"Do you think Europe should forgive your debt, check box 'Yes' or 'No'." "No" means a lot of pain now and recovery later. "Yes" means less pain now but no hope of recovery ever. Choose wisely...
... at this very moment, politicians from Spain's Podemos to Italy Five Star movement are drafting memos demanding that the IMF evaluate their own debt sustainability. Or rather unsustainability.
"Greece is being 'hit', there's no doubt about it," exclaims John Perkins, author of Confessions of an Economic Hit Man, noting that "[Indebted countries] become servants to what I call the corporatocracy ... today we have a global empire, and it's not an American empire. It's not a national empire... It's a corporate empire, and the big corporations rule."
It appears the sovereign peoples of Europe would not go gently into a Federal States of Europe night. Investors need to prepare for the inevitable political solution: referendums across Europe on the constitution of the Federal States of Europe needed to sustain the Euro. Events this weekend will trigger the search for the democratic legitimacy for the single currency and the centralised constitution it requires... or the demise of the unelected 'king Juncker' and 'queen Lagarde' of the Federal States of Europe.
"...won’t a successful Greece show others that — much as many young people who cannot afford to pay their rent return home — they, too, can return to the way things used to be?..."
Simply put - Europe can't 'afford' anything positive to come of Greece...
With the ECB reneging on its responsibility as lender of last resort – not the first time it has used its power to political ends in Greece – Greek banks may soon be forced to “bail-in” deposits – i.e. confiscate the cash of their customers.
European investors are increasing purchases of gold as Bloomberg reports, Greece’s turmoil boosts the appeal for an alternative to the euro. Demand from Greek customers for Sovereign gold coins was double the five-month average in June, the U.K. Royal Mint said in an e-mailed statement.As one Frankfurt-based bullion dealer noted, "most of our common gold coins are sold out, when people learned that the Greek banks will be closed, they started to think that it may not be such a bad idea to have some money in gold."
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.
Presented with little comment aside to ask if someone is off-script?
NOONAN: THE CRISIS HAS COMMENCED
SCHAEUBLE SAYS `HELLISH DIFFICULT TASK' ON GREECE
NOONAN: I HAVE SYMPATHY FOR THE GREEK PEOPLE
But always remember, "Greece doesn't matter," which as Mohamed El-Erian explains, is somewhat true, since European leaders have two other existential issues to contend with also...
An extensive look at what would happen if Greece were to leave the Eurozone, through a legal fudge.
Given the self-admitted lack of 'rules' around emergency funding from The ECB, today's (latest) threats to withhold Greek funding "due to politicial events" are perhaps the most ominous non-blackmail warning yet by the entirely independent Mario Draghi and his henchmen...
The Bundesbank's Jens Weidmann unleashed a litany of cticisim on the Eurosystem (read the ECB) when he said that Greek banks should not continue to buy the short-term debt of their government, which is then repoed back to the ECB in exchange for precious cash. "The Eurosystem must not provide bridge financing to Greece even in anticipation of later disbursements," said Weidmann, who also sits on the European Central Bank's Governing Council, which approves such funding to Greece. "When banks without access to the markets buy debt of a sovereign which is likewise locked out of the market, taking recourse to ELA raises serious monetary financing concerns," he said in a speech to be delivered at a conference in Frankfurt.
And it started off all so well: the market, blissfully ignoring what we wrote just yesterday in Why The IMF Will Reject The Latest Greek Proposal In Just Two Numbers, was in full blown levitation mode overnight when it sent Japanese stocks to their highest close since 1996 (pre dot com) and with the Chinese central bank doing its best to keep levitating local stocks away from the abyss, pushing the SHCOMP up another 2.5%. Euro Stoxx 50 went from flat to down 1% and is bouncing. As BBG's Richard Breslow adds, predictably, the market is taking this as a ploy, not an end game. Of course, this is precisely the "Bear Stearns is fine" conventional wisdom that Cramer was spewing days before Bear failed because nobody could fathom how anyone can conceive of a worst case scenario. Only it isn't nobody: we reported before of a Goldman's "Conspiracy Theory" Stunner: A Greek Default Is Precisely What The ECB Wants.
Who could have possibly foreseen that the IMF would throw up all over the Greek "proposal"... aside from this post here "Why The IMF Will Reject The Latest Greek Proposal In Just Two Numbers" yesterday afternoon of course. In any event, moments ago Bloomberg reported that just as we wrote here yesterday afternoon, there is no deal and that Greek PM Alexis Tsipras told his associates that creditors not accepting equivalent fiscal measures has never happened before, according to a Greek govt official, who asked not to be named in line with policy. Creditors “not accepting parametric measures has never happened before. Neither in Ireland, nor in Portugal, nor anywhere. This strange stance can hide two scenarios; they either don’t want an agreement or serve specific interests in Greece.”
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