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Latest Greek Economic Collapse Means Country Will Soon Be Out Of Eurozone, Or Bankrupt, Or Both

Tyler Durden's picture


Once is fine, twice - passable, three times - eh... But when one has missed forecast after forecast after forecast as many times as Greece, one wonders what the hell is going on. Earlier today we got confirmation that what everyone with half a brain (obviously this excludes the apparatchik idiots in Brussels) had been expecting had come to pass, namely that the Greek economy has completely imploded. Per Reuters: "GDP contracted at an annual pace of 7.3 percent in the three months to June, from 8.1 percent in the previous quarter, according to seasonally unadjusted figures by statistics agency ELSTAT, while unemployment stayed near record highs. "Domestic demand is incredibly weak, exports do not benefit from global economic growth ... A 2011 deficit of 8.5 percent to 9 percent doesn't seem implausible," said Ben May, a London-based analyst at Capital Economics. Unemployment fell slightly to 16.0 percent in June, helped by seasonal tourism jobs. But it remained close to a record 16.6 percent it hit the previous month, well above its 11.6 percent level in June 2010. And as rumblings from everywhere confirm, most notably from Greek 1 Year bond yields which are pennies away from 100% (i.e. one doubles their money if Greece does not go broke n the next 365 days), and Greek CDS which now predict a virtual certainty of bankruptcy, Europe has had enough of being used as a liquidity source over and over. Because as speculated ever so often, Greece (and now Italy) realized that the balance of power in Europe is entirely with the broke nations: after all what will Brussels do: blow itself up by kicking Greece out? As a result, Greece continued to promise and promise while doing nothing. Well, it appears that Europe is now about to test just what happens when Greece is kicked out. According to sources Greece will either be kicked out of the Eurozone by the end of the year or will be insolvent in the next 4 months. Either way, things are about to get truly exciting. And unfortunately, what Greece is doing by leeching of the Eurozone is precisely what the US is doing by "leeching" of the (temporary) dollar reserve standard. As Greece is about to find out, all good things come to an end. Soon after, America will also discover that those 4 week Bill yields of 0.000% will be a much cherished memory.

More from Reuters:

Anger at Greece's failure to meet fiscal targets that are a condition for its international bailout is nearing breaking point in Berlin and other European capitals, with senior German politicians now talking openly about the possibility of Athens exiting the euro zone.


But Athens ruled out any chance of quitting the single currency, pledging to make every effort to qualify for a 109-billion euro bailout agreed by euro zone leaders in July, the second rescue package for the debt-laden country in little more than a year.


"There is no threat of Greece exiting the euro zone," government spokesman Ilias Mosialos said. "We are proceeding with reforms quickly."


Greece is missing fiscal and reform targets set out under the first, 110-billion euro bailout it obtained in May 2010, despite the spending cuts and tax hikes it took to comply.

Faced with the threat of its EU partners blocking an 8-billion euro bailout tranche due next month if it does not get its act together, the country's socialist government pledged on Tuesday to step up long-promised budget cuts and asset sales.


But economic figures released on Thursday show austerity is stretching the economy to the limit, making it more and more difficult for the country to meet its 2011 budget deficit target of 7.6 percent of GDP, from 10.5 percent last year.


Reacting to earlier pressure from the inspectors, Greece has taken steps to make its labor market more flexible, including below minimum-wage salaries for people getting their first job.


But before agreeing to new aid disbursements, the inspectors insist that Greece remove hurdles to the introduction of company-level wage contracts, cut the number of civil servants and open up closed professions, such as taxi owners and pharmacists.


Taxi drivers and doctors went on 24-hour strikes on Thursday to protest at the measures. Students opposing university reform have occupied more than 100 faculties across the country as the school year begins.

Bottom line: the status quo is slowly and surely ending, one insolvent day at a time.


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Thu, 09/08/2011 - 11:58 | 1646428 Long-John-Silver
Long-John-Silver's picture

Should I start popping the corn for this show now? 

Thu, 09/08/2011 - 12:14 | 1646496 tekhneek
tekhneek's picture

"There is no threat of Greece exiting the euro zone," government spokesman Ilias Mosialos said. "We are proceeding with reforms quickly."

I just shit my pants and blew water out of my nose. This shit's priceless.

Thu, 09/08/2011 - 12:36 | 1646599 Ethics Gradient
Ethics Gradient's picture

Never believe anything until it has been officially denied.

Thu, 09/08/2011 - 13:35 | 1646834 MFL8240
MFL8240's picture

Love it!

Thu, 09/08/2011 - 13:36 | 1646837 MFL8240
MFL8240's picture

Love it!

Thu, 09/08/2011 - 13:36 | 1646839 MFL8240
MFL8240's picture

Love it!

Thu, 09/08/2011 - 14:42 | 1647137 english serf
english serf's picture

its confirmed then

Thu, 09/08/2011 - 12:05 | 1646430 tawdzilla
tawdzilla's picture

toga party 2nite @ Merkels house

Thu, 09/08/2011 - 12:24 | 1646536 Herman Strandsc...
Herman Strandschnecke's picture

The dyslexic will be the one dressed as a goat

Thu, 09/08/2011 - 12:00 | 1646432 oogs66
oogs66's picture

how do stocks keep going up?

Thu, 09/08/2011 - 12:04 | 1646456 Long-John-Silver
Long-John-Silver's picture

Stealth printing presses are still in use.

Thu, 09/08/2011 - 13:53 | 1646934 Sudden Debt
Sudden Debt's picture



In the 90's, we had KNIGHTRIDER!!

In the 10's, we have KNIGHTPRINTER!!


Thu, 09/08/2011 - 14:43 | 1647141 Instant Wealth
Instant Wealth's picture

Printmaster Ben and the Furious Fed

Thu, 09/08/2011 - 14:44 | 1647145 The Gooch
The Gooch's picture

"we know how to fix this mess-fire Ben and the printing press- RON PAUL"

Thu, 09/08/2011 - 12:00 | 1646435 Azannoth
Azannoth's picture

When Greece defaults the voluntary or involuntary way everything we've seen till now will look like picnic, and it looks like that's a given

Better keep your bug-out bag up to date

Thu, 09/08/2011 - 12:00 | 1646440 BORT
BORT's picture

Here is what is really not needed in Europe right now


Iceland's Volcano Katla under Close Observation

Increased geothermal heat and seismic activity below Mýrdalsjökull glacier in south Iceland, which covers the volcano Katla, may indicate an upcoming eruption. Scientists are closely monitoring the volcano, although it is not certain whether an eruption is imminent.

Thu, 09/08/2011 - 12:04 | 1646460 PY-129-20
PY-129-20's picture

Isn't Katla very powerful? When that other volcano erupted, Eyjafjala...something, they always mentioned Katla as the bigger threat and that they were connected in a way.


Thu, 09/08/2011 - 12:51 | 1646594 Use of Weapons
Use of Weapons's picture

ZH might just have eyes/ears on the ground if/when it blows. Let's say its being tracked. The 1973 one was a baby - Katla is much bigger.


The issue is simple: . Each of the eruptions of Eyjafjallajökull in 920, 1612, and 1821–1823 has preceded an eruption of Katla.


Here's the disaster porn: last 48 hrs of activity in the crater, looks like it is increasing - Myrdalsjokull = glacier sitting on top of katla, and note the size differences between the two 

Katla volcano can be found under the south-eastern part of Icelands Myrdalsjokull icecap.

Katla volcano has a large ice covered caldera which is 9 miles in diameter and is the fourth largest volcano in Iceland at 220 square miles.

Katla has erupted many times in the past, usually once in every 80 years. The last major eruption was in 1918, and is rumoured to have caused death by gas poisoning in some areas of the UK.


Some say the world will end in fire;
Some say in ice.
From what I've tasted of desire
I hold with those who favor fire.
But if it had to perish twice,
I think I know enough of hate
To say that for destruction ice
Is also great
And would suffice.

Thu, 09/08/2011 - 15:10 | 1647275 Azannoth
Azannoth's picture

That volcano could put the world in a mini-iceage for a few years, think crop failures, food riots, wars, etc.

Thu, 09/08/2011 - 12:02 | 1646450 poggi
poggi's picture

What's all the excitement.  Hell, Greece first defaulted about 50 BC, so, what's new.  Order the Greek salad and be calm.  It'll all be okay.

Thu, 09/08/2011 - 12:21 | 1646519 Cole Younger
Cole Younger's picture

True...until BAC has to make good on the derivatives it holds....But no worry there either...BAC likely owns derivatives on its derivatives and those derivatives are likely insured by other derivatives (and so on). 

Thu, 09/08/2011 - 12:57 | 1646663 WSP
WSP's picture

But since the execs at BAC (as well as the others in our kleptocracy) make the rules, control the government and justice system, and most importantly, the printing presses that feed our ponzi scheme, does it really matter?  Seriously? 

If a bet goes bad, they just change the accounting rules, print money, or dump it on investors, so in the end, does it really matter?  They win, you lose, period!   Don't want to play you say?  Doesn't matter.  Buy gold, they will run it down or change the rules or do a 90% windfall tax.  Hold dollars, they will debase it.  Try to start a business, they will regulate you away.   No, the best option most have is to max out credit cards and other debt and collect government assistance.  They don't care though, they will just print more.


Thu, 09/08/2011 - 17:59 | 1647982 honestann
honestann's picture

All correct, except for one minor but rather nasty detail.

The entire system rewards people for being non-productive, destructive, dishonest slugs.

The entire system punishes people for being honest, creative, productive individuals.

Therefore, the end result will be nobody producing and everybody consuming.

Except... where will the products come from when nobody is a producer?

Answer:  the products won't exist, and the majority of mankind will die off.  This is what the elitists have been planning, what they have openly published, and what they have been actively pushing forward in many other ways by making the world unhealthy and people braindead.

What people just don't seem to get (or want to face) is that money cannot buy anything if nothing is produced.  And that's where this is headed.

The producers need to withdraw from society, become self-sufficient, refuse to be participate in "commerce", refuse to be fleeced... and let the vast majority of predators and parasites destroy themselves.  Just make sure you are far, far, far away in the extreme remote boonies, well armed, and capable of self-sufficiency.  These will be the "meek who inherit the earth"... assuming anyone gets off their butts and takes these actions.  If not, all mankind will perish.  And good riddens.

Thu, 09/08/2011 - 12:02 | 1646451 kaiten
kaiten's picture

Well, I think kicking Greece out of eurozone was the german position from the very beginning. They just cannot do it directly, so it´s all about forcing them to leave "voluntarily".

Thu, 09/08/2011 - 12:36 | 1646591 Cugel
Cugel's picture

Well, I think kicking Greece out of eurozone was the german position from the very beginning.

So I guess the Germans were right all along then, eh?

Thu, 09/08/2011 - 12:47 | 1646640 kaiten
kaiten's picture

in what sense?

Thu, 09/08/2011 - 13:06 | 1646701 Cugel
Cugel's picture

In the sense that they are now having the problems with Greece that they anticipated they would have with Greece before. Hence, their aversion was well founded.

Thu, 09/08/2011 - 13:29 | 1646806 kaiten
kaiten's picture

Of course, it´s well founded. I also believe they are right. Greece has nothing to do in eurozone. The sooner they leave, the better. For both, eurozone and Greece.



by "very beginning" I meant 2010, when this crisis started, but it´s also true in broader sense, since 2001 when Greece joined. But eurozone is not a union only between Greece and Germany, so it wasnt just a german decision(to let them in), and there were also other issues, like German unification etc

Thu, 09/08/2011 - 14:11 | 1647017 Fuh Querada
Fuh Querada's picture

Only the markets can throw Greece out of the EUR. The power elites will never permit it.

Thu, 09/08/2011 - 12:10 | 1646479 frugartarian
frugartarian's picture

just default already, jeeeezzz

Thu, 09/08/2011 - 12:16 | 1646503 guiriduro
guiriduro's picture

Inevitable really, austerity simply introduces an unemployment->contraction->debt expense cycle.  The irony is, what Greece needs is credit - provided that credit can be spent productively.  And for that to happen Greece needs some reform, but mostly it needs its (new) creditors to also know their money is not going into servicing the enormous unproductive debt overhang it already has, or to rank pari passu with its existing (greedy) creditors.  I think policy makers already know this, they've bought as much time as they can, the next step is bankruptcy / haircut / writedowns.  Greece needs to get out of its current obligations in order to form new ones.  This will of course force the problem into the financial sector with a new Lehmans event.  The squabbling was not really whether Greece could "austere" itself into a model debtor, but rather the brinkmanship between the investor class and its politician puppets, versus the Greek and German taxpayers, neither of whom want (nor should have to bear) the consequences of prior malinvestment.  Which isn't to say the Greeks don't have significant reforms to do, just that there is no way for them to accomplish it in the status quo. 

Thu, 09/08/2011 - 12:36 | 1646598 ElvisDog
ElvisDog's picture

Greece needs to get out of its current obligations in order to form new ones

Hah, that is funny. And why would you lend money to someone who had just declared bankruptcy so they could take out a new loan? I mean, I know it happens with countries, Argentina is an example, but it does seem a little dubious from a "will they repay this new loan" point of view.

Thu, 09/08/2011 - 14:25 | 1647072 guiriduro
guiriduro's picture

Well, I guess the real question would be, what is worse?

A partially (or even fully) reformed debtor whose past excesses are so large that, with the best will in the world, they will be unable to meet their obligations.  Would you lend to them?

Or, a partially reformed debtor, having just recognised the simple fact that its past debts are totally unaffordable and had declared bankruptcy. Having cleared the previous debt through default, they present you with a transparent, reformed, productive plan for use of new debt.  Would you lend?  Or at least, neither scenario being ideal, which would you consider worse?

Thu, 09/08/2011 - 17:52 | 1647946 honestann
honestann's picture

#1:  Default on all debt.

#2:  NO MORE DEBT.  Never borrow another penny.  NEVER.

After the default, they have a clean slate.  They can learn to live without debt.  Zip, zero, nada, none.  Anyone who claims that individuals OR governments cannot exist (or cannot function as effectively) without debt is either insane, a blatant liar and fraudster, or both (a banskster).

Thu, 09/08/2011 - 13:46 | 1646805 edotabin
edotabin's picture

We know the bankers are crooks. We know the greek public sector is a huge blood-sucking organism.

If they implemented the austerity where it needed to be implemented (deflate huge blood-sucking organism) and took half the savings and invested it by encouraging the more ambitious, hard-working Greeks things would have been more workable.

A friend told me he saw on the news that they are preparing for 10-15% cuts in the public sector starting sometime in September. Far too little, far too late.

They didn't have the time to do it.  Dogma has superceeded the real world in Greece. It took about 30 years to create this monster and it will take about 10 years of very aggressive policies to change it back. There was no way this could/would happen in 1-2 years.

Thu, 09/08/2011 - 12:16 | 1646504 Jack Burton
Jack Burton's picture

Greece defaults and European banks blow up. Bang! I mean BANG!

Thu, 09/08/2011 - 12:39 | 1646608 Ethics Gradient
Ethics Gradient's picture

Unlikely. There may however be some printing.

Thu, 09/08/2011 - 13:39 | 1646850 sun tzu
sun tzu's picture

ECB will print and buy up the bad debt from the banks just like the Fed bought trillions of bad CDO's and MBS's from the US banks. 

Thu, 09/08/2011 - 12:17 | 1646507 Mugatu
Mugatu's picture

Its like breaking up with your girlfriend - it takes several attempts before you both realize its over.

Thu, 09/08/2011 - 12:23 | 1646526 MS7
MS7's picture

I don't understand the critique. Greece cut jobs, pension, salaries during a recession and people are surprised that the economy tanked? You mean if they followed the even stricter requests of the Troika it would have been better? Already the unemployment is at least 16%, hospitals are lacking in supplies, and there is an increase in homelessness. I suppose if the Troika wants to kill off 1/2 the people,  that might be one way of improving the economy. What do you mean "leeching" off the EU? The rescue money is rescuing the banks. The incompetent and servile Greek government could have just defaulted last year and given its people a chance. Instead it wants to make friends with the powerful and the banks.

Thu, 09/08/2011 - 12:30 | 1646527 knukles
knukles's picture

I'll take both for a $Bazillion, Alex.

BTW, was at a dinner of 8 guys last night.  All well educated, comfortable professioanl types... doctors, etc.  One of the fellows is Greek, US naturalized citizen, spends half of year each place, business in both countries.  Topic du jour was Pan-European Clusterfuck.  He was going on and on about how the stupid fucking Germans paid for EVerything in Greece for all the years they were in the EU... roads bridges, pensions, you name it.  He was openly disparaging of the Kraut's absolute waste of money, especially after the integration of E Germany, years of Agricultural Subsidies to  France, etc.
Was an amazing portrayal of the Greek thank you (fuck you very much) attitude toward their northern rich neighbors... and his opinion of the Greek zeitgeist was "Milk the fuckers for anything we can get before they throw us out."

Real eye opener.
Makes one wonder why Germany.... EU.... 
Ah, old conspiracy theories of post war meetings in certain hotels... 

Thu, 09/08/2011 - 13:44 | 1646835 PY-129-20
PY-129-20's picture

"stupid fucking Germans?"

Well, I guess we were foolish enough and deserve that attitude. We believed they would use it wisely. We thought it was our duty to help to build a new Europe. We felt guilty for what we had done. And rightfully so.

Like that Telegraph article. It mentioned our generosity towards our European neighbours. I say - kick these beggars out, end the Euro-project and minimize the current EU. Nigel Farage got it right. We need that money here in our own country. Ordinary people have lost a lot of money during these past years.

No, we need a new Germany here. A Germany that is aware of its past, but also self-confident and has strong and good relations to the USA, Great Britain and Ireland, Netherlands, France, Poland, Russia, China, India and Northern Europe. And we need a much more democratic Germany - like Switzerland.


Thu, 09/08/2011 - 17:47 | 1647890 honestann
honestann's picture

Unfortunately, the chaos that has been caused by trying to FORCE predatory elitist bankster control over everyone in europe and the world seems to have finally destroyed Switzerland too.  If only they had been willing to hold on a bit longer, they might have been able to stay coherent with their excellent history and not destroy their banking system and now even their currency.  What a shame.  Self-destruction on a continent wide scale.

Wake up humans!  We can all be independent AND friendly.  In fact, people who are left alone and not forced to participate in endless elitist wet-dreams are prone to being friendly and even collaborators or partners.  But the lesson is, each case must be fully voluntary by all parties involved.  Those who wish to "opt-out" must always be allowed to fully opt-out, and never be punished or inconvenienced for doing so (beyond not receiving the benefits the cooperative endeavor creates).

Germans should bail.  Be independent.  Your inclinations and habits can be the basis of a great country, a great economy, and do everyone benefit by providing a great example.  Your leaders tried force in WW2, and that was a disaster.  The euro project is ANOTHER attempt at force, albeit not military in nature.  No more force.  No more deals that force anyone to be part of anything they don't wish to be.  And I don't mean "dont force countries", I mean "don't force any individual", which means, end the damn EU, which is nothing but a different kind of force and another way for misguided predatory elitists to play masters over teeming masses of slaves.  Cut the crap.  Get real, and get free.

Thu, 09/08/2011 - 12:24 | 1646533 Cdad
Cdad's picture

What?  Oh, we are now on the "Greece is not fixed" trade?  Didn't know.  Thanks for the I was just about to get levered up on Netflix.  Whew!

Thu, 09/08/2011 - 12:25 | 1646540 Texas Ginslinger
Texas Ginslinger's picture

"There is no threat of Greece exiting the euro zone," government spokesman Ilias Mosialos said. "We are proceeding with reforms quickly."

A statement like that would make Baghdad Bob proud.  Greece obviously hired the right spokesman. 

Thu, 09/08/2011 - 13:34 | 1646823 edotabin
edotabin's picture

Will never forget the scene when Bahgdad Bob was saying that no "agressors" would ever set foot in Iraq and Us tanks were visible behind him.

Thu, 09/08/2011 - 12:25 | 1646542 Mesquite
Mesquite's picture

Didn't Mr. Trichet promise 'unlimited liquidity,,'??

And now this...

So, guess Reality still wins..


Thu, 09/08/2011 - 12:40 | 1646614 Ethics Gradient
Ethics Gradient's picture

It's not a liquidity crisis.

Thu, 09/08/2011 - 13:10 | 1646709 falak pema
falak pema's picture

Its basicly the insolvency of banks now caught between Basel III and their meltdown. But the liquidity is still lurking there mega big if there is a stampede run on a currency started by a huge and concerted short. We will then find out if Trichet's unlimited liquidity pump cans resist :

a) the market speculation carry trades, repeated pump n dump swings, and resulting increasing interest  spreads.

b) inflation spikes...

A double whammy in the race to the bottom on both sides of the pond!

Got to have a supple body to do the giant splits in FED and ECB circles....cover your naked asses where ever you be!

Thu, 09/08/2011 - 12:26 | 1646546 mikmid
mikmid's picture

Crack-up-boom. The fiat race to the bottom revs up, insolvency revs up, global GDP slowdown revs up. Gentlemen start your engines, 1st to the bottom wins.

Thu, 09/08/2011 - 12:28 | 1646558 EL INDIO
EL INDIO's picture

I think the biggest upset this autumn will be the violent rise of the dollar. Everyone is so bearish about it, everyone is so sure a massive QE3 is coming but what if it does not?

If you believe that those who run the show are evil don’t you think the most evil think to do right now is to screw everyone by not printing more money?

They will probably do it later, but not before they f**ked everyone.

The EURO holders will try to flee it, where are they going to go? Some money will be allocated to Gold but most of it will go back to the dollar until it collapses too. Right now the USD is doing a silent rally but it won’t stay that way for long.

Think about it, it is not in China’s interest to see its dollar holdings evaporate, therefore they will not do what might kill the dollar. Slowly buying commodities is the best they can do.

Folks if you have some PMs hold on to them but do not buy at this very high prices wait until the end of this month to see what happens. If you don’t have any buy some and keep some cash for the eventuality of a strong dollar rally.

Better to be prepared than sorry.

Thu, 09/08/2011 - 12:39 | 1646610 ElvisDog
ElvisDog's picture

Nice icon. That was truly one of the sweatiest movies ever made. Everyone except Clint Eastwood, who never broke a sweat.

Thu, 09/08/2011 - 12:42 | 1646622 EL INDIO
EL INDIO's picture

 Hey thanks.

Post a picture in a message and I'll post it back in black&white then you could use it as an icon.

Thu, 09/08/2011 - 12:43 | 1646625 Use of Weapons
Use of Weapons's picture

Looks like students / the children are getting the worst of it again.


#1 Add Youth + feeling like you're invulnerable + lack of hope + realising your parents' generation are screwing you

#2 ??

#3 Profit!


I'm fairly sure we can all work out what #2 entails.

Thu, 09/08/2011 - 12:44 | 1646627 Instant Wealth
Instant Wealth's picture

But Athens ruled out any chance of quitting the single currency, pledging to make every effort to qualify for a 109-billion euro bailout agreed by euro zone leaders in July, the second rescue package for the debt-laden country in little more than a year.

Imagine the other eurozone members quitting simultaneously, leaving the Greeks alone.

"Here you have it, Greece ... Brussels `n stuff ... you can keep it ... have fun as a single-member union ... kalinichta"

Thu, 09/08/2011 - 12:46 | 1646635 jtmo3
jtmo3's picture

"Soon after, America will also discover that those 4 week Bill yields of 0.000% will be a much cherished memory."


Don't bet your life savings on it. Maybe in the long run, this statement might be true. But short term...


Greece = nothing much if you don't count the us interest rates.

Us = biggest military in the world. 


Sometimes, timelines get pushed longer than most would expect.

Thu, 09/08/2011 - 12:54 | 1646655 JLee2027
JLee2027's picture

With these poor numbers has Greece fallen into an economic Depression?

Thu, 09/08/2011 - 12:59 | 1646672 Dick Darlington
Dick Darlington's picture

OT: Don't forget Spain. Here's one more example how seriously fooked up the spanish savings banks are. There's a lot of denial, smoke screens, kicking the can and, of course, ECB, but it doesn't change the underlying reality.

Highlights of the article:

Spain's central bank kicked off the sale of Caja de Ahorros del Mediterráneo a day after the bailed-out lender disclosed huge losses and triggered new fears about the health of the country's ailing savings banks.

Spain faces a mammoth task in finding a buyer for CAM, which has €71 billion ($100.10 billion) in assets, rising bad loans and dwindling deposits. It came under government control in July. Preliminary results, published Monday, showed its balance sheet had deteriorated much more than previously thought; it lost €1.14 billion in the first six months.

CAM's woes add to pressure on the Bank of Spain's efforts to clean up a banking system that continues to grapple with the collapse three years ago of a decade-long housing boom. CAM, Spain's 10th-biggest bank by assets with an extensive branch network, was a big lender along Spain's Mediterranean coast, where bankrupt developers have left thousands of half-finished apartment buildings and plots of land with their lenders.

The bank's bad loans soared to 19% of total lending at the end of June, after its new central bank administrators reviewed the loan book, doubling the 8.5% past-due loan ratio disclosed by CAM in March.

"We were expecting the revised numbers to be bad and that the new administrators would recognize new loan losses, but these numbers are very scary," said Maria Lopez, a banking analyst with Espirito Santo Investment in Madrid.

Spain injected €2.8 billion into the Alicante-based lender this summer. Before the central bank takeover this summer, CAM was in advanced talks to merge with three smaller peers. But the would-be partners became increasingly concerned about CAM's solvency and pulled out of the merger plan.

Thu, 09/08/2011 - 13:03 | 1646685 falak pema
falak pema's picture

It is amazing that a small country like Greece can bring the whole banking system down. The incestuosity amongst ponzi banks is at a level that defies the imagination!

Thu, 09/08/2011 - 13:06 | 1646698 Use of Weapons
Use of Weapons's picture

For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.

Thu, 09/08/2011 - 13:14 | 1646739 falak pema
falak pema's picture

they have a game where you throw horse shoes at any Banksta nail within sight...Nail the bastas....

Thu, 09/08/2011 - 14:31 | 1647100 Fuh Querada
Fuh Querada's picture

Thailand initiated the Asian financial meltdown in 1997.

Thu, 09/08/2011 - 13:04 | 1646692 Mediocritas
Mediocritas's picture

Why don't these clowns just get it over with? Stop faffing around, just mark it zero already. Let the losses cascade through the system, let all the CDS trigger, let illiquidity reign supreme, let them all declare bankruptcy in a nuclear chain reaction until they're all gone, let deflation brutalize markets for a few months. Let it all come crashing down.

Meanwhile, establish national banks and roll regular Joe's accounts into them so people with savings can still access cash. Launch an entirely new currency if necessary and hand it out in a great re-distribution. Just exclude the financializers from the game. They had their fun, they screwed up the world, they're out of the system now.

Heavily restrict credit based on current account deficit. Ie, if a nation is running a big deficit, constrain credit to stop it getting bigger. Either eliminate floating exchange rates or implement aggressive protection against nations that refuse to float themselves because floating against a peg gets a nation's economy ruined.

The world would recover quickly as opposed to the multi-decade, slow motion rape of the real economy to benefit the elite gamblers, that's going on now.

Thu, 09/08/2011 - 13:11 | 1646725 JLee2027
JLee2027's picture

+ Global Reset bitchez 

Thu, 09/08/2011 - 13:09 | 1646715 hourglass86
hourglass86's picture

Fuck you Zerohedge! Like you dont know the tactics the IMF is using to humiliate and destroy the nations it invades! I cant believe you dont support the greek people while they FIGHT for their survival!



Thu, 09/08/2011 - 13:49 | 1646867 edotabin
edotabin's picture

Let's step back for a second........

Greece has turned into a hellhole for anyone that may be productive, have a new idea or actually wish to work.  The government controls every single little thing and most of the "people" went along with it because they chose to follow the path of least resistance.

I definitely feel for the 25%  of people that are hard-working, productive and forward-thinking.  Problem is, over a 30 year period 75% has chosen to suck on the gov't teet all the while being encouraged by gov't to do so.

Haven't you realized that this is how the scam works? The IMF doesn't just show up.  Someone has to create the proper conditions. The people fell for it hook, line and sinker.


Thu, 09/08/2011 - 17:27 | 1647848 honestann
honestann's picture

Well, sorta.  But remember, the IMF only has to get one - or at most a handful - of power-crazed kleptocrats to "ask" for loans.  And hell, these power-hungry sellouts get huge kickbacks and election support for approving these deals.  So really, as everywhere, the ultimate responsibility falls SQUARELY on government officials and banksters.

The banks should be stiffed.  The people should demand they default on every penny of those loans.  Every "penny" they received is pure fiat, which means, pure fraud, and therefore need not be repaid.  If the IMF wants their money back, they (their members) can print it in unlimited quantities at zero cost to themselves.  So screw them.

This is the predators-that-be (government) and predator-class (headed by central banks and large financial institutions) agains mankind.  Period.  And their SOLE weapon is FAKE money and FAKE promises they had no right to make in the first place, all of which require enslaving generations of people who did not approve, and many of whom were not even born yet.  This is so vile, so evil, so utterly and completely predatory, that those involved should be hung, and the debts defaulted upon.

Without the debts around their necks, the people of Greece (and everywhere else on earth) can start to work, start to produce, and start to find out how good life CAN BE when governement doesn't exist, or is only a minor, off-in-the-corner afterthought once in a blue moon on only a few issues.

Hang the government elite - all of them, in every country.  Hang the banksters - all of them, in every country.  Let people exchange real physical goods for real physical goods so no bunch of predators can insert themselves in the lives of everyone, steal from everyone, and become masters of everyone.  Let people be people, and mankind will do well.  Otherwise, mankind is FINISHED.  And that's not an exaggeration.

Fri, 09/09/2011 - 01:13 | 1649646 edotabin
edotabin's picture

Then, instead of sending the IMF they will send a few aircraft carriers. I understand the sentiment but things are not that simple.  First off, there is nothing wrong with the idea of banking.  It is the fractional reserve system and predatory lending that has created the need for fancier and fancier instruments that are now unwinding in a semi-controlled (at best) fashion.  If the banks had the money many of these problems would not exist.

You are making assumptions about working hard and realizing how GOOD life can be. If waking up at 4 am to plow a field is GOOD, then that is a matter of opinion and you are entitled to it.  I happen to be of a different opinion.

We simply have to shed some light on the process of money creation/circulation and make the process more transparent for all to understand. 

Fri, 09/09/2011 - 13:41 | 1651602 honestann
honestann's picture

Sorry, won't and can't work in a technological world, especially with all the knowledge and practice the predators have at running these scams, obscuring the truth, establishing and selling blatant fictions to the masses, and dominating "elected governments".

If someone runs a "bank" that isn't anything like a bank is today, that would work, but ONLY if it is nothing more than a vault/warehouse for the storage of valuable goods and/or a clearing house for "gold debit cards" (so people can buy with credit cards, and the ownership of the gold simply changes hands).

However, even these utterly trivial functions won't work (will be taken over and corrupted by the predators) unless ABSO-FREAKING-LUTELY foolproof systems are established to assure the total amount of gold in the vaults always exceeds the credits available to the "gold debit cards".

And most importantly, zero forms of fractional reserve practices of any type whatsoever can exist, because this one simple practice instantly and utterly destroys even the most honest, viable system.

And by the way, NOTHING WHATSOEVER could possibly be more "transparent for all to understand" than "to buy anything, you must bring real, physical gold coins".  And that's a fact, and a great reason to support the pure physical gold standard.

Thu, 09/08/2011 - 13:17 | 1646753 LookingWithAmazement
LookingWithAmazement's picture

All the doomers come out again - for nothing. But it will end in an anti-climax: end of September the Bundestag will simply agree with the July 21st agreements, with the europhile support of SPD, Greens and the Communists. FDP, CSU & CDU don't want elections because they'll get wiped out, so their protests will be a mere ritual. Euro will survive, crisis goes over, banks saved. Up to the Christmas. Boring world we live in.

Thu, 09/08/2011 - 14:23 | 1647066 Pancho Villa
Pancho Villa's picture

The world is especially boring to people who walk around with their eyes tightly shut.

But if you feel that everything is fine and dandy in the EZ, then now is certainly the time to load up on Greek debt. It is currently going for bargain prices. How much do you own?

Thu, 09/08/2011 - 14:37 | 1647117 Ag1761
Ag1761's picture

Bailout ground hog day



Thu, 09/08/2011 - 13:33 | 1646828 Maxwell Smart
Maxwell Smart's picture

So there might be an escape route from euro and EU. Thank you, Greece, for finding it.

Thu, 09/08/2011 - 14:01 | 1646973 LookingWithAmazement
LookingWithAmazement's picture

Indeed. Nothing happens.

Thu, 09/08/2011 - 18:27 | 1648074 Use of Weapons
Use of Weapons's picture

Which is exactly what Chamberlain thought.








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