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Citi's Buiter Goes All Maya On The GRexit

Tyler Durden's picture





 

While Citi's Willem Buiter believes that the new coalition in Greece removes the very short-term risk of GRexit, as he notes in an Op-Ed in the FT today that "minimum demands for relaxation of fiscal austerity by the new government will not exceed the maximum fiscal austerity concessions Germany is willing to make", he does think the TROIKA "unlikely to tolerate another failure to comply on all fronts by the December assessment" leading to an end-2012 Armageddon a la the Maya. The "willful non-compliance" with the conditionality of the TROIKA program also brings doubt on the willingness of core eurozone nations to "take on significant exposures to Spain and Italy unless it can be established unambiguously that a willfully and persistently non-compliant program beneficiary will be denied further funding". His succinct summation of the "onion-like unpeeling and unraveling" of the Euro's endgame is perfectly described as: "The greatest fear of the core nations is not the collapse of the euro area but the creation of an open-ended, uncapped transfer union without a surrender of national sovereignty to the supra-national European level" as he sees material risk of "procrastination and policy paralysis".

 

Financials Times: Race To Save Euro Will Follow 'GRexit'

...

...we consider it highly unlikely that Greece will comply sufficiently with even ‘lite’ fiscal austerity conditionality, let alone with structural reform conditionality, including privatisation targets, which are unlikely to be relaxed. Political opposition to both austerity and reform now are stronger in Greece than ever before. So is resistance to bailouts in the core. The troika – the European Commission, European Central Bank and the International Monetary Fund – may forgive a Greek failure in the September progress assessment, but is unlikely to tolerate another failure to comply on all fronts by the December assessment.

Grexit may well be triggered by a troika review declaring Greece wilfully non-compliant with the conditionality of its programme, stopping the disbursements to the Greek sovereign.

There is now a material risk, if procrastination and policy paralysis prevail, that the end game for the euro could be an onion-like unpeeling and unravelling. Survival to fight another crisis will require at least the following: an enhanced sovereign liquidity facility, banking union and sovereign debt and bank debt restructuring, with only limited sovereign debt mutualisation.

...

The end game for the euro area, if the political will to keep it alive is strong enough, is likely to be a 16-member area, with banking union and the minimal fiscal Europe necessary to operate a monetary union when there is no full fiscal union.

Minimal fiscal Europe will consist of a larger European Stability Mechanism, the permanent liquidity fund, and a sovereign debt restructuring mechanism (SDRM). The ESM will be given eligible counterparty status for repurchase agreements with the eurosystem, subject to joint and several guarantees by the euro area member states. There will be some ex-post mutualisation of sovereign debt. Sovereign debt restructuring through the SDRM will recur.

Banking union aims to sever the poisonous umbilical cord between sovereigns and the banks in their jurisdictions. A roadmap to banking union will likely be announced at the EU summit on June 28-29. It better be a credible path. In any case, implementation is the hard part, and time is of the essence.

 


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Thu, 06/21/2012 - 12:39 | Link to Comment firstdivision
firstdivision's picture

I see Brian Sacks going away party must have ended.

Thu, 06/21/2012 - 12:47 | Link to Comment centerline
centerline's picture

Nah, the party is just moving into a more freaky mode now.  Ugly lights still have yet to come on.  Best to get the beer googles going on now.

Thu, 06/21/2012 - 13:00 | Link to Comment ACP
ACP's picture

I must be still waking up, I thought it said Citi goes butta & mayo.

Thu, 06/21/2012 - 13:10 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Too funny!

I suspect you're still drunk :>)

Thu, 06/21/2012 - 13:13 | Link to Comment ACP
ACP's picture

Nah, been sober at least a couple hours now.

Thu, 06/21/2012 - 12:43 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

The fiat crack addicts were severely disappointed yesterday. Time to go all badass on their "growth" projections.

The Tuesday before the Fed meeting everything was coming up roses. The Thursday after the Fed meeting the freaking world is coming to an end.

Transparently funny.....if it weren't so terribly sad. The terminal stage of fiat withdrawal ain't pretty. Hide your eyes girls and boys. Hide your eyes.

Thu, 06/21/2012 - 12:54 | Link to Comment centerline
centerline's picture

Fiat DT's.  Yikes.  Instead of spiders, do they see little central bankers all over them?  Hmmmm...

Thu, 06/21/2012 - 15:02 | Link to Comment potlatch
potlatch's picture

thousands and thousands of credit card spiders, the fiat of last reserve.... a promissory from a broke citizen

Thu, 06/21/2012 - 12:43 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

Banking union aims to sever the poisonous umbilical cord between sovereigns and the banks in their jurisdictions. A roadmap to banking union will likely be announced at the EU summit on June 28-29.

Seems sudden, the announcement I do not doubt, the actual union is pure mythology however.

Speaking of things that only exist in the abstract, why is Citi still around now?

Thu, 06/21/2012 - 12:46 | Link to Comment centerline
centerline's picture

It is already clear that the EU is faced with mutually assured financial destruction if any key components slip.  Otherwise Greece would have been thrown from the train long ago.  Behind the scenes, it is likely (almost certain) that curtains for the EU means the same for the civilized planet due to infinite friggin conterparty exposure leveraged into the next dimension.

The party is going to end in an ugly way.  Looking more and more each day that everything will be done to prevent the evitable, and in doing so will make the crash orders of magnitude worse.

Thu, 06/21/2012 - 12:51 | Link to Comment noses
noses's picture

WTF is a "supra-national European level"? Something where actual citizens decide what to do? Or cities and vilages? Can't believe this would ever happen.

 

Someone should get his Latin in order to avoid this kind of bullshit.

Thu, 06/21/2012 - 12:56 | Link to Comment centerline
centerline's picture

The "new and improved" EU that doesn't suffer from the pesky bugs of the first version.  Whitens your teeth and gets stains out of your carpet too.  Nevermind the side effects.

Thu, 06/21/2012 - 14:25 | Link to Comment Matt
Matt's picture

I suspect Supra-national means above the national. An unelected leader(s) at the top who will have authority over the Euro-Nations. 

Thu, 06/21/2012 - 15:05 | Link to Comment potlatch
potlatch's picture

lol.  "Something where actual citizens decide what to do? Or cities and vilages? "  too funny.

 

Yes, I believe they are developing something the Dutch developed, called "Underwater Districts" -- places that better pay their taxes johnny on time, or the dikes get lifted. Financially speaking.

 

Makes New Orleans look like the high Andes

Thu, 06/21/2012 - 12:52 | Link to Comment falak pema
falak pema's picture

greek exit without CDS trigger...that is the plan. Merkel signs pact with opposition making ESM ratification possible on July 1. It includes concessions to allow eurobonding in some conditions and...agrees to Tobin Tax Euro-wide banking transactions provided at least 9 countries sign it in Euro zone...

Hollande gets some bones thrown to him from the german banquet table...

Thu, 06/21/2012 - 12:55 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

fuking shitheaded bankster asswipe

Thu, 06/21/2012 - 12:57 | Link to Comment Eurodollar
Eurodollar's picture

Eurozone will manage the exit of Cyprus, Portugal, Greece and Ireland. Perhaps Malta will join (yeah this small island has a property bubble cooking too). It will be a costly departure and probably there will be short term shocks (that the liquidity pushing Central bankers should be able to deal with). 

These countries are small enough to get their businesses in order with their own currency and some hefty devaluation. Growth can return. The real questionmark for me; and what makes me concerned is that Spain might try the same thing. That would surely be a nail to big for the coffin. I am not sure it would be good for Spain either. It is a huge country with little production. Tourism would be enough for the smaller nations in the sun, but Spain would still suffer. 

 

Thu, 06/21/2012 - 13:00 | Link to Comment centerline
centerline's picture

The math doesn't work with or without Greece.  Therefore, I contend they cant afford for even Greece to bail.  The circlejerk needs as many participants as possible...  allows for more time lag on the proverbial check kiting.

Thu, 06/21/2012 - 13:03 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Another financial terrorist speaks.  "Give us our crack fix or else".  Fuck the paper-pushers.

Thu, 06/21/2012 - 13:04 | Link to Comment Vegetius
Vegetius's picture

Banking union aims to sever the poisonous umbilical cord between sovereigns and the banks in their jurisdictions.

Power grab by Eurotrash of Rumpy and Barroso egged on by the North Europeans who have no intention of following through.

Quote time -

"Left-wing zealots have often been prepared to ride roughshod over due process and basic considerations of fairness when they think they can get away with it. For them the ends always seems to justify the means. That is precisely how their predecessors came to create the gulag." -- Margaret Thatcher,

Thu, 06/21/2012 - 13:36 | Link to Comment Disenchanted
Disenchanted's picture

 

 

"Maya"  As in illusion...right?

Thu, 06/21/2012 - 15:07 | Link to Comment potlatch
potlatch's picture

10 years ago, I tried to get a buddy to name a subdevelopment he was investing in "Maya Acres".  He balked; pussy.

Thu, 06/21/2012 - 16:36 | Link to Comment 100pcDredge
100pcDredge's picture

So...

The Maya were right?

After all...

Weren't they?

Aren't they?

I mean:

http://engage.tmgcustommedia.com/wp-content/uploads/2011/01/you-are-here...

 

 

 

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