European Deathwish Exposed: Greek Bailout Package Delayed By Three Months

Tyler Durden's picture


Looks like Europe plans (and we use the term very loosely) on pushing its fate literally to the wire. Yesterday we explained why for Greece March is D(eadline)-Day, and as Greece itself stated, absent bailout cash coming in, it is game over: for Greece, for the Eurozone, and for Europe as the serial chain of defaults and exits begins. Which is why we read with great surprise minutes ago that according to the European Commission, the entire Greek bailout package has been delayed by three months because of delays in payouts of the 2011 tranche! Naturally this is supposed to have the optics of punishing Greece for doing absolutely nothing to fix its fiscal situation but all it will do is send the market (the European one that is - America is still stuck in some idiotic limbo where it fools itself that it can exist in isolation from the world's biggest economy) even more into Risk Off mode, as the world will be forced to wait until the 11th hour and 59th minute to find out if the Euro and Eurozone will survive for a few more months. In the meantime, Mario Monti is off to Brussels to satisfy an unscheduled craving for Belgian beer and chocolate, or something.

From Reuters:

The next 5 billion euro tranche for Greece that was originally scheduled to be paid in December 2011 is now to be paid out in March 2012, Commission spokesman Olivier Bailly said.


A further 10 billion euros that Greece was originally to receive in March this year, will now be paid only in June and all of those sums can also be delayed if inspectors judge Athens is failing to deliver promised fiscal reforms.


"That cannot be changed," Bailly said, referring to the three month rhythm in paying out tranches of the first Greek rescue programme.


Last year, Athens repeatedly said it faced the risk of defaulting if the EU and IMF did not pay out scheduled tranches. Europe's political leaders have made it clear that as long as Greece meets criteria on reforms, it will be financed as necessary by the EU and IMF, but investors with money in Greek bonds are watching its cashflow closely.


The payouts are part of the aid that Athens has been promised under a 110 billion joint EU/IMF financing programme in 2010 in exchange for fiscal austerity and structural reforms that are to make public finances of the highly indebted country sustainable.


Out of the total, 73 billion euros have already been paid, and 37 billion remain to be disbursed.


The delay in the payout of the money last year, which meant 8 billion euros from September were only paid out in December, was caused by Greece's failure to keep up with its commitments to implement austerity and structural reforms.


Bailly said that if Greece fails to meet the aid conditions again, more delays in pay-outs would follow. A team of EU and IMF inspectors will visit Greece on January 14-16 to verify reform progress.


"If our mission in mid-January concludes that there is a delay in progress, we would have to review March (payment due then)," Bailly said.


Euro zone leaders agreed on a second, 130 billion euro financing programme for Greece in October to maintain the country's access to emergency financing for longer after initial expectations that Athens would be able to return to markets in March 2012 proved optimistic.


But details of the second programme, which includes a 50 percent haircut on Greek bonds held by private investors, are still under negotiation.

Sure enough, the EURUSD is now firmly under 1.28 as the printers are starting their warm up sequence.

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Thu, 01/05/2012 - 10:44 | 2035306 Squishi
Squishi's picture

rigidity is the mother of all printing...

Thu, 01/05/2012 - 11:17 | 2035410 Hugh_Jorgan
Hugh_Jorgan's picture

First the Banking "concrete" begins to harden. Then as it does, it begins to take the load from the outstanding financial pressures. Cracks begin forming as the pressure builds and builds and builds. Then...

Thu, 01/05/2012 - 11:39 | 2035482 Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

I know there are a lot of peeps saying there is no way we get more QE but the stronger the dollar gets the higher the probability that we will.

Thu, 01/05/2012 - 10:45 | 2035308 lolmao500
lolmao500's picture


Thu, 01/05/2012 - 10:46 | 2035310 ZeroPower
ZeroPower's picture

Hell was breaking loose this summer in the credit and equity markets while EUR held a bid. Quite the opposite now, i suspect some heavy FX players are either closing out their long USD positions and/or China might be re-thinking their EUR "diversification".

Thu, 01/05/2012 - 10:47 | 2035316 surf0766
surf0766's picture

So we should see a 2000 pt drop in the dow to make up for all the hope/over optimistic rallies.... Right?

How many dam headlines have they run . Markets rise on EU hopes... yadda..

Thu, 01/05/2012 - 11:55 | 2035535 YBNguy
YBNguy's picture

A 2000 pt drop would be a blessing for Helicopter Ben as it would be the perfect excuse to start QE-nTH...

Thu, 01/05/2012 - 10:47 | 2035317 Clam McCain
Clam McCain's picture

risk on, off....bitchez


Thu, 01/05/2012 - 10:48 | 2035319 Irish66
Irish66's picture

Petroplus is done, absolutely no credit available

Thu, 01/05/2012 - 11:13 | 2035403 lolmao500
lolmao500's picture

And? Boohoo.

Thu, 01/05/2012 - 10:48 | 2035320 Toolshed
Toolshed's picture

This is OT, but what a hoot! Check out this article on the WSJ about Ron Paul's portfolio:

Here is a quote to give you a feel of the absurdity:

“Yet we would argue that performance alone can’t tell you whether an investment approach is sensible or not.”

Cue Twilight Zone theme.

Thu, 01/05/2012 - 10:57 | 2035353 a growing concern
a growing concern's picture

There was a funny comment on there to the WSJ: "You guys need to stick to something you are good at... like hacking phones."


Plus one for that guy.

Thu, 01/05/2012 - 11:18 | 2035417 Toolshed
Toolshed's picture

That would be me. Thanks.

Thu, 01/05/2012 - 11:06 | 2035375 Al Huxley
Al Huxley's picture

The quality of the propaganda is really dropping lately, I mean really "performance alone can't tell you whether an investment approach is sensible or not." That's just so fucking dumb it's impossible to respond to.

Thu, 01/05/2012 - 12:03 | 2035574 centerline
centerline's picture

Funny.  I was thinking the same thing the other.  Where is the creativity?  I guess consolidation and control leads to some unfortunate side effects.  Just wondering when (if) we see the first journalist to flip out and try to expose the invisible hand.  Got to be someone in that profession with a spine somewhere.  Maybe.

Thu, 01/05/2012 - 12:22 | 2035673 ElvisDog
ElvisDog's picture

Here's an investment approach for you - pay off all of your debt. Perform any maintenance on your house and car that will be needed in the next 2-3 years right now. Have 2-3 months (or more) living expenses in cash. Then, keep your investment powder dry and wait and see how things shake out.

Thu, 01/05/2012 - 12:57 | 2035859 ucsbcanuck
ucsbcanuck's picture

Agreed - less than 10% of my portfolio in the markets right now. Mainly cash and bonds.

Thu, 01/05/2012 - 15:10 | 2036317 Buckaroo Banzai
Buckaroo Banzai's picture

It's all about the Big Lie, baby.

Tell people that "Making money in gold is the newest strategy to lose money!" loud enough, and maybe they'll believe it.

Thu, 01/05/2012 - 11:15 | 2035406 Real Estate Geek
Real Estate Geek's picture

I see that WSJ made sure to put this hit-piece on the free side of the pay wall, too.  Not surprising at all.

Thu, 01/05/2012 - 10:48 | 2035321 MFL8240
MFL8240's picture

The fuckin clowns are back to work after the holiday.  Time to help Bernanke make the US look stable and destroy Gold.  This shit is getting real old.

Thu, 01/05/2012 - 10:48 | 2035322 misterc
misterc's picture

Market wants to see Draghi's hand. Call!

Thu, 01/05/2012 - 11:34 | 2035464 Instant Wealth
Instant Wealth's picture

... that's right - what's even better, it seems to be prized in already.

Thu, 01/05/2012 - 10:49 | 2035324 MFL8240
MFL8240's picture

The fuckin clowns are back to work after the holiday.  Time to help Bernanke make the US look stable and destroy Gold.  This shit is getting real old.

Thu, 01/05/2012 - 10:50 | 2035327 disabledvet
disabledvet's picture

This sounds more like a full fledged panic than some money-printing scheme. Forget runs on this day and age we get runs on entire nations. I say all hell breaks loose over the weekend as institutions realize the EU is finished right now.

Thu, 01/05/2012 - 10:50 | 2035329 Cult_of_Reason
Cult_of_Reason's picture

Just default like Argentina, get over with it already, and start growing the economy with a clean balance sheet.


Thu, 01/05/2012 - 10:56 | 2035344 CrashisOptimistic
CrashisOptimistic's picture

This is what so very many don't understand.

There is no international bankruptcy court.  There is no expungement.  Declaring default means NOTHING.

If you are a bondholder and Greece says "sorry, we are defaulting", you just nod and say nothing.  You continue to send bills.  You continue to smash their credit rating.  

You Continue To Compound The Numbers.

If Greece were to EVER have any assets outside Greece, in perpetuity, you file confiscation papers with that country's courts.

The point being  . . . THERE IS NO DEFAULT.  IT'S FOREVER.

Iceland is paying back that money.  So is Argentina.  Everything didn't turn out great and won't.

Thu, 01/05/2012 - 11:02 | 2035366 Everybodys All ...
Everybodys All American's picture

They do still carry the debt but it would be paid in their own currency and could very easily be renegotiated at better terms. Default and go back to the Drachma. Move on and move out of the Euro.

Thu, 01/05/2012 - 11:11 | 2035396 CrashisOptimistic
CrashisOptimistic's picture

The debt instrument says Euros.  Not drachmas.

It's forever.  Their only hope is to hold money in yen or dollars and wait for the euro to crash.  Or oil.  Nothing else has enough liquidity to try this.  There is not enough gold in the world to try this.  They have to try to repay in cheaper Euros.

There is no way to do that.

There is no answer.  All problems do not have solutions.

Thu, 01/05/2012 - 11:43 | 2035490 Mitzibitzi
Mitzibitzi's picture

Sure there is...

The Greeks merely point out that they have armed forces and the creditor does not..

Which will obviously only work until the banks DO, in fact, have their own armed forces - say... September, or thereabouts, allowing for some basic training and instruction into the Rules Of Engagement for Kleptocratic Enforcement Personnel (it's fine to kill people, but don't break anything that looks valuable and portable - that kinda thing).


Thu, 01/05/2012 - 13:22 | 2035972 Ned Zeppelin
Ned Zeppelin's picture

Hence the beauty of socializing losses by swapping private debts for public debts - the recipient (bankster) is guaranteed collection, absent collapse.

Thu, 01/05/2012 - 11:19 | 2035419 tmosley
tmosley's picture

Iceland is paying back that money.  So is Argentina.

Citation needed.

Thu, 01/05/2012 - 11:39 | 2035480 reload
reload's picture

would have greened you Mr Mosley -but italics prevent it.

If Iceland is paying back monies owed (including deposits taken by its now dead banks) why has the UK govmt made wholeits citizens who held money in Icelandic accounts (up to the insured max) and why have municipalities (which we call local authorities) had to write off larger sums. IIRC the county of Essex has written of £12M.

what does icelandic debt (issued pre 2008) now trade at? does it trade at all?

Thu, 01/05/2012 - 13:24 | 2035976 Ned Zeppelin
Ned Zeppelin's picture

Wait a second - Iceland chose not to socialize the bank losses. Iceland (as a country) wins. Ireland socialized them - loser.

Thu, 01/05/2012 - 13:31 | 2035992 Freddie
Freddie's picture

Argentina paying back bondholders? Where?  Argentina's politicians and populace are the biggest deadbeats like GReece.  The pols grabbed the pensions and savings of responsible Argentinians to keep the party going for the deadbeats that vote in the Peronists.

I think these bonds get written off eventually and the whole scam starts over.  The IMF gives them aid money etc.

Thu, 01/05/2012 - 12:10 | 2035612 centerline
centerline's picture

The default is coming. Money that cannot be paid back, won't. This truth will assert itself at some point. Somehow.

But, "growth" is not coming back, unless you are talking about the beginning of a new monetary system/cycle built on similar principles of MMT. In the physical world, we are going to have to deal with an entirely different reality from what we are leaving behind. Real constraints... not how many zeros can a silicone chip handle. These constraints are here now and will persist. Maximum population. Maximum burn of fossil fuels (lagging extraction). Maximum social complexity. Etc.

Thu, 01/05/2012 - 10:50 | 2035330 bank guy in Brussels
bank guy in Brussels's picture

Just small amounts on the liquidity swap lines from Ben B. ...

Can kicking shall proceed.

Thu, 01/05/2012 - 10:50 | 2035332 Irish66
Irish66's picture

When does IBEX get halted?

Thu, 01/05/2012 - 10:51 | 2035333 CrashisOptimistic
CrashisOptimistic's picture

Serial microphone sprinters.

We'll be seeing them run to the microphone just about daily to announce ***agreement*** over and over again.

There is no fucking miracle coming.  They Don't Have Any Money.  They Owe Trillions.

It's over.  End it.

Thu, 01/05/2012 - 10:51 | 2035334 fonzanoon
fonzanoon's picture

Bank of America is down almost 1%!!!!! what a bunch of shit.

Thu, 01/05/2012 - 10:52 | 2035335 apberusdisvet
apberusdisvet's picture

I'm really surprised that NATO hasn't already invaded Greece, for "humanitarian" reasons of course.

But since the country's gold has already been expropriated and there are no energy resources, it appears that the only resources worth pillaging are some islands which have already been spoken for by Eurocrats.

Thu, 01/05/2012 - 11:24 | 2035437 RichardENixon
RichardENixon's picture

How about confiscating the Acropolis and turning it into "AcropolisLand" complete with rides, zany costumed characters, and outrageously overpriced food, hotels and souvenirs? You could squeeze some decent revenue out of that.

Thu, 01/05/2012 - 12:59 | 2035871 ucsbcanuck
ucsbcanuck's picture

+1 for the mental image it evokes 

Thu, 01/05/2012 - 10:52 | 2035337 LawsofPhysics
LawsofPhysics's picture

Extend, pretend (all the while preparting to take everything by force).  Same as it ever was.

Thu, 01/05/2012 - 10:52 | 2035338 Peter K
Peter K's picture

But, but.... the Sep payout was to be E11b or Greece would be out of cash by Oct 17. Obviously no payout, and nothing happened. Now Greece had a bond redemption of E2.5b on the 19th of Dec and another E5.7b on the 29th of Dec. But the E8b Euro payed out in Dec would only cover thsi redemption. And since then, Greece had E1b to through into the NBG. So how is Greece funding the expense side of the Greek Income Statement?

Thu, 01/05/2012 - 10:53 | 2035340 SheepDog-One
SheepDog-One's picture

SURE new world economic model is 'Delay total implosion by 3 months'...whatever!

Thu, 01/05/2012 - 10:54 | 2035343 DutchDude
DutchDude's picture

This is megalomaniacs calling Greece's bluff on wanting 75% haircuts instead of 50%, nothing more...

The kicks to the can are getting smaller and smaller...that's for sure...

Thu, 01/05/2012 - 11:00 | 2035361 CrashisOptimistic
CrashisOptimistic's picture

There don't have to be any haircuts.  The banks can just go quiet and keep sending bills to Greece for payment.

There is no expungement mechanism to make that debt go away.  The EU can only threaten bond holders with jail, and at some point the bondholders will leave the area and CONTINUE to send demands for payment.

There is no international bankruptcy court.  The money is owed.  Pay it.  If you don't pay it, it compounds forever.

The F word.  Forever.

Thu, 01/05/2012 - 13:10 | 2035853 earleflorida
earleflorida's picture

this can - this infamous can, that's been kicking down the road, so, so long, has finally been severed in half,... having been kicked down the road so long - forever, yet lastly, overtaken by leather taps of  metal fatigue from the once high-heeled-rollers above - always riding high the gutters edge, flippin-and-a-floppin, down the road -spinning tirelessly out of control - thrashing and rimming the center thin upon stone-cold - and now, how ironic,... now, but two tin cups with a  tethered tear as ballsy handles - now applicable, but fabulously,... only suitable for begging - a fitting bifurcation to bestow upon the sizing stools of europe, and america when kicking the can down the road couldn't have gotten any more  richly, and lavishly rewarded,...  

Thu, 01/05/2012 - 10:56 | 2035348 RobotTrader
RobotTrader's picture

WFC and JPM now green.


Crisis is over.

Thu, 01/05/2012 - 11:16 | 2035405 lieutenantjohnchard
lieutenantjohnchard's picture

jpm @ $45. robottrader: jpm is best in breed. i'm all in.

jpm @ $35. robottrader: hey, i'm yielding 2.9% on my jpm dividends.

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