Greece Has Defaulted: Here Is Where We Stand

Tyler Durden's picture

After reading this, everyone should have a fairly good grasp of what happened not only today, but ever since the great (and quite endless) European financial crisis took center stage, and what to look forward to next...

From Chindit13

In a nutshell---okay, a coconut shell---this seems to be where we are:

1)  Greece was able to write off 100 billion euros worth of debt in exchange for a 130 billion rescue package of new debt, of which Greece itself will receive 19%, or about 25 billion, so that it can continue to operate as an ongoing concern.  Somehow Greece is in a better position than before, with more debt and less sovereignty and still---by virtue of sharing a common currency---trying to compete toe-to-toe with the likes of Germany and the Netherlands, kind of like being the Yemeni National Basketball team in an Olympic bracket that includes the US, Spain and Germany.  At least a "within the euro" default prevented bank runs in Portugal, Spain, Italy et al.

2)  As a result of the bond haircuts, Greece has many pension plans that can no longer even pretend to be viable, at least according to the original contracted scheme, but pensionholders still working can take heart in the fact that their current wages will be cut, too.

3)  CDS buyers will have to sweat bullets, jump through hoops, and be forced to endure every cliche known to man, but they might end up getting something for all their trouble, provided their counterparty is solvent and that counterparty itself is not heavily exposed to an insolvent party or a NTBTF institution, otherwise known as a Lehman Brothers.  Expect the legal profession to be the prime beneficiary of this "event", as any new CDS contract will be at least a hundred pages of boilerplate longer in the future.

4)  Good luck to any less than AAA rated sovereign who wants to issue debt from now on out.  That contracts can now be unilaterally abrogated, as Greece' bonds were with the retro-CACs, bodes ill for attractive pricing from here on out.  Peripherals in the EU will suffer most, as they face the added indignity of being subordinated to the ECB at any point the ECB chooses to exercise its divine right of seniority.  The thing that used to be called the risk free rate no longer exists.  Bill Sharpe take note.

5)  One hundred billion euros worth of perceived wealth evaporated.  That can not be a good thing for a Eurobanking system already capital short, as it raises leverage (quick back of the envelop calculation) by about 6% across the board.  It also will not make the interbank market any more trusting, thus increasing the likelihood of perpetual LTRO.  LTRO lll looks to arrive sooner than QE lll.

6)  With the drawn-out Greek event and the LTRO, Europe might believe it has firewalled the system for at least three years and limited damage to Greece and Portugal (who will likely undergo a similar default by the 3rd quarter).  LTRO-provided liquidity, it is hoped, will lower market rates enough in Spain and Italy so that those countries can meet sovereign bond obligations and both service existing debt and issue new debt.  When the LTRO expires in 2015, "hopefully" something called organic growth will have taken over in countries imposing severe austerity measures on their public sectors, so that debt servicing becomes easier.  Organic growth obviously is something that comes in a can, a can which has been kicked out to 2015.

7)  As Europe now speaks increasingly of greater EU financial integration, Sarkozy's poll numbers will be the victim and a less EU friendly individual will likely win the upcoming election.  Since France and Germany fortunately have a long and storied history of being the best of friends, and no one in either country would ever pander to nationalist sentiments, this shouldn't present a problem.

8)  Given how much angst was caused by the drawn out Greek affair, the Spanish leader knows he has enormous leverage with EU leadership and he can continue to do what he has been doing with regard to ignoring the deficit targets demanded/suggested by the EU.  The EU might well bark at him, but they cannot afford to bite at this time.  Muchos gracias, Greece.

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AbruptlyKawaii's picture

does the isda decision mean cds will pay off?

CompassionateFascist's picture

ZOG banksters have got Greece buried under so much paper it'll never be heard from again. Might be able to do it w Spain too. Italy, prolly not. In any case, IranWar will have busted out long before then, so it won't matter; oil at $250 per will burn all the paper away.

john39's picture

the U.S. is being fleeced at the same time.  most won't realize it until after the process is finished.

Doña K's picture

It looks like a bailout of the banks not Greece as Greece only gets 19% of it. There will be some hanging in the square soon.

jeff montanye's picture

maybe not hangings, but it might be time to put on a food taster.  and some kevlar.

The Big Ching-aso's picture



It's about time they greefaulted.   I wonder if they give a shit?

fonestar's picture

Maybe this was their strategy all along?  Play this thing out for so f'ng long that nobody gives a shit, or even notices once it does finally happen?

The Big Ching-aso's picture



Ya, like a slow-motion movie train wreck without sound effects.

Michael's picture

Complete and total worldwide economic collapse on the way bitches.

GetZeeGold's picture


Phones ringing.


It's Spain, Portugal, Italy, Ireland.....I guess it's a conference call.


AbruptlyKawaii's picture

blues ;)


this whacha looking fo baby ya ;)


and in swedish

blues is all that counts baby

Oh regional Indian's picture

Actually that first name is it. Greece Default Headline Fatigue whiel out there in Spain, in a country that once ruled alongside GB is saying No mas.

And look, Syria is on the 33rd parallel too. 

it is all unfloding as per plan....North/South AND East/West.

Check it out...



The Big Ching-aso's picture



Does this mean I shouldn't renew magazine subscriptions for those good 2 year discount deals?   Btw, do U happen to have some Mayan ancestry?

aceofswords's picture

'Complete and total worldwide economic collapse on the way bitches'......


Let the 'games' commence after close of business on 17th March 2012!

HAL 9000's picture

Has the mission been completed? You know that I have the greatest enthusiasm for it.

fiddy pence haff pound's picture

it's gonna be a HOLOF.I.R.E.

Get your marshmallows.

Yamaha's picture

Two new guns and reloading equipment this weekend - but I really like the grenade launchers!  Bought two of them........

FubarNation's picture

Load up on components especially primers  Shortages are starting to show up.

cossack55's picture

True. Primers were the problem during the last ammo shortages.  Reloaders are on the bottom of the distribution list.

The Big Ching-aso's picture



Yer gonna need guns to defend yer popcorn.   Sounds like eating on the go is gonna be de rigueur.

Michael's picture

The Ruger SR 9 leaves nice patterns.

Dull Which's picture

I think it's either not give a shit or not know.... this morning: NO mention of the decision/default and therefore obviously no mention that those who signed up voluntarily have been shafted less than 7 hours later....

smiler03's picture

You needed to look at the BBC business page, it was covered more or less "live" yesterday.

oogs66's picture

Who is they? Greek puppet politicians and ECB care. Citizens think they care, but have been lied to

The Big Ching-aso's picture



The finance-wizard ouzo boys, Columbo.   Who do you think greefaulted, the Swiss?

Imminent Collapse's picture

I thought that Greece actually had to bring money to the table - now Greece gets 19% of the proceeds? Sounds like they did OK. Anyone know which story is true?

Doña K's picture

Read point 1 of the article.

100B for 130B Greece gets 25B to pay salaries and pensions, buy oil etc, and the 5B goes to the banks. result: Greece now owes more than before and will default again come September. Greek banks own CDS's and maybe they will get some money to ssustain themselves for a while.

Merry go arround until the fat lady sings. Please don't ask who she is!

The Big Ching-aso's picture



The fat lady.    Is it Mangela?

mt paul's picture

fat lady ?

too much baklava

Rakshas's picture

Just arbitrarily listening to tunes while trying to decide what to do next, then this one from Matt Good started playing, few years old but certainly made me stop for a few minutes and listen and forget this bullshit for a while....... fukin reality always comes back though, kind of like herpes, or Greek troubles......

tamboo's picture

one of those fat yid supreme court bitchez.

Handyman's picture

Lots of duct tape.....I mean lipstick, on that PIIG.

Handyman's picture

Lots of duct tape.....I mean lipstick, on that PIIG.

sessinpo's picture

Doña K"

It looks like a bailout of the banks not Greece as Greece only gets 19% of it. There will be some hanging in the square soon."


I doubt it. The main population and protestors don't even know who their real enemy is. They have been doing sporadic protests for over a year now with a few eruptions of riot like destruction but that is only because their economic situation is depression like. Sovereingty and personal freedom isn't quite understood over there because they have been socialist for the longest time under a nanny state. Just compare the Greek protests to that of the Arab Winter, Egypt, Tunisia, Libya and Syria. The people there/are ferocious in their protest, giving up their lives. You say that to a Greek and they get upset. But I say "Hey, freedom isn't free."  The majority of Greeks haven't figured this out yet, only a few realize it.

DaveyJones's picture

" kind of like being the Yemeni National Basketball team in an Olympic bracket that includes the US, Spain and Germany."

the real problem is that none of the players will admit it's really the special olympics

i_fly_me's picture

Actually, your analogy is more apt than that. 

To the players, it is just "The Olympics;" they aren't even aware of the larger context.

DaveyJones's picture

that's how special they are

The Big Ching-aso's picture




Ya know, the bottomline is it looks like the Greeks financially phucked most everyone in the ass.   Can't say I'm surprised.