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ECB Saves Greece From Certain Bankruptcy. Again

Tyler Durden's picture


A few days ago we wrote that "Greece Runs Out Of Money. Again" because it did. The country, which is permanently locked out of the bond markets, would be down to a negative cash balance as soon as its August bond payment to the ECB was made. The reason is that the Troika continues to delay its decision. whether or not to hand over Greece its next monthly allowance. So with the country threatening to once again be on the front page as math rears its ugly head, the ECB has decided to take the bold step and admit that in lieu of even remotely credible collateral pledged and repledged in the ponzi repo system, the ECB has no choice but to expand the universe of eligible "collateral" against which it will provide cash. From Reuters: "The ECB's Governing Council agreed at its meeting on Thursday to increase the upper limit for the amount of Greek short-term loans the Bank of Greece can accept in exchange for emergency loans, the newspaper said in an advance copy of the article due to appear in its Saturday edition."

As a reminder, on July 20 the ECB pretended to act in a prudent fiduciary capacity and halted the acceptance of worthless Greek bonds as eligible ECB collateral. Naturally, this was merely an epic case of sweeping under the rug, because bonds eligible for traditional collateral had already ran out, even as the ECB greenlighted the continued provisioning of funding via the Emergency Liquidity Assistance, or ELA, in which the pathway of repledging a liability as a money good asset took on one extra step by using a national central bank as an unnecessary intermediary. The reason: merely to obfuscate the fact that actual money good collateral, and by implication, assets, no longer exist, allowing the Eurosystem to accept more and more worthless "assets" in exchange for frashly printed euros.

This is precisely what just happened:

Until now the Bank of Greece could only accept T-Bills up to a limit of 3 billion euros ($3.70 billion) as collateral for emergency liquidity assistance (ELA) but it has applied to have this limit increased to 7 billion euros, the daily said, citing central bank sources.


The ECB Governing Council gave this wish the green light, the paper said.


The move should enable the Greek government to access up to an extra 4 billion euros of funds, the paper said, adding that this should ensure the country keeps its head above water until the "troika" of the European Union, the European Central Bank and the International Monetary Fund decide on the disbursement of the next tranche of money from its aid program in September.

So does this step-wise increase in the pool of eligible collateral mean that eventually each peripheral country will run out of assets pledgable for cash (which in turn is used to pay interest to the ECB and various other "Official" institutions)? Yes, at least under the current regime. Because when all possible assets that Greece has have been handed over to the ECB for safekeeping just so the country is "allowed" to stay in the Euro and continue to pay its institutional interest, all the while allowing for "privatization" asset sales to take place for various Western banks.

Sadly, even if the ECB were to lower it eligible collateral threshold to zero, the fun will eventually end in a world of finite assets, because while one can print electronic money with the push of a button, an "asset" by implication takes at least some effort, and cost to create.

This is just what we explained back in May, when we quantified just how much borrowing capacity unde rthe ELA Greece, which is now less than a shell of a real economy, truly has.

From Quantifying The Plan Z Dry Powder - This Is The Greek ELA Borrowing Capacity

We already posted a full run down from JPM on what the immediate costs from a Greek EMU exit would be (starting at €400 billion and going higher), but one point that bears repeating is just how much borrowing capacity Greece has under the ELA in the aftermath of today's news that the ECB is leaving Greek banks to fend for themselves until such time as the Greek recapitalization payment is wired over to Greece, which the ECB has defined simply as "soon." The answer: woefully inadequate, and certainly not enough to backstop the remaining Greek deposits of €170 billion as of the end of March (likely far less now), at €65 billion. And that's an upside estimate: as JPM says "The true maximum amount that Greek banks can borrow via ELA is likely though to be significantly smaller because not all loans are accepted as collateral via ELA." Remember: this is all just one giant game of chicken - Greece's Syriza has bet the farm that the cost from a Greek fallout is just too big to Europe and the terms of the hated "Memorandum" will be adjusted, while to Europe, on the other hand, the outcome to Greece, at least according to Europe and the IIF's Dallara will be "between catastrophic and armageddon." So... Who blinks first?

From JPM:

Greek banks have run out of ECB eligible collateral already and can only access Bank of Greece’s ELA, but even with ELA, the collateral,typically loans, is not unlimited. They have already borrowed €60bn via ELA which, assuming 50% haircut corresponds to around €120bn of loan collateral. Outstanding loans are €250bn, so Greek banks have a maximum of €130bn of remaining loan collateral which allows for a maximum of €65bn of additional borrowing from Bank of Greece’s ELA. This corresponds to around 40% of Greek bank deposits which stood at €170bn as of the end of March. The true maximum amount that Greek banks can borrow via ELA is likely though to be significantly smaller because not all loans are accepted as collateral via ELA. The alternative is for Greek banks to be allowed to issue more government guaranteed paper but the ECB can, with a 2/3rd majority, block a steep and unsustainable increase in Bank of Greece’s ELA. This would effectively cut Bank of Greece off from TARGET2.

Once TARGET2 starts unwinding, with a massive €644 billion claim on the Eurosystem by the Bundesbank, and the realization that an imploding heretofore "contingent" and suddenly all too real liability amounting to 25% of German GDP means an in-kind collapse in living standards, then the simmering German anger will go truly parabolic.


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Sat, 08/04/2012 - 11:14 | 2677932 Jlmadyson
Jlmadyson's picture

Save #127


Saved indeed.

Sat, 08/04/2012 - 11:23 | 2677952 nope-1004
nope-1004's picture

So where to these funds come from?

Sat, 08/04/2012 - 11:28 | 2677961 slyhill
slyhill's picture


Sat, 08/04/2012 - 11:37 | 2677979 Bay of Pigs
Bay of Pigs's picture

Swap lines via the FED?

But, but, but...they said no more...

Sat, 08/04/2012 - 12:12 | 2678043 malikai
malikai's picture

Just waiting for the signal. I want in on this fade so bad I can taste it.

Sat, 08/04/2012 - 13:31 | 2678198 engineertheeconomy
engineertheeconomy's picture

Corrupt politicians giving away their citizens freedom, wealth and resources...

and that's news?

Sat, 08/04/2012 - 15:53 | 2678416 AldousHuxley
AldousHuxley's picture

Greece is fucked.


French/German banks loan to Greece debt which they can't repay, but heck it is fun to spend other's money

years later, Greece says they spent all of the money partying and Uzo

French/German banks "save" greece from bankruptcy with more  loans that just stretches out repayment schedule longer.

years later, Greece says lower interest rate isn't helping.

French/German banks strech our repayment schedule longer to lower interest rate....



What needs to happen is Greece to declare bankruptcy and get their house in order.

French/German banks need to be punished and take the loss for giving loans to while knowing they can't pay back.

Investors with these banks need to be punished for not supervising banksters.

Let hard working Greeks improve their own situation. rolling over debt to lower interest rate isn't helping.

Sat, 08/04/2012 - 19:51 | 2678708 MisterMousePotato
MisterMousePotato's picture

I don't think that this is going to end well, but - for the time being at least - seems like Greece wins. Again.

How long can/will it go on? I started lurking here well over two years ago. From what I could deduce, seemed then like it was, "Game over, man. Game over."

But I've yet to see any significant change or changes anywhere. Every day just seems like more of the same.

Sun, 08/05/2012 - 00:46 | 2679036 savagegoose
savagegoose's picture

as more and more people strip their wealth from the fiat system , it become smore fragile.  the dilution of paper value increases, all you have to do is ensure you're out the game and let them destroy themselves

Sat, 08/04/2012 - 11:42 | 2677990 The Monkey
The Monkey's picture

Seems like very few people are watching German sentiment.

Sat, 08/04/2012 - 12:21 | 2678057 saturn
saturn's picture

The ECB is operating beyond the mandate I am willing to entrust in their incompetent hands. They, apparently, don't give a f*ck.

Sat, 08/04/2012 - 11:41 | 2677987 Hulk
Hulk's picture

The funds are optical...

Sat, 08/04/2012 - 11:42 | 2677991 centerline
centerline's picture

Like check kiting, it's all in the flow!  

Sat, 08/04/2012 - 11:50 | 2678004 RockyRacoon
RockyRacoon's picture

So where to these funds come from?

No, really.  I'd like to know as well.  Having collateral and all that is one thing, but "money" from where to trade for the trinkets offered as collateral?   Will this shit never end?  I've got bailout fatigue.  I need to go fishing.

Sat, 08/04/2012 - 12:00 | 2678027 Bay of Pigs
Bay of Pigs's picture

Well, the FED hid $11T of "funds" in 2008/9, so my guess is that they have, or will do the same thing.

Sat, 08/04/2012 - 12:14 | 2678044 Conrad Murray
Conrad Murray's picture

Hell, the Pentagon admitted to not being able to track $2.3T on September 10, 2001.

Sat, 08/04/2012 - 12:39 | 2678094 Hype Alert
Hype Alert's picture

Exactly.  This reminds me of when Kanjorski demanded that mark to market be shelved and that worthless paper would be valued MUCH higher than it was worth in real terms.   There can only be one outcome when you think about it being part of a pool of assets and one of them, by edict/gunpoint, is artifically priced in a fiat monetary system.  The pool of assets value doesn't change in total and never will, but the worthless paper will force all the other assets in the pool to rise in cost in nominal terms to balance it out with the artifically priced worthless paper.  This is the part of free market they can't control and obviously don't understand.  Much the same as forcing minimum wage up will never increase overall living standards.  It simply limits the number of people you can hire.  They really should teach this stuff in school.


Sat, 08/04/2012 - 12:44 | 2678104 HardlyZero
HardlyZero's picture

From $100B in Libya Gold held in Manhattan ?

Sat, 08/04/2012 - 13:56 | 2678243 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Libyan gold is mostly in shipping containers buried out in the desert. My brother-in-law lived there the last five years and was in the top levels of society/gov't. He says it was well-known: Gaddafi would bury the gold, then the guys who buried it were machine gunned. Only the Colonel knew the GPS coords. Maybe you could find it with some remote satellite imaging...would make a good movie plot.

Sat, 08/04/2012 - 19:46 | 2678701 BenwaBall
BenwaBall's picture

This might be the dumbest comment that's ever been posted on the internet.

Sat, 08/04/2012 - 12:15 | 2678046 Jlmadyson
Jlmadyson's picture

Million dollar question as always, but watch the swap lines.

Sat, 08/04/2012 - 13:30 | 2678194 JohnKozac
JohnKozac's picture

Do swap lines show up on the Fed balance sheet as an expansion? Or what line do you look for on the Fed balance sheet?

Sat, 08/04/2012 - 16:41 | 2678484 Haager
Haager's picture

I've heard that the ECB had some reserve because they've put 70% with the bailout of 210billion , leaving 30% as reserve. 

Will that show up somewhere?

Sat, 08/04/2012 - 11:51 | 2678008 Silver Bug
Silver Bug's picture

QE to infinity continues.

Sat, 08/04/2012 - 12:25 | 2678061 HardlyZero
HardlyZero's picture

Ahh, yes ...this Thursday can kicking explains why the price of Gold went up Friday, on a nice upward trend.

Yes, the expansion of the lending facility leads to the POG increasing linearly (possibly exponentially).

Sat, 08/04/2012 - 13:15 | 2678163 takinthehighway
takinthehighway's picture

I get this mental image of cheerleaders chanting, "KICK THAT CAN...KICK THAT CAN"...

Sat, 08/04/2012 - 13:06 | 2678147 bank guy in Brussels
bank guy in Brussels's picture

As Jim Sinclair has long said,

What must be provided, will be provided ... Have no doubt about that

QE to infinity ... the only tool in the toolbox

In Europe as elsewhere, the can WILL be kicked

Sun, 08/05/2012 - 23:58 | 2680886 Mentaliusanything
Mentaliusanything's picture

It's all Debt to me.

Sat, 08/04/2012 - 11:55 | 2677933 slewie the pi-rat
slewie the pi-rat's picture

{Paste}:>  Remember: this is all just one giant game of chicken - Greece's Syriza has bet the farm that the cost from a Greek fallout is just too big to Europe and the terms of the hated "Memorandum" will be adjusted... <:

why just this one party?  not sure how this works at this point;  has someone called another election?  syrizzza isn't even part of antonioSam's goobermint but is the "opposition" in the parliament

yes,l it can be seen as a game of chicken, but why by syrizzza?  [this part sounds like it was written before the last election...]

Sat, 08/04/2012 - 12:33 | 2678070 HardlyZero
HardlyZero's picture

Well, the other parties just snagged another $4B...probably a 'honest take' from the 'man'.  They will run this ship onto the shoals, and then steal from the passengers as they escape, and then gut the shipwreck...and then let the wrecked facade rot and rust in the tide.  Then probably invite everyone to watch the whole thing and charge entry fee and rent out prime seats to TPTB to take notes.  Then shoot some movies and sell the rights.  Haven't had this large size of a currency collapse in many decades or centuries, so it should be a big deal with lots of sidebar events.  SOP for these things.

Sat, 08/04/2012 - 12:49 | 2678116 slewie the pi-rat
slewie the pi-rat's picture

plus, i misunderstood what tyler was doing there, quoting a piece from b4 the election

written b4 the election, the above {Paste} is no longer "party-correct" but does indicate how the MSM propaganda about the realities of greek politics were picked up and spread b/c altho the various pollls did show syrizzza doing as well as anybody prior to the election, the uynderlying party alliance dynamics were ignored by all but a few...

..but i'll bet they sold a shitload of soap!

the banksters still probably want to keep the EU together, btw...

as tyler notes... the wealth transfer of greece's assets to the banksters' holding companies is the important item tho

for FIAT!!!

good thing "it can't happen here", huh?

Sat, 08/04/2012 - 12:26 | 2678065 saturn
saturn's picture

What supernatural force is holding Greece in the Eurozone, I wonder?

Sat, 08/04/2012 - 12:40 | 2678097 HardlyZero
HardlyZero's picture

Summer vacation.

September will be a bi*ch.

Everything after the O-lympics and the 'last' Summer-2012, and US Congress is out of town.

And USPS is bankrupting while everyone else is off in the Hamptons or vaca in Spain.

Sat, 08/04/2012 - 11:16 | 2677938 fonzannoon
fonzannoon's picture

It seems like the idea is that once people lose their belief in fiat money everything goes to hell pretty quickly. So it seems like all you have to do is keep your head in the sand and believe in fiat money and that won't happen. I feel better now.

Sat, 08/04/2012 - 11:32 | 2677966 slyhill
slyhill's picture

Right. And if you are smart (lucky) enough to have everyone else base their illusion on yours, they have little choice but to believe. 

Sat, 08/04/2012 - 11:34 | 2677976 fonzannoon
fonzannoon's picture

I guess my point is, faced with losing trust in the dollars in their wallet, or not losing trust....people will just not lose trust. If inflation started creeping higher and higher I think people will create more and more enemies to blame for that than the idea that their dollar is dying.

Sat, 08/04/2012 - 12:01 | 2678028 malikai
malikai's picture

At the end of that road, which can be quite long, you have the inevitable.. Truth.

Sat, 08/04/2012 - 11:17 | 2677940 New_Meat
New_Meat's picture

ECB gets the Vezina Trophy this year, no sweat. - Ned

Sat, 08/04/2012 - 11:20 | 2677941 CClarity
CClarity's picture

These ECB stick saves probably qualify them as a team for the Winter Olympics 2014 - when the same game may still be in play.  The ECB Hockey Team. But will they play against or in the same bracket as the NYFed Plunge Protecters team? Sigh.

Sat, 08/04/2012 - 11:19 | 2677945 Uncle Remus
Uncle Remus's picture

Fucking assholes.

Sat, 08/04/2012 - 11:19 | 2677946 Jlmadyson
Jlmadyson's picture

Oh yea;


But, but, but CNBC said Troika was the boozaka.....the savior of all.....right?

Sat, 08/04/2012 - 11:20 | 2677948 Need More Cowbell
Need More Cowbell's picture

They just need more cowbell

Sat, 08/04/2012 - 11:22 | 2677950 centerline
centerline's picture

Closer and closer to zero each day.  And each step raises the stakes.  Yeah, this is going to end well.  Seems to me the EU is trying to buy time to get through the American elections.  Hot potato toss might be coming up.  USD is too strong.  And remember these central bankers all work for the same team (Goldman mostly).

Sat, 08/04/2012 - 11:30 | 2677965 fonzannoon
fonzannoon's picture

I truly fail to understand what getting through the elections does for TPTB. If the world fell apart before the elections or after it what difference does it really make?

Sat, 08/04/2012 - 11:34 | 2677973 centerline
centerline's picture

Same here.  But, the effort to pull it off is amazing.  For this reason, I really can't wait to see what comes next!

Sat, 08/04/2012 - 12:05 | 2678036 malikai
malikai's picture

It's just a show. An excercise in futility (and spending money). We all know that both horses are owned by the same guy. The entire purpose of the elections these days is to provide adequate distraction by focusing the sheep on the two poles of influence. If all goes well, for the next four years, the sheep will be too busy fighting the other camp to pay any attention to what's really going on.

Sat, 08/04/2012 - 12:36 | 2678088 centerline
centerline's picture

It's a show, but you can't have the strings showing.  At least not so obviously that the illusion is lost.  Right now there are still lots of folks trapped in the "my team" against "your team" paradigm - or hopelessly distracted by usual sideshows of abortion, gay rights, race, gender inequality, etc.

Sat, 08/04/2012 - 11:38 | 2677980 Jlmadyson
Jlmadyson's picture

Probably not much besides keeping or putting whoever they want in the office.

Sat, 08/04/2012 - 11:40 | 2677985 fonzannoon
fonzannoon's picture

I don't see that ever changing. After we allowed the same group of assholes after 2008 to keep running the show I don't see why it matters anymore. The public proved to be a big dumb collective idiot.

Sat, 08/04/2012 - 11:50 | 2678005 centerline
centerline's picture

But they dont know it.  When the left-right, red-blue, etc. jig is finally up, the remaining middle-class folks who can still make waves is bound to be pissed off.  This is where it gets interesting.

If Mitt wins, then proceeds down a similar course, J6P is really going to have a hard time explaining what the hell just happened without concluding he has just be had.  If Obama gets back in office, everyone will pretty much just accept that business as usual will continue.  I could be all wrong, but am expecting an epic foot-in-mouth event coupled with a crowd polarizing running mate selection.    

Sat, 08/04/2012 - 11:56 | 2678020 fonzannoon
fonzannoon's picture

I think the Republican party mailed it in with McCain and now just phoned it in with Romney. Romney could not be trying any harder to lose. Look at this tax return thing. He is flailing. Like he did not see this coming? If he is too high in the polls in October I bet he calls Obama some rascist name to make sure he tanks it. He will probably pick trump as his vp just to make sure he is viewed as an elitist ahole.

Not that it matters when Mitt and Obama get back to the yacht club in January the first round is on Obama as they laugh it off.

Sat, 08/04/2012 - 12:36 | 2678086 francis_sawyer
francis_sawyer's picture

I think you pretty much nailed it...

The only reason to even keep it interesting is so the MSM can paid in the 'divide & conquer' bazaar...

Only way Obama loses in the end is if the Illuminati decide to play the 'Start a Race War' card for some hidden agenda that nobody has figured out yet... If Obama loses, trust me, there will be race riots in this country (& they will be sparked & facilitated by the MSM itself (who take their marching orders from you know who)...

Sat, 08/04/2012 - 12:38 | 2678091 centerline
centerline's picture

+1 fonz.

Sun, 08/05/2012 - 10:49 | 2679336 fiddy pence haf...
fiddy pence haff pound's picture

I don't know why the other parties running a candidate for prez

don't just have the biggest love-in conference during the last month

before the elections, right across the street from an alt-media conference

including zh, fo course.

And then we can all laugh as we watch the MSM trying to ignore the event.


It'll be great having the two sold-out parties complaining about the 0.001%

the other parties get as having cost them their election while half of florida

is barred from voting. They can just piss off, or que se hodan, as they say in







Sat, 08/04/2012 - 12:28 | 2678069 Vegamma
Vegamma's picture

Objective is to delay as long as possible, not to a specific date or event. Every year they postpone the blowup puts another $10 million in each bankster's pocket, courtesy of free loans, aka stealing from savers and taxpayers. Even if you believe we will hyperinflate, you'd rather start the endgame with $50 million (diversified into some physical and oversees property), than $50,000.

Sat, 08/04/2012 - 12:32 | 2678077 fonzannoon
fonzannoon's picture

I'd rather start the endgame with 50 million in cash and then shut off the printers and let the deflationary crunch that ensues make my 50 mil worth exponentally more than hyperinflate and watch it erode. The key is cash not digits.

Sat, 08/04/2012 - 13:20 | 2678180 takinthehighway
takinthehighway's picture

That's assuming that you would hold that $10 mil instead of investing it in tangibles like a secure hideaway and supplies for same. What's a glass of water worth in the desert?

Sat, 08/04/2012 - 16:24 | 2678458 Haager
Haager's picture

I don't think that they do care that much about the US-elections. Don't get me wrong on this, but they know that it doesn't really matter who wins the election in November.

There are elections in the Netherlands in September, and over a year  in Germany. I hope they don't try to stretch it that long.


Sat, 08/04/2012 - 11:29 | 2677962 RobotTrader
RobotTrader's picture

Yep, the PigMen had advance knowledge of this event, no wonder the DAX and CAC had one of the biggest 2 day moves ever this past week.

BBVA was up 11% on Friday alone.

Sat, 08/04/2012 - 11:29 | 2677964 vinu02
vinu02's picture

Greece has defaulted multiple time this year but it doesnt matter Rally ON, its election year Unsafe zone for investing 1400 -1516. S&P500 is up 104% since march 09.

Sat, 08/04/2012 - 11:32 | 2677969 Jlmadyson
Jlmadyson's picture

104% psssh. That's not a bubble no.......


And certainly not in a global recession/depression.




Man oh man when this thing pops.

Sat, 08/04/2012 - 11:41 | 2677988 Winston Churchill
Winston Churchill's picture

I'm calling the top.

Cannot see the bottom from here,maybe its the clouds blocking my view.

Strap in.

Sat, 08/04/2012 - 11:45 | 2677999 fonzannoon
fonzannoon's picture

I don't know Winston. This market rallies hard when there is no news. It rallies harder when there is bad news. The Bernanke put is still well in place and The Draghi diarrhea mouth put seems to be working too.

Sat, 08/04/2012 - 12:20 | 2678056 Jlmadyson
Jlmadyson's picture

Oh it will work. Until it doesn't.

Whatever the next Lehman around the corner is the point it doesn't. And it most certainly is around the corner. What day/month who knows how long they can keep the game up. Look for more repos that is for sure.



Sat, 08/04/2012 - 16:20 | 2678450 Haager
Haager's picture

Libor again. Amazing that Libor, Euribor remains low or getting even lower. That makes me think that central banks are interested in such a low rate and I fear that increasing it will cause even bigger trouble than it was in '29.

Sat, 08/04/2012 - 20:42 | 2678763 Jlmadyson
Jlmadyson's picture

During the 08 crises I watched it skyrocket every single day it got worse in the market. Until it didn't.


They crushed it to save their asses.

Sat, 08/04/2012 - 12:29 | 2678074 Al Huxley
Al Huxley's picture

This demonstrates again that when the choice comes down to default or 'anything else' anything else will always win.  And that will definitely be seen as 'Risk On', should be good for gold and commodities as well.

Sat, 08/04/2012 - 12:36 | 2678085 Jlmadyson
Jlmadyson's picture

A self-sustaining death cycle.



Sat, 08/04/2012 - 11:31 | 2677967 Fantasy Planet
Fantasy Planet's picture

Greece will continue to live in the ECB's basement w/ premium cable channels and a mini-fridge until the ECB's house is foreclosed on.  But who's going to 'floreclose' on the ECB?  Riddle me that.

Sat, 08/04/2012 - 11:54 | 2678015 machineh
machineh's picture

'Speculators' -- say it with a sneer!

Sat, 08/04/2012 - 11:33 | 2677970 booboo
booboo's picture

The Germans goosestep to a different drum beat now, they will all lay down in the streets in the fetal position and humm out a few bars of a Wagner Opera, perhaps Ride of the Valkyries.

Ta,da,da,daa daaaa


Sat, 08/04/2012 - 12:47 | 2677971 The Big Ching-aso
The Big Ching-aso's picture



This is like watching rodeo clowns trying to grab a greeced-up PIIG.  Highly entertaining.

Sat, 08/04/2012 - 11:35 | 2677977 It is a bargin ...
It is a bargin my friend's picture

Watch the olympics and chill, this shit can wait another week, and who knows...could be the last as we know it

Sat, 08/04/2012 - 11:44 | 2677992 gunsmoke011
gunsmoke011's picture

So what is next – if the ECB continues to accept collateral the is more and more worthless – when will it end? Sure – I will gladly give you 20,000 Euros for your dirty underwear – No Problem. Next week toe jam sox will be going for 50,000 Euros so don’t throw them away.

Sat, 08/04/2012 - 11:51 | 2678007 PMakoi
PMakoi's picture

Ask not what your liabilities can do for you,

Ask what your liabilities can do for your Country!

--Zorba the Kennedy

Sat, 08/04/2012 - 11:57 | 2678023 Piranhanoia
Piranhanoia's picture

The headline is a bit misleading.   When it is said and perhaps even done,  it is not Greece that is getting the money or bankrupt.  It is only the banks owned and operated by GS that get any money and it is they who have bankrupted the nation by relieving it of any money, collateral or hope.  The people are being killed for profit.  That isn't bankruptcy is it?   That is class warfare.

Sat, 08/04/2012 - 11:58 | 2678024 adr
adr's picture

I would say the entire thing comes crashing down next year when the results of the drought affect the leveraged hypothacted bullshit electronic commodity trades.

It doesn't matter how much paper you hold if the conracts aren't going to be filled. The problem with a commodity contract, is that it is actually tied to something pyhsical. Someone at some point has to pay money for the conract and take delivery.

If the price goes too high the consumer I going to bypass the market and go straight to the producer. Sometimes enough is enough. Speculators driving prices past records, just because they believe there will be a greater fool to sell to, will get burned.

If Wall Stret drives the price of beef to a point where is in unaffordable for people to buy, do you think people will actually buy it? How much is a contract worth that can never be filled?

Answer, nothing.

Sat, 08/04/2012 - 13:35 | 2678211 JohnKozac
JohnKozac's picture

<<If the price goes too high the consumer I going to bypass the market>>


I'm waiting for those Chinese tankers filled with DooDads, T-shirts, etc. to pull up into Galveston Bay & up to the docks there and sell the stuff directly off the boat.....can you imagine? Bypassing Walmart? Kohls? Macy's? and 1 Million other stores.....

T-shirts = 2 cents;

DooDads =  5 cents;

Thingamajigs = 15 cents;

and the list goes on for miles!

Sat, 08/04/2012 - 12:15 | 2678045 crawldaddy
crawldaddy's picture

on more recent news,  ECB now will accept " shits and giggles" from Greece as acceptable collateral

Sat, 08/04/2012 - 12:18 | 2678052 DavidC
DavidC's picture

One has to give the bankers (central and otherwise) credit though - every time we think they're got to the final bullet they keep finding another one. And the ECB still has 0.75% to play with (and at some point I think they will lower further - they have to because there's no recovery coming) and Mr Hendry will be able to retire.

The only problem - all they're concerned with is their survival, they have no comprehension of (or desire to comprehend) the problems 'the people' will suffer or are already suffering as a result.


Sat, 08/04/2012 - 12:26 | 2678064 fonzannoon
fonzannoon's picture

The US keeps that Iranian pot simmering at all times. If things get unbalanced you better believe Iran render's unto Caesarr what is Caesar's. If Russia or China gets involved and the US citizens have to all go broke through hyperinflation to prove to the world that we will fight a worthy cause they will. War is good for the economy didn't you hear?

Sat, 08/04/2012 - 12:32 | 2678078 Jlmadyson
Jlmadyson's picture

Remember in 08 before the elections Bush was supposed the pull the trigger. I recall a very lengthy article from the New Yorker claiming plans were being made.

4 years later, much like our financial system not one thing has changed,


The game rolls on.

Sat, 08/04/2012 - 12:28 | 2678066 Brahms Third Racket
Brahms Third Racket's picture


Which, of course, is why we classify them as psychopaths.

Sat, 08/04/2012 - 12:53 | 2678122 monopoly
monopoly's picture

And to think Greece is where the Olympic flame started. What a travesty. I wish they would blow up already so they can start over with a clean slate. And, must admit, am tired of the TV delayed tape Olympics. Too much shouting by those broadcasting events and I feel I am watching a program of commercials interspersed with a few minutes of sports. I know, need those commercials so they can pay Matt Lauer his 15 million each year to read that teleprompter.

Oh well.

Sat, 08/04/2012 - 17:04 | 2678522 smiler03
smiler03's picture

That's American TV I suppose.

Here in the UK we have commercial free, up to 23 high definition channels at any one time, coverage from the BBC which is no doubt providing the service to you. I hope the BBC is making money out of the massive coverage that they're providing.

Who's Matt Lauer?

Sun, 08/05/2012 - 09:09 | 2679247 TrainWreck1
TrainWreck1's picture

Lauer is a generic US TV eunuch.


Sat, 08/04/2012 - 13:07 | 2678142 Quinvarius
Quinvarius's picture

And so it will continue until the last deflationist learns how ponzi economics actually works and buys gold at 50k an ounce.  Fiat isn't money.  This system exists so we can keep creating more fiat whenever someone with access to a printing press or politician needs it. This system exists to continue a banker/government fantasyland where complete boobs are fooled into working for nothing but cocktail napkins with pictures of dead people on them.  Meanwhile, if you are connected, you get as much of the ration card fiat mining scrip as you want for nothing.

Only in a system like this could something like bitcoin seem like an alternative.

Sat, 08/04/2012 - 13:26 | 2678185 The Count
The Count's picture


Sat, 08/04/2012 - 14:03 | 2678252 YesWeKahn
YesWeKahn's picture

I wonder why greeks have to work hard at all. When they need money, They simply need to be on the edge of being bancrupt.

Sat, 08/04/2012 - 14:21 | 2678277 Lednbrass
Lednbrass's picture

Yep. And the same is true for Spain, and behind them Italy- which is why it cannot last.

Sat, 08/04/2012 - 14:18 | 2678273 the tower
the tower's picture

I'm not trolling but I still want to put this out there: what if this goes on forever, nothing crashes, and everybody was wrong?

What would my investment strategy be?

Sat, 08/04/2012 - 14:23 | 2678280 Lednbrass
Lednbrass's picture

Buy some of the unicorns producing the magic milk that kept it all going?

Sat, 08/04/2012 - 17:11 | 2678535 Black Forest
Black Forest's picture

What would my investment strategy be?

De-invest completely.

Sat, 08/04/2012 - 14:33 | 2678292 Downtoolong
Downtoolong's picture

increase the upper limit for the amount of Greek short-term loans the Bank of Greece can accept in exchange for emergency loans


When your new deal is pure insanity, a mere nightmare probably does seem like hard collateral by comparison.


If only we could go back to the days when our fantasies were backed by dreams.

Sat, 08/04/2012 - 14:55 | 2678325 Nussi34
Nussi34's picture

When will they stop dumping money is this shithole?

Sat, 08/04/2012 - 17:08 | 2678526 Black Forest
Sat, 08/04/2012 - 18:03 | 2678578 Haager
Haager's picture

Etwas genauer bitte. Berlin. Köln, Bielefeld oder die Uckermark?

Sat, 08/04/2012 - 18:21 | 2678593 TraderTimm
TraderTimm's picture

So, Greece's payment due August 17th has been taken care of through this expansion?

I was looking forward to the financial fireworks when they defaulted.

Sat, 08/04/2012 - 18:45 | 2678629 Snakeeyes
Snakeeyes's picture

But look at their budget deficit! Highest in Europe! How many times can Greece be saved?

Sat, 08/04/2012 - 18:53 | 2678638 EuroInhabitant
EuroInhabitant's picture

Of course Greece will not go bankrupt. After all the billions, summits, austerity and other noises, the European Popes will not let Greece go down on just a billion on a late Tuesday afternoon.

Sun, 08/05/2012 - 08:46 | 2679232 shovelhead
shovelhead's picture

"We will trade electrons until we reach the event horizon."

Mario Drahgi.

Politics trump arithmetic again...and again...

Sun, 08/05/2012 - 09:43 | 2679273 steve from virginia
steve from virginia's picture


People don't understand what's happening in Greece and elsewhere:


 - A central bank cannot offer unsecured/leveraged loans to anyone. It cannot 'print money'. 


 - Should a central bank leverage itself (whether the proceeds are used to retire underwater private sector loans or not) there is then no lender of last resort.


 - When the private sector is insolvent due to leverage, the public sector becomes insolvent for the same reason, more so if the public sector takes on the private sector's bad loans (due to discount window operations such as LTRO/QE).


 - By leveraging, the central bank does not fix the private sector banks, it poisons itself, instead.


 - A drowning man cannot rescue other drowning men, nor can drowning mens' anchors be handed over to the man on a boat. The anchors (bad loans) will swamp the boat.


- As the markets realize there is no effective lender of last resort the system-wide bank run will accelerate (as is underway in Europe right now and for this reason).


What is true in Europe is also true in the United States: unsecured loans by the central bank = no lender of last resort, all marketplace participants equally insolvent with no guarantor for finance system assets.


 - Central banks cannot 'fix' our crisis which is a matter of thermondyanamics rather than money supply and credit.


Also look up 'impossible trinity'.

Sun, 08/05/2012 - 10:58 | 2679348 fiddy pence haf...
fiddy pence haff pound's picture

Greek bankers are following the spirit of the whole exercise.

When life gives you lemons , you make lemon-aid.


The banks have been getting under-the-table funding from the

ECBunker so that the system doesn't go tits-up after Greeks

withdraw all their savings, which savers are doing in droves.

So, you want to play 'fake banking' in a globalised banking system,

says the Gr bankers? no problem. i wanna play too.

They've given loans to Piraeus bank and the owner has hived the money

in Swiss shells and has now bought the last officially-"government-run" bank,


I don't care what happens next because this may hasten the fall of the whole

house of cards as the big boys try to stop Greece from benefitting in any way

from the choke-hold on their necks. I told y'all, they picked the wrong


If ECB/IMF move to shut down global-third-party-equity funding of banks,

they're gonna shoot themselves in the foot.

Philosohical question du jour: what is illegal banking?


see Rueters 2 Aug

"most bank regulators dispute Greek stance on virtual capital


Sun, 08/05/2012 - 11:58 | 2679455 Pairadimes
Pairadimes's picture

Greece cannot be allowed to go tits up during the Olympics. End of western civilization and all that, plus just plain bad form.


But what the hell is left to collateralize? Baklava? Virgin pussy? Ok, Baklava?

Sun, 08/05/2012 - 13:09 | 2679611 grekko
grekko's picture

Bandaid #27.

Do NOT follow this link or you will be banned from the site!