Greece Is In Trouble Again: Bonds, Stocks Plunge As Bailout Talks Collapse; IMF Sees "Explosive" Debt

Tyler Durden's picture

It may - or may not - shock readers to learn that Greece is once again on the verge of collapse.

10-year bond yields shot up and stocks tumbled on Friday, a day after euro zone finance ministers acknowledged the country's fiscal progress but once again failed to break an impasse with the IMF over the country's future bailout targets. Early on Friday morning, the greatest Greek nemesis alive, and surely in the afterlife, German Finance Minister Wolfgang Schaeuble said that Greece’s creditors won’t unlock further financial aid to the country unless the government meets its reform promises, which he said it hasn't done yet.

Two years after its third bailout, Athens and the Troika, or is that Quadriga, i.e., its European and IMF creditors, are still at odds over the fiscal goals Greece can achieve after 2018, when its third rescue programme ends. According to Reuters, the talks have dragged on for months, hindering the conclusion of a bailout review that would help Athens qualify for inclusion in the ECB's much desied bond-monetization programme and return to bond markets as early as this year.

And, yes, the ongoing disagreements have rekindled fears of a new crisis in Greece, which never really emerged from any of the previous ones, which was forced to sign up to another bailout in July 2015 in order to stay in the euro zone.

Worse, hinting that there may not be a 4th bailout simply because the Greek people will snap by then, the Greek parliament's budgetary office warned on Friday that "the fiscal cost of the delays may prove bigger than the benefit of a deal".

Greek 10-year bond yields rose by 21 basis points on Friday, while stocks were 3 percent down. Which means that in the Greek market where an occasional trade takes place once a week, someone sold an oddlot.

"The outcome was tougher than what the market had hoped for," Beta Securities analysts Takis Zamanis told Reuters.

There was some good news for Greece, now in its 7th years of economic depression, when European Commission Vice President Valdis Dombrovskis said that Greece outperformed its fiscal targets last year and was on track to meet its 2018 primary surplus target of 3.5 percent of economic output. But he added that more discussions were needed on the fiscal trajectory thereafter and on measures which might be needed and would be implemented only if Greece missed its targets.

In other words, back to square one.

The IMF, which participated in two Greek bailout programmes but is so far only an observer in the current one, says Athens can only achieve a surplus of 1.5 percent of gross domestic product in 2018 unless it adopts more measures now and is granted more debt relief.

The IMF also was the source of bad news, reporting that Greece’s debt is “highly unsustainable” and will reach 275% of GDP - this is after it has been "reprofiled" three times already - by 2060 unless the country’s loans are significantly restructured, according to a draft confidential review of the country’s economy. Without prior bailouts, Greek debt/GDP would be between 400% and 500% as of this moment.

The assessment, prepared ahead of an IMF board meeting on Feb. 6  and seen by The Wall Street Journal, was significantly more pessimistic than that of Greece’s eurozone creditors and underscores the difficulty of the fund moving ahead with a new bailout for Greece in the near future.

Under the draft review, which comes as Athens and its creditors once again failed to find an "austerity" solution, debt is projected to reach around 160% of GDP by 2030 but “become explosive thereafter.” Under the same scenario, debt is seen reaching as much as 275% of GDP in 2060.

The assessment presents a contrast with the eurozone’s own forecasts. An official eurozone analysis in May projected debt-to-GDP of 104.9% in 2060, under a baseline scenario in which Greece fully implements its bailout program. Eurozone governments are resisting the IMF’s push for more debt forgiveness that will come largely at their expense.


“Greece cannot be expected to grow out of its debt problem, even with full implementation of reforms,” the IMF says, adding that the country needs significant debt relief from its European partners to ensure the debt load is sustainable.


The draft review says that measures agreed by the eurozone in May to ease Greece’s debt load need to be further specified, and that “ambitious extensions of grace and maturity periods, a full deferral of interest on European loans, as well as a locking in of the interest rate will be needed” to put debt on a sustainable path.

Meanwhile, "The pressure is on for the Greek government following yesterday's Eurogroup meeting, since it did not receive substantial support, not even by the supportive EU Commission," Axia Ventures Group said in a morning note. Greece's leftist-led government, which is sagging in opinion polls, is refusing to adopt more austerity measures, saying the country is delivering on its bailout promises.

And so, the impasse will go on until Greece either runs out of money again leading to the next social crisis and bailout, or until either China or Russia acquires it in bankruptcy auction, or the Turks invade.

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buckstopshere's picture

Lots of Greek webcam prostitutes looking for dollars.

ParkAveFlasher's picture

Hey, who kicked this can here?

kliguy38's picture

NOW you see the explosive debt????? BWWAAAAAAAAAAAAAAAAAA

froze25's picture

Not shocked, how long for the EU till the break-up? Italy is about to default as well.

gatorengineer's picture

Don't worry Merkels got this....

froze25's picture

Amazing how much Merkel looks like Hitler. Seriously look a pictures of them side by side. The resemblance is insane.

xythras's picture
xythras (not verified) froze25 Jan 27, 2017 6:54 PM

Someone should fucking nuke that socialist cesspool.

The greeks are responsible for inventing all homeless reactionary movements. They called them philosophy. Also known as 5th column. Soon in your beautiful pristine neighborhood

5th COLUMN: Left-wing US Government Leeches defy President Trump gagging order on Twitter, Urge Sedition


Not to mention pedophilia and LGBT.All Made in (ancient) Greece

eatthebanksters's picture

This is the black swan that everyone has been avoiding.

OpenThePodBayDoorHAL's picture

Have you even seen the prices of luxury penthouse apartments in Frankfurt and Paris these dayss? I mean it's crazy, if you're a banker it's getting harder and harder to maintain a decent staff, butler, limo drivers etc., let alone keep the wine cellar full of Veuve Cliquot. Those starving grandmothers in Greece need to be squeezed some more, and I mean quick! Porcini mushroom season is coming soon to Tuscany and the chopper pilot says the fuel bill from the Gstaad ski chalet just went up again...surely there are a few more Greek pensioners left we can drive to suicide

Placerville's picture

It's the manboy haircut.

Escrava Isaura's picture

Financialization is collapsing in Greece as well?

Ohh gosh. I am shocked.

Wait a minute. Don’t they have nice weather?

So, go enjoy the outside.


Justin Case's picture

Doctor Klauberg brought Gretl Braun to the GDR (Communist East Germany). She was the youngest sister of Hitler's wife, Eva Braun. Gretl Braun was chosen as the ‘surrogate’ mother of Hitler's offspring using artificial insemination from Hitler’s frozen sperm.

Gretl Braun was a member of the Social Democratic Party (SPD), whose ideology centered on the principles of Marxism and the interests of the working class and trade unions.

Arrow4Truth's picture

She's the spitin' image of Hitler's mother. Uncanny resemblance.

Seasmoke's picture

Noooooo !!!!! Not Greece stories again. And to think they only got less than 2 years from kicking the can and now they are in even worse shape.

Vageling's picture

You know who! GS! They thought it was a good idea to add them to the dysfunctional "family". Greeks being Greek only works with the Dragma. Damn banksters. They took most of the money. 

Now shocked? Yes, that took longer than expected. Shocked that Greece is heading that route possibly? No. Seems the IMF is the most sane here.

FreedomGuy's picture

Excellent comment!

All other countries should take notes.

Kirk2NCC1701's picture

Speaking of prostitutes, webcams and

"Read my lips"...

Greece, we no longer give a shit or "Greek bum fuck" what you do, or what happens to you.

Stop funding (paying rent to) German banks.

Sheeple is as sheeple does. Bah!

froze25's picture

They need to default, switch to their own currency and get their house in order and kick out the rapuges. It's the only way.

Justin Case's picture

The aid programs were badly designed by Greece’s lenders, the European Central Bank, the Europe Union and the International Monetary Fund. Their priority, a report says, was to save not the Greek people, but its banks and private creditors.

After six years of ongoing bailouts amounting to more than €220 billion, or $253 billion in loans, Greece just cannot get out of crisis mode.

This accusation has been around for a long time. But now, for the first time, the Berlin-based ESMT has compiled a detailed calculation over 24 pages. Their economists looked at every individual loan instalment and examined where the money from the first two aid packages, amounting to €215.9 billion, actually went. Researchers found that only €9.7 billion, or less than 5 percent of the total, ended up in the Greek state budget, where it could benefit citizens directly. The rest was used to service old debts and interest payments.

A “haircut” for Greece at the beginning of the credit programs in 2010 would have been probably more meaningful. Although the German government would then possibly have to support the German banks with state aid. “But it would have been at least clear where the money is going,” Rocholl said. Much controversy between the governments in Athens and Berlin would have been avoided – and it would have been cheaper for the German taxpayers too, the study have found.

alchemical trader's picture

Wow! A thoughtful, reasoned comment with no ugly comments,  trash talking or bitching about the 'joo world order'

You must be in the wrong place buddy.

Al Tinfoil's picture

Krugman and Kramer could sort this out in no time.

Yog Soggoth's picture

 They need a Grump to make a Grexit. I am looking for a new Drachma this year or next. I would advise everyone snap them up immediately. Greece is low at 32 on the world gold scale, but I know a thing or two about underground reserves of stuff. That is what the SDR'S are based upon. It is not just based on what has been mined, but what is underground and atop with a reasonable extraction rate vs. time scenario. Investing in Greece is also a great idea in other forms of assets, or you could wait for things to get expensive.

Jaspergers's picture

Greece is just a few years ahead of your country ( and I don't know where you live). Call it a template. All the same trends are in place and playing themselves out. I hope I'm wrong but it's pretty clear from where I'm standing.

BabaLooey's picture

Shocking. I never saw this coming. - said the Greek denier.

Shocking. I never felt him cumming. - said the pregnant Greek mother

Shocking. I never met Bob Cummings. - said Zorba the Greek.


Justin Case's picture

Lots of merican webcam prostitutes looking for crack sellin their crack.

SpanishGoop's picture

'Again' ?

They have never been out of it, just ask the Greeks.


Theta_Burn's picture

Not true... last week eveything was just fine..

NoPension's picture

Beat me to it! 


Vageling's picture

And they should demand an explanation from... Well Germany is a good start why! 

But hey! I was wondering what our Eurogruppefuhrer was up to. AFM making a boo-boo of Soros's shorts. Belastingdienst (Dutch IRS) is completely screwed by fuck-ups that will cost over 100 mln €.

 How great to know he's more concerned screwing the Greek.

Placerville's picture

My Big Fat Greek Debt Part 4.

The same debt you love to hate, just Bigger and Fatter!

OregonGrown's picture

This HAS TO BE bullish for the EURO..... as well as EU high yield bonds / bunds...... /s


Hyperinflation in 3.....2.......

CompassionateConservative's picture

Well, whatever they do they'd better not put Golden Dawn in power because they're evil nazis and as history clearly shows nazis don't know how to restore an economy.  They just need to be put in hock to the Jews, God's Chosen, even more.  Pay the Jews you filthy Greek goyim!  You owe them!

Shitler's picture

Golden dawn golden dawn golden dawn!

Hohum's picture

Don't worry.  The problem will either be "fixed," or the media will just stop talking about it.

Son of Captain Nemo's picture

WOW!!! Who saw this coming?!!!

roadhazard's picture

It sure takes those people a long time to starve to death.

peippe's picture

it's those damn goats & the milk & cheese they produce. 

Greece may outlast us all.

Cradle of Mediterranean Civilization.

whatamaroon's picture

Sad the Greeks have been in a depression for 7 years, unlike here in the US that has been depressed for 8 years.

SpanishGoop's picture

"that Greece outperformed its fiscal targets last year and was on track to meet its 2018"

Nonsense, by 2018 no Greeks will have an euro left to pay taxes.

It will only go downhill from here.


CompassionateConservative's picture

They need more loans to buy the poor downtrodden rapists from subhuman Africa nice cars and homes that they so richly deserve just because they hopped on a shitty raft with their fellow niggers and crossed the sea.  Of course if common working class Greeks balk at that then they are fucking racists and nazis worse than Donald Trump!  REFUGEES AND ISRAEL FIRST!

hotrod's picture

Where is Varoufuckedus.  He seems to get alot of attention for nothing.

Vigilante's picture

He made a royal mess then he buggered off

Note to all...Never elect  a leftie uni perfesser to run economic policy

Esp one that never had a real job outside academia.


Chuckster's picture

There seems to be a lot of countries for sale these days.  Donald is a business man.  Can Greece become Trump Nation?

gatorengineer's picture

Heard there was a shortage of Greek diners in NYC... Good fit...

Vigilante's picture

GR is the polar opposite of a Trump nation.

As harsh as it sounds, the muslim rapefugees washing on our shores are more likely to like capitalism/entrepreneurship than most Greeks


are we there yet's picture

No rational investor would buy Greek bonds at any interest rate, unless they are guaranteed by some solvent third party. Buying bonds from Greece is like loaning money to a man in bankruptcy, going through a divorce, who is out of work and living in an elderly care facility. The payback math just does no work.

Antifaschistische's picture

unless, you have a prenegotiated, under the table bail-out guarantee from your friends at Davos. (via someone elses tax dollars, or fiat cb counterfeiting)

FX223's picture

Reverse mortgage could work in that situation but get it signed before the divorce is final and take the cash to Vagas DOUBLE ZERO baby!