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Quantifying The Plan Z Dry Powder - This Is The Greek ELA Borrowing Capacity

Tyler Durden's picture


We already posted a full run down from JPM on what the immediate costs from a Greek EMU exit would be (starting at €400 billion and going higher), but one point that bears repeating is just how much borrowing capacity Greece has under the ELA in the aftermath of today's news that the ECB is leaving Greek banks to fend for themselves until such time as the Greek recapitalization payment is wired over to Greece, which the ECB has defined simply as "soon." The answer: woefully inadequate, and certainly not enough to backstop the remaining Greek deposits of €170 billion as of the end of March (likely far less now), at €65 billion. And that's an upside estimate: as JPM says "The true maximum amount that Greek banks can borrow via ELA is likely though to be significantly smaller because not all loans are accepted as collateral via ELA." Remember: this is all just one giant game of chicken - Greece's Syriza has bet the farm that the cost from a Greek fallout is just too big to Europe and the terms of the hated "Memorandum" will be adjusted, while to Europe, on the other hand, the outcome to Greece, at least according to Europe and the IIF's Dallara will be "between catastrophic and armageddon." So... Who blinks first?

From JPM:

Greek banks have run out of ECB eligible collateral already and can only access Bank of Greece’s ELA, but even with ELA, the collateral,typically loans, is not unlimited. They have already borrowed €60bn via ELA which, assuming 50% haircut corresponds to around €120bn of loan collateral. Outstanding loans are €250bn, so Greek banks have a maximum of €130bn of remaining loan collateral which allows for a maximum of €65bn of additional borrowing from Bank of Greece’s ELA. This corresponds to around 40% of Greek bank deposits which stood at €170bn as of the end of March. The true maximum amount that Greek banks can borrow via ELA is likely though to be significantly smaller because not all loans are accepted as collateral via ELA. The alternative is for Greek banks to be allowed to issue more government guaranteed paper but the ECB can, with a 2/3rd majority, block a steep and unsustainable increase in Bank of Greece’s ELA. This would effectively cut Bank of Greece off from TARGET2.

Once TARGET2 starts unwinding, with a massive €644 billion claim on the Eurosystem by the Bundesbank, and the realization that an imploding heretofore "contingent" and suddenly all too real liability amounting to 25% of German GDP means an in-kind collapse in living standards, then the simmering German anger will go truly parabolic.

One thing is certain: at least JPM is "hedged."

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Wed, 05/16/2012 - 17:44 | 2433189 semperfi
semperfi's picture

How can anyone take Greek debt seriously anymore?  Unbelievable.

Wed, 05/16/2012 - 19:17 | 2433403 CH1
CH1's picture

They can - and will - if the other choice is "face reality."

Wed, 05/16/2012 - 21:53 | 2433821 goldfish1
goldfish1's picture

Cost of Greek exit from euro $1Trillion

UK government making urgent preparations to cope with the fallout of a possible Greek exit from the single currency



Wed, 05/16/2012 - 21:56 | 2433830 goldfish1
goldfish1's picture

Game on:

Reports from Athens that

"massive sums of money were being spirited out of the country"


Wed, 05/16/2012 - 21:59 | 2433843 goldfish1
goldfish1's picture

The head of the International Institute of Finance banking lobby, Charles Dallara:

The damage to the rest of Europe if Greece were to leave the euro would be "somewhere between catastrophic and armageddon."

Wed, 05/16/2012 - 17:44 | 2433191 Olympia
Olympia's picture


...the barbarians, who forced beautiful Europe to get down Zeus’“back” and made her a prostitute ...the unworthy Europeans, who in 1945 “took Europe down” from “Mount Olympus” and in 2012 relinquished “enslaved” Europe to the Phoenician loan sharks.

Germans are proved to be the easy solution to breach Europe’s door. Whoever wishes to “set foot” on Europe and demolish it, the only thing he has to do is to “fool” the Germans. For a second time in less than fifty years, Europe’s idiots become the victims of foreigners and they serve their interests at the expense of Europe...





The German traitors of Europe along with the Phoenicians from Asia may have forced Europe to get down from the "back” of the Greek “bull”, but it remains to be seen how they shall pull it through with the “bull”.



Wed, 05/16/2012 - 18:39 | 2433309 Joe The Plumber
Joe The Plumber's picture

Greeks, the disgrace of Greece

Wed, 05/16/2012 - 18:47 | 2433326 Peter Pan
Peter Pan's picture

A Greek cartoon recently stated that "it is great luck to be born a Greek. It is also great luck to die as a  Greek. But the bit in between is a great piece of bad luck." I guess that sums it up.

Wed, 05/16/2012 - 18:55 | 2433352 Joe The Plumber
Joe The Plumber's picture

I do admire their sense of humor and am sad that many will have to suffer, even those who always voted against socialism and free stuff will have to suffer too. Even the greeks who warned their people for years this would happen are forced to suffer

Wed, 05/16/2012 - 17:44 | 2433193 fonzannoon
fonzannoon's picture

It seems Greece is totally fked either way. May as well exit and crash the system.

Wed, 05/16/2012 - 17:51 | 2433211 twh99
twh99's picture

Time to whip up some popcorn and watch the fun.

Wed, 05/16/2012 - 18:30 | 2433289 semperfi
semperfi's picture

I know these idiots did it to themselves (just like us Americans are), but I still feel sorry for them - its going to get ugly.

Wed, 05/16/2012 - 18:58 | 2433358 Joe The Plumber
Joe The Plumber's picture

Just keep in mind they all werent idiots. They had their pariahs and outcasts who warned the population this would happen for years.

There were some greeks who paid their taxes and voted against socialism and freebies.

Wed, 05/16/2012 - 21:38 | 2433775 macholatte
macholatte's picture

to paraphrase........


The Greek Republic will endure, until politicians realize they can bribe the people with their own money.

--  Alexis De Tocqueville

Thu, 05/17/2012 - 06:04 | 2434438 Withdrawn Sanction
Withdrawn Sanction's picture

I know these idiots did it to themselves

This is not directed personally at you, SF, but at this line of reasoning that essentially says, we did it to ourselves.  Not true.  Some of us did it to others of us.  Some of us played by the rules, while others of us put their thumb on the scale.

Yes, in an 8th grade Civics class sort of way, via democracy, we got what we asked for; however, in cold hard reality, none of us exerts any realistic control over the political process.  Does anyone really think your one-fifty millionth of a vote sways things one way or another?  Get real.  The ones who control this process are the ones w/the cash who are willing to buy what they want and the political prostitutes who are willing to sell it to them.  

Wed, 05/16/2012 - 18:22 | 2433279 narnia
narnia's picture

Either the Greek govt needs to start hiring a good counterfeit outfit or about 105 billion euros are simply going to evaporate in the form of lost deposits in the Greek banking system.  

Wed, 05/16/2012 - 17:46 | 2433199 Vegetius
Vegetius's picture

This Summers blockbuster Movie;

Totally Alien     (to anyone with sense)

Scene 103; the team try to grab a plane to make their escape!


Merkel: Make the lie big, make it simple, keep saying it, and eventually they will believe it.

Hollande: Well that’s how I got my job, but lets talk about a loan of a few billion Darling Leader

Draghi is on the phone in the toilet ------

Draghi: [WHISPERS] Transfer my money to Sweden, Sandro and have you buried the gold in my villa in Sicily. Good man I knew a  Capizzi would keep his word.

Hollande: Draghi! Get out here we need help.

Draghi: We must Print! Print! Print!

Herman van Rompey: Great Crap on a Christmas tree, is that the only advice you have.

Draghi: It is what Big Boy Ben told us to do!

Merkel:The great masses of the people will more easily fall victims to a big lie than to a small one.

Hudson: [reading a motion detector] I got signals. I got readings, in front and behind.
Frost: Where, man? I don't see shit, except that asshole Draghi
Hicks: He's right. There's nothin' back here.
Hudson: Look, I'm telling ya, there's somethin' movin' and it ain't us! Tracker's off scale, man. They're all around us, man. Jesus!

Herman van Rompey: : [looking through an infra-red scope, walks right past a PIIG] Maybe they don't show up on infra red at all.
[the PIIG pounces on Herman and drags him up to the ceiling]

Hicks: Where's Rumpy? Where's Rumpy?

Hudson: The President of the European Council is gone! Let's get the fuck outta here!

Vasquez: LET'S ROCK!

Everyone starts shooting----------

Hicks: Remember: short, controlled bursts.

Jose Manuel Barroso: Pity you did not say that to Draghi two years ago!


Hollande: Draghi what the fuck are you waiting for, SHOOT SOMETHING! YOU ASSHOLE!


Hudson: We're all gonna die man.

Wed, 05/16/2012 - 17:47 | 2433201 Anglo Hondo
Anglo Hondo's picture

And I thought JPM had actually hedged the hedges, kinda double-negative.


I win, you lose, again.


Wed, 05/16/2012 - 17:49 | 2433204 willien1derland
willien1derland's picture

Jamie Dimon plays Sonic the Hedge Hog in Disney's latest movie release, 'The Pretenders' - coming to your favorite airline's departing flights from Europe!

Wed, 05/16/2012 - 17:54 | 2433221 Olympia
Olympia's picture

The end of the world is near.

When Barack Obama announced the US (2010) national budget for this year, we experienced unprecedented feelings. Never before had an imperialistic power moved them to pity. This is unthought-of. This year’s deficit is estimated to be $1.6 trillion and its foreign debt has gotten completely out of hand. It hits numbers that only mathematicians and astrophysicists knew existed few decades ago. There is no space for these numbers in the electronic boards so it is driven to add new elements on them.

 It all started with the big crisis of 1929. The American economy reached a deadlock because of its social "pathogenesis"; a deadlock that led it to economic crisis in a different - faster- pace than the rest of the industrial forces of that time. Important decisions had to be made - mostly social - and the Whites didn't like that, especially the Whites' rulers, the Anglo-Saxons.





Wed, 05/16/2012 - 19:23 | 2433416 JLee2027
JLee2027's picture

US Debt is almost 16 trillion, not 13 trillion. When did you write this 2010?

Wed, 05/16/2012 - 19:24 | 2433418 Olympia
Olympia's picture

yes, in 2010

Wed, 05/16/2012 - 17:56 | 2433224 Pancho Villa
Pancho Villa's picture

Exiting the euro would be very painful, even with a functioning government to manage it. Exiting the euro without a government would be a true nightmare. Bank runs start, banks run out of money, the banking system freezes, and suddenly everyone is forced into a cash-and-barter economy. Tourism ceases because no one wants to visit a country where they cannot be sure their credit cards will work (not to mention the riots).

'Disorderly exit' doesn't even begin to describe the chaos that would result.

Wed, 05/16/2012 - 18:35 | 2433304 Global Hunter
Global Hunter's picture

I disagree if there's chaos and volatility it will be caused by the banksters, humanity can get on just fine without banksters and politicians as they're the vain insecure thugs that cause mass suffering in this world.

Wed, 05/16/2012 - 20:23 | 2433558 ThirdWorldDude
ThirdWorldDude's picture

You could make it through if you live in a remote area or a small town. Big cities are a story that you'd prefer to skip.

Wed, 05/16/2012 - 18:05 | 2433235 Sans-culottes
Sans-culottes's picture

I wonder when Greece will recover?....The year 3012 maybe

Wed, 05/16/2012 - 18:08 | 2433248 Olympia
Olympia's picture

History shall repeat itself in a far greater scale and therefore the benefit for the leading roles shall be much greater. If ancient Greeks won the battle against the barbarity of the East in favour of Europe, then modern Greeks are those who are meant to win the battle against the barbarity of both Eastern and Western world in favour of the human kind.


Nice Read: Germany, the DISGRACE of Europe



Wed, 05/16/2012 - 18:47 | 2433329 Joe The Plumber
Joe The Plumber's picture

Nice try

But it is the corrupt greek population that stole their children's future

You will be known for centuries as that moron country

In 224 years the greece territory has been in loan default for 58 years

How many defaults have their been? This is just one of many. Dont blame the germans for not giving you free money anymore

Wed, 05/16/2012 - 19:25 | 2433417 Olympia
Olympia's picture

by reading the aforementioned article was that all you understood?

No worries about it. Stay here and watch who will laugh at the end. :)

Wed, 05/16/2012 - 18:16 | 2433267 LongOfTooth
LongOfTooth's picture

"...Greece's Syriza has bet the farm that the cost from a Greek fallout is just too big to Europe and the terms of the hated "Memorandum" will be adjusted..."


Syriza is bluffing?  





Wed, 05/16/2012 - 18:26 | 2433283 semperfi
semperfi's picture

In the midst of anarchy & chaos, how is Greece going to roll-out "The New Drachma"?  How much organization & planning would that require?  They can't even form a govt let alone a new currency system.   Greece is like an abandoned newborn baby.  If there isn't a parent to step in and take care of it, its going to starve to death.

Wed, 05/16/2012 - 18:38 | 2433307 fonzannoon
fonzannoon's picture

Thats a great point semperfi. Maybe China or Russia steps up with some humanitarian aid?

Thu, 05/17/2012 - 03:32 | 2434326 Watson
Watson's picture

Don't know about China, but Russia might want a naval base...

Wed, 05/16/2012 - 18:36 | 2433302 MS7
MS7's picture

If Germany and the Troika didn't want Greeks to start withdrawing their money en masse, why are they going on and on about how easy it would be for them (EU) if Greece were to leave the euro, and about how this election will decide whether they want to stay in the euro? If those folks had kept their mouths shut, the Greeks would not be in a panic. After all, the leading candidates, including SYRIZA, are pro-EU and want to stay in the euro.

Wed, 05/16/2012 - 18:50 | 2433340 Joe The Plumber
Joe The Plumber's picture

They want to stay in the EU to get subsidized

Greeks dont want to stay in the EU if they actually have to pay anything for it

Wed, 05/16/2012 - 21:16 | 2433321 navy62802
navy62802's picture

Dry powder? They have no more dry powder. It's more like how many more sheep do they have to slaughter. Because whenever the Greeks get bailed out, it costs someone ... usually the European taxpayer. Soon, it will largely be the US taxpayer. The question is how many sheep must be slaughtered to keep Greece alive. Ultimately, this is the end result of globalization and the mindset of those who think in terms of a globalized economy. Ultimately, it's nothing more than global socialism. Those who don't have take from those who do. Those who make poor decisions and borrow and spend beyond their means don't bear the consequences of their mindless spending. If globaliztion is left to run its course, the standard of living of the poorest nations in the world will rise while the standard of living of the wealthiest nations will drop. They will meet somewhere closer to the bottom.

PS - Just to be clear. I have nothing specifically against Greece. Love the people, love the country. I just can't stand the bailing out of governments who were irresponsible. It's the same dislike I have for the bailouts of the major American banks which were irresponsible. It rewards bad behavior and encourages more of the same.

Wed, 05/16/2012 - 22:12 | 2433872 goldfish1
goldfish1's picture

Those who don't have take from those who do.

You mean California?

Wed, 05/16/2012 - 19:31 | 2433434 Curtis LeMay
Curtis LeMay's picture


 21:27 GMT, 16 May 2012

The boss of the world’s largest foreign currency dealer ICAP, Michael Spencer, has revealed they are ready to trade in drachma as ICAP prepares for Greece’s exit from the eurozone. 

Spencer said that a Greek departure would be good for the Greeks, who would otherwise be forced to live in ‘penury’. 

He said: ‘Once one country leaves, and it benefits, a few others will think it’s sensible. The whole nakedness of the euro experiment will be plain to see as the emperor without his clothes.’


"Euroland" is toast, as any sane person has known for more than a decade.


Wed, 05/16/2012 - 20:33 | 2433589 frenzic
frenzic's picture

if you take out a loan with a bank for a thousand it's you who worries

If you take out a loan with a bank for a million it is the bank that worries

If you take out a loan with a bank for a couple of hundred billion

Guess who's up shit creek (and rightly so, the scam ends here)

Wed, 05/16/2012 - 21:49 | 2433814 HD
HD's picture

EU will indeed blink. Greece has little left to lose - and the rest of the EU would implode on their exit. The bankers overplayed their hand - and left Greece to rot. Greece has far more to gain by playing hardball than rolling over to Goldman's overlords.


Thu, 05/17/2012 - 03:09 | 2434311 Watson
Watson's picture

EUR notes are printed in various European locations (including Greece). The location (actually the authorising national central bank) is given by a code letter next to the serial number. By the laws setting up the ECB, 'all Euro notes are created equal' in the sense that each national central bank has to accept notes created by another.

However, it is not difficult to imagine situations where the notes from (say) Greece are not considered as desirable as those from (say) Germany. For example, a stressed central bank might ('accidently') print as many notes as it needs to deal with a local banking crisis.

In order to be helpful, I believe (but the reader should check) that the code letter for Greece is 'Y', the code letter for Germany is 'X', (and as a less obvious, but pretty strong alternative, the code letter for The Netherlands is 'P').

Happy European holidays!

Thu, 05/17/2012 - 09:46 | 2435029 CrisisMaven
CrisisMaven's picture

"then the simmering German anger will go truly parabolic." - I'm quite afraid, it won't. What options do "the" Germans have? Vote for a communist regime, like they just got rid of? The money pledged through TARGET2 and other shenanigans is gone and anger will not create new schnitzels or bratwursts on their plates. No, they'll shoulder their newest harness and plough on. Trust me. Plough on parabolically, maybe :-)

Mon, 08/13/2012 - 12:26 | 2701009 govttrader
govttrader's picture

soooo...ur sayin there's a chance?????


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