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Define Irony: Greek Banks Refuse To Buy ESM Bonds To Fund Greek Bailout
Assuming there are no complete breakdowns or abrupt U-turns among Greek and/or German lawmakers, it appears as though formal discussions on the new Greek bailout package will commence and, in all likelihood, the country will enter a new €86 billion program.
A large portion of the funding will come from the ESM - Europe’s rescue fund. On Tuesday, the ESM sold €2 billion worth of bonds via its dealer group. Nothing too notable about that.
What is notable however, is that one of the 39 dealer banks refused to participate. That bank was none other than National Bank of Greece. Here’s Reuters:
National Bank of Greece declined to buy bonds from the euro zone's bailout fund in a sale on Tuesday because of Greece's capital controls, bankers said, a sign of the country's financial isolation.
NBG is one of 39 dealer banks the European Stability Mechanism routinely uses to help distribute its bonds.
The banks, called the Market Group, underwrite the bonds and sell them on to investors in a process known as syndication. Banks earn a flat fee plus any margin they make in the process.
Sources at two dealer banks said that NBG declined when it was asked in an online chat forum to take part in Tuesday's bond sale, citing the capital controls.
The bankers said it was very rare for dealer banks to decline an offer to participate.
Presumably what’s happened here is that because Greek depositors can’t buy bonds due to capital controls, National Bank of Greece would end up having to inventory its allotment of ESM paper, as there would be no one to sell it to.
We're not sure what is more hilariously ironic, the fact that Greek banks are refusing to help fund the bailout mechanism that will be used for their own recapitalization, or the possibility that the capital controls effectively imposed on Greece by creditors are making it harder to raise funds for the bailout.
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Clusterfuck. Whodathunkit?
The wheels fell off this ponzi scheme much faster than I anticipated.
They forgot to bundle it and sell it in tranches with 100x leverage. What kind of amateur misses that?
Where's that video from 'Scanners' where the guy's head explodes? I'm nearly at that point.
So if we keep shuffling the debt around fast enough.... it goes away? Busted banks are allowed to recapitalize themselves by borrowing more and then "washing" the money through the ESM so it turns debt into capital? I'm not so surprised that the Greek banks refused to participate (though I can think of several reasons they might want to- including the fact that it's all going to get defaulted on anyway so why should they give a shit), but that Europe ever offered this option to them in the first place.
I might have been born at night, but not last night. This is horseshit. There is NO way you can build an argument that this has any explainable benefit to anybody, short of kicking the increasingly heavy debt can down the road another few feet.
Irony. You keep using that word but I don't think it means what you think it means.
Unintended consequences are such a pain.
@NoDebt Here you go: http://vignette3.wikia.nocookie.net/uncyclopedia/images/b/b5/Exploding-h...
irony: they break a toe kicking the can
Alanis Morrisette didn't get that either. Rain on your wedding day isn't irony. It is just that: rain on your wedding day. Nice song though.
I think he is refering to the "tin" can being kicked down the road----Iron-ically
I saw that movie as a kid. It freaked me out. Pretty cool though.
The opposite may be in fact true; if the Greek banks offer to exchange what deeds they already hold for the new bonds then the Greek central bank will have to accept the deal since their deeds are formally accepted by the ECB as collateral; but their value is actually overvalued so that ECB can still offer ELA funding. The Greek NB is avoiding this deal on direct order of the ECB so that the Greek banks cannot escape impeding haircuts by "loading" the ECB with their worthless deeds through the Greek National Bank.
No worries, CALPERS and TIAA-CREF will be all over these.
"Banks earn a flat fee plus any margin they make in the process." - When has a bank ever EARNED a fucking thing?!?!
Greek banks have seen Jesus?
They just know better.
They're skipping the bonds themselves and loading up on the CDS - that's where the money is in Greek bonds.
I lol-ed.
Choosy Beggars.
....I cooked it..... ain't no way Ima gonna eat it........
edit; maybe I'm still stinging from the AM/EM takedown but Angela is giving me real wood here......
Bwahahahahahahahahahahahahahahahahaha
What a Greek Tragedy or is it a Comedy, or....never mind.
we're already dealing with arguments over loaning Greece enough money to be able to pay the interest on prior loans to Greece to allow them to pay the interest on prior loans which were created out of thin air by the act of loaning it...
we're through the Looking Glass, people.
It's been 8 Fucking years for &€£#! Sake!
Greek banks are about to get an offer they can't refuse - like Tsipras did
Maybe they thought it was a bad investment knowing that Greece will never pay them back...
"Sorry no buyers! Bank is closed!"
This is pretty clever actually.
"Go offer your shit paper to the Americans...
We don' wan no steenkin' Bonds!
one giant circle jerk
not really, no one wants to jerk Angela's schlong.
now if the ESM throws in some free spiderman towels....
"We got tons of that worthless shit on our books as it is. How do you think we got so broke?"
Looks like somebody just crapped her blouse.
They know they ain't gonna be worth spit.
...€86 billion program. ....
in My opinion double as much will be needed. And 100 years to repay.
In my opinion double as much will be needed. And in 100 years it still wont be repaid. fixed it for ya.
You mean they are not scared of Mutti??
Mein Gott!
If Greeks aren't prepared to invest in their own country, why should anyone else?
Is it still possible to throw the mugs out of the EU?
The debt issuance was from the ESM ( European Stability Mechanism ) located in Luxembourg. It is not part of the ECB, it is not part of the IMF, and it is not part of the EU. This is an entirely separate organization created by treaty of EU members but outside of the EU.
So basically, its another fucking bank, backed by EU taxpayers that doesnt have to live by ECB or EU laws
What color will the "revolution" be?
Liberty is a demand. Tyranny is submission..
They probably read the newspaper.
will bail you out so you can bail us out and so fort an so fort. The wheels on the buss go round and round!
Irony, the opposite of wrinkly