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Germany Demands "Managed" Greek Default And 50% Bond Haircuts In Exchange For Expanding EFSF, Peripheral "Firewall"

Tyler Durden's picture




 

Back on July 21, the same day as the Greek bailout redux hit the tape, we speculated that the biggest weakness in the Second Greek Bailout is that the EFSF would have to be expanded to well over the current E440 billion (which even at its current size has not been fully ratified in Europe, and based on recent events may not be implemented until 2012 thanks to Slovenia and Finland), or about E1.5 trillion (and possibly as much as E3.5 trillion). The reason this is a "problem" is that it would have to come exclusively at the expense of Germany which would have to pledge anywhere between 50% and 133% of its GDP (as France would have long since been downgraded and hence unable to participate in the EFSF at a AAA rating). We also assumed that the debt rollover with a 21% haircut would not be an issue as it should have been a formality: on this we were fatally wrong - the debt rollover plan has imploded and means that the entire Greek bailout has collapsed as some had expected. And now that it is clear that contagion is threatening to sweep through the core, it is back to Germany to prevent the gangrene, no longer contagion, from advancing beyond the PIIGS. However, in order to prevent a full out revolution, Germany's economic elite has said it would agree to an EFSF expansion and hence installation of European firewall, but at a price: a "controlled" default by Greece and 50% haircuts for private bondholders (as German banks have long since offloaded their Greek bonds).

This means that "Lehman" is indeed here: just like back in 2008 Paulson et al thought they could contain the adverse effects of a Lehman bankruptcy, while the financial system ground to a halt 4 days later when money market funds broke the buck, so now Greece is somehow expected to remain in the eurozone even as it files bankruptcy. How or why they think the market will buy any of this is beyond stupefying, but we are sure all those armies of lawyers who never have a practical sense of what actually ends up happening in the real world, and who are poring over tomes of EU and EUR charter to see if they can file Greece without expelling it from the Eurozone, certainly has something to do with it.

So as part of this new strategy, here are the three key components of the plan to "firewall" contagion, via the Telegraph.

Sources said the plan would have to be released as a whole, as the elements would not work in isolation.

 

First, Europe’s banks would have to be recapitalised with many tens of billions of euros to reassure markets that a Greek or Portuguese default would not precipitate a systemic financial crisis. The recapitalisation plan would go much further than the €2.5bn (£2.2bn) required by regulators following the European bank stress tests in July and crucially would include the under-pressure French lenders.

 

Officials are confident that some banks could raise the funds privately, but if they are unable they would either be recapitalised by the state or by the European Financial Stability Facility (EFSF) – the eurozone’s €440bn bail-out scheme.

 

The second leg of the plan is to bolster the EFSF. Economists have estimated it would need about Eu2 trillion of firepower to meet Italy and Spain’s financing needs in the event that the two countries were shut out of the markets. Officials are working on a way to leverage the EFSF through the European Central Bank to reach the target.

 

The complex deal would see the EFSF provide a loss-bearing “equity” tranche of any bail-out fund and the ECB the rest in protected “debt”. If the EFSF bore the first 20pc of any loss, the fund’s warchest would effectively be bolstered to Eu2 trillion. If the EFSF bore the first 40pc of any loss, the fund would be able to deploy Eu1 trillion.

 

Using leverage in this way would allow governments substantially to increase the resources available to the EFSF without having to go back to national parliaments for approval, which in a number of eurozone countries would prove highly problematic.

 

The arrangement is similar to the proposal made by US Treasury Secretary Tim Geithner to the eurozone at the September 16 EcoFin meeting in Poland. Gathering turmoil in financial markets has convinced Germany to begin work of some kind of variant of the US plan, despite having initially rejected the notion as unworkable as threatening to compromise ECB independence.

In other words, Germany will be humiliated to appear weak after conceding to Geithner's proposals even after everyone in Europe already took turns at mocking the tax cheat. Which is why Germany has decided in turn to humiliate Greece, and in the process initiate a chain of events that will bring the end of the Eurozone, albeit, mercifully, much faster.

The proposal would be hugely sensitive in Germany as its parliament has yet to ratify the July 21 agreement to allow the EFSF to inject capital into banks and buy the sovereign debt of countries not under a European Union and International Monetary Fund restructuring programme. The vote is due on September 29.

 

As quid pro quo for an enhanced bail-out, the Germans are understood to be demanding a managed default by Greece but for the country to remain within the eurozone. Under the plan, private sector creditors would bear a loss of as much as 50pc – more than double the 21pc proposal currently on the table. A new bail-out programme would then be devised for Greece.

And with incompetent hubris bringing us here, we are happy to see said hubris is still front and center. Because if Europe really thinks there is such a thing, quadrillion sin USD FX swap lines notwithstanding, as a "managed" bankruptcy, then it fully deserves to ride into the sunset, battling the windmills of evil shorters and vile bloggers, on the much suffering back of Don Quixote's Rossinante.

 

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Sat, 09/24/2011 - 13:10 | 1705398 eisley79
eisley79's picture

Truth Hurtz Bitchez

 

managed default, like maniac_researcher(http://twitter.com/#!/designerdean) had a managed deletion of his account .

Don't mess with the zhedge LOL

Sat, 09/24/2011 - 13:12 | 1705409 So Close
So Close's picture

I do not understand why the strong EU countries don't break away and form there own EU.  EU North?  EU ver 2.0?  EU Validus?  What is in it for them if they stay?  They will be fighting the fiscal debacuhery forever and I can not see how they will win.

Sat, 09/24/2011 - 13:29 | 1705451 Ancona
Ancona's picture

They can't "break away" now. This shit is as contagious as crabs in a Vietnamese whorehouse. There are four other countries who are in just as deep as Greece as this shit hits the fan. When Greece leads the way, others will soon follow.

Doom on bitchez!

Sat, 09/24/2011 - 13:56 | 1705541 Ahmeexnal
Ahmeexnal's picture

Seems like the enlightened democracies of europe still can't learn that you cant appease a nation of sociopaths.
Last time they let them invade Poland and thought that would keep the rest of the continent safe.
Now they think that letting them "invade" Greece will once again be enough to keep them satisfied.

Sat, 09/24/2011 - 14:02 | 1705567 Market Efficien...
Market Efficiency Romantic's picture

yeah, right, as an extremist, you would see it that way. As a realist, you would recognize, how Greece was set up, hey, yeah, the Goldmanites are among us and the only relevant result will be a destabilization of Europe, much in the interest of the US and the UK. It really hurts, how blindsided some people spread their BS, coloured with historical anger.

Sat, 09/24/2011 - 14:15 | 1705596 Ahmeexnal
Ahmeexnal's picture

Yes, Greece was setup...by the EU and the francogerman banking mafia (with help from their US agents, GS).
Soon GS will also spring the trap on the US.
Too bad the MSM don't tell you that the EU was a Rothschild/Bilderberg plan, just like the thousand year empire that capsized just over half a century ago.
It really hurts, how blindsided some people spread their BS, coloured with historical ignorance.

Sat, 09/24/2011 - 14:15 | 1705611 Market Efficien...
Market Efficiency Romantic's picture

Re Rothschildt control and European integration, I totally agree with you, but I am missing your link from the NWO elite to Germany as a nation of sociopaths. If you look into the political and corporate in the US, the de-facto NWO controlled FED and JPM, I wonder, how you direct the responsibility at any Eu government. They joined the game, were played and now are all getting buried. So, the question is, who is exercising control institutionally, not in person.

Sat, 09/24/2011 - 14:22 | 1705613 Ahmeexnal
Ahmeexnal's picture

http://www.prisonplanet.com/leaked-1955-bilderberg-docs-outline-plan-for...

And now for the grand move in their chess board, the powerelite have moved their puppet peon to ask for UN full membership.
Interesting how this happens just as the bank meltdown is about to blow up.
The british setup the middle east to explode with their 1948 partition and have just now lit the fuse.
Ask yourself how much money per capita the PA has received. Nowhere in earth will you find that much money being poured into a black hole. Most of that money never really made it to the PA, it was just collected by the corrupt powerelite thanks to the gullibity (and hatred for Israel) of their taxpayers.

Sat, 09/24/2011 - 14:26 | 1705637 trav7777
trav7777's picture

um...the banking mafia is jewish, not German.  WTF does this mafia have to do with the invasion of poland?  Hilter was a german nationalist who was no fan of the banking mafia.

Sat, 09/24/2011 - 14:30 | 1705647 Ahmeexnal
Ahmeexnal's picture

Trav, your idiocy knows no boundaries.
Some ought to carve a swastika on your fat greasy bald forehead.

Sat, 09/24/2011 - 14:34 | 1705656 trav7777
trav7777's picture

why don't you come and fuckin try it you motherfucking idiot?

You bitch about the jewish rothschilds and then bitch about the german nationalist who tried to put them down.

What the fuck is the matter with you? 

Sat, 09/24/2011 - 14:45 | 1705678 Ahmeexnal
Ahmeexnal's picture

You fucktard, he did not try to put them down you fool. They financed him you idiot. He was a puppet just like Franco, Lenin, Castro and many more.
He played the confetti card to a ignorant crowd.
The culprits of hyperinflation were the idiotic rulers who engaged themselves in a war financed on debt which they lost. They blamed someone else in order to keep their heads attached to their bodies you idiot!
The Roths claim to be something they are not. That too will come to light soon.
As for you and your kind, you will soon get what you deserve. IN FUCKING SPADES!

Sat, 09/24/2011 - 14:51 | 1705711 Market Efficien...
Market Efficiency Romantic's picture

know the story of him being an illegitimate grandson of Vienna's Rothschildt and a maid? Documents were quickly raided after WWII and now reside with British security services.

Sat, 09/24/2011 - 15:24 | 1705785 gmrpeabody
gmrpeabody's picture

You boys need to learn to play together. Off to your rooms!

Sat, 09/24/2011 - 16:13 | 1705886 RSloane
RSloane's picture

Srsly.

I have four pit bulls, two rottweilers, and three pissed-off mastiffs. Come and try it!

Oh yeah? I have seven rocket launchers and six grenades. And a bag of doritos. Come get some!

Sat, 09/24/2011 - 16:51 | 1705939 ZeroMargin
ZeroMargin's picture

Trav777 is a MOTHER FUCKER SON OF A FUCKING GERMAN WHORE

Sat, 09/24/2011 - 23:01 | 1706600 jeff montanye
jeff montanye's picture

and i thought "nixon sucks dead dog dicks" (wall, new jersey, 1970) was nasty.  i do think that the palestinians get a better shake here than in the msm.  and that's a good thing.  wait ....

Sun, 09/25/2011 - 15:29 | 1708265 Duffminster
Duffminster's picture

I'm certain I'll top the list along with Tyler and a handful or Zero Hedge regulars and we already do.  Just write anything mentioning GATA, the FED and and manipulation and you get scored in the top 1%.   Write an article like this one, and you get scored in the top 0.01% or higher: Deflationary Depression & Default or Debt Monetization and Inflation - Gold and Silver remain Honest Money and the Fed doesn't want you to believe it.

 

 

Sun, 09/25/2011 - 20:38 | 1709002 TravsMom
TravsMom's picture

How did you know?  You are one sharp cookie!  Come give me some nookie!

Sat, 09/24/2011 - 16:23 | 1705898 SMG
SMG's picture

Incorrect, banking mafia is Illuminati, as are the Rothschilds.

Sat, 09/24/2011 - 21:22 | 1706438 caconhma
caconhma's picture

<Hitler was a German nationalist who was no fan of the banking mafia.> The same is going for Stalin.

The second time (both WWI and WWII) German and Russians/Soviets set themselves up for a mutual destruction.

The German's geopolitical stupidity does not know any boundary.

 

Sat, 09/24/2011 - 14:29 | 1705644 Market Efficien...
Market Efficiency Romantic's picture

hey, I realize, much of our atandpoints are closer than it first appeared. Totally agreed on the long-standing Bilderberg agenda, but check their annual invitation list and you recognize that there is a large group of CFR people, the entire US financial elite (perferably with Rothschildt ties such as JPM and Lazard), some fucked European aristocrats and old money US and European entrepreneurs. And then, there is the group of potential recruits out of European countries. Check Steinbrueck, his now regular Bilderberg participation, his missing current political role in Germany and the yet unseen close to self-nomination to under the current circumstances next German chancellor. But these people are recruits to be executing the politics of people who do not like to appear in the public so much.

Sat, 09/24/2011 - 15:47 | 1705828 RoadKill
RoadKill's picture

All this racist, conspiratorialist, nutcase posting confirms what most of us already knew about the SHTF goldbug crowd. Makes me feel a lot better that all the doomsday BS you post is about equally as valid.

Go to your bunkers and eat your gold. We won't miss you.

Meanwhile the rationale people can see that this is actually more positive then negative.

Greece had to go under. Government deficits have to be slashed no matter how many commies throw rocks (because it's all they can afford). The banks have to be recapitalized. And while this all happens we need a coordinated effort to keep money from freezing up.

In the long run... This is good for the world. And in the long run, humanity will continue to prosper, thrive, invent and grow - despite those of you CHEERING for WW3. Buy great companies at cheap valuations, if they get cheaper, buy more. They will grow earnings and pay growing dividends - unlike bars of metal that only have value because our Neolithic relatives thought they were pretty. Well managed assets of all kinds go up with inflation. Not just gold.

Love this blog. But a lot of the posters are really horrible people.

Sat, 09/24/2011 - 16:20 | 1705895 xtop23
xtop23's picture

 Yes by all means buy stocks !! Theyre really cheap right now !!! 

 QE is going to happen here eventually and then your stocks will rise. Great. The problem is with the associated inflation your purchasing power will remain the same or be decreased. 

 And thats if youre on the winning side of the trade.

 No thanks pal Ill stick with my doom and gloom, years and years of prior precedent that assure me that hyperinflation will occur, and that the globes governments will do the exact wrong thing to fix the current economic challenges.

Sat, 09/24/2011 - 17:00 | 1705959 dark pools of soros
dark pools of soros's picture

go read Dying of Money - you don't have much a clue about the real effects of inflation

Sat, 09/24/2011 - 14:21 | 1705622 Market Efficien...
Market Efficiency Romantic's picture

Even with the Rothschildt family having their origin in Frankfurt, with the second generation the power was distributed mainly to the French and British family clans. Today's core is definitely closer associated with the British crown and the US financial and security services than with any German group.

Sat, 09/24/2011 - 14:27 | 1705639 Ahmeexnal
Ahmeexnal's picture

Yes, that is somewhat correct.
While the head might reside in the City, the arms are controlling most of the world:

http://havanaschooleng.blogspot.com/2010/12/cuban-conspiracy-four-rothsc...

Sat, 09/24/2011 - 16:25 | 1705900 TK7936
TK7936's picture

BS. Even Joseph Ackermann is a Jew so your franco german mafia is not even franco german. These are poeple that already fucked the germans during the empire by collecting there gold in exchange for iou's and never returning it. Thats the bases of there wealth.

Sat, 09/24/2011 - 17:22 | 1706001 optimator
optimator's picture

No one forced the Greeks to spend, and have the lowest retirement age in the EU.  But, if Greece was raped by Goldman she was a most willing victem!

Sun, 09/25/2011 - 05:13 | 1706963 kaiten
kaiten's picture

.

Sat, 09/24/2011 - 14:23 | 1705630 trav7777
trav7777's picture

it ain't gonna matter if the EFSF buys fuckin wop debt, they can't pay it back in the first goddamned place.

Debt as an institution and the notion of "financing" things over time with growth is DEAD.  The sooner people realize this, the easier it will be for them to make rational choices.

Sat, 09/24/2011 - 17:08 | 1705975 dark pools of soros
dark pools of soros's picture

I think one of the ways to explain this is to show the population and oil production charts of the last 100 years..  growth can't happen without cheap energy or increases in efficiency..  both look to be stagnate at best

the downturn is amongst us and that will bring down production and population and lead to consolidation in both

Sat, 09/24/2011 - 17:24 | 1706005 optimator
optimator's picture

Agreed, but expansion and growth is what the past has been based on so we are entering a new era and the unknown.

Sat, 09/24/2011 - 18:16 | 1706081 snowball777
snowball777's picture

People will keep fucking though.

 

Sat, 09/24/2011 - 13:44 | 1705510 Market Efficien...
Market Efficiency Romantic's picture

They would lose either way. A core EUR or, as being discussed by the Benelux, Germany and I believe Austria would work much more smoothly, as the economic culture and philosophy and the fiscal policy are pretty similar and don't need stupid ex-post harmonization. However, the core EU currency would quickly appreciate and the peripheral EU currency would in parallel depreciate, giving the core massive and structural problem, while the periphery would finally turn economically competitive.

Beyond that, I believe EU leaders are very aware that such a step would for long kill the idea of the United States of Europe and many would rather take up a larger burden than being responsible for such a historic kiss of death.

Sat, 09/24/2011 - 17:29 | 1706017 Dingleberry
Dingleberry's picture

A shitload of customers is what the northern countries get. Northern countries are rich because they do not spend money and export. Southern ones are poor because they spend and import. The euro allowed the spanish, greeks, italians, et al, to feel richer than they were (and are). The germans, etc., know this. That's why there stocks are tanking. They are about to lose a ton of business. And China/US won't pick up the slack.

Sat, 09/24/2011 - 23:07 | 1706609 Aeonios
Aeonios's picture

I do not understand why the strong EU countries don't break away and form there own EU.  EU North?  EU ver 2.0?  EU Validus?  What is in it for them if they stay?  They will be fighting the fiscal debacuhery forever and I can not see how they will win.

You know I thought of that myself. The answer, IMHO,  is that Angela Merkel is a scum-sucking braindead ponzi boss who is too busy collecting free handouts from the ECB to bother worrying what the German people will do next year.

That and they would have to kick out France, too, and oh boy look at how many frenchies are sitting on top of the ponzi pyramid. 2/3s of the "troika" is french.

Sun, 09/25/2011 - 04:35 | 1706940 NoClueSneaker
NoClueSneaker's picture

'Cause banksters apes on coke. Gov. jobs outsourced 10 yrs. + ago ...

GS lawyers write german, dutch and finnish laws.

Sat, 09/24/2011 - 13:11 | 1705406 Sudden Debt
Sudden Debt's picture

They just try to save as much as possible by buying time and finding idiots who buy their crap.

 

Sat, 09/24/2011 - 13:33 | 1705473 topcallingtroll
topcallingtroll's picture

If a publicly traded company in the usa had made false statements for a year, but was secretly buying protection and selling assets to unsuspecting buyers who trusted the public announcements they would face civil and possibly criminal liability.

Of course governments can lie all they want without fear. They can trade on inside information with impunity.

Government cannot be reformed. Hence it needs to be kept small enough to drown in a bathtub when we get mad at it.

Get the rope, get the guns, get the government. Hang the politicians now. Civil war is brewing and I am ready.

And fuck you FBI. why dont you investigate the real crimes and prosecute and jail enough culprits that i dont have to "conspire."

Sat, 09/24/2011 - 17:10 | 1705978 dark pools of soros
dark pools of soros's picture

Rule of Law in the USA??   No, just a few scapegoats to keep the rest playing the same crony game

Sun, 09/25/2011 - 04:48 | 1706950 NoClueSneaker
NoClueSneaker's picture

FBI moved 500 agents  from white-collar crime investigations to Homeland Security ( TSA p0rn ). US of A has now 120 FBI !!!!  agents in total who pretend to investigate something.

1987 there was 1000+ of them - and they managed to put hunderts of thieves in the jail.

Milken payed more than 750 mio. $ in fines.

Today GS and Morgue steal trillions on daily basis - and the SECs help them.

( Fraudulent Bullying Ignorance ) .

 

.... erm, same shit here . Daisy cutting of ppl. in finance police and taxing authorities.

 

Sat, 09/24/2011 - 13:48 | 1705525 max2205
max2205's picture

So on Tuesday this will all be priced in? Ready, set, SQUEEZE!

Sat, 09/24/2011 - 15:14 | 1705763 AbelCatalyst
AbelCatalyst's picture

Seriously, this is like watching a family of beavers try to plug up the Mississippi River.... They have no clue how impotent they are in relation to the 30+ years of debt that has been built up... A few trillion is like dust in the wind!! Go, go, go you little busy beavers! You can do it!!!

Sat, 09/24/2011 - 13:15 | 1705417 johngaltfla
johngaltfla's picture

The problem that hasn't been answered to date:

Who is bailing out Germany?

It ain't the UK or US....

Sat, 09/24/2011 - 13:27 | 1705458 Dick Darlington
Dick Darlington's picture

That's exactly what i've been saying. EU-dictatorship is so blind in their eurofanatism that they have never even thought abt that. (Or maybe Germany actually has and they have "other plans" which are not disclosed in public). Saddle Germany with infinite responsibility of the insolvent banks and banana republics all over eurozone and you end up in a situation that there's no way left to delay the inevitable.

Sat, 09/24/2011 - 14:21 | 1705625 Greyhat
Greyhat's picture

Germany will call Darth Vader and his imperial storm troops to bail us out! :)

I dont understand all this anti german crap, if it were other peoples wealth  they would fight for it same as we do.

Sat, 09/24/2011 - 14:27 | 1705638 trav7777
trav7777's picture

germany has a history with the primary ethnic group in the bankster clan along with the dominant ethnic group strangling media here in the USA

Sat, 09/24/2011 - 15:16 | 1705765 Ahmeexnal
Ahmeexnal's picture

yes, that's what the MSM will say when TSHTF, just as they have done in the past in other countries.
sheeple are sheeple.

Sat, 09/24/2011 - 17:03 | 1705965 Greyhat
Greyhat's picture

Eat the rich! Its kosher! ;)

Sat, 09/24/2011 - 18:18 | 1706087 snowball777
snowball777's picture

Since when are pigs kosher?

Sat, 09/24/2011 - 16:10 | 1705878 TK7936
TK7936's picture

All this debt is insured in the US.

Sat, 09/24/2011 - 20:38 | 1706374 newworldorder
newworldorder's picture

The FED will bail them out directly under the guise of helping NATO and inderectly through the IMF. At least, this is what they will be promised. Obama may now be wispering these sweet nothings in Merkel's ears.

Sun, 09/25/2011 - 04:52 | 1706956 NoClueSneaker
NoClueSneaker's picture

Ratzinger  here - I'm sure he and his boss will help.

Sat, 09/24/2011 - 13:15 | 1705418 Corn1945
Corn1945's picture

Seems like the "rescue" attempts are getting more desperate, impractical, and ridiculous with each passing day.

Sat, 09/24/2011 - 13:16 | 1705422 UBIGDummy
UBIGDummy's picture

Im so happy I have DZZ right now;)

Sat, 09/24/2011 - 18:19 | 1706088 snowball777
snowball777's picture

For how long?

Sun, 09/25/2011 - 03:21 | 1706895 IrritableBowels
IrritableBowels's picture

Buehler?

Try ERY out.

Sat, 09/24/2011 - 13:17 | 1705423 DosZap
DosZap's picture

http://www.spiegel.de/international/europe/0,1518,787847,00.html

Seems Greek business (legit owners are saying NO WAY,they will not pay.)

Sat, 09/24/2011 - 13:22 | 1705441 ArkansasAngie
ArkansasAngie's picture

add me and mine to that list of hell no I won't pay.

Sat, 09/24/2011 - 13:19 | 1705426 lolmao500
lolmao500's picture

So basically they follow Timmy's plan! Hell has frozen over.

Sat, 09/24/2011 - 13:20 | 1705428 PulauHantu29
PulauHantu29's picture

China is screwed, don't forget the massive Greek Bond holdings they have.

China goes....OzLand goes too.

"Treasury Secretary Timothy Geithner told the IMF panel that the European debt crisis posed the most serious threat to the global economy and that failure to take bold action raised the risk of domino-style defaults by heavily indebted European countries."

 

http://today.msnbc.msn.com/id/44652216/ns/business-world_business/

Sat, 09/24/2011 - 13:54 | 1705532 SMG
SMG's picture

Oh don't worry, China's doing just fine.  

 

Subprime crisis sweeps Wenzhou as bankrupt bosses flee

http://www.shanghaidaily.com/article/?id=483329

Oh wait..

Sat, 09/24/2011 - 13:21 | 1705432 ArkansasAngie
ArkansasAngie's picture

Honestly ... the folks that have bought Greek bonds over the last 2 years deserve to get spanked.  I'm certainly not willing to bail them out.

BTW:  That goes to you too Ben and Tim.  Your debts ... you get to pay.

 

Sat, 09/24/2011 - 13:21 | 1705433 rambler6421
rambler6421's picture

More Gold Margin Hikes Coming our way Bitchez!

Sat, 09/24/2011 - 13:22 | 1705434 Hulk
Hulk's picture

Serious question: Who or what holds Greek paper at this point? (other than banks) And why?

Sat, 09/24/2011 - 13:23 | 1705447 Tyler Durden
Tyler Durden's picture

Answer below. It excludes the billions in Greek debt that Greek banks have pledged as cash collateral to the ECB.

Sat, 09/24/2011 - 13:28 | 1705457 lolmao500
lolmao500's picture

Total Government debt exposure to Greece

European banks : 52 billion (most of it in France + Germany)

Non-European banks : 1.9 billion

Total lending exposure to Greece

European banks : 136 billion (most of it in France + Germany)

Non-European banks : 9.4 billion

Sat, 09/24/2011 - 14:06 | 1705582 Market Efficien...
Market Efficiency Romantic's picture

Only that the direct debt exposure numbers are worth next to nothing, as long as the covers are not taken off the CDS reinsurance chain. I bet, the non-European involvement will prove to be somewhat more than the stated numbers.

Sat, 09/24/2011 - 13:29 | 1705462 gorillaonyourback
gorillaonyourback's picture

michael hudson had a good point,  he said they were just stringing this out so the big commercial banks could get out of greek bonds and then default leaving the little guy to take the haircut.

Sat, 09/24/2011 - 18:22 | 1706093 snowball777
snowball777's picture

If you look around the table and don't spot the sucker,...

Sat, 09/24/2011 - 13:50 | 1705529 Diablo
Diablo's picture

TD; those are the holders of greek bonds, but there is no way of knowing who holds (or more importantly who wrote) any/all of the CDS on the greek bonds? thats the real SHTF scenario. correct?

Sat, 09/24/2011 - 14:11 | 1705559 Ahmeexnal
Ahmeexnal's picture

Norway's oil fund also has a considerable amount of greek bonds. Somehow Norway believed owning greek bonds better than owning gold. Unless they know the truth of the meaning of BONDS. Yes, it means those bonds will be redeemed with greek slaves. And that -as Vikings, who are responsible for the very word SLAVE- might indeed turn out to be...better than gold!

http://www.theglobeandmail.com/globe-investor/investment-ideas/norways-p...

Sat, 09/24/2011 - 14:31 | 1705649 trav7777
trav7777's picture

the word slave has a latin etymology...try again, fuckforbrains

Sat, 09/24/2011 - 15:19 | 1705770 Ahmeexnal
Ahmeexnal's picture

When people rely solely on the MSM and wikipedia for their information they are truly fuxored.
Hey, don't you have some dinosaurs to feed on your farmville facebook games you idiot?

Sat, 09/24/2011 - 18:26 | 1706100 snowball777
snowball777's picture

It's okay...you can blame your scrambled brain on HAARP, sklabo.

Sun, 09/25/2011 - 00:51 | 1706740 NoControl
NoControl's picture

slave

c.1290, "person who is the property of another," from O.Fr. esclave, from M.L. Sclavus "slave" (cf. It. schiavo, Fr. esclave, Sp. esclavo), originally "Slav" , so called because of the many Slavs sold into slavery by conquering peoples.

As I remember, the Romans would get most of their slaves from the Slavic peoples and so it stuck.

Most Slavic people don't even know this...  so there's hope for black people in US with the history of slavery hanging over the culture.....  what time doesn't heal it callouses.

Sat, 09/24/2011 - 15:28 | 1705793 drider
drider's picture

Norway is keen on obtaining a good starting position for accessing the oil/gas reserves in the SE area of the Mediterranean sea.

Norway's oil funds have acquired a considerable amount of greek bonds to secure such a position.

They have also provided Turkey with two vessels "thor beamer" and "bergen surveuor" to conduct searches in the area.

So they are playing ball with both sides. They are actually hedging!

Smart people if you ask me...

Sat, 09/24/2011 - 14:21 | 1705627 Hulk
Hulk's picture

Thanks TD, I suppose the answer to the "why" is that they are stuck with it. Always wondered why the reserve fund held lehman paper too. I suppose the answer to that was stupidity...

Sat, 09/24/2011 - 14:28 | 1705642 trav7777
trav7777's picture

can't be true...the swiss banks are taken to the woodshed too...do they have exposure to the others' banks?

Sat, 09/24/2011 - 16:51 | 1705942 ZeroMargin
ZeroMargin's picture

trav7777 is a MOTHER FUCKING SON OF A GERMAN WHORE

Sat, 09/24/2011 - 18:28 | 1706105 snowball777
snowball777's picture

At least she earned her keep...your momma was too ugly to fuck; they had to make you with a turkey baster and an easy-bake oven.

 

Sun, 09/25/2011 - 20:39 | 1709006 TravsMom
TravsMom's picture

Baby, I always earn my keep

Sat, 09/24/2011 - 14:51 | 1705709 Byte Me
Byte Me's picture

On the face of it Portugal has a prob because of its size - maybe Holland too, but probably not -- DE and GB get covered by the Bund and BoE.

The rest don't matter ---- except for France, whose banks are having a torrid time because of this exposure.

Sat, 09/24/2011 - 13:21 | 1705435 lolmao500
lolmao500's picture

And why the hell is it so hard to kick Greece out? I mean come on. KICK GREECE OUT = at least good for a few months of markets going up!

Sat, 09/24/2011 - 13:26 | 1705455 Segestan
Segestan's picture

Socialist hate the thought of Greece getting away.... think domino.

Sat, 09/24/2011 - 13:47 | 1705523 Diablo
Diablo's picture

you cant kick someone out...there is no mechanism (in the maastricht treaty) to kick someone out. they can only leave 'voluntarily'.

 

Sat, 09/24/2011 - 13:55 | 1705536 caerus
caerus's picture

there is currently no treaty provision that provides for the expulsion of a member state from the EU or the EMU...the legal considerations are very complex (by design, i'd imagine)...check out the maasctricht treaty (aka treaty on european union or TEU) and its amendments the treaties of amsterdam, nice, lisbon...

withdrawal from EU

if this next link doesn't work for some reason click on the 1st ref from the wiki article linked above...condensed and better than trying to wade through the treaties

withdrawal and expulsion from EU/EMU

Sat, 09/24/2011 - 14:40 | 1705677 Market Efficien...
Market Efficiency Romantic's picture

That may be the case de-jure, but de-facto Europe can tell a country that its services are no longer needed. What is the country supposed to do, stay and be starved to death. It's not that the Greek have so much profitted from the Euro. Enforcement of treaties and financial and political power are just two very different ideas.

Sat, 09/24/2011 - 15:04 | 1705740 caerus
caerus's picture

my point is "de-facto" the EU does NOT want to expel any member...neither does it want any member to "withdraw" the EU exists to shackle the member nations, subject them to central authority, and rob them of their national sovereignty...the legal argument presented by phoebus athanassiou, the legal counsel for the ECB, argues against withdrawal and expulsion...the fact that it does so from such a magnanimous posture is insulting...

for example:

 

The first objection to reading a right of expulsion into the treaties is a formal one. A

Member State’s expulsion from the EU or EMU would inevitably result in an amendment of the

 

treaties, for which the unanimous consent of all Member States is necessary under Article 48

TEU. Given that a Member State’s expulsion would, by definition, be contrary to the presumed

wish of that Member State to continue its membership of the EU, a right of expulsion would be

inconceivable, since it would have to entail an unauthorised Treaty amendment, in breach of

Article 48 TEU. Besides, it is likely that some Member States would object to the introduction of

a right of expulsion in the treaties, coupled with an amendment of Article 48 TEU to make that

possible, since this would expose them to the risk of being forced out at some future date.

 

 

in other words...we presume that no state would ever want to leave, therefore we cannot get the unanimity (since the possibly expelled state would obviously object) necessary to amend the treaties to allow for their expulsion....the paper is full of this stuff

<a href="http://synonblog.dailymail.co.uk/2010/01/sovereign-its-later-than-you-th...">sovereign it's later than you think</a>

Sat, 09/24/2011 - 15:39 | 1705807 lolmao500
lolmao500's picture

Funny how the elite only cares about treaties when it fits them uh?

Sat, 09/24/2011 - 16:21 | 1705897 drider
drider's picture

Hmmm ... a Greek as a legal counsel to the ECB. That is interesting indeed!

I like his interpetation of the EU treaties: the Greeks can leave the eurozone if they choose to do so, even though he argues this is inconceivable (I may add "for the time being", it depends also on the will of the Greek people).

So the German elite is actually battling with the Greek elite to make the problem "dissapear" (forcing the Greeks out of the eurozone) by demanding austerity measures that may result in 1) having Greek people turn against their elite and 2) enlarging the deviation of the Greek economy from the Eurozone normas.

From the appearances of things, they have lost an important battle, after the "divine" intervention of the american elite... On the other hand they have gained complete control of the internal distribution of any european funding directed to Greece for growth, by successfuly placing an overseeing comitee. Needless to say that the direct "management" of this funding used to be critical to the Greek elite well-being...

So the German elite will have to continue struggling/living with the idea of a Greek orderly default within the eurozone. Even though that entails the use of even more German tax-payers money which may result in having German people turn against their own elite.

If you disagree with the use of the word "elite" please replace it with "government"!

Sat, 09/24/2011 - 16:44 | 1705918 caerus
caerus's picture

yes...i thought that greek counsel angle was rather poetic...and that was a very insightful analysis i might add

Sun, 09/25/2011 - 04:59 | 1706964 NoClueSneaker
NoClueSneaker's picture

GS & Morgue CDS ?

Sat, 09/24/2011 - 13:24 | 1705449 digalert
digalert's picture

"German banks have long since offloaded their Greek bonds"

You gotta love these guys. Give us another month and we'll have piled our dung high enough to mask grift...at least till the next bag of dung drops. Question, can the Bamster wait? Screw the economy, screw jobs, screw the people, screw europe. This is erection season, we gotta save Bama's ass.

Sat, 09/24/2011 - 13:45 | 1705515 max2205
max2205's picture

Offloaded Greek bonds to who or what?.....mars?

Wtf gimmie a break. I call bs on this one

Sat, 09/24/2011 - 14:57 | 1705726 Market Efficien...
Market Efficiency Romantic's picture

No it's not Mars, it's simply the ECB. Even though, Sarko and Trichet had actually envisioned the ECB buyback to mostly benefit the large French banks.

Sat, 09/24/2011 - 13:25 | 1705453 BlackholeDivestment
BlackholeDivestment's picture

http://www.youtube.com/watch?v=RdOAzxI6Ge4 <<too funny

...so, they can ride the hores, get off and walk ...right into the Sun ...Bitchez. http://www.youtube.com/watch?v=ww7WlSPi9gc

Sat, 09/24/2011 - 13:26 | 1705456 zorba THE GREEK
zorba THE GREEK's picture

This is just more BS out of Europe. I don't believe they will have a real plan in place in time to deal with

melt-down. It will be day to day crisis management like in the U.S. during and after Lehman. 17 different

countries agreeing on a plan of action is a laugh. The U.S. can't even get 2 political parties to agree on

minor details and they speak the same language. The EZ was doomed from the outset. 

Sat, 09/24/2011 - 13:34 | 1705476 Dick Darlington
Dick Darlington's picture

Amen Zorba, couldn't have said it better myself.

Sat, 09/24/2011 - 13:37 | 1705485 RSloane
RSloane's picture

I think you're right. It takes a lot more than "Hey! Lets use the same currency and kick down those checkpoints..." to create a union. It looks like it will really be every country for themself.

Sat, 09/24/2011 - 13:32 | 1705469 Barb Dwire
Barb Dwire's picture

So this is bullish right Robo?

Sat, 09/24/2011 - 14:25 | 1705632 Hulk
Hulk's picture

The Robo answer is that the Fed will print, which gets him all wet in the shorts...

Sat, 09/24/2011 - 13:32 | 1705471 PaperWillBurn
PaperWillBurn's picture

And Monday being opposite day we can expect another $100 drop in gold

Sat, 09/24/2011 - 13:34 | 1705478 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

The FED saved the world back in 08. What makes you think they will not do it again? Timmmy has proven that money made of air can create wealth. Who are we to tell him he is wrong?

Sat, 09/24/2011 - 13:34 | 1705479 RSloane
RSloane's picture

If Greece is needing new revenue sources, they could begin hiring out large portions of their population for "flash" riot mobs. Why should the French or British populations suffer under water cannons, tear gas, and large plastic shields beating over their heads? Apparently the Greeks love the stuff. Rent them out and save Greece!

Sat, 09/24/2011 - 17:19 | 1705995 drider
drider's picture

Haha, talking about solidarity between the people!

Anyway, your comment also reminded me of the anti-globalization movents in the start of the decade...

Sat, 09/24/2011 - 14:17 | 1705615 Lord Welligton
Lord Welligton's picture

The second leg of the plan is to bolster the EFSF. Economists have estimated it would need about Eu2 trillion of firepower to meet Italy and Spain’s financing needs in the event that the two countries were shut out of the markets. Officials are working on a way to leverage the EFSF through the European Central Bank to reach the target.

Does someone want to explain to them that that simply means "printing" €2tn?

The complex deal would see the EFSF provide a loss-bearing “equity” tranche of any bail-out fund and the ECB the rest in protected “debt”. If the EFSF bore the first 20pc of any loss, the fund’s warchest would effectively be bolstered to Eu2 trillion. If the EFSF bore the first 40pc of any loss, the fund would be able to deploy Eu1 trillion.

So, this money is not for Greece. It is to purchase €2tn of Italian and Spanish debt.

Meanwhile the banks take €50bn+ hit. To be recapitalised by the EFSF, because no one else will provide capital.

Greek economy and society collapses because they cannot compete within the Eurozone.

Another "crisis" arises within three months.

 

Sat, 09/24/2011 - 16:38 | 1705920 RSloane
RSloane's picture

Greece is already bye-bye. Its like financial triage...who can they appear to save and not appear to save.

Sat, 09/24/2011 - 14:48 | 1705701 ivana
ivana's picture

NWO and banksters have conquered EU countries without single bullet. Long prepared scenario and milestones are being realized bit by bit. Remaining traces of democracy will vanish soon.

EFSF will use leverage to avoid parliaments (??!!!) and I wonder who will manage whole "operation" ... hmmmm ... probably same five major banksters which hold 96% of derivative market.

Jesus , game is over soon ... welcome to fascism 2.0!

Sun, 09/25/2011 - 05:08 | 1706968 NoClueSneaker
NoClueSneaker's picture

.

Sun, 09/25/2011 - 05:07 | 1706969 NoClueSneaker
NoClueSneaker's picture

SA already on spot . More than 3 ppl. in the streets - and  the anti-riot gear and 1000 paramilitary psychopats demonstrate the "power" and "defend the citizens" ....

Police was yesterday. Blackwater long ...

Sat, 09/24/2011 - 14:50 | 1705704 jekyll island
jekyll island's picture

I am so over this.  Can we talk about me for a little bit? 

Sat, 09/24/2011 - 14:51 | 1705705 jekyll island
jekyll island's picture

Damn low bid double posting computer.  Probably shouldn't be doing this from work. 

Sat, 09/24/2011 - 15:06 | 1705745 Tuffmug
Tuffmug's picture

Can anyone tell me what haircut the yield of the Greek 10 year bond ( currently 22%) is forecasting?

Sat, 09/24/2011 - 15:24 | 1705784 pizzgums
pizzgums's picture

hey, no complaints.  they're getting off better than the GM bondholders who nothin'.

Sat, 09/24/2011 - 16:37 | 1705917 RSloane
RSloane's picture

There is more and more and more chatter about this on the net. I expect full panic mode when the Asian markets open tomorrow.

Sat, 09/24/2011 - 16:53 | 1705944 xtop23
xtop23's picture

My guess is a Gold move to the upside of $50 + and Silver $2 + during Asian trading. On Monday's open I bet we have a really nice bounce. Bullion dealers are frigging dry.

Additional margin hikes on the way guaranteed. 

I say bring it on you manipulating bastards. Bring it on. 

 

Sat, 09/24/2011 - 17:51 | 1706043 dcb
dcb's picture

(LOL). we will d3mand the banks take a haircut, but then we will give them the free mo9ney6 to offset their loss!!Now what about the holders of thd bonds on the insolvent banks that needto be recapitialized, or the equity holders

Sat, 09/24/2011 - 18:29 | 1706107 snowball777
snowball777's picture

If there are people still holding shares after this much foreplay, they deserve to get royally fucked.

 

Sat, 09/24/2011 - 18:49 | 1706125 xtop23
xtop23's picture

I have to agree. Thats why I think well bounce late tomorrow ( Asia must be drooling ) and Monday open. Anyone with heavy leverage and with any sense of self preservation at all unwound and is already on the sidelines.

Or buying miners on the cheap.

Sat, 09/24/2011 - 19:31 | 1706219 Tom Green Swedish
Tom Green Swedish's picture

As Axl Rose once said.  Its all Greek to me.

Sat, 09/24/2011 - 19:31 | 1706220 Tom Green Swedish
Tom Green Swedish's picture

As Axl Rose once said.  Its all Greek to me.

Sat, 09/24/2011 - 19:40 | 1706242 robertocarlos
robertocarlos's picture

This is the best of all possible worlds.

Sat, 09/24/2011 - 19:52 | 1706271 blindman
blindman's picture

what is this?
.
2,250,000 Contracts Betting Against October S&P 500
http://www.moneyteachers.org/Put+Options+S&P500.htm
.
October 2011 Stock Market Mega Crash !!!
http://geraldcelentechannel.blogspot.com/
.

Sat, 09/24/2011 - 23:04 | 1706606 Joy on Maui
Joy on Maui's picture

That would be "Rocinante", not "Rossinante".

Sun, 09/25/2011 - 00:40 | 1706731 johnjb32
johnjb32's picture

Some very bare-knuckled bargaining is taking place. Germany has the high hand. From my perspective this is clearly no longer about saving the EU or restoring... growth. This hard bargaining is to see who's going to get hurt least as it all comes down. -- Michael C. Ruppert

 

http://www.collapsenet.com/154.html

Sun, 09/25/2011 - 00:50 | 1706738 NoControl
NoControl's picture

slave

c.1290, "person who is the property of another," from O.Fr. esclave, from M.L. Sclavus "slave" (cf. It. schiavo, Fr. esclave, Sp. esclavo), originally "Slav" , so called because of the many Slavs sold into slavery by conquering peoples. As I remember, the Romans would get most of their slaves from the Slavic peoples and so it stuck. Most Slavic people don't even know this...  so there's hope for black people in US with the history of slavery hanging over the culture.....  what time doesn't heal it callouses.
Sun, 09/25/2011 - 01:33 | 1706779 Fips_OnTheSpot
Fips_OnTheSpot's picture

It's depressing..... that they are still able to keep up "the plot".

Another 2tn "firewall" (this is getting stupid) will drive Germany as well into the the final debt-death-sprial (>90% GDP). Since noone shall think that the money will just sit there - it'll be pulled off the counter.

I wonder how long - esp. german - sheeples are still in in-depth sleep mode until they wake up and bouncing around:

Maaaah! Maaaaaah! Maaaaaaaaah! Maaa Saaaviiiings!

Sun, 09/25/2011 - 04:21 | 1706932 choorles
Sun, 09/25/2011 - 06:36 | 1707027 Fuh Querada
Fuh Querada's picture

"50%" is, of course, negotiable.

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