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A Shift In European Sentiment - Is Germany Prepared To Let Greece Default?

Tyler Durden's picture


Something quite notable has shifted in recent weeks in Europe, and it originates at the European paymaster - Germany. While in the past it was of utmost importance to define any Greek default as voluntary (if one even dared whisper about it), and that the money allocated to keep the Eurozone whole would be virtually limitless, this is no longer the case. In fact, reading between the headlines in the past week, it becomes increasingly obvious that Greece will very soon become a new Lehman, i.e., a case study where the leaders are overly confident they can predict the outcomes of letting a critical entity default, and manage the consequences. Alas, this only proves they have learned nothing from the Lehman case, and the aftermath is still not only unpredictable but uncontrollable. But that's a bridge that Europe will cross very shortly. And what is truly frightening is that this crossing may happen even before the next LTRO hits the banks' balance sheets, thus not affording Euro banks with sufficient capital to withstand the capital outflow and funds the unexpected. In the meantime, here is UBS summarizing the palpable change in European outlook over Greece, and over the entire "Firewall" protocol.

The German government seems uneasy about the firewall discussion. Some German media recently carried stories that a 'super rescue umbrella' would be agreed at the next summit on 1 March, amounting to €1.5 trillion, a number arrived at by adding up the €500bn of the ESM, the €440bn of the EFSF (though only about €250bn remain available) and the $500bn that managing director Lagarde has been seeking in additional financing for the IMF. There is a sense that trying to impress the market with a large number may once again backfire as analysts would quickly shoot down in any such attempt, for example by arguing that the IMF money would not actually be earmarked for the Eurozone, or more seriously maybe, that countries such as Spain and quite possibly France may come to be seen as unable to contribute ever more rescue funds. Instead, it is felt that the preferable option may be to point out that the ESM will be a much better designed and effective instrument than the EFSF, and that €500bn is enough for the problems at hand.


One gets the sense that the German government is not a priori unwilling to commit more financing to crisis management, but not now and only if it becomes clear that really the existing funds are insufficient. Also, there is a view that the government may at times have listened too much to advice from market sides, which then led to initial positions that subsequently needed to be revised. For example, bank recapitalisation was mentioned as something that ultimately seems to have done more harm than good and is now widely criticised for accelerating deleveraging. Also, the insistence that any Greek restructuring had to be 'voluntary' initially stemmed from fear of upsetting markets, but has now come to be criticised as having serious adverse implications such as undermining the sovereign CDS market. As a result, the German government may now be more inclined to stay firm on the firewall discussion and insist that €500bn for the ESM is sufficient for now.

While this step was inevitable from the beginning, what also was inevitable was the fact that leaders would be forced to exude confidence over what happens next. The truth is that they have no idea. Because if Paulson was proven 100% wrong in under 5 days following the Lehman default, when the money markets broke and the Fed has to literally force a bailout of the global financial system, what can one say about two bit second tier politicians from Europe, who have never even seen a DCF model?


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Mon, 02/06/2012 - 08:31 | 2130104 achmachat
achmachat's picture

If you know Jean-Claude Juncker, you know that the very fact of talking about a Greek default, means that it's already been decided as an inevitability.

Mon, 02/06/2012 - 08:38 | 2130128 Snidley Whipsnae
Snidley Whipsnae's picture

ZH... "it becomes increasingly obvious that Greece will very soon become a new Lehman, i.e., a case study where the leaders are overly confident they can predict the outcomes of letting a critical entity default, and manage the consequences."


The unwind of Lehman is ongoing with no estimate of completion.

Lest we forget, Kyle Bass was on ZH a short time ago and predicted that the holders of Greek debt will experience a 100% loss.

Of course, this will not trigger a CDS event... ;)

Mon, 02/06/2012 - 08:42 | 2130137 MsCreant
MsCreant's picture

"Of course, this will not trigger a CDS event... ;)"

Yeah, instead it has triggered a bunch of Euro-crats getting together for lots of small parties, constantly. But not really an event per se.

Mon, 02/06/2012 - 08:46 | 2130148 Ghordius
Ghordius's picture

MsCreant, our EU-crats are quite comptemptible creatures, little paperpushers and burocrats that don't cost much.

If you want to join the parties, you have to go to Washington, DC.

Mon, 02/06/2012 - 08:50 | 2130157 MsCreant
MsCreant's picture

I stand corrected. In any comment I ever make G, please know that if I'm pointing a finger at you guys, I have 4 pointed at the US. I am not a random Euro basher for bashing's sake. I make fun of everyone equally (including my self).

You guys did have Bunga Bunga at your parties, but I guess you need Barney Frankfurter to put together your "events." Barney has arranged for events with Fannie and Freddie...

Mon, 02/06/2012 - 08:58 | 2130168 Ghordius
Ghordius's picture

;-) I merely wanted to point you to the better parties!

Bunga Bunga, by the way, is a tradition in Italy, it goes back to the times of the Borgia Papacy. But they are private parties. Private like in "oligarch's".

Tue, 02/14/2012 - 14:22 | 2158184 littleguy
littleguy's picture

What planet do you live on Ghordius? Eurocrats cost a fortune to maintain. Van Rompuy earns more than the president of the USA! Case in point. They drive the freakin' parliament to Strasbourg where they have another one every month just to satisfy the vanity of the French! It's a joke. Always was and always will be. Thankfully not for much longer. Bring it on and let's start again. 

Mon, 02/06/2012 - 08:45 | 2130142 He_Who Carried ...
He_Who Carried The Sun's picture

Letting Greece slip into default would be a VERY bullish thing.

Think about endlessly nurturing a Greek state in which more than 80% of its population do -at least in part- not pay their taxes.

You cannot ask a German taxpayer to do that! If the Greek hate their country that much, why should others care?

And why now? Because LTRO's have refinanced European banks sufficiently and contagion risks from Greece have become minimal. The ball was thrown back into Greek hands. The only problem is, that the Greek are to slow to realise that their affairs don't matter much anymore.... ;-) 

Write downs have been applied to all Greek positions to a great extent (somewhere in the 90% area) already and much faster than anticipated in spring 2011, so its become cheaper to let them go now and I'd happily join those you enjoy saying: Bye bye!


Mon, 02/06/2012 - 08:54 | 2130159 Snidley Whipsnae
Snidley Whipsnae's picture

"If the Greek hate their country that much, why should others care?"

Simply because many Greeks don't pay their taxes does not mean they hate their country.

The 'people' always follow the lead of their leaders. If the leaders lie, cheat, steal, don't pay taxes (like little Timmy G) then the people will follow suit.

Corruption at the top always leads to a corrupt populace... Coming to a soverign near you soon.

Mon, 02/06/2012 - 09:01 | 2130176 He_Who Carried ...
He_Who Carried The Sun's picture

They elect whom they deserve, and THAT's coming NEAR YOU very soon, so better think about what you're saying....

Mon, 02/06/2012 - 09:31 | 2130226 StychoKiller
StychoKiller's picture

The time is coming when everyone in the USA will have to choose between doing what is easy (voting for the Republicons/Decepticrats), and what is right (voting for Ron Paul).

Mon, 02/06/2012 - 09:48 | 2130260 Snidley Whipsnae
Snidley Whipsnae's picture

If you believe that who is elected in the US, or Greece, has any bearing on the quality of leadership received in Greece, or the US, then the silicone implants in you're avatar have more brains than you do.

Regardless of who is elected, with the possible exception of Ron Paul, the bankers will still be pulling the strings in DC.

...and, it is not 'coming near me', it's already here and has been for a very long time.

Mon, 02/06/2012 - 10:40 | 2130414 He_Who Carried ...
He_Who Carried The Sun's picture

If you insult my funbags once more, I'll zip IT UP for ya... wanker!

Mon, 02/06/2012 - 10:53 | 2130478 Snidley Whipsnae
Snidley Whipsnae's picture

The good part of you 'zipping it up' is that it's so short you need not be concerned about getting it caught in the zipper... wanker.

Mon, 02/06/2012 - 11:10 | 2130546 He_Who Carried ...
He_Who Carried The Sun's picture

Short?  *lol*

I am so sorry for you, then I must decline.

I only take big and strong, so keep on wanking...

Mon, 02/06/2012 - 09:08 | 2130178 djudy003
djudy003's picture

Yup, not to mention s&p @ ~1400....... The idea is, will the LTRO, the latest QE3 anticipation rally and the soar ears of everyone from hearing about an imminent Greek default be enough. Or will the Politicians be wrong again and let Greece go only to scramble to hold up the other PIIGS up at any cost. ...

Mon, 02/06/2012 - 10:55 | 2130496 number cruncher
number cruncher's picture

Letting greece default is the worst outcome, its not bullish at all, thats why they have been desperately trying to avoid a default... especially as the market gorged on th elatest LTRO with the junkiest of collateral that would result in one mother of a margin call when the collatral loses value due to a sovereign shock or cds daisy chain...grab the popcorn and watch the sideshow unfold into the main event and make sure youcare ready to go very short on the risk that has beeng gobbled up from the pigs at the trough.

Tue, 02/14/2012 - 14:41 | 2158264 pkea
pkea's picture

told you last week germany is done with them but that's not even the major problem

Mon, 02/06/2012 - 08:31 | 2130105 RazorForex
RazorForex's picture

LOL Watch Greece Default and Euro rally like mad. In this bizaro world this would not surpise we one bit. Not one bit!

Mon, 02/06/2012 - 08:36 | 2130122 Ghordius
Ghordius's picture

that's quite exactly what I expect...

Mon, 02/06/2012 - 08:40 | 2130135 GeneMarchbanks
GeneMarchbanks's picture

It'll be short lived if it happens as the Socialists rise like the Phoenix in Portugal...

Mon, 02/06/2012 - 08:43 | 2130138 Ghordius
Ghordius's picture

yes. well, for some Portugiese like our dear ex-Maoist Barroso the Socialists are practically bourgeouis...

Mon, 02/06/2012 - 08:45 | 2130147 He_Who Carried ...
He_Who Carried The Sun's picture

You just don't get it...

Mon, 02/06/2012 - 08:33 | 2130110 MsCreant
MsCreant's picture

They just want to wear us out so that by the time it really happens we won't give a shit. It will already be "priced in." Where's that amazed troll guy who says, "It's boring?"

Mon, 02/06/2012 - 08:48 | 2130154 Snidley Whipsnae
Snidley Whipsnae's picture

"Where's that amazed troll guy who says, "It's boring?"

Moved on to Portugal...

The 'still not boring' part will be watching what happens to the CDS owners ... Which will make the losses to Greek bond holders look like weak sisters.

Hey, this is great news for Corzine/MFGlobal... Finally out of the headlights and soon to be a distant memory... to all but those that got their asses handed to them.

Mon, 02/06/2012 - 08:33 | 2130111 akuacumen
akuacumen's picture

It would be to the benefit of the EU and Greece to just let them default. Greece can't sustain it's debt even with the haircuts and their economy is not going to improve any time soon, the EU can't keep throwing money into that bottomless pit either. Time to let go and let nature take it's course already.

Mon, 02/06/2012 - 09:23 | 2130219 atomic180
atomic180's picture

Agree let the EU protect those that show the resolve and will to help themselves and devil what may those that dont.  

Mon, 02/06/2012 - 08:33 | 2130114 Ratscam
Ratscam's picture

The EU must be suffering brain damage from the record cold temperatures in Europe stemming from global warming .......pfff

Mon, 02/06/2012 - 08:59 | 2130169 falak pema
falak pema's picture

fat f

Mon, 02/06/2012 - 08:58 | 2130170 falak pema
falak pema's picture

If Europe freezes the world is HOT right now; in toronto +5°C!

Mon, 02/06/2012 - 09:13 | 2130198 djudy003
djudy003's picture

Was watching french television yesterday about how some people can not affored to heat their houses any more so they are cutting trees... I guess they should keep sticking up to Russia and see what it means to pay more for energy.

Mon, 02/06/2012 - 09:03 | 2130181 the tower
the tower's picture

Your statement is correct. As global warming creates extreme weather patterns there will be more periods of sudden heat, cold, rainfall and draught. If you thought that global warming just gradually warms the planet than you have not been reading anything else than FOX headlines...

Mon, 02/06/2012 - 08:34 | 2130115 Jefferson
Jefferson's picture

The sudden vertical drop in the financial markets when Greece defaults will truly be a shock and awe moment delivered by the globalists.

Mon, 02/06/2012 - 09:01 | 2130177 HoofHearted
HoofHearted's picture

And some of us have just loaded up on FAZ for such a moment...

Mon, 02/06/2012 - 09:07 | 2130186 Zero Govt
Zero Govt's picture

i doubt the markets will budge an inch from the latest announcements of political posturing

why should a telecoms provider or wheat farmers shares move because some tossers in Brussels want to write-off Greek debt?

If anything moves it'll be bank shares... but even they're 'cushioned' with a €1 Trillion ECB bailout (socialism for the inept)

Politicians do not move markets... quite the reverse in fact 

Mon, 02/06/2012 - 09:19 | 2130210 Jefferson
Jefferson's picture

So I guess Paulson's decision to pull the plug on Lehman was a non-event that did not move the markets. (sarc off)

Mon, 02/06/2012 - 08:36 | 2130119 slackrabbit
slackrabbit's picture

This stuff is getting to be a joked about on mainstream TV, so the end must be near.

Mon, 02/06/2012 - 08:35 | 2130120 battle axe
battle axe's picture

They should be close to ring fencing the German banks, as soon as that is done, bye bye Greece, hello Drachma...

Mon, 02/06/2012 - 08:38 | 2130127 MsCreant
MsCreant's picture

"Hello Drachma" may mean "Hello Greece."

Mon, 02/06/2012 - 09:18 | 2130205 battle axe
battle axe's picture

Christ, at this point lets get this done with, one way or the other. I would be interested to see what happens if Greece actually does default. I have a sneaky suppression that not a whole lot will happen. The French/Germans have been buying time to fortify their own banks against this. So let the Experiment begin...

Mon, 02/06/2012 - 08:37 | 2130125 Nachdenken
Nachdenken's picture

13.11 CET Sarkozy has asked for the setting up of a central bank account for all Greek revenues that will be used to pay off Greek debt.  The external control fantasy restated.  It is a very close call for now.  The end is the same, a different time frame, and each partuicupant races to protect its bit.

Mon, 02/06/2012 - 08:39 | 2130130 agent default
agent default's picture

No, it's a game of chicken.  It's so old by now that it is not even funny.  Just sad and boring.

Mon, 02/06/2012 - 08:55 | 2130162 AnAnonymous
AnAnonymous's picture

You have to love can kicking games to enjoy this one.

Why not take bets on how long the wait is going to last to spirit up bored US citizens?

Mon, 02/06/2012 - 08:40 | 2130134 papaswamp
papaswamp's picture

Absolutely...let them default and stay in the Euro...The Euro plummets in value...German products become even cheaper. German manufacturing wet may have been the plan all along.

Mon, 02/06/2012 - 08:46 | 2130146 Sandmann
Sandmann's picture

German products become even cheaper


Incomprehensible. This logic makes Bangladesh one of the richest countries on earth. To have Demand it must be EFFECTIVE which means people have to have jobs and access to credit and banking systems. Just how defaulting on Debts gives access to buying more imported goods is not clear to Non-Americans. No doubt all those people living in tents in California and having homes foreclosed are simply looking to trade up to new homes in better neighbourhoods !

Mon, 02/06/2012 - 08:52 | 2130158 GeneMarchbanks
GeneMarchbanks's picture


Sadly common sense and logic are on their way out being supplanted by economic theory.

Mon, 02/06/2012 - 08:55 | 2130164 AnAnonymous
AnAnonymous's picture

US citizen economic theory.

Mon, 02/06/2012 - 09:01 | 2130174 Ghordius
Ghordius's picture

gimme another break. China trashed the first paper currency even before the Great Mongol Hyperinflation. Paper is a Chinese Invention.

There is no country that had so many hyperinflation as China, courtesy of the longest recorded history of the world.

Mon, 02/06/2012 - 09:05 | 2130185 AnAnonymous
AnAnonymous's picture

I suppose that Chinese had the decency to keep their inflation crisis for themselves.

How many of them have they exported?

Maybe one at the end of the 16th start of the 17th century...

Save that, I have no trail.

Contrary to US citizens who made a national sports to export their issues onto others...

Mon, 02/06/2012 - 09:13 | 2130199 Ghordius
Ghordius's picture

you are correct. well, the US is the current hegemon of this world. but this makes your "US citizen" comments not less cryptic, particularly for the majority of the US citizens themselves, who are quite oblivious to the US hegemony.

If you have a message, then adapt it for your audience. before you drive akak mad, possibly...

Mon, 02/06/2012 - 09:30 | 2130225 AnAnonymous
AnAnonymous's picture

Nothing cryptic.

US citizenism is 'Americanism'.

US citizens ('Americans') are proponents of US citizenism.

Europeans are in this regard US citizens.

They fully support the set of beliefs and want to mimick the US of A with their paneuropean project.

Europeans, just like any other US citizens, have exported their shit onto others.

And will keep doing it as their US citizen nature commands them.

Europeans are even in advance compared with their North Ameerican brethern when it comes to feed the new colonization wave being launched.

Mon, 02/06/2012 - 09:08 | 2130187 AnAnonymous
AnAnonymous's picture

Fiat is no issue. It is mere sidetracking by US citizens.

The nineteenth century knew its own crisis, maturing in the GD, two world wars, the run for Africa, communism taking over in China and Russia, Nazism and fascism taking wings in Germany and Italy.

All that without a fiat at it is.

Looking at the uncomplete list, one can only see how low league players the Chinese are.

Mon, 02/06/2012 - 09:18 | 2130208 Ghordius
Ghordius's picture

hey, if you are standing on the height of Chinese culture/history, then of course you take the long view, even after Chairman Mao gutted those cultural mountains to mere hills with his Cultural Revolution Nuclear Bombs, albeit somewhat higher than Europe's.

But here in ZH, you are writing mostly to the inhabitants of the Plains of Freedom. Living in the NOW and HERE.

Again, your message does not reach the address, recompile a bit...

Mon, 02/06/2012 - 09:36 | 2130239 AnAnonymous
AnAnonymous's picture

Plains of freedom? US citizenism does not promote freedom.

People interested into freedom have no issue admitting that the Chinese ended slavery when entering into Tibet.

US citizens who had all the pain in the world to end slavery whenever they went and actually maintained or strengthened it have for some obvious reason.

US citizen french even had Haitian former slaves compensated them for breaking their shackles.

It really takes a consenting person to wish and see in US citizenism the plains of freedom.

No. US citizenism is bereft of freedom. US citizens dance a masquerade, claiming to advance under the guise of freedom while pushing for coercion.

US citizens are duplicitous.

Mon, 02/06/2012 - 08:40 | 2130136 DaBernank
DaBernank's picture

The Euro is freegold.

Mon, 02/06/2012 - 08:43 | 2130139 agent default
agent default's picture

The Euro is bullshit, it's not even a real currency, it is a derivative used to shift speculation from the currency exchange rate to the sovereign dedt rating of participating countries.  It will go down in history as the greatest bankster scam ever pulled off.

Mon, 02/06/2012 - 08:46 | 2130149 MsCreant
MsCreant's picture

No, the dollar. World reserve currency. Fuck yeah!

Mon, 02/06/2012 - 08:56 | 2130163 agent default
agent default's picture

Gold, silver and any sort of real asset that you can hold physically, carries intrinsic value AND hide from the government.  They will pull all stops to save themselves, and they will go to extremes you only read about in history books.  Everything else is part of the scam.

Mon, 02/06/2012 - 08:46 | 2130152 GeneMarchbanks
GeneMarchbanks's picture

Riiighht... unlike the Yen which is a real currency or maybe that rock solid $ of yours...

Mon, 02/06/2012 - 08:59 | 2130172 agent default
agent default's picture

No fiat currency is real but lets face it the Euro is way to much of a fiat currency.  It's a super national currency/derivative/WTF sort of  a situation and it's beginning to show.

Mon, 02/06/2012 - 09:04 | 2130183 Ghordius
Ghordius's picture

and you too, gimme a break: what is this "derivative" of the EUR? It's a bloody completely standard fiat currency, that's all...

The only thing where it's a bit "better" than others is that it has a board made out of 17 national banks.

Mon, 02/06/2012 - 08:45 | 2130144 ConspiracyTheory
ConspiracyTheory's picture

We need a guinea pig to see the effect of a sovereign default. Greece is a good candidate due to the small size. I doubt they will let the country default though. This is going to be another last minute decision like the US debt ceiling deal.

Mon, 02/06/2012 - 08:47 | 2130145 Zero Govt
Zero Govt's picture

managed decline

politically managed decline

Hahahahahahahahahahahahahahahahahahahahahahahahaha :)))

Mon, 02/06/2012 - 08:46 | 2130151 Element
Element's picture

Maybe Barroso should give a swelling speech?

Actually, best not, probably can't afford the carpet cleaning.

Mon, 02/06/2012 - 08:47 | 2130153 The Reich
The Reich's picture

Jawohl, mein Führer!


Let them default, whatever the consequences will be. It's best to get unpleasant things over and  done with.

Mon, 02/06/2012 - 08:49 | 2130155 Sandmann
Sandmann's picture

Think about endlessly nurturing a Greek state in which more than 80% of its population do -at least in part- not pay their taxes.


Tim Geither doesn't pay taxes and his gradfather was German 


Jamie Dimon's family was Greek - does he pay taxes ? 

“I love the retail broker business because my dad is a broker and my grandfather was a broker and it was the first job I ever had,” Jamie Dimon, 53, said at a Securities Industry and Financial Markets Association meeting Oct. 27.

Mon, 02/06/2012 - 08:54 | 2130160 falak pema
falak pema's picture

AS I write this, Merkel is in France to talk to Sarkozy and their joint statement will be projected on French TV this evening.


As we know the Greek government was given an ultimatum yesterday to define a common across board political position as reply to Troika demands. SO Merkozy know what Greek government will draw as their Rubicon in the final countdown to next week's deadline, which will condition if they get paid next installment from EU hand outs, and the outcome of Greece default (when and how).

So today is a critical phase on TV face to face with the people, not only on what Europe is doing for ESM firewall and fiscal convergence but also Greece!

Mon, 02/06/2012 - 09:12 | 2130173 Zero Govt
Zero Govt's picture

if anything is "critical" the last place Merkozy will talk about it is on TV to the public

i expect nothing but posturing and clucking from Sarkozy and stern but inane dribble from Merkel

..another vacuous waste of time and space then

Mon, 02/06/2012 - 09:19 | 2130209 falak pema
falak pema's picture

On Greece : their joint statement just off the press is : We expect the Greeks to sign now. NO MORE CONCESSIONS POSSIBLE. ITS MAKE OR BREAK AND WE EXPECT THE GREEKS TO HONOUR THEIR COMMITMENTS.

If you read between the lines this means : A greek default is INEVITABLE if the Greeks tell the Troika "this is NOT doable"....

So Merkozy today have officially opened the door to the notion of default, saying : its their choice! As before, it was : We will do everything possible to make it impossible for Greece to leave Eurozone. This is now off the table. 

Mon, 02/06/2012 - 09:00 | 2130171 Syameimaru
Syameimaru's picture

Greece is now officially in denial. They claimed-- just before the EU-set deadline passed-- that there "was never any deadline".

They should have known better, because France and Germany immediately contradicted them. Not just some policy wonks, either: Sarkozy and Merkel themselves, at a joint press conference!

This is WORLD NEWS, but for some reason the American and Japanese media (I'm watching both) have no reporters covering the issue. Not a blackout, just pure disinterest in this incredibly important story. There's a fundamental disconnect at work between Europe and the rest of the world. Their financial clusterf--k is going to affect us all.

Mon, 02/06/2012 - 09:11 | 2130192 AnAnonymous
AnAnonymous's picture

Who knows?

All those resources European US citizens are no longer able to consume will be there for the take.

Europe sinking might mean some other parts of the world rising.

Aggregated demand is nothing of short supply in the US of A, resources to support the activity needed to satisfy that demand are.

Mon, 02/06/2012 - 09:01 | 2130175 Everybodys All ...
Everybodys All American's picture

When Greece leaves the EU and Euro what we all need to watch is the economic recovery that takes hold in Greece. If this occurs as expected much like in Iceland you can figure many others such as Portugual, Spain, Ireland, and Italy will follow. This will be a game changer no matter how you look at it.

As far as the immediate impact. I'm not convinced that this will be as contained as the politicians would have you believe. Counter party risk is something no one calculates real well.

Mon, 02/06/2012 - 09:13 | 2130196 AnAnonymous
AnAnonymous's picture

Iceland is a totally different scenario.

The last move makes checkmate but you have to play all the previous moves before playing the last move.

Mon, 02/06/2012 - 09:11 | 2130193 atomic180
atomic180's picture

A broad assumption is that Greece will act as a type of Lehman collapse watershed moment. Quite differently it may act as was first assumend in the US that Lehmans failure would largely be a non event and that in fact a Greece defult may act as a symbolic firewall for the other piggys to tighten their belts or there bacon will soon too be in the fire. It seemed that the Greece foot dragging/can kicking gave hope to the others piggs that thay too would be able to take hostage the banks/insurance and they too could use Greece president to get better term post Greece bailout.

Mon, 02/06/2012 - 09:14 | 2130197 Vince Clortho
Vince Clortho's picture

This is simply another Euro-Drama.  Tensions build as numerous sources cite an imminent Greek Default.  At the last minute a rumor will be released, saving the day.  The Markets will rocket on this bullish rumor, perhaps 200-300 points on the dow.  The world breathes a collective sigh of relief as the financial masters once again save the day.


Rinse. Repeat.

Mon, 02/06/2012 - 10:12 | 2130318 Money 4 Nothing
Money 4 Nothing's picture

I agree, it's like perpetual Ground Hog day.

Mon, 02/06/2012 - 09:19 | 2130212 flyonmywall
flyonmywall's picture

Well, they decided to let Lehman default, and the predictable outcomes of that were oh so predictable. Nice job fuckers.


Mon, 02/06/2012 - 09:39 | 2130245 atomic180
atomic180's picture

Perhaps its all been priced in no way to tell yet? But needless to say there would have be problems with the other piggs post bailout.

Mon, 02/06/2012 - 11:44 | 2130665 atomic180
atomic180's picture

Germany and France have finally drawn the line that a Greek defalt is better than the Moral Hazzard risks proposed by widdening the door for the other piggies plus others. Its about time the resolve of Germany, the banker of last resort showed their resolve...

Mon, 02/06/2012 - 09:35 | 2130228 ucsbcanuck
ucsbcanuck's picture

"Because if Paulson was proven 100% wrong in under 5 days following the Lehman default, when the money markets broke and the Fed has to literally force a bailout of the global financial system, what can one say about two bit second tier politicians from Europe, who have never even seen a DCF model?"

@TD - this is an unfair comment. Comparing Paulson to Merkel, Sarkozy and Juncker is comparing apples to oranges. You need to compare Paulson to the finance ministers of Germany, France and Luxembourg i.e. Schauble, Baroin and some other dude/dudette.

In fact to be fair to at least Merkel - I think she's more likely to understand DCF models than Dubya ever was, even though Dubya had an MBA LOL!

However, I agree with your sentiment - Germany thinks they can firewall THEIR own banks and institutions, and let Greece go to the wall. When push comes to shove they're ultimately going to let the Eurozone burn.

Just like they refuse to pull their weight in Afghanistan, leaving the US, UK and Canada to do the heavy lifting. Or in NATO as a whole:

Mon, 02/06/2012 - 09:50 | 2130241 Die Weiße Rose
Die Weiße Rose's picture

The only people worried about a Greece default are:

Goldman Sachs, Tim Geitner, Christine Lagarde IMF, Mario Monti ECB, Ben Bernanke, Barack Obama,

mostly because they are all afraid to lose their Jobs.

The Myth of Germany wanting to create a new Europe, wanting to keep the Eurozone together at all costs was always just that: A Myth ! That Myth was spun by the US and UK and the Murdoch Mainstream Media, to further their goals of a new world order, with a clean sweep in the middle east with total control of Oil and other Resources secured via Israel.

It is a strategic game by US and UK interests and if you study the geographic details on the map of the world, you will realize the name of the game.

A Greek Default would expose the big bailout scam, that is doomed to failure, for what it really is: a scam, not only in Europe, but even more so in the UK and also in the US.

Because if the PIIGS Bailout fails, all other bail-outs will be exposed as a scam, and it will be a Lehman, Bear Sterns and AIG freak time all over again...

Germans just could'nt care less if Greece defaults -

and that is why Angela Merkel is so cool and composed, that's why her popularity is at an all time high in Germany.

Germans so far have not given in to the free bailout shit, that financial fraud scam Tim Geitner and David Cameron

have been trying to peddle and serve up in Europe, after it failed so miserably in the US and the UK !

The only ones worried about a Greek Default are the US and the UK -

because they will lose billions, and Goldman Sachs must be getting hot by now with all those Greek CDS contracts !

Germans just could not care less! They want all this shit to blow up,

so that Markets can reset and get back to fundamental SOP

Standard Operating Procedure once again.


Mon, 02/06/2012 - 09:50 | 2130274 chindit13
chindit13's picture

It sounds as if somebody is becoming practical and has decided to go with the lesser of all evils and the cheapest-to-deliver Greece.

Giving Greece more money just adds to what already will never be repaid and merely postpones the inevitable default.  Voluntary haircuts surely would need another "touch up" in the not so distant future, and it would destroy the CDS market and add to everyone's cost of borrowing.  Retroactive CACs (on bonds issued under local Greek Law) are an additional dangerous precedent.  Default, but within the euro, is the best of a bad set of choices.  Greece can keep what few euros its banks still have, and with their debt evaporated, they will have to sit in the penalty box for probably no more than three months before some banker decides to take a risk, NPV the loan's profit, get a bonus, and leave the clean-up to the next guy.  Default outside of the euro triggers bank runs in Portugal for sure, most probably Spain, and perhaps Italy.  Can't have that.  The danger is that default rips the bathing trunks off of some long premium CDS player.

All of what will hit the fan with a within-the-euro default is going to hit the fan regardless.  Practicality says take the pain at the least cost, though it took two years for Germany to become practical.

Meet y'all in Lisbon next week.  Eggtarts and Port all around.

Mon, 02/06/2012 - 10:26 | 2130364 NotApplicable
NotApplicable's picture

Hegel would be proud.

Mon, 02/06/2012 - 11:47 | 2130676 tony bonn
tony bonn's picture

good - let greece fail and unpredictable results ensue....that is the implaccable requirement of ridding the world on ponzinomics....blow up the fraudulent house of cards now....

Mon, 02/06/2012 - 12:51 | 2130849 gnomon
gnomon's picture


Mon, 02/06/2012 - 12:49 | 2130856 gnomon
gnomon's picture

Best practical idea from this thread: The assets that one can hide (and that governments do not define) will be the most valuable going forward.  

And there will be an increase in value of those assets precisely on that aspect and apart from the other attributes.  And that increase is yet to come!

Mon, 02/06/2012 - 18:41 | 2132169 honestann
honestann's picture

Wake up Greece.  Declare a 100% sovereign debt default.  That will put your economy on a sound footing.  Yes, you'd have to give up on debt financing... but that's part of becoming a solid, stable economy.  Yes, you'd have to cut back government workers, cut their salaries and cut their benefits... but that's part of becoming a solid, stable economy.  And yes, you should swear off all fractional reserve practices and adopt grams of physical gold (coins) as lawful money.  Do all that and your economy will become prosperous in a mere year or two.

Tue, 02/07/2012 - 03:48 | 2133188 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, 02/08/2012 - 08:54 | 2137330 Jacks Cold Sweat
Jacks Cold Sweat's picture

pesta re megale !


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