B+

"More cynically, if a default of bank liabilities is inevitable, it may deem it better to ensure that domestic claimants on Greek banks switch into hard 'convertible' Euro banknotes (or offshore accounts), leaving the residual claimants (the ECB which has provided ELA funding) to take the loss."

As that €126 billion or so of total ECB/Eurosystem claims on Greek banks were "charged off" in case of a terminal Greek "event" then the entire ECB capital buffer would also be wiped out, leaving the ECB with negative equity. Translated: dear Eurosystem members: we need more cash.

As we have asserted since 2012, the template for dealing with Crises has been laid out in Europe, particularly in the countries of Spain and Cyprus.

Update: As expected, the Greek parliament has voted in favor of the referendum announced Saturday by PM Alexis Tsipras. 

Here's how it plays out... "no one gets out of this alive"

While the path ahead suddenly just got very confusing for both Greece and Europe, one thing is clear: going forward the Greeks will only have themselves to blame for whatever the final outcome is. That, and the Greek trargicomedy which has now lasted for over 5 years, may finally be over.

Greek PM Tsipras just delivered the biggest Friday night bomb in recent European history: he stunned the Troika and his peers in Europe with the biggest shocker of all - a referendum announcement, aka the Greek "nuclear option", something which cost his predecessor George Papandreou his job. At this point there is no turning back, and the Greeks - of which 80% want to stay in the Euro even as 80% want an end to austerity - will get to choose their own fate. Whatever choice they make, they will now only have only themselves to blame.

Greece is the proverbial early harbinger of everything that’s wrong with the world, and of everything that could be done about it.

Is it time to step in and buy the dip in Chinese mainland shares after last week’s harrowing 13% decline on the SHCOMP? Absolutely not, Morgan Stanley says.

*CHINEXT PLUNGES 8.3%, BIGGEST ONE-DAY LOSS EVER (down over 27% from highs)

Some people talk about peak energy (or oil) supply. They expect high prices and more demand than supply. Other people talk about energy demand hitting a peak many years from now, perhaps when most of us have electric cars. Neither of these views is correct. The real situation is that we right now seem to be reaching peak energy demand through low commodity prices.

The kids and wife have asked me, "Why do you think it is, dad, that the murderers and robbers are usually black?"   How is a dad supposed to answer this question?

The completion of this pattern will take time to unfold. But it predicts a MASSIVE collapse in stocks.

While Greece is collectively scratching its head why Tsipras et al were at loggerheads with Europe for 4 months, during which time the Greek economy entered a recession and saw its banks not only depleted of all cash but become de facto wards of the ECB, just to reach an "agreement" that could have taken place back in February, and attention shifts to just how Tsipras will pass last night's impromptu capitulation through hard-line leftist parliamentarians, Greece now has another problem: how to unpivot the aggressive pivot toward Russia in the past few months, which culminated with the signing of an energy deal last week in St. Petersburg.

There are effectively no tools left for governments and central banks to deal with another major crisis. Like Paris in 1940, they have no Plan B. They’re completely defenseless to support the financial system or the currency in the event of a major shock. We should all take a moment to appreciate this level of incompetence. This doesn’t happen overnight. It takes decades of “blunder and neglect” to engineer financial vulnerability on this scale. But they’ve somehow managed to pull it off.

Nobody can deny that the chances of war are increasing in the world.