Bundesbank to refuse bailout recipients' sovereign bonds as collateral from May.

Ekathimerini carries the report linked here. This is not however merely an extremely serious matter for Greece, for it also starting from next May will restrict the activities of many banks previously using Portuguese and Irish sovereign bonds as collateral.

As the Greek newspaper points out in the following quotes the end game finally seems to have now arrived for Greece, as even its new issue bonds following the "voluntary" haircut will now seen to be as worthless as those they replace:

Up until this week Greek bonds had been used by banks to draw liquidity from eurozone central banks and the European Central Bank. However, the ECB announced on March 21 that it was giving eurozone member states’ national central banks the right to reject bonds of banks guaranteed by states that are in European Union and International Monetary Fund reform programs: Greece, Portugal and Ireland, for the time being.

In this context, the Bundesbank has become the first of the eurozone’s 17 central banks to refuse these countries’ bonds as collateral, according to a report in Friday’s Frankfurter Allgemeine Zeitung. This means that as of May, the German central bank will cease to lend to commercial banks that use Greek, Irish or Portuguese bonds as collateral.

The report came to my notice via The Slog, John Ward's views may be read from here.

IMF changes rules to fit Greece and the Euro Zone.

The full report is in the Wall Street Journal linked here. The following is an even more eye-opening quote than this posting's headline, from the content of the article:

The fund has lent Greece proportionally more compared to Athens's IMF contributions than any other country in the fund's history. Also, most of the IMF's lending resources have been promised to euro-zone nations.

IMF to cancel €10 Billion of first Greek Bail Out commitment

The €28 billion the IMF is supposedly going to contribute to the second Greek Bailout is really only €18 billion as they will withdraw  €10 billion offered as part of the first package.

The Slog this morning indicates that the EU contribution may be even funnier money, read here.

Can Britain recover the money it gave under the EFSM please?

More considerations on the settlement of CDS on Greece

I had hoped more information would heve been surfacing on the internet by now, but so far can oly offer readers this link, from which comes the following:

... the number that keeps showing up in the press is that there are only $3 billion of credit default swaps on Greek debt. That is only half true. The reality is that there is a NET $3.2 billion of CDS on Greek debt. The total or GROSS amount of swaps written is estimated to be about $60-70 billion (Dan Greenhaus, Chief Global Strategist, BTIG). This is in the 4,323 contracts that are known about.
Of the net exposure, the loss is likely to be less than the $3.2 billion, unless Greek debt goes to absolute zero. But that does not tell the whole story. For instance, just one Austrian state-owned "bad bank," KA Finanz, faces a hit of up to 1 billion euros ($1.31 billion) for the hole Greece's debt restructuring punches in its balance sheet. That loss, which will be borne by Austrian taxpayers, is someone else's gain. The net number means nothing to them – they lose it all, over a third of the expected total loss.

Every bank and hedge fund, insurance company, and pension fund has its own situation. Care to wager that the larger banks won't win on this trade? My bet is that there will be $30 billion in losses, out of which maybe someone will make $27 billion in gains.

Will the counterparty that holds your offsetting CDS be able to pay? Will all taxpayers be so accommodating as Austria's? Does anyone think that taxpayers will bail out a hedge fund that cannot pay its debt, if it sold protection and has to default?

ISDA agrees Credit Event occurred, Greece in default - Now Portugal

A typical report of the long anticipated and much deferred outcome in Greece is here.

Next step in the handover of mainland Europe under full German control will be Portugal.

Will Britain finally get some leaders prepared to extricate our islands from this ever deepening disaster?

Berlin Philarmonic fetes Greek Cabinet's approval of CACs???

Dianne Reeves, 'S wonderful seems a fitting marking of the Collective Action Clause enacted retroactively and just now confirmed to be enforced by the Greek Cabinet, meeting under the puppet PM Papademos!



Angela Merkel, she's wonderful is she not?

TARGET2 Claims on Bundesbank & 2 potential Doomsday Charts

 

 

H/T

Acting Man Blog

As Ironies Too has been pointing out for years, there ain't nuthin behind the ECB!

When it starts acting like it is a real Sovereign Central Bank (with taxpayers it can sacrifice) watch out, for disaster looms!

That's what the EU Fiscal Treaty is all about, but it might have been sensible to have got the German taxpayers signed up before incurring such grotesque commitments!

Time to recall Sarkozy' Davos remarks from Fenruary 2011

As I blogged at the time, Sarkozy's remarks, also reported on video from this link to the actual posting, were pretty clear on the consequences foreseen by Merkozy in letting the Euro drift:

"Whether it be Chancellor Merkel or myself, never, never will we turn our backs on the euro. We will never abandon the euro, we will never drop the euro," Sarkozy told the World Economic Forum in Davos.

"The euro spells Europe. The euro is Europe and Europe has spelled 60 years of peace on our continent, therefore we will never let the euro go or be destroyed," he insisted.

"For us, it's not simply an economic issue, it has to do with our identity as Europeans. For those of you who want to bet against the euro, be careful how you invest. We are determined to ensure the strength of the euro."

"It is of such importance that we will be there whenever it needs to be defended. The consequences of it failing would be so cataclysmic that we could never entertain the idea," he declared.

As President Sarkozy's re-election campaign gets under way, it seems important to remember these words, for none of his actions in the interim seem to indicate he either then, nor indeed now, has a proper grasp of the full extent of the gravity and extent of the disaster that he and Angela Merkel have jointly created.

It is not at all encouraging that he remains jointly in charge of the EU as it clearly approaches a Greek default and what he has therefore forecasted will be a cataclysm.

Greece finally defaults!

The announcement of the S and P latest downgrade of Greece may be read from here.

The amusing part now has begun to unfold as various experts and leading lights of the EU system switch from claiming this as a real disaster and the end of the common euro currency, to assertions that it is really nothing to worry about at all, as we heard in an hilarious broadcast from the BBC Today programme this morning.

Greece's private creditors get ' Haircut' notice of 73 to 74 percent!

The farce continues with these notices being served as Europe's financial markets close. We must wonder what other surprises might be in store when Wall Street shuts, last week it was the announcement by Mme Lagarde in Berlin that the IMF would only meet 10% of the costs of Greek Bailout 2.0!

The report on the PSI terms may be read in this summary from DW, linked here.

Greek talks fail, new deadline noon tomorrow

The FT has the report linked here. In considering the latest brinkmanship it is important to realise this is not a continuation of the dispute over the haircut of the private sector bondholders, but a question of actual money being advanced for the second Greek  bailout.

Now not just potentially scalped private banks, insurance companies etc are crying "enough" this weekend - it is the Troika of the IMF, ECB and EU itself, but also the governments of the other EU member states within the Euro who must raise the cash from the austerity strapped electorates to whom they must eventually look for re-election! A very different kettle of fish.

Whatever happens in Greece may now be a credit event!

Well round and round it goes! It now appears from this report in the San Francisco Chronicle, just updated, that while only 50% of private participation in the bond roll-over might be voluntary, the "authorities" are no longer so concerned about it being a credit event and thus triggering a pay off on outstanding Credit Default Swaps.

The suppositions continue, even while now apparently reversing direction!

Portugal to require second bailout - 50 Economists

Reuters pours some realism over those wishing the Eurozone's woes might just vanish, a quote is here:

A separate poll of 50 economists suggested there is a 70 percent chance that Portugal will require a second EU/IMF bailout at some point.

One is tempted to question what a private haircut on Purtuguese bonds might be called when recalling that Merkozy promised Greece would be a unique and one off case. Maybe they could get Greece to buy the bonds and cough up the 30 billion, Antonio Saraiva, head of Portugal’s main industry confederation, said yesterday was needed “I’ll dare to say we have a credit crunch...What is lacking is €30bn.” (As reported by Open Europe today) and the whole lot can now be included with the Greek haircut, (negotiations upon which are seemingly endlessly continuing) thus maintaining the pretence that things are developing as Merkozy wished!

Remember in all this, it was the dreaded two headed Merkozy which made the early error by not just accepting a Greek default and a Euro exit! They would never allow it, seemed to be one of the early statements if memory serves.

Greek farce continues IIF negotiator Dallara leaves Athens

CNN has the latest non-report on the Greek "haircut" debt non-deal! Link The crux for me is here:

Dallara and Lemierre left Athens Saturday but a team of experts and Greek government representatives continued to hold discussions, IIF spokesman Vogl said.

Greece and our money

John Redwood MP, one of the few astute spokesmen in Westminster on the EU, chooses to write on the traffic light situation in and around Parliament on his blog this morning, this follows yesterday's offering on roads and before that on yachts. Prior to that post we did have something on Greece, but that was long before yesterday's harrowing IMF proposal.

For detail on that we must rely on the Wall Street Journal who fifteen minutes ago updated this comment, from Washington, where it remains the dead of night. This article presently concludes as follows:

Some experts and policy makers maintain the world needs far more money than even the IMF is seeking in order to contain the growing crisis. The $500 billion proposed by the IMF "is not nearly sufficient to provide bailouts for Italy and Spain," said Desmond Lachman, an economist at the American Enterprise Institute and former IMF official. He estimates that Italy could need $750 billion and Spain could need $450 billion for bailouts. "Additional money would have to be ponied up by the Europeans."
Those and other nations in the euro zone also face growing economic strains, raising the risk that they will need more than outside loans to recover.

It was 30th May 2010 that I appear to have first headlined a posting stating "Greece must exit the Euro and Default" concluding it as follows:

This blog has been stating this obvious fact as it appears in this posting's headline for some considerable time, in fact ever since the so-called Greek crisis first hit the headlines! Other common sense on the present terrible situation is in other postings below this.

Time and again since then I have blogged on the futility of pouring money into Greece, with no Euro exit nor devaluation possible and that it would would surely bring the world to its present point.

Little could I ever have guessed, however, that when we finally arrived at the crunch, even our brightest MPs would seek distraction with topics such as traffic lights, roads and yachts. At least Douglas Carswell MP yesterday recognised the acute danger the country faces, his Party leadership, in thrall to Clegg, clearly do not!

Present ECB risks from the coming Greek default.

Der Spiegel has a good analysis of the unfolding problems this weekend for the ECB, linked here, of which this is a small quote:

Since May 2010, the ECB has purchased sovereign bonds from crisis-stricken euro-zone member states worth €213 billion. An estimated €55 billion of that are Greek bonds. Such widespread bond purchases have resulted in sharp critique from financial experts.

But the ECB is also carrying much higher risks. They stem from the collateral that banks must post when they borrow money from the ECB. Often, that collateral consists of sovereign bonds from the countries where the banks are located. As such, when Greek banks borrow from the ECB, they post Greek sovereign bonds as collateral. Increasingly, however, they are taking advantage of the ability to issue bonds themselves, which are then guaranteed by the Greek state. Those bonds too are accepted by the ECB as collateral.

In the last three-and-a-half years, financial institutions from debt-stricken euro-zone countries such as Greece, Portugal and Ireland have borrowed extensively from the ECB. Since the peak of the financial crisis in 2008, the ECB has provided euro-zone banks with unprecedented amounts of liquidity. In December, the ECB flooded European banks with additional capital with unusually long loan periods of three years -- an influx of fully €500 billion. The loans were processed by national central banks in the euro zone.

The ECB does not publicize official numbers regarding which bank borrowed money, nor do they make amounts public. But Greek banks currently have few options when it comes to accessing fresh liquidity. Other banks have simply stopped lending them money. And Greeks have likewise begun pulling their capital out of Greek banks to deposit it in more secure accounts abroad.

'Immeasurably Large' (read on from the link for worse news)

S&P mass downgrading of NINE of the Economically Ugly Eurozone.

Lucas Papademos,Vice President of the ECB and head of the Greek Central Bank when Greece joined the Euro and fellow culprit Jean-Claude Trichet, former head of the ECB.

The Standard and Poor's report is quoted here, the reality could not be more stark:

We have lowered the long-term ratings on Cyprus, Italy, Portugal, and Spain by two notches; lowered the long-term ratings on Austria, France, Malta, Slovakia, and Slovenia, by one notch; and affirmed the long-term ratings on Belgium, Estonia, Finland, Germany, Ireland, Luxembourg, and the Netherlands.

All ratings have been removed from CreditWatch, where they were placed with negative implications on Dec. 5, 2011 (except for Cyprus, which was first placed on CreditWatch on Aug. 12, 2011).

The outlooks on the long-term ratings on Austria, Belgium, Cyprus, Estonia, Finland, France, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, and Spain are negative, indicating that we believe that there is at least a one-in-three chance that the rating will be lowered in 2012 or 2013.

Where the depths of crisis first became clear more than two years ago, in Greece, the BBC News this morning is also reporting that the talks regarding a resolution of what is increasingly taking on the characteristics of a humanitarian disaster, have collapsed, as admitted by the appointed EU Governor of Greece Lucas Papademos at a televised dinner last evening, also reports here.

The incompetence of the leaders of the EU clearly places the entire economy of the world at risk, see this video report from India:

Greece plans law to force private bondholders to take haircut

Bloomberg has the report here. It seems any dirty trick will be sought to avoid triggering the CDS payments that were purchased in good faith by their holders. Can the troika really believe that the markets will afterwards accept that Greece was a once off?

The EU reality in Greece - Suicides jump by 22%

The EU is destroying, quite deliberately, one of its member states. It has already crushed its democracy, the inspiring source for all such on our Continent, without apparent thought nor with a single regret.

Other facts of daily life in Greece, soon to be experienced, no doubt, in other former member states of the EU, detailed in this report, over and above the shameful leap in the number of suicides by 22% are:

Unemployment rising to 18.2%.

RTL, the largest radio network in Europe, lost 50% of its advertising revenues in Greece since the start of the crisis—and has decided to leave.

And now pharmacies are having difficulties obtaining medications.

Greece was the default Merkel and Sarkozy solemnly promised they would would not allow!

Greece is a minor problem compared with Spain and Italy, now at the stage where Greece arrived over two years ago.

Ireland is in danger of losing its new coalition government because of the austerity according to the Irish Times of this morning, read here.

Portugal has been driven to sell a large hunk of its electricity supply industry to the Chinese, as I posted here.

Can this really continue, if so for how much longer can it do so and be ignored by the British Parliament, whose business for next week, in the face of this appalling crisis, is a complete wasteland of nothingness?

Playing poker over a Credit Event in Greece

Two articles worth considering this evening are linked here and here. The game for several months has been to avoid pay-out on the Credit Default Swaps due on a Greek bond default. It has been an ugly spectacle for those who believe in free markets and private enterprise.

I feel the end game is getting close.

Update from Reuters 1825 GMT here.