"We don't want to scare everybody, but we are preparing for full-scale war," warns Vadym Prystaiko - Ukraine's deputy foreign minister - telling CBC during a stunning interview that "what we expect from the world is that the world will stiffen up in the spine a little." Prystaiko concludes, "we would like [The West] to send lethal weapons to Ukraine... weapons to allow us to defend ourselves."
A quick recap of the key implications of Friday’s Greek “deal”, and what it means for the future of the Eurozone, the common currency and capital markets.
Germany Gives Greece Just Enough Rope: Varoufakis Says If Troika Rejects Reforms "The Deal Is Dead And Buried"Submitted by Tyler Durden on 02/20/2015 23:28 -0500
Here is what Schauble meant when he said that the "Greeks Certainly Will Have A Difficult Time To Explain The Deal To Their Voters": under the conditionality of the Troika's approval, the Tsipras government now has to walk back essentially all the promises it made to the Greek people - promises which by some accounts amount to over €20 billion in additional spending - or the Troika, pardon Institutions, will yank the entire deal and the Grexit can then commence. And that's the bottom line. It's also the reason Schauble was gloating: because he gave the Greek government just enough rope with which to hang itself.
Right now there is a world war taking place right in front of us but all we see on cable news are the nightly military skirmishes on the periphery of the conflict. The real war is economic, financial and currency related and the empire is already over-extended in debt, military operations and financial manipulation. Surely the near-term dollar strength is evidence that while defeat is not imminent and that all markets can be manipulated for a season, ultimately real global market forces will prevail. Just remember that all empires eventually become over-extended financially, economically or militarily and the consequences of retribution and blowback are real and deadly to innocent populations.
Having, as we previously explained, been given 'just enough rope' by the Germans, we thought it worth looking at just what Greece capitulated on (or perhaps a shorter version - what they did not capitulate on) and how Tsipras and Varoufakis will sell this to their fellow politicians... and most of all people.
A bank which has €54.7 trillion, or a little over $62 trillion at today's exchange rate, in derivatives - a number that is 20 times greater than the GDP of Germany - just failed a central bank stress test due to lacking governance and risk management controls and, just maybe, has insufficient capital? What can possibly go wrong.
Update: EUROGROUP SPOKESPERSON SAYS AGREEMENT REACHED ON GREECE
While the Eurogroup will supposedly present a Greek deal in a few minutes some of the key terms remains undisclosed, and somewhat unexpectedly Reuters reports that Greece will have until Monday, which is a national holiday, to list the planned measures it intends to take. It is surprising that Germany has agreed to an open-framework of this nature, which also means that once the final momerandum is available, everyone will dissect the language to find out just who folded. So while we wait, the Eurogroup's press is said to begin momentarily. Watch it live below.
*EU MEETING ON GREECE PUSHED BACK AGAIN TO 11AM ET., GREECE SENT THE WRONG LETTER TO EU
Finance ministers from across Europe are arriving in Brussels for the latest, most critical (until the next one) stare-down across the table at The Greeks. As Germany's Schaeuble noted somewhat pessimistically "we shall see," on the outcome of today's meeting, adding that Greece "must take seriously" previous agreements and "Europe needs mutual trust." Varoufakis on his arrival explained that he "hopes for white smoke" by the end of the day adding that "Greece has gone the extra 10 miles... and hopes EU can meet them one-fith of the way."
"The Eurozone chess game has entered its third and final stage. Germany wins in three moves - Euro, deflation and purchase of public debt by the ECB (QE) – and in the last few years it has found a way to maximise its profits and reduce to zero its risks as Europe’s creditor.... If we wait too long before leaving the Euro, then Germany will get checkmate and after cashing in all the benefits of our entry into the Euro, it will also cash in on the benefits of our exit."
All of the biggest problems in the financial world revolve around the bond markets today:
** Greek Bank Runs Accelerate as Possible ‘Grexit’ Looms
** Fatigue with Greek Crisis Breeding Massive Complacency
** Ukraine a Significant Setback for NATO
** India Demand To Rise To 35 - 40 Tonnes This Month
** Gold Oversold - Fundamental and Technical Position Good
- Greece Should Not Give In to Germany’s Bullying (FP)
- Greece Can Pay Its Debts in Full, but It Won’t (WSJ)
- Early Friday humor: Euro Region Economy Strengthens Amid Wrangling on Greece (BBG)
- Euro zone may need extra summit to clinch Greek deal (Reuters)
- Oil-Drop Pain Spreads to Saudi Arabia’s Energy Behemoth (WSJ)
- Yellen Confronts Economists’ Ignorance (BBG) - where does one even start with this one
- ECB Plans to Push Greek Banks to Shed State Debt If Talks Fail (BBG)
With the new and revised (until it is re-revised again to some future date), Greek D-Day set for today's third in the past 2 weeks Eurogroup meeting, every favorable headline serves as a springboard for ES-buying algos, while every negative headline is promptly ignored. And since this is Europe's style trial ballooning, there have been many of both with just these two hitting in the last hour:
- GREECE, EURO ZONE NEAR DEAL ON PACKAGE, REUTERS CITES UNIDENTIFIED GREEK OFFICIAL
- GREECE DID NOT GO FAR ENOUGH IN THEIR LATEST PROPOSAL: GREEK GVOERNMENT SPOKESMAN
Guess which one pushed ES into the green?
With reports of near mutiny in Syriza's ranks amid the back-bending they have done to try to meet Germany's demands - only to be abjectly denied by a non-ultimatum-setting Schaeuble - it is perhaps time to prepare (ahead of tomorrow's apparent "G" day) for the possibility that Greece creates a systemic event. As Goldman recently warned, there are aspects that leave us more worried than we have been since the start of the Euro area crisis with a tight schedule to avert a disorderly outcome. Risk markets so far have traded in a resilient (well managed) manner but risks of an accident remain and here is how Goldman suggests you hedge that exposure.
The global financial system desperately needs a big, bloody sovereign default - a profoundly disruptive financial event capable of shattering the current rotten regime of bank bailouts and central bank financial repression. Needless to say, Greece is just the ticket: A default on its crushing debt and exit from the Euro would stick a fork in it like no other. But don’t count on the Greeks.