Ireland

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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With an agreement in principle on the table, Greek PM Alexis Tsipras now turns his weary eyes towards Syriza party hardliners whose support he will need in order to pass the new deal through parliament. Should the political stalemate prove intractable, Greece may need to call a referendum or snap elections.

While the latest European FinMin summit desperately tried to put on a united facade when responding to the latest and greatest Greek proposal, which incidentally is so weak that the IMF will throw up all over it as shown below, the reality behind the scenes was anything but. In fact, Greece was this close to having capital controls forced on it earlier today, and would have, if the demand of not just its old "BFF", Germany's finmin Schauble, but Ireland's Noonan, had materialized.  As the FT reported moments ago, "Germany’s Wolfgang Schäuble and Michael Noonan, his Irish counterpart, pushed for curbs on emergency liquidity for Greek banks unless capital controls were imposed, one of the officials said.

"The net effect of all that will be the disappearance of nominal wealth — it crosses an event horizon into a black hole never to be seen again. The continent discovers it is a lot poorer than it thought. Fifty years of financial engineering comes to the grief it deserves for promoting the idea that it’s possible to get something for nothing."

Whatever the eventual financial costs to EU taxpayers of a Greek default, the political costs of a Greek exit are likely to be seen as unacceptable. Most likely the EU will allow a covert Greek default, disguised for the time being by extended repayment schedules, bogus refinancing formulae and possible delayed haircuts as bonds mature. They may insist that such moves are not a technical default. Despite that absurdity, our obedient press corps may even concur with such a characterization, and investors may be so thrilled that a relief rally occurs in stocks and bonds. Extend and pretend will once again be the only acceptable manner to confront our intractable problems.

A Greek exit from the euro would change everything. The greatest change being simply doubt and fear regarding the outlook for other vulnerable EU nations, EU banks and the EU banking and financial system. We discuss short and long term considerations, best and case outcomes, and wealth preservation strategies.

The economic hitmen have honed their skills among the poor and relatively defenseless, and have been coming closer to home in search of new hunting grounds and fatter spoils. There is nothing 'new' or 'modern' about this. The only difference is that it is not happening in the past or in a book, it is happening here and now. "Economic powers continue to justify the current global system where priority tends to be given to speculation and the pursuit of financial gain. As a result, whatever is fragile is defenseless before the interests of the deified market, which becomes the only rule."

"Both the US and China have a vital interest in reaching an understanding because the alternative is so unpalatable," Soros wrote in an article for the New York Review of Books, with the danger imminent if Chinese economic reforms fail forcing President Xi Jinping to "foster some external conflicts to keep the country united and maintain himself in power." These "conflicts" would present themselves in the form of a Sino-Russo alliance which could draw the entire world into war.

German notes begin with an X, while Greek notes start with a Y. Spain is V, France U, Ireland T, Portugal M and Italy S. Belgium is Z, Cyprus G, Luxembourg 1, Malta F, Netherlands P, Austria N, Slovenia H, Slovakia E and Finland L.

Greek 10Y yields are breaking back above 13%, bonds ar trading at 50 cents on the dollar, Greek stocks are near multi-decade lows, and Greek bank bonds have collapsed amid the ever-more-likely Grexit (or at least redenomination amid capital controls). But, there are some very smart chaps who must know something Tsipras, Merkel, and the rest of the world does not... because they are spending "Other People's Money" to buy the dip in Greek stocks and bonds. From Allianz and PIMCO (the world's lagest Greek bondholder ex-ECB) to Putnam and Wilbur Ross, it seems more than a few American investors will be impacted should Greece really implode.

Keynesian policy of manipulating economic “aggregates” through countercyclical macro-measures appeared to work when balance sheets were not stretched to the brink. The glaringly obvious result of such policies, gross capital consumption through malinvestments epitomized through a serial bubble economy, did not discourage our money masters. The best and brightest even suggest bubbles are the only remedy to what they believe is some sort of secular stagnation. Just as drugs, the abuser must increase the dosage to feel the same high and spend accordingly.

For a sense of what is driving sentiment this morning look no further than the Athens stock market which exploded higher yesterday on a Bloomberg story based on "two sources" that Germany was willing to compromise, only to close just as the IMF pulled a classis bad cop and announced it was halting work on Greece, and before further news from Bild that Germany was preparing for a Greek default while Europe had given Greece 24 hours to submit a final, workable proposal. As a result, it tumbled promptly at the open even as optimism persists and since the opening plunge, Greek stocks have continued to climb and are now back to yesterday's euphoric opening levels.

"An early election would be possible, but the least likely: the PM will likely be able to pass an agreement through parliament with opposition support, in turn generating strong incentives for a shift to a more moderate coalition within the existing parliament rather than a new electoral campaign following a painful compromise with European creditors," Deutsche Bank says, laying out the likely outcome if and when Greek PM Alexis Tsipras does finally accept an unpopular deal with creditors.

The “inconsequential” war certainly and drastically changed America, of that there is no doubt. Whether for the good, or bad, you’ll have to decide for yourself. On the positive side, the war did cement American independence. It proved that to defeat America on its home ground, a very, very large army, and a great commitment to prolonged and bloody war, was going to be needed. On the negative side; the war left the country with constitutional revisionism, centralized power, protectionism, mercantilism, expansionism, blind patriotism, and militarism. That decentralist small-government thingy conceived by the Founding Fathers didn’t last very long, did it? One must wonder “War, what is it good for? Was it all worth it?”