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New Government Likely In Greece, Depositor Bail-In Still Possible, Deutsche Bank Says
Over the weekend, the entire world looked on in horror as Alexis Tsipras - who just days earlier secured a crucial referendum victory which by all accounts empowered him to ride into Brussels a conquering hero - was eviscerated by German FinMin Wolfgang Schaeuble and several like-minded EU finance ministers who smelled blood last Thursday after Greece submitted a proposal that betrayed the Greek PM’s lack of conviction.
As outlined exhaustively here over the past 24 hours, the new “deal” for Greece has implications far beyond the Aegean and may well mark the beginning of the end for the EMU experiment, for although the Greek drama highlights the need for a fiscal union to compliment the common currency, the "bargaining" stance adopted by Germany makes it far less likely that financially weaker states will be willing to turn over their fiscal affairs to Brussels.
But leaving the bigger picture implications aside for now, the two most important short-term considerations for Greece are: 1) establishing political stability, and 2) stabilizing the banks.
Neither of these will be easy.
In fact, both could prove to be rather monumental tasks. With Tsipras facing a party revolt and the Greek banking sector facing outright insolvency, Deutsche Bank has more on politics and bank "normalization."
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From Deutsche Bank
Next Greek steps
On the political side, statements from Greek PM Tsipras following the conclusion of the summit indicate a desire to take ownership of the "difficult" agreement, despite the large concessions made. We would consider this as significant, as the PM still commands a meaningful degree of influence in Greek public opinion as well as within the SYRIZA party itself. Following Saturday's authorization vote in the Greek parliament, at least 32 government MPs have indicated they would be unwilling to support an agreement, effectively leading to a loss in the government's parliamentary majority. The support of Independent Greek junior coalition member also remains to be seen following negative statements on a potential agreement from party leader Kammenos overnight, effectively leading to a potential loss of more than 40 MPs from the government coalition.
As such, we would consider a minority or national unity government as the most likely outcome following the Greek PM's return to Athens later today. A minority government would involve a major cabinet reshuffle by the Prime Minister with the departure of dissenting cabinet ministers (most notably energy minister Lafazanis) and the replacement by more politically-neutral members. Opposition support would remain at arm's length, to be provided by New Democracy, River and PASOK controlling more than 100 MPs. Combined with support from moderate SYRIZA MPs, this would generate a parliamentary majority of at least two-thirds. The alternative outcome would be a government of national unity with more active involvement by pro-European parliaments in the cabinet re-shuffle as well.
Whether Greek PM Tsipras would remain in his position under such a government remains to be seen, but party leader statements so far suggest that this may be acceptable. Either way, PM Tsipras will have to take decisions on how the SYRIZA party membership and parliamentary group is likely to change in coming days: press reports that he is likely to ask for dissenting MP resignations, to be replaced by more moderate MPs, inclusive of outspoken Speaker of the House Konstantopoulou who also expressed disagreement over the weekend. Whether dissenting SYRIZA MPs resign or form a new anti-euro parliamentary grouping remains to be seen. Either way, it is likely that the new government's mandate is implicitly or explicitly set to run until the signing of a new ESM agreement by September, to be followed by a new election. Greek politics are now likely to shift to more well-defined political narratives, ultimately distinguished by party positions on euro membership rather than austerity.
Bank normalization will take time
In terms of the Greek banking sector, immediate decisions will need to be taken given the exhaustion of the ECB ELA buffer. An immediate increase in the ELA cap would allow continued rationing of cash from ATMs in coming days. It is possible the ECB waits for such a decision on Wednesday, when the ESM negotiations formally re-open and there is a "credible perspective" for the conclusion of the review. (ZH: it does indeed appear the ECB is waiting until Wednesday at least). More broadly, the return to a more normally functioning banking system in Greece with fewer restraints on liquidity will likely depend on the timeframe of a new bank recapitalization program. The Euro leaders statement highlights that this will require a comprehensive recapitalization exercise following the transposition of the Bank Recovery and Resolution Directive in Greek legislation. At face value, this suggests that the possibility of depositor bail-in cannot be ruled out given the directive's provisions. In practice, it is unlikely that there are a significant number of deposits above the directive's 100k legally protected limit implying that this may be avoided. Still, bank recapitalization is unlikely to take place until after the summer. In the meantime, the ECB will require bank solvency assurances to maintain financing of the Greek banking system and continue to increase ELA, particularly given Greek bank's declining collateral availability, likely at around 5bn EUR under the current ELA haircut schedule. ECB financing in coming months will likely need a front-loaded disbursement of ESM guarantee funds in an escrow account or an alternative "bridge guarantee" financing method. Either way, it is unlikely that capital controls are lifted soon.
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As you can see, a government reshuffle (something we've predicted for months) is imminent although it is as yet entirely unclear what the political landscape will look like in six months and indeed it's not at all clear whether Tsipras will survive the melee.
As for the banks, well, they're essentially wandering aimlessly through a minefield. For those interested in a detailed account of the challenges that lie ahead for the Greek banking sector, see "Greek Banks Not Out Of The Woods, May Impose Tougher Capital Controls." The short version is simply this: Lacking sufficient collateral to keep the ELA game up for much longer, Greece's banks will need to be recapitalized in short order barring a dramatic decrease in ECB haircuts. Even in the most optimistic scenario, capital controls are likely here to stay for the foreseeable future.
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While this crap comes out of the Greek gov...
Tsipras Has Support to Pass New Debt Deal: Achilleoudis
Fucking traitors, all of em
Some how the word traitor ...................does not cut it
But I cannot think of a better word
Greek banks won't repoen until Tsipras is gone. Which at the rate things are going should be by this Friday.
Tsipras ................should have gone with the Yanis plan.....................he bottled it
The Eurozone can dictate terms to Greece because it is no longer fearful of a Grexit. It is convinced that its banks are now protected if Greek banks default. But Varoufakis thought that he still had some leverage: once the ECB forced Greece’s banks to close, he could act unilaterally.
He said he spent the past month warning the Greek cabinet that the ECB would close Greece’s banks to force a deal. When they did, he was prepared to do three things: issue euro-denominated IOUs; apply a “haircut” to the bonds Greek issued to the ECB in 2012, reducing Greece’s debt; and seize control of the Bank of Greece from the ECB.
None of the moves would constitute a Grexit but they would have threatened it. Varoufakis was confident that Greece could not be expelled by the Eurogroup; there is no legal provision for such a move. But only by making Grexit possible could Greece win a better deal. And Varoufakis thought the referendum offered Syriza the mandate they needed to strike with such bold moves – or at least to announce them.
He hinted at this plan on the eve of the referendum, and reports later suggested this was what cost him his job. He offered a clearer explanation.
As the crowds were celebrating on Sunday night in Syntagma Square, Syriza’s six-strong inner cabinet held a critical vote. By four votes to two, Varoufakis failed to win support for his plan, and couldn’t convince Tsipras. He had wanted to enact his “triptych” of measures earlier in the week, when the ECB first forced Greek banks to shut. Sunday night was his final attempt. When he lost his departure was inevitable
http://www.zerohedge.com/news/2015-07-13/yanis-varoufakis-merkels-contro...
Son of a BITCH! I just BTFH and now they're talking about bail-ins? FML!
So Tsipras called referendums expecting the country would vote yes, while pushing for no, but had no clue what to do when they voted no. Then ended up supporting an agreement far worse than the one his people rejected out of his own fear. Than Merkel, Schauble et al, put out a plan expecting the Greeks to reject and it gets accepted. They are putting out plans to posture, not as credible plans, and then are shocked that that the only plans that they provide are followed. I go back and forth wondering if they are clueless and incompetent, or lyres and tyrants. I’m leaning towards the prior.
Don't worry, they're both.
Looks like nobody actually noticed this one.
Greece was in danger to go the Iran style CIA intervention to adjust their political & social path
https://www.wsws.org/en/articles/2015/07/04/pers-j04.html
And of course,the current government hanged for good. So between being hanged and leaving with a compensatory package this is what resulted :)
I read the same article. Clearly Varoufakis was correct and now Tspiris has to deal with the consequences of his poor poitical stance that never made any sense: staying in the Euro while refusing austerity measures.
Controlled opposition?
Controlled opposition?
The Banksters/Psychopaths feeding off the world are like Heartworms in dogs or cancer cells in humans...The only way to destroy them is to poison the entire system and hope that the host survives...I see no other solution.
Or you know, arrest em, hang em.
#ThisIsACoup
..just exploded to No#1 worldwide on Twitter - its getting ugly amongst the people.
I think it's been proven, amply by now, that "the people" don't matter. It's a banker's world, we just rent space in it.
That can be changed by the right people, with the right technology, at the right time.
It just wasn't time yet.
Nice pic of Schaeuble.
Looks like he has a raging boner without the pill
Wake the fuck up. No one is going to arrest them.
http://www.rollingstone.com/politics/news/eric-holder-wall-street-double...
Boy Greece, you sure did the "democracy" thing to show the world how it's done. Holy fuck are we all screwed. One minute everyone is Braveheart, the next they are clamboring to keep the gas from getting shutoff...worse yet, Facebook.
You may be right - but I'm sure there are some people in Italy and Spain watching this who have another take. I think the lesson may be don't threaten an exit - take the exit while you have a strong government in power. Greece was never interested in exitting the Euro. I don't know why Italy is still in, its a loser for them and they could run their own currency.
Government OF the Banksters,
BY the Banksters,
FOR THE BANKSTERS
just like here . . .
IMO the real root of the problem is that individual people look to politicians, bureaucrats, some guy up in the clouds . . . or anyone but themselves for 'the answers'.
And most have no idea of what 'money' is or the whats & whys of how they individually are supposed to 'owe' it to someone.
Instead, they shrug their shoulders, say 'Oh well', bend over and take it.
P.S. - if theyre a politician and get lots of positive mainstream media coverage, - you can just Bet that they will butt rape you. TPTB own msm.
The last plan failed three weeks ago.
This one will last at best three days.
I think they really are forcing them out of the Euro for whatever fucked up reason, thinking they can contain it.
They must have took pleasure making Tspiras their bitch when he agreed to their sovereignty-stealing deal, knowing that'd never pass through parliament.
He should have called in sick that day!
Seriously this looks like the beginning of a Euro wide Bank Run to me.
Convert to gold and dollars and confidence in the euro collapse once folks realize there will be no money for Greece.
The jokes keep coming in :
S&P: Could Upgrade Greece Pretty Quickly If Deal For Bailout Looks Solid
That would make them better off than Chicago.
Tick tock bitches
WHERE IS GOLDEN DAWN WHEN YOU NEED THEM!?!??!?!?!?!?!
LIKE.............. NOW!!!
There will be NO GREXIT ever.
And if you don't like it, then why don't you go fuck off and die.
Yes, there will. It will either come with votes or with guns, sooner or later.
Then why don't you make it happen and take the lead instead of keep waiting for it?
Shove another rock up your ass moe-ron.
Its true there will be NO GREXIT ever. "a burning building with no exits".
Thats the agenda. period.
Even after all these shenanigans the UK goverment still want to join the EU Currency. The people dont but that doesnt matter. even if they have a referendum and the people say NO they will still join the currency union.
I'd interpret a GREXIT to mean the neocon merikans have lost control of their european vassals. Time will tell, but I don't think it's going to happen either without woar.
I'll take Greece for a $1000, Alex...
..but its only worth 1 euro ?
How'd you miss that the institution getting control of $50B in Greek assets is controlled by dear Wolfgang himself?
Poroshenkovopolos?
You do know Greeks and Germans, you are both a fucking joke. Even Joe the plumber is laughing at you. Think about that.
Joe the plumber laughs when he sees a bagel; or a super sized hot dog.
Is he the yardstick to understand the world from the John Doe perspective?
Maybe he should go to the US Senate, like "Mr Smith goes to DC".
Now thats like going to some place between hell and a hilarious place, its a riot!
Quit it. You are loyal to a form of slavery with your comments. Quit protecting the system. On ZH we do not have to compete because most of us equally agree the world is going to shit.
Bye Bye Demosthenes; Yanis was the true spirit of Syriza's revolt.
As we are talking about paradigm changes in world governance here is some interesting news about block chain management of financial assets; not just bitcoin money but also asset purchases that could change the face of finance :
http://uk.businessinsider.com/bnp-paribas-bitcoin-blockchain-securities-...
Hahaha! When the financial world sees itself dying by a thousand cuts.
Same as the Oil lobby world now facing paradigm change.
I like this quote from the article:
"banks face death by a thousand cuts as startups attack different parts of their businesses from multiple angels."
Read more: http://www.businessinsider.com/bnp-paribas-bitcoin-blockchain-securities-firms-redundant-2015-7#ixzz3fmoYjFi9As long as depositor bail-in is below 99% that is OK . It's only the Russian oligarchs who pay. Wait.... that was Cyprus.
I keep hearing about "The Greek govt will do this" "Tsipras is thinking about X"
Nobody is taking the Greek population into consideration. There's absolutely no way that all the greeks that have nothing (and the ones that will soon lose the little they have) will just sit on their thumbs and watch their country get whipped into submission. It's going to be the french revolution all over again.
Now, that's if the greeks have any guts left. If they don't do anything, then they'll lose all my sympathy and they'll deserve whatever awaits them.
Banks control governments. Governments control us (by force). So banks control us by force. Has there ever been a clearer window into the world we live than the Greek / EU deal (Great Capitulation)?
That's how the German rescues the Greek's creditor, Deutsch Bank
Total sellout, sigh. I guess Diogenes is still looking.
Taking a leaf out of the German book it takes Nazis to default on impossible debts (1933).
Golden Dawn anyone?
Hello, Portugal, Spain, Italy are you watching. Wake up, you're next. The banks keep the charade going a little longer.
We all know that Greece will never be able to pay back any of their loans. So next time you fly into Athens it might have a different name. "Welcome to Deutsche Bank city, hope you enjoy your stay." Those bankers better hope their servants keep the place in good shape, or they'll have a lot more printing to do.
The lesson every PIIGS country should have learned from this is that you should start printing and accumulating your own currency right now, if only for bargaining purposes.
Absolutely!
Having an alternative currency already circulating within the national borders would be sweet...
Party is over. Nothing to see here. Go back home and have some ice-cream ...
The party is only just starting....we have a nice old song in our country. Some of the words go like: "Misery makes wolves out of people and hunger pushes the wolves out of the woods. You (the rich) can think that we are just rubble and that you dont have to be afraid. But a day will come when you will shake with terror, when you hear us shouting under your windows. Because you, the rich, are to blame, that misery makes wolves out of people and hunger pushes the wolves out of the woods. Hey now, it is time to settle the accounts. After all, only you are to blame that misery makes wolves out of people and that hunger guides us to crush you."
Here, in my country in Central Europe, we have already seen a mock gallows in front of the government building. Our politicians were shocked. Now, these are just symbols. But once these symbols start to appear, it is just a question of time. It is simply just a question of time. This is the haunting song: https://www.youtube.com/watch?v=z1QN1DLrpbU
The mistake was forgiving Germany's debts after WW2. Seems they didn't learn anything, and if anything became a whole lot more skillful. There are other ways to make slaves of europe.
WTF????
Tyler, please stop with this "end of the EMU experiment" BS! This crisis has been generated exacty to ensure the "need for a fiscal union." Do you realize you just supplied the exact justification for Hegel's synthesis?
Since they couldn't EVER achieve this at the ballot box, they were forced into this method, knowing full well that a fiscal crisis would eventually occur, regardless. Greece, as we see, has made a fine whipping boy.
Why is this so hard to see?
Sure the peoples money could be, and probably will be confiscated. These people had the unmitigated gall,,, the audacity,,, to vote against the bankers. They will be punished so there will be no 'next time'.
there are celebrations @Deutsche Bank - extend and pretend they do like
So shitty deal, capital controls still imposed, and still has to be passed in government.
Remember that movie "there will be blood"? soon to be coming to greek streets, I seriously hope some politicians are killed as an example...
How come there are no politician serial killers? why do they have to go for babies or kids or normal humans? where are those bible freaks killing greedy bastards?
The institutions Greece lend money from did not bring any CONSIDERATION to the table.
As a matter of fact,no bank ever brings any consideration to the table.
This is illegal and imoral.
Solution is simply to hang the banksters and start from scratch.
Jubilee!
"...the Greek drama highlights the need for a fiscal union to compliment the common currency..."
Oh yes! Go and propose it to the German taxpayers!! LOL
I have to believe that if the evil parasites had not had the power to threaten outright theft of the Greek people's savings, Greece would have been on its way to a new independence and healing.
Unfortunately and apparently the banking parasites have the ability value labor-earned money at the same price as created out of thin air debt-money. In fact created out of thin air debt-money is more valuable, according to the banks, since they have the power to attached interest to it.
This is patently unfair, since labor-earned money be should much more valuable than created out of thin air debt-money.