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Juncker Warns Of Greek Default As Europe's Patience With Greece Runs Out
Following up on our report from this morning that according to former Greek defense minister, German submarine chief procurer, and not to mention Jenny Twenty repeat offender, Evangelos "Xanax" Venizelos, we learn that the god of Deus Ex Machinae is about to abandon Greece, after an announcement by that most magic unicorn-infatuated of bureaucrats, Eurogroup head Jean-Claude Juncker made it clear that Greece is all but finished. As Reuters reports, "The possibility of a sovereign default by Greece cannot be ruled out, Jean-Claude Juncker, head of the Eurogroup of finance ministers from the single currency zone, said in a German magazine on Saturday." Translation: A Greek default on that €14.5 billion bond maturity D-day of March 20, is now inevitable. In an advance copy of comments to news weekly Der Spiegel, Jean-Claude Juncker was quoted as saying Greece could no longer expect solidarity from other euro zone members if it cannot implement reforms it has agreed. "If we were to establish that everything has gone wrong in Greece, there would be no new programme, and that would mean that in March they have to declare bankruptcy," he said. So after years of delaying the inevitable sovereign Lehman weekend, it is finally here. As a reminder, when Lehman filed, everyone, at least those in charge, thought the fall out could be contained. It couldn't, and the Fed had to step in with roughly $30 trillion in backstops, guarantees, and asset purchases. The same will happen this time.
Curiously, it was none other than Zero Hedge who said back in April of 2010, that Greece should just cut the cord and get on with it, because "Not only will a delay in defaulting do nothing for the economy except bleed it to death slowly, but ever more frequent risk flare episodes culminating in bank runs will intensify the deposit outflows and impair the banking system beyond repair (for depositors to keep their money in Greek banks, they need to be compensated for the risks: double digit rates sound about right), thus dooming any hope for an economic recovery." Funny how correct we were on that assessment, just two years ahead of the Eurozone's kleptocrats. On the other hand, having called Europe's bluff for as long as it did, is also an admirable development, if only instead of recycling the cash mooched out of Germany to pay European banks, it had been injected back into the economy and not into German submarines....
As for next steps, the only question now is what happens in that critical interval between February 29 when the second ECB 3-year LTRO takes place, and March 13, when the next FOMC statement is due, incidentally just after the BLS announce that all the labor numbers in the past few months were really just a joke, and the economic contraction is about to hit the US despite what those who believe that the market, and thus the economy, is really just a reflection of one month's seasonal labor adjustment.
And while in the past imminent deadlines were always promptly forgotten this time around, Greece may have boxed itself into a corner, having said earlier today that all must be set in under 24 hours or else the bailout is off the table. Alas, there will be no resolution tomorrow.
On the brink of bankruptcy, Greece must wrap up talks with foreign lenders on the bailout and quickly get political approval to ensure funds begin flowing in time for it to pay back 14.5 billion euros of bonds falling due in mid-March.
But negotiations with its 'troika' of international lenders have stumbled over their demands that include cutting labour costs by axing holiday bonuses and lowering the minimum wage - proposals strongly opposed by Greek political party leaders.
Some more from Reuters why tomorrow may be finally the day when the foreplay officially ends:
Euro zone finance ministers told Greece on Saturday it could not go ahead with an agreed deal to restructure privately-held debt until it guaranteed it would implement reforms needed to secure a second financing package from the euro zone and the IMF.
Euro zone ministers had hoped to meet on Monday to finalize the second Greek bailout, which has to be in place by mid-March if Athens is to avoid a chaotic default. But the meeting was postponed because of Greek reluctance to commit to reforms.
Instead, the ministers held a conference call on Saturday to take stock of progress on the second financing package, which euro zone leaders set at 130 billion euros back in October.
"There was a very clear message that was conveyed from all participants of the teleconference ... to the Greeks that enough is enough," one euro zone official said. "There is a great sense of frustration that they are dragging their feet.
"They should get their act together and start talking honestly, decisively and speedily with the Troika on the aspects of the programme that remain to be finalized - on fiscal and labor market reforms," the official said.
"There is a great sense of frustration with Minister Venizelos, who is very hard to get hold of because he is very busy campaigning for the leadership of (the Greek party) PASOK, so he is not available to meet with Troika members," the first official said.
"He is preparing his own political future, rather than the future of his country. People are seriously disgruntled about that and have conveyed this very clearly to him this afternoon," the official said.
"There is an increasing sense of frustration that why should we honour our part of the bargain, which we have in the past, while Greece does not seem to care that much, and has not delivered their part of the bargain," the official said.
Alas, if Venixanax is now unreachable, it pretty much seals the deal. Or lack thereof.
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CW coming in Greece, those folks are gonnna be highly PO'd. Violent Global Spring anyone.. ?
a tablespoon of socialist yoghurt falls off "U n i t y" and "S t a b i l i t y"
the Marxist-Banker State of Europe is crumbling (what a 'surprise' for socialism ..never saw that one coming eh?)
Send your wreaths and crocadile tears to Brussels, before there's no Eurocrats/Eurocretins left to receive them and throw their toys outta the pram
Maybe the rush to war against Iran is simply cover for the great European collapase. Greece is the first to default, banks will collapse, in the end the ECB will have to print on a massive scale.
If a real down and dirty bloodbath can be engineered against Iran and a whole nation's oil reserves brought under US and NATO control while the public is told to be patriotic and accept the austerity that bank failures and sovereign debts will bring on, then it will be a big win for the globalist EU and the neo-con/neo-liberal war and economic teams.
Tens of thousands will die, but the economic elites will hold the whip hand after Iran has been burnt to cinders. Israel can expand some more, and western oil companies can pick up oil production on the newly liberated oil fields,
Europe's crisis is unavoidable, but the effects can be controlled if a war economy is in place. In order to get people in line, the NATO forces are likely to let some Iranian missiles through to hit European targets or hit them with NATO missiles and blame Iran. A few dead Europeans will be all the excuse needed to impose a war time security clamp down across Europe. Economic crisis can always use a good war to ensure an iron grip over the newly poor populations.
Remember, in war and economic austerity, the 1% will gain even more wealth and more power. It is a win, win for them.
But hey, watch the super bowl and forget about these problems, the elites are in control, you have nothing to worry about.
"Good night, and good luck". You are going to need it in the coming year!
Iran cold be cover, butyou are dreaming if you think the Iranians wil let anyone take their oil.
In general agreement with you --who better to blame our troubles on?
In case anyone is interested, here are the latest figures on Greek (Hellenic) CDS levels:
Gross Notional: $68,854,433,156
Net Notional: $3,241,922,557
The net notional number is down 66% from a year ago, which should comfort those who do not believe in counter-party risk. Said same people know that garlic cloves around the neck offer protection from roving vampires (FYA Romania has about a billion net notional outstanding).
For Portugal:
Gross Notional: $62,541,449,854
Net Notional: $4,989,409,014
For Spain:
Gross Notional: $152,169,855,940
Net Notional: $14,253,512,254
And for the forward thinkers, Italy:
Gross Notional: $292,007,823,515
Net Notional: $21,832,086,388
The numbers, by any consideration, are substantial. That is why ISDA should tread very carefully when they decide what is, or what is not a default event. Those Gross Notional numbers mean that a whole lot of folks are relying on CDSs as a hedge. Make them meaningless by bending over backwards to define a Non-Event, and sovereign pricing takes a hit. Still, ISDA still seems to be leaning toward the wrong side of fiscal responsibility.
From the ISDA website:
“Generally, however, the inclusion of a (retrospectively applied) CAC would not, in and of itself, be expected to trigger a Credit Event. On the other hand, the use of such a clause to effect a reduction in coupon or principal or one of the other events set out in the definition of the Restructuring Credit Event could trigger if the other requirements of the Restructuring Credit Event were met (for example decline in creditworthiness), as its effect would be to bind all holders of the relevant debt.
Note: a Credit Event in Europe is defined by the ISDA’s EMEA, a body made up of BAC, Barclays, BNP Paribas, Credit Suisse, Deutsche Bank, Goldman Sachs, JPM, Morgan Stanley, Societe General, UBS, Blue Mountain Capital, Citadel, DE Shaw, Elliott Management Corp, PIMCO.
*chindit's note: would the erasure of 70% of Greece's outstanding not not make them, in relative terms, slightly more creditworthy (i.e., less dead), thus allowing ISDA to declare "Non-Event"?
Have you checked who is in ISDAs commission? The same banks that have sold CDSs.
It's a sham.
OOOOOOOOOps. Sorry.
I didn't read the whole post thru. You have checked it.
its not a one sided trade as you're implying. The banks have both wrote and bought CDS. But unlike the hedge funds the banks are more willing to be coerced into "voluntary" restructurings and the like because they need to play by the rules or theyll be ostracized from the group. It's also in their collective interests not to have a global meltdown.
Thx for commenting on my comment.
But, and this is a big but.....there are no more rules. Since they started the COCAINATED EASING and re-enacted the Plunge Protection Team to put a floor of 1100 under S&P six times from May until Nov 2011, the normal rules have been abolished. Right now it is strictly central government control in order to avoid something that cannot be avoided.
agreed. As these things usually go, instead of a big default a year ago, which at this point the rest of the world may have forgotten(Greece would still be in a world of pain) all of the interventions have just drawn things out.
Agree
I agree with your points, but the overall gross notional size of the CDS market on just these four sovereigns suggests there are plenty of folks relying on them as a hedge against the sov paper they own. Make that insurance meaningless via a convoluted (and self-serving) default event threshold, and one can guesstimate that the increased cost to sovereigns of issuing paper would be roughly the equivalent of what the CDS cost. That skin has to come off somebody's teeth.
Regarding ostracizing, note that one member of ISDA's European committee, or EMEA, is Elliott Management Corp. Of course, they are only one of fifteen voting members of the committee.
Ok theoretically.
But how does that work operationally? I don't think there are enough lawyers and judges in the world trained enough to cover all those trillions. Remember AIG?
I was going to edit my comment to drivenZ, but you closed my window, so I'll add here what I was going to add there....
Also, I suspect, but have no way of confirming, that not everyone is net flat on the CDSs of these four countries. I know Morgan Stanley claims they are (ignoring for a moment counterparty risk), but I'd be willing to be there is a Corzine/AIG or two out there who has taken in a lot of premium in the belief somebody will come to the rescue.
Check ATOMIZER's post a little further down. He linked the following:
http://static7.businessinsider.com/image/4e1ad818cadcbbea6b030000-596-421/banks-interconnectedness.jpg
http://www.bis.org/statistics/rppb1201.pdf
yes for sure, agreed. though they would have already marked to market their CDS losses. So any blow up isn't going to happen from just a loss stand point, if there's a credit event. Atleast not at any of the big banks. They have to mark to market and post collateral as the positions lose value. If they made it this far they'll be fine from a liquidity perspective.
dead on, the snake eating its tail, kicking the can until its bled the people to rock bottom land. Scam, sham and criminal gang bang.
If I correctly understand your numbers in case of Greece default would trigger payments of only 3.2 bln and assuming recovery of 30% it would be reduced to 2.2 bln. If so losses on CD's are not so big and there is no problem on the side of CD's. Is it?
Time to get this over with. A default will be a disaster, but delaying it would be even worse. Don't see any other way out.
Any event that takes to death zombie banks is a GREAT thing.
"The possibility of a sovereign default by Greece cannot be ruled out"
i fail to see how junker saying this means that the game is over for Greece. Sounds like what they've been saying all along. Its political posturing. At this point they arent going to come out and say "we'll save greece at all costs". The Greek politicians(or whats left of them)will put it in cruise control if they hear that.
Then you should have read this:
"Greece default not an option, says Jean-Claude Juncker"http://www.telegraph.co.uk/finance/financialcrisis/8805446/Greece-default-not-an-option-says-Jean-Claude-Juncker.html
"At this point" was the key part of my post. Im aware of what theyve said in the past. That was when they had a much longer runway. Though they still have plenty of time to kick the can, IMO and I can nearly guarantee that they will.
Right on.
The only point that seems when it is going to matter is when they are removing the furniture.
Then something is happening that is real.
Going back to my original post that detailed the Gross Notional size of CDSs on the four countries, and assuming some of those are owned by people who are actually using them to hedge sovereign paper exposure, then I think the "cheapest to deliver" Greek rescue---considering ALL of Europe---is to take a 70% haircut, pretend Greece will abide by EU regulation, and declare a Default Event, thereby saving the CDS market and allowing the PIIGS to issue at rates lower than a non-CDS world would allow.
It will hurt regardless, may trigger counterparty problems, will definitely raise the ongoing specter of retroactive CACs, but it is cheaper than destroying the CDS market, or having to deal with a within-or-without the euro Greek default, with all the peripheral bank runs a "without" default would create.
What would it take to "declare a Default Event" ?
What would it take to declare a default event? An act of God, Allah, Shiva, Buddha and Bokonon. If they’re unavailable, the next best thing: the EMEA Committee of ISDA (see my earlier post for voting members), the majority of whom might well be net short CDSs.
One can assume that the height of the bar for declaring a default event is directly proportional to the degree the voting members are long CDS premium (sold protection). Recall that they voted against an event when the haircut was "only" 50% on Greek sovereign paper.
Not to mention an Act of War...that should get the dominoes falling
this is a banksta fraud this whole shitting match; so NEVER support a CDS payment scam. That is pouring oil onto people's cause. Let those fukkers burn in hell whatever the consequences. Euro zone must never allow the bubble to eat the real economy at the expense of real people, to the benefit of unreal Banksta shills. Pull the plug on this planned uber-alles Piracy.
The people will prevail if they regain their freedom from debt serfdom. Whatever the route to that be. Back to economic fundamentals of real world and democracy.
Greek Default? I never heard such a thing! Is Juncker crazy? Where did he get that idea?
So left field.
Less than 24 hours to get it done...I'll guess a 4-500 Dow gap (chasm) down to get things going. Welcome home P3
http://www.theaustralian.com.au/business/in-depth/a-deal-must-be-reached...
They have said this few times already. The real date is March 20.
As to DJIA, the only real player is the Plunge Protection TEam = Primary Dealers. Whenever they run our of moeny or get an order from Timmy Geithner to leave, then the market will gasp 2k or 3k points.
I strongly recommend ATOMIZER's post a little further down for everybody. He linked the following:
http://static7.businessinsider.com/image/4e1ad818cadcbbea6b030000-596-421/banks-interconnectedness.jpg
http://www.bis.org/statistics/rppb1201.pdf
Greece...just default...just do it...otherwise it's Euro banker dick forever. But maybe you are into that sort of thing, given your history...
." Funny how correct we were on that assessment, just two years ahead of the Eurozone's kleptocrats.
The right people needed 2 years to get their assets out of Greece.
I'm not feeling it yet. My gut is telling me they kick the Greece can down the road until at least June. The same with Israel attacking Iran. I think everything happens after June 1st. However, the second half of this year is going to be one for the ages. We are going to wake up in January 2013 and say, "What just happened, last year?!"
Germany does not want to give Greece any more money, but the Bernanke has his checkbook, and he is still willing to write some digitial checks. I'm looking for March to be a non-event. What's a few billion, when he likes to spend a trillion at a time? It's going to take some type of black swan event to cause a default in Europe, but it's coming.
As the tension builds toward June, look for gold and silver to continue to rise. I'm expecting $2000 gold and $45 silver by the end of June.
I wouldn't short the DOW yet. Look for the top in March at around 13,500. I never thought we would get back that high, but the Bernanke is a wily check writer.
Newager
You think they will try; can they? What happens to oil? Gold? All of that....how much power does fiat hold over the minds of men? How much power does fiat hold over reality?
As much as i hate this sham market, greece will not default and the sham will go on. I'm in wrong i will be glad.
Forever ends in a moment.
If we were to establish that everything has gone wrong in Greece, there would be no new programme, and that would mean that in March they have to declare bankruptcy
New moon, March 22 (3/22) conveniently, the same day that Iran is attacked by Israel? Or the day some synthetic false flag attack on the US is perpetrated to achieve that end?
Jean-Claude Juncker, ? Why have Luxembourg Banks become full of Greek customers ? Luxembourg population 300,000 highest per capita income in the EU and highest recipient of EU funding per capita
Calling Mr Buffett, special terms available, and get your free gift.
14.5 billion euro plus tips required.
Juncker is a money laundering artist... tha late Kim Y Il had almost 4bill USD in Lux Banks.
ESM will be HQed in Lux - no taxes
SPV giving 20-30% Partial Protection ( CDS ? ) to EFSF/ESM Bonds wil be in Lux - no taxes
Everybody is after Swiss Banks... forgetting Luxemburg Banks ( about 180 diff insitutions ! )
Hidden Treuhand co's and Holdings Ltd's-( under 1929 law ) are free to do any bussiness they are ORDERED TO - no taxes
Lux Exposure is 3-4 times their GDP
I ASK THAT GUY JUNCKER, TO OPEN HIS AND HIS FELLOW EU OFFICIALS BANK ACCOUNTS IN LUXEMBURG... !!
CAN HE DO THAT ?? IS HE AFRAID ? OUR POLITICIANS ALSO HAVE SECRET ACCOUNTS IN LUXEMBURG !!!
WHEN ! WHEN ! WE DECIDE TO ESTABILSH A FINANCIAL INCENTIVE ZONE IN GREECE, IN 10 AEGEAN ISLANDS WITH
LOW TAXES ON HOLDINGS ( 8% FLAT ) AND 10% ON OFF-ON-SHORE BANKING, THEN THE LEGAL TAX HAVEN WILL
BE IN THE AEGEAN. NO SHARKS, EZ/EU COUNTRY, 8 MONTHS OF SUN, GOOD HONEST PEOPLE, AND 3HRS FLIGHT TO LONDON.-
SO MR LAUNDRY MAN-JUNCKER, GO F THY SELF, AND GIVE ACCESS TO LUX BANK ACCOUNTS ... YOU ARE A CRIMINAL.
PP
Luxembourg...one of the 4 last AAA sovereign credit ratings
YOU ARE SOOO PREDICTABLE...
SEE HERE THE MOST IMPORTANT CHARTS.. FOR TEH DAYS TO COME !! GOVERNANCE.... ONLY AFRER THEY REDUYCED THEIR GIIPS HOLDINGS...]
I HAVE THE NUMBERS ! AND THE GOVERNANCE SLIDES ( PASSED JAN 31-FEBR 2 2012 _
http://www.scribd.com/doc/80532656/First-They-Reduce-Their-Holdings-Then...
PP
http://www.stratfor.com/weekly/germanys-role-europe-and-european-debt-cr...
pp
This would be a fairly normal process if Greece were a corporation or an individual. In such cases, someone is appointed after bankruptcy or debt restructuring to ensure that a corporation or individual will behave prudently in the future.
What a junk article ! This is the level of Stratfor analysis ? It is pitiful. He might as well ask why the IMF has never walked across Washington DC to tell the US Government to get its spending under control and stop dirty floating the US Dollar. It is this failure of the IMF to demand Structural Adjustment in US Government Spending and Taxation that discredits the organisation. Instead the USA has for years piled up ever increasing deficits and rewarded itself with tax cuts for the rich.......but what would the normal process be if the US were a corporation or an individual. In such cases, someone is appointed after bankruptcy or debt restructuring to ensure that a corporation or individual will behave prudently in the future.
Two big differences. they have rammed the european banks flush with cash via LTRO prior to the collapse. Also Lehman was much bigger.
As long as Ron Paul is in the race, There Will Be Bid
Impossible to crash the market lest he shoot up in the polls
The FSN interview with the lady who bailed out of the Commodities biz was good, she Holds nothing back to say the least. I rarely listen though the guests arent that good and Fast Forward anything with his son(s).. lol
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Man, they have been jabbering about a default for ages... let it happen... the markets will CRASH with a resounding boom, a huge devaluation... better get into cash, Bitchez!!
Uh oh, they've brought out the Dutch to court the creditors.
http://www.youtube.com/watch?v=n0wTycwN6Ik&feature=related
No worries. No hurries. Everything can wait 'til Monday. We have a Super Bowl to watch.
Per AP: Greek crisis talks for debt deal pushed to Monday
http://finance.yahoo.com/news/greek-crisis-talks-debt-deal-185515745.html