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EU Declines To Extend Greek Budget Cut Deadline, Ends Overnight EURUSD Ramp

Tyler Durden's picture





 

Many have been scratching their heads over just why the EURUSD hit a multi-month high of over 1.33 in the overnight session after once again, nothing was resolved in Greece, and in fact Greece has come begging to the finmin meeting in Brussels hoping the Troika would simply let it slide with open issues relating to pension cuts. That scratching promptly came to an end some minutes ago after the EU's Altafaj said there would be no deadline extension, somewhat illogically since there is no deal yet and the deadline has already passed, but some are finally starting to grasp that putting the ball back in the Troika's court is actually not a good thing since it is Germany's desire at this point merely to have the smallest excuse to part ways with Greece. The EURUSD has thus dipped by 60 pips back to levels seen last night, yet levels that are still 250 pips rich to the 1.30 seen three days ago before the relentless rumor (and hope)-driven ramp up commenced. Should there be nothing favorable to come out of the FinMin meeting today look for that difference to promptly close, now that there are just 40 days left until the heard Deadline of March 20, and a bond exchange offer needs an absolute minimum of 30 days before results are tabulated, and holdouts (yes there will be many billions in holdouts) are calculated.

Bloomberg summarizes the long overdue shift in mood:

  • First Word Cross Asset Dashboard shows sentiment slipping during European trading, with EU stocks below earlier highs, U.S. futures lower, and FX mixed as Greek debt talks hit yet another snag, writes Bloomberg analyst TJ Marta in following note:
  • Pension agreement continues to prevent successful end of Greek talks; IMF gave Greece another 15 days to identify another EUR300m of cuts
  • EU claiming no knowledge of 15-day extension
  • EU bond yield spread to bunds mostly modestly wider
  • Bund, Treasury yields mostly modestly to moderately lower; U.S. 10-yr yield +1.8bps in typical post-auction underperformance
  • FX, commodities mixed in modest ranges
 


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Thu, 02/09/2012 - 08:12 | Link to Comment lolmao500
lolmao500's picture

If only Greece could default already... then Portugal...then Ireland... then Italy... then France...then Germany... then America... then Japan... then China...

Thu, 02/09/2012 - 08:20 | Link to Comment theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

Hey guys! Through my contacts in the government I can offer you the investment of a lifetime. Now that the greeks are getting their houses in order there's a scramble to invest in the coming recovery - and now is the time to get as as we're right on the cusp of it now, I can feel it.

The investment will go into a fund managed by some of our greatest investment banks; it will go towards building seaside resorts, condos, high class restaurants, gold courses, night clubs, sporting arenas, business venues, hotels, swimming pools, cruise liners and so on - all to be built in greece, by the greek people! Now that the europans have their houses in order and solidarity has won through I expect germans, dutch, and scandanavians to pour into these resorts, turning them into a goldmine for early investors.

Just comment bellow and tell me what you think....

Thu, 02/09/2012 - 08:25 | Link to Comment MillionDollarIdiot
MillionDollarIdiot's picture

Id be interested in investing in one of your "gold courses" although I fear your lack of english skills means you meant to say golf course, in which case im out..... 

 

Full Disclousre: IM LONG GOLD COURSES! 

Thu, 02/09/2012 - 08:27 | Link to Comment theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

yes, a typo! f is next to d...

However, I may have been thinking of the gold plated road early investors in that gold(f) course will be riding!

Freudian, what!!!

Thu, 02/09/2012 - 08:42 | Link to Comment ConspiracyTheory
ConspiracyTheory's picture

If only the mayan is right about the end of the world... if only Nostradamus tells us exactly when the end of time is... if only the bible tells us the time Christ comes the second time.... then I will short and sell everything with 1000x leverage and go to the mountain. Perhaps money doesn't even matter anymore since everything will end 

Thu, 02/09/2012 - 08:13 | Link to Comment Fips_OnTheSpot
Fips_OnTheSpot's picture

Rumormill: 10000rpm->8000rpm

Thu, 02/09/2012 - 08:13 | Link to Comment mushioov
mushioov's picture

I'm quite positive that MillionDollarBonus is Vermin Supreme in disguise.

Thu, 02/09/2012 - 08:14 | Link to Comment valley chick
valley chick's picture

can someone pronounce this patient dead? 

Thu, 02/09/2012 - 08:22 | Link to Comment youngman
youngman's picture

It has been dead for a long time..but they are still forcing an asprin down its throat...

Thu, 02/09/2012 - 08:35 | Link to Comment Conrad Murray
Conrad Murray's picture

I would, but they suspended my license :(

Then again, if you get me a case of Ramen and a few smokes...

http://mycarepack.com/index.aspx

Thu, 02/09/2012 - 08:14 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

'That scratching promptly came to an end some minutes ago after the EU's Altafaj said there would be no deadline extension, somewhat illogically since there is no deal yet and the deadline has already passed, but some are finally starting to grasp that putting the ball back in the Troika's court is actually not a good thing since it is Germany's desire at this point merely to have the smallest excuse to part ways with Greece.'

It does not follow that a Greek default = automatic exit from the EZ. You could see a scenario where the Greeks default devalue and stay in. As for Germany, not sure a clear cut motivation is obvious even regarding the Greeks.

Thu, 02/09/2012 - 08:16 | Link to Comment Quintus
Quintus's picture

Agreed, they might not leave the EZ, but then they'd face trying to rebuild their economy with a still-present productivity gap vs Northern Europe that would be almost insurmountable.

Default with no exit devaluation would be pretty much the worst possible option.

Thu, 02/09/2012 - 08:22 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

Productivity gap? Shipping and tourism. I fail to see why a domestic currency would inhibit tourism especially when they are no longer competitive with Turkey and even the Adriatic.

Worst possible? You're getting ahead of events.

Thu, 02/09/2012 - 08:30 | Link to Comment Quintus
Quintus's picture

You can't run a first world economy based on tourism alone.  As for shipping - have a look and the Baltic Dry and Chinese export figures for a glimpse into the future of that industry.

To build something workable economically, the Greeks would have to create a viable export industry of some kind, but while stuck in the Euro they'd either have to undergo some kind of productivity miracle to compete with the Germans or pay themselves Chinese wages.

Having a domestic currency at a heavily devalued rate would not inhibit tourism, I never said it would - in fact I said the opposite.  They need to escape the Euro and reintroduce the Drachma to have some chance of recovery.

Thu, 02/09/2012 - 08:42 | Link to Comment Ghordius
Ghordius's picture

Quintus, following this logic I would have to conclude that going back to a gold standard would be the worst Greece could do?

Greece has a viable export industry. Greece has a "devaluing-as-much-as-needed-vs-the-rest-of-the-world" currency, it's the EUR.

The problem with Greece is the funding they put in state-owned industries that are sinking the state. You should see how the railroads in the North are organized, or the electricity facilities on the islands. Or how difficult the state makes it for farmers.

It's like "papa is earning enough, children, but mama can spend 10% more any day".

Thu, 02/09/2012 - 08:28 | Link to Comment Ghordius
Ghordius's picture

I'm not that sure. When it comes to offering a hotel room with some Med in front, the North has the productivity gap.

Productivity is relative. This was already a study-in-case at the gold-backed times between Britain and Portugal, Ricardo made some break-through discoveries there in the 19th. It's the relation between the cost structures that generates trade.

Default "makes free". I repeat: debt is relative, what is really hard is to live within your means, particularly for governments.

Thu, 02/09/2012 - 08:20 | Link to Comment Ghordius
Ghordius's picture

Add in the fact that in the polls 80% of the Greeks distrust their government, 70% want to keep the EUR and some 60% trust the European Union's governance...

I'd be very suprised if we see soon a return of the Drachma. IMO, the only Drachma-friends seem to be in the City and in NY.

Thu, 02/09/2012 - 08:27 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

Since when is the majority in the right? Unless you're a product of this nightmarish hellscape of mob-o-cracy masquerading as democracy.

NY & the City have already reached their objective which was to discredit the euro as an alternative to the $.

Thu, 02/09/2012 - 08:35 | Link to Comment Ghordius
Ghordius's picture

Did not say that, in fact some 60% of voters are quite clearly on the left of the spectrum, hence the socialist's parties strenght.

Mob-o-cracy? No, more the kleptocracy model that is also quite common in Italy's south. Goes like that: "Johannis, my extended family is going to give you 150 votes, don't you forget us when it comes to give sinecure government/provincial/municipal job's. You know, we don't really care what this bunch of thiefs do in Athens, we just want to care for our own".

Very little of the "saxon/frankish/germanic we-are-the-community/state" mindset that Max Weber identified as Protestant Ethics.

Thu, 02/09/2012 - 08:46 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

Beautiful. Just gorgeous, really. Max Weber... sweet Jesus. Seriously though, this is what it boils down to isn't it? The Protestant Reformation and righteousness. Calvin, Luther's desire for a separate German religion: no more Pope for me!!!

I love it. The debtors must be slaughtered!!! Hitler remains way ahead of 99% of social scientists yet still. I look forward to the sequel, let's call it the Nuts-iz or Farcism, what say?

Thu, 02/09/2012 - 11:02 | Link to Comment Ghordius
Ghordius's picture

Eh? I was on a sociological observation, not on a crusade. And I'm not following Weber in the Nazi style or even endorsing him.
My point was on the sense for community vs sense for family.

By the way, I am NOT a Protestant.

Thu, 02/09/2012 - 09:41 | Link to Comment Nussi34
Nussi34's picture

98% want to keep on receiving free money from Germany, retire at 40 and get 15 monthly salaries per year!

Thu, 02/09/2012 - 08:15 | Link to Comment Jefferson
Jefferson's picture

There is no way Greece is going to get a deal that is politically acceptable to the Greek popluation. Greece will be made an example of in order to insure that governments in the remaining PIIGS don't start lining up for haircuts.

Thu, 02/09/2012 - 08:15 | Link to Comment fightthepower
fightthepower's picture

Revolt Greek losers!

Thu, 02/09/2012 - 08:20 | Link to Comment youngman
youngman's picture

It must be something to be a businessman in Greece right now....every day its a changing market..."were saved"..."were not saved".....and what is being saved mean...I would have already taken my money out of the banks if i could..I would have prepared for 6 months of hell...if I could...I would have an exit stratagy....Call the cousin in Italy...doing deal have to pay in advance deals...I would not wait for 30 days for a payment...it just has to be fallin apart in the big picture...

Thu, 02/09/2012 - 08:27 | Link to Comment Freegolder
Freegolder's picture

EUR/USD rates:

 

  • QE3 in the US, low to negative bond yields, more QE, and then some more QE til currency collapse
  • No QE in Europe, sovereign defaults and forced austerity, still no QE
  • marked to market gold in the Eurosytem accounts
  • Gold at $42 per ounce fixed in the US

There will be one winner in the currency war.

 

(central banks exist to maintain stablity in the banking system and the currency, nothing more, nothing less. Those that enter the QE highway are fools, and will be vilified sonner rather than later by the masses).

Thu, 02/09/2012 - 08:31 | Link to Comment Dick Darlington
Dick Darlington's picture

In other news, Target2 imbalances getting a lot worse in Dec. Italy's Target2 deficit jumped by almost 45 billion in Dec and Spanish one jumped almost 40 billion. These two countries have almost 400 billion in deficit inside the Target2 system. oops...

Thu, 02/09/2012 - 08:44 | Link to Comment valley chick
valley chick's picture

wow...there is other news?!

Thu, 02/09/2012 - 09:13 | Link to Comment fonzannoon
fonzannoon's picture

Look at those US banks go.....wow.

Thu, 02/09/2012 - 09:39 | Link to Comment Nussi34
Nussi34's picture

It is about time the Greeks trade their BMWs against donkeys again.

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