expensive safety net.