Nielsen

According to Bloomberg, the ECB has called an extra-ordinary GC meeting tonight to “discuss latest developments”.

I don’t have any concrete information, but in my opinion there are two possibilities:

1.       A Greek package will be sorted this weekend.  I’ll give this less than 5% probability.  I have spoken with people in Athens this afternoon (I am all over the papers there today with my note from yesterday that they’ll have to go to the IMF) – and the message continues to be that there is a huge hurdle to climb before they’ll ask the IMF for help.  Also, the key IMF people are still in Washington at this time.

2.       A serious banking problem is about to emerge and a safety net has to be provided before Monday morning.  This could relate to Greece – or it could be another of these cross-country unclear cases, like Alpe Hypo, where Trichet had to step in. 

Stay tuned – will be back if and when we learn more

 
Erik F. Nielsen

Its not been a good week for Greece. Most seriously, the news yesterday that the four biggest banks are seeking help from the government following a drop in deposits of some EUR10bn pushes them into the danger zone which could turn into the end-game unless properly addressed. While the EU Summit spelled out how the crisis will be addressed (an IMF-led program co-financed by the Europeans), important uncertainties remain, including (1) whether the Greek government will agree to IMF conditionality; (2) how and when the European money will be disbursed and at what interest rate; and (3) whether the IMF/EU package will be big enough. - Erik Nielsen, GS

Here is the latest on the Greek collapse, straight from Reuters: "Greek banks have asked for access to the remaining part of a 28 billion euro state support package, highlighting pressure on the sector from the country's recession and spiralling borrowing costs." So take €17 billion in immediate liquidity needs and couple this with the outflow of deposits, which we have been pounding the table on since February: "Data also showed Greek bank deposits had fallen 8.4 billion euros, or 3.6 percent of the total, since December." Add to this the unsustainable yield (and at this point financial and corporate) curve which is indicative of endgame, and you have the reason why Athens realizes it is now in a full-blown liquidity crisis. The fact that the funding crisis has forced banks to resort to shoring up short-term liquidity in the form of immediate "financial crisis" assistance highlights just how serious the situation is. Indeed, as Reuters summarizes, "The banks' request for aid could help the lenders face possible liquidity problems in the short term but would not reverse a grim outlook."With all this to ponder, it is no surprise that the Bundesbank has just realized throwing money in a bottomless pit may not be the most prudent use of capital: the bank has suddenly gotten cold feet on the whole Greek bailout. In fact, events from the last few days have even gotten Goldman's always cheerful Erik Nielsen to say that things in Greece will likely get even worse.

This is the skinny on the EU's Greek rescue package. The (empirical) truth, the whole truth, and nothing but the whole (empirical) truth! Moral hazard, be damned...

Forget April - for Jim "Mad Money" Cramer March may well have become the cruelest month. First, we broke the news that Cramer's TheStreet just became the object of an investigation by the SEC. What should be more troubling for the Mad Money Maestro is that the latest Mad Money Nielsen numbers just came in. And they stink: March was the weakest month for Jim Cramer's show in well over a year. After posting a slight improvement in February courtesy of the market's consternation with Greece, March was a collapse. Expect many more sound effects, props, gimmicks (luckily, no incremental cleavage is possible) shortly. Also expect much more pro-cyclical stock advice (buy if the stock market is going up, sell if vice versa), and more big picture proclamations that are refuted within 24 hours. Also expect many more ads for male incontinence products as the show has to resort to showing increasingly "distressed" advertising inventory.

I am back from yet more travel, this time a couple of days in Florida, and a quick 24 hours on the –rainy- shores of Lake Como at the Spring Ambrosetti forum. Of note: the state of the world/me being an optimist. Judging by the mood of people at Ambrosetti, and the nature of the questions and comments I received on both the two panels I was on, and separately in conversation, people continue to think my optimism is , sort of nuts. At the heart of it, people simply find it impossible to believe that global demand can remain above 4pct-ish if the US is struggling. There is one major dilemma with this, substantially held view, it is called “ the evidence”. - Jim O'Neill

Something funny happened on the road to a Greek bailout: nothing. Well, a few exceptions: Germany and the ECB are now enemies, nobody knows what the hell the Maastricht rules really are, the ratings agencies are discredited beyond repair as even the ECB says its own internal bureaucrats can do a better job at modelling the Greek AAA rating... Yet Greek debt is still yielding 6%+. If anyone will recall, the primary concern that various administration George Pap[...]'s had, was that Greek debt was "unfairly" yielding double where German debt is. So yeah, lots of talk, more non-bailout bailouts, and in meantime, Greek default risk is pretty much where it was two months ago. Which is why speculation that emerged toward the end of last week that Greece will promptly issue new debt, is now being squashed by G-Pap (fin min or FM, not to be confused with the prime min or PM). In the end, it is all irrelevant: as Ambrose Evans-Pritchard says, the end is close for Greece.

From Goldman's Erik Nielsen: "According to the Reuters story below, Merkel said this morning as a government declaration in front of the German parliament (ahead of the EU summit) that help to Greece would only come as the very last resort, and that it (bilateral help) would come ONLY in combination with the IMF. Whether this was formally agreed yesterday by the Euro-zone heads of state remains uncertainly, but I think it is very likely. If so, its just a matter of rubber stamping it in the full EU summit today, since none of the non-Eurozone EU members would object to the IMF being involved" and this "It is not clear when Greece will formally approach the IMF, but it might happen within weeks, and very likely during the next few months. I think negotiations – when they get under way – will focus on a program of about EUR20bn over 18 months. Stay tuned."

Title of today's episode in the never ending soap opera: The Taking Of Stalingrad...er, Santorini - the Propaganda behind the scenes. From Goldman's Erik Nielsen (not his title - you see he would be fired for a joke as off-color as that).

Goldman's Chief European strategist is starting to sound less and less confident that all shall be well. The same can not be said for his ebullient (and still employed) colleague Jim O'Neill, whose answer to everything is "BRIC." Anyway, here are Erik Nielsen's latest (and increasingly more skeptical) summary views on the Greek bailout. By the way, the IMF shotgun approach to "helping" any and every member country is to peg its currency to something and establishing a currency board. The IMF simply does not know how to do anything else. So how the hell can the IMF operate in the context of a monetary union?

Goldman's chief Euro strategist Erik Nielsen is out with another note, this time one of praise and wild-eyed adoration for the increasing desperation in Greek polemics (note, not actions: those tend to be more of the semi-violent police clashing, people striking variety). Well, duh, of course Greece will promise it will take out a second-lien on the Parthenon (and a first on the Acropolis): the country will be out of money in two weeks for Pete's sake! Aside from the pandering desire to be next in line as lead underwriter on the next Greek multi-billion swap (and receive fees, millions of dollars in juicy fees), Nielsen does provide a good narrative that ties in the Greek bail out, and the recent anger against CDS "Speculators" who will at the end of the day be the validation for why Europe will have "no choice" but to bail out Greece, as it is solely through their vile scheming that GGBs are trading so much lower compared to where they should be trading. Because taking a cue straight from the US market, none of this bankruptcy stuff is relevant at all when dealing with capital markets.

Greek bailout rumors are fine and dandy, even if you can get 10 for the price of a Kindle these days. They originate roughly every 2 hours, "sourced" by the same lowly bureaucrat in Athens, and day after day are proven flat out wrong. And while rumors are fleeting, and Merkel keeps saying that the only reason why Germany does not want to bail out Greece is because Greece has actually not asked for any bail out (Europe may be doomed, but its bureaucrats sure have taken the art of passing the buck to next level), what we do know are the specific funding milestones over the next two months that alas will not accept rumors instead of accrued interest or bond maturities. Goldman's Erik Nielsen provides a wonderful revised roadmap for what will happen in the immediate future, not what may happen in order for Greece to have its cake (European bailout) and eat it too (avoid riots that may soon be put on the escalating warfare conviction buy list). In the meantime, our belief is that every day that concludes with no bond deal announced, will cost Greece another 15 bps in yield for whatever GGB issue the country finally comes to market with. Today it is 7%, tomorrow 7.15%, a couple of years from now: 100%, then 1,000% after that, etc.

Frequent Zero Hedge readers will, of course, be aware that we take a keen interest in the ongoing state of "financial journalism."  Suffice it to say that the ups and downs of the more mainstream players in the field are indicators that command, if not rabid attention, our regular interest, or even amusement.  In this context, the sort of intuitively obvious relationship between, say, CNBC's Nielsen ratings and a 30 day moving average of the VIX, never disappoints when given visual expression.

Part 1 makes a case that an ideal way to catalyze job creation in the U.S. is to subsidize American consumers and producers of customized
education, and American operators of associated online markets. Part 1 concludes by speculating about the reasons that said subsidies are
absent from all talk of "jobs stimulus." From part 1: "A guess? In two words? Banks, children."

Compare and contrast the following headlines:

• Guardian: Angela Merkel dashes Greek hopes of rescue bid

and then,

• Bloomberg: Merkel Rallies EU on Greece, Fails to Convince Allies

Really nothing much to say here.