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Greek Bank Stocks Crash Again Amid Fresh Signs Of Economic Disintegration
Greek Bank Stocks Crash Again Amid Fresh Signs Of Economic Disintegration
After trading limit-down on Monday when Greek stocks opened for trading for the first time since PM Alexis Tsipras called a referendum that would later prove to be a complete waste of time, shares of Greek banks once again flirted with the daily 30% loss limit on Tuesday as there were simply no bids for a set of institutions that everyone knows is insolvent.
The banks, which are only operational because the ECB has decided to keep the ELA liquidity drip on at least until the central bank sees whether or not Greece will be able to make a €3.2 billion bond payment on August 20, are in desperate need of recapitalization, and according to Brussels’ estimates, will need somewhere on the order of €25 billion to stabilize the system.
Of course that total effectively grows by the day, as the collapsing Greek economy (and we mean “collapsing” in the most literal sense of the word after yesterday’s astonishingly bad PMI print) takes its toll, driving up NPLs in a vicious circle wherein capital controls meant to stem the deposit outflow cripple the economy which in turn serves to further cripple the banks.
Speaking of this self-feeding loop, here’s Kathimerini with more on how the banking sector deep freeze has reverberated through the broader economy:
The state’s losses from indirect taxes alone in the first couple of weeks of capital controls and the shuttering of banks is more than half a billion euros, according to a study published on Monday by the Hellenic Confederation of Professionals, Craftsmen and Merchants (GSEVEE).
The drop in consumption in the first two weeks after June 28 amounted to 50 percent, or 3.8 billion euros, with corporate turnover falling 48 percent on average. This meant the state coffers missed out on 570 million euros in taxes.
…click on the above link to read the rest of the article…
Black Swan 2: This Is “The Next Critical Chapter In The Austrian Banking System Story”
Black Swan 2: This Is “The Next Critical Chapter In The Austrian Banking System Story”
When it comes to the sweeping of (trillions of) toxic assets until such time as the ECB starts purchasing not only government bonds but equities, bank loans and really anything else that in a normal world would have some “mark to market” value, Europe had a ready answer: bad banks. A tradition which started with Switzerland and the semi-bailout of UBS during the great financial crisis, “bad banks” have been proposed every time there are a few hundred billion in bad assets that need to be swept away or otherwise removed from the the public eye.
In fact, it was just a few hours ago that Spain’s economy minister praised the usefulness of bad banks, which have certainly seen their fair share of use in Spain over the past 5 years.
- GUINDOS: BAD BANKS USEFUL INSTRUMENT TO CLEAN UP BALANCE SHEETS.
Yes, useful. Until you have a massive blow up like in Austria when several years of avoiding reality exploded in everyone’s face when the Bad Bank meant to fix the mess left after the collapse of Hypo Alpe Adria itself became insolvent, after the horrendous state of its balance sheet could no longer be masked, and creditors were shocked to learn they would foot the bail out, or rather bail in costs thanks to massive debt writedowns.
And since there is never just one cockroach when it comes to hiding Europe’s biggest financial problem, namely trillions in non-performing loans, the question always is: which cockroach is next?
For now the answer, thanks to the ECB’s relentless intervention in all capital markets is hiding, but one proposal comes from Daiwa Capital Markets which suggests to take a long hard look at Austria’s Pfandbriefbank Oesterreich AG.
Here is what Daiwa’s Jakub Lichwa thinks:
…click on the above link to read the rest of the article…
EU and Greece Running Out of Time – As Bank Runs Intensify, Bail-Ins Likely
EU and Greece Running Out of Time – As Bank Runs Intensify, Bail-Ins Likely
– EU and Greece running out of time as talks end “in disarray” – again
– Greece warns Merkel of ‘impossible’ debt
– Concerns Greece out of money by end of April
– Friday’s “agreement” in Brussels falls apart hours later as protagonists fail to agree on specifics
– Greece now insolvent – will run out of liquidity by end of April
– Greek banks on verge of collapse as runs continue – €1.5 billion emptied out of banks last week alone
– ‘Grexit’ could propel gold to over $2,000/oz
– Cyprus style bail-ins look increasingly possible
Greece’s place in the Eurozone is as precarious as ever as talks between Prime Minister Tsipras and European leaders in Brussels broke down – hours after reaching general agreement – and Greece warned Germany that it will be “impossible” for Greece to service debt payments due in the coming weeks if the EU fails to provide short-term financial assistance.
Greece – faced with illiquidity, insolvency and a potential banking collapse – is running out of time and appears to be on the back foot as its international creditors refuse to countenance any debt restructuring, rescheduling or forgiveness.
The warning from Greece came in a letter from Tsipras to Angele Merkel provided to the Financial Times. It comes as concerns mount that Athens will struggle to make pension and wage payments by as early as next week, the end of March, and could run out of cash completely before the end of April.
The letter, dated March 15, came just before Ms Merkel agreed to meet Mr Tsipras on the sidelines of an EU summit last Thursday and invited him for a one-on-one session in Berlin, scheduled for Monday evening.
…click on the above link to read the rest of the article…
Another step down the long, slow road to IRA nationalization
Another step down the long, slow road to IRA nationalization
Let’s take a brief walk into financial reality for a moment.
At the time of this writing, the United States government’s official debt is nearly $18.1 trillion.
Now, let’s look at who the biggest owners of that debt are:
1) Taxpayers of the United States.
If you’ve held a job in the Land of the Free, 15.3% of your salary has gone to fund Social Security and Medicare.
Each of these programs holds massive trust funds that are supposed to pay out beneficiaries, both present and future.
Conveniently, the trust funds are required by law to buy US government debt.
And given that every single US taxpayer is an ultimate beneficiary of these trust funds, that ranks the people of the United States as among the biggest holders of US debt.
How sustainable is this? Not very.
The 2014 trustee reports for both Medicare and Social Security indicate that nearly ALL of the trust funds are sliding towards insolvency.
…click on the above link to read the rest of the article…
