Home » Posts tagged 'greece' (Page 29)
Tag Archives: greece
German DAX Surges Over 12,000 On Greek Optimism, But The Money Has Run Out
German DAX Surges Over 12,000 On Greek Optimism, But The Money Has Run Out
Moments ago, the German DAX roared gingerly back over 12,000 dragging US equity futures alongside it, with the catalyst cited as the somewhat optimistic tone following the three hours of talks held late last night to try to break an impasse that risks sending Athens stumbling of the euro zone. As a result, a smiling if only through his teeth, Tsipras said Greece was “moving swiftly to meet creditors’ demands for a detailed economic reform plan” and assured euro zone leaders his leftist-led coalition would speed up work to avert bankruptcy.
Still, nothing that happened last night actually unlocks any new money. Reuters reports that “while a joint statement by the EU institutions spoke of a “spirit of mutual trust” and Tsipras said he left feeling more optimistic, German Chancellor Angela Merkel stressed no money would be released before Athens implements budget measures and other reforms that it has so far been reluctant to accept.”
The risk of a continued standoff, exactly a month after Greece secured a last-gasp four-month extension of an EU/IMF bailout, was highlighted by different descriptions by Tsipras and Merkel about what reforms Athens would need to launch.
…click on the above link to read the rest of the article…
The Unraveling Is Gathering Speed
The Unraveling Is Gathering Speed
Debt saturation and debt fatigue = diminishing returns on central bank tricks.
Does anyone else have the feeling that things are not just unraveling, but that the unraveling is gathering speed?
Though quantifying this perception is more interpretative than statistical, I think we can look at the ongoing debt crisis in Greece as an example of this acceleration of events.
The Greek debt crisis began in 2011 and reached a peak in 2012. The crisis was quelled by new Eurozone/IMF loans to Greece, and European Central Bank chief Mario Draghi’s famous “whatever it takes speech” in late July, 2012.
The Greek debt crisis quickly went from “boil” to “simmer,” where it stayed for almost two-and-a-half years. But no one with any knowledge of the gravity and precariousness of the situation expects the latest “extend and pretend” deal to patch everything together for another two years. Current deals are more likely to last a matter of months, not years.
We can discern the same diminishing returnsin Federal Reserve/central bank interventions, as the initial rounds of quantitative easing pushed stock and bond markets higher for years at a time, while the following interventions generated lower returns.
What factors are reducing the positive effects of intervention and causing increased volatility? Let’s start with the engine behind every central bank/state intervention and every “save” of the status quo: debt.
…click on the above link to read the rest of the article…
After Pillaging Pensions, Greece Raids Utilities To Repay Troika; Bonds Plunge As Bank Run Accelerates
After Pillaging Pensions, Greece Raids Utilities To Repay Troika; Bonds Plunge As Bank Run Accelerates
Following yesterday’s news that the ECB is now running simulationson what a Grexit would mean for Greek bond prices (spoiler alert:
“fundamentals” suggest a 95% loss), overnight we got more confirmation that Mario Draghi continues to tighten the screws on the Greek sovereign corpse, when Bloomberg reported that the ECB once again raised the maximum amount of emergency liquidity available to Greek lenders by €400 million, but less than the Greek central bank requested, people familiar with the decision said.
The increase was approved by the ECB’s Governing Council on Wednesday, the people said, asking not to be identified as the council meeting was private. Greece requested about 900 million euros, one of the people said. The increase should take ELA to about 70 billion euros. Policy makers raised the limit by 600 million euros on March 12, after a boost by 500 million euros to 68.8 billion euros on March 5. Greek banks haven’t used all their ELA and have a total of about 3 billion euros in liquidity available, one of the people said.
However, not a single penny from this additional emergency “liquidity” would enter the economy, as all of it was merely provided to offset the ever faster Greek bank run because as Reuters reported, on Wednesday Greek banks saw deposit outflows of €300 million,the highest in a single day since a February deal with the euro zone that staved off a banking collapse, two senior Greek bankers familiar with the matter said on Thursday.
…click on the above link to read the rest of the article…
It’s What Jesus Would Do, Right?
It’s What Jesus Would Do, Right?
On the day that Mario Draghi opened the ECB’s overly opulent new €1.3 billion palatial building(s) in Frankfurt, which led to fierce and fiery protests with hundreds arrested, amongst others from the Blockupy movement, and the IMF for some reason found it necessary to tell the eurozone that Greece is its most unhelpful client ever (really? let’s see the others) and to leak that finding to the press to boot, the Greek parliament voted in an anti-poverty law with a huge majority.
Oh, and it was also the day that a San Francisco church decided to dismantle an elaborate system of outdoor showerheads it had installed to get rid of those pesky homeless on its property. The showerheads would get the ‘rough sleepers’ soaking wet every hour or so. As one tweet said: “It’s what Jesus would do, right?” Anyway, enough protest was enough to get them backtracking.
I don’t know what the shower system cost, and who really cares, but I do know the price tag for the Greek law to help its poorest: €200 million. Or about 14% of what that one building cost (the EU has much more construction going on). Which, by the way, was announced as, I paraphrase and kid you not, “an example of what Europe is capable of”.
No comment there, I couldn’t have out it any better myself. One thing’s for sure: the building is not meant for the poor. There were thousands of cops at the opening alone to prevent them from entering. Cops paid for with taxpayer money, including that from the poor.
…click on the above link to read the rest of the article…
Are Greek Capital Controls Now Inevitable?
Are Greek Capital Controls Now Inevitable?
While the trading algos are blissfully honing their headline-scanning skills (it should take no longer than a few nanoseconds to find whether “patient” and “international” are in the FOMC statement) ahead of tomorrow’s Fed announcement and avoiding any macro developments from around the globe, the biggest international news hit earlier today when Greece came one step closer to if not a Grexit, then a full blown bank run and capital controls when none other than the chair of the Eurogroup Jeroen Dijsselbloem became the first European Union official to suggest the possibility ofcapital controls to prevent Greece leaving the euro, which in turn drew a furious reaction from Athens, which accused him of “blackmail.”
Quoted by Bloomberg, Dijsselbloem said that “It’s been explored what should happen if a country gets into deep trouble — that doesn’t immediately have to be an exit scenario,” he said. For Cyprus, “we had to take radical measures, banks were closed for a while and capital flows within and out of the country were tied to all kinds of conditions, but you can think of all kinds of scenarios.”
In Athens, the insolvent but proud government issued an angry reply: cited by Kathimerini, spokesman Gavriil Sakellaridis said “It would be useful for everyone and for Mr Dijsselbloem to respect his institutional role in the eurozone. We cannot easily understand the reasons that pushed him to make statements that are not fitting to the role he has been entrusted with. Everything else is a fantasy scenario. We find it superfluous to remind him that Greece will not be blackmailed.”
…click on the above link to read the rest of the article…
Dollar Demand = Global Economy Has Skidded Over the Cliff (March 18, 2015)
Dollar Demand = Global Economy Has Skidded Over the Cliff
Borrowing in USD was risk-on; buying USD is risk-off.
There is a lively debate about the global demand for U.S. dollars:
Global finance faces $9 trillion stress test as dollar soars (Telegraph.co.uk)
Is There a US$ Shortage? Will it Sink the Global Economy? Again? (Mish)
The Dollar Squeeze – How Problematic Is It? (Acting Man)
The Global Dollar Funding Shortage Is Back With A Vengeance And “This Time It’s Different”(Zero Hedge), which references a Bank for International Settlements (BIS) paper: Global dollar credit: links to US monetary policy and leverage.
“Unless you enjoy multivariate regression analysis I suggest skimming the BIS working paper. Major points I got were:Correspondent Mark G. went through the BIS report and offered these insightful comments:
1. Almost all of the dollar denominated debt and bond growth since 2009 was generated by the global shadow banking system. Banks per se were smaller players in issuing this debt, and US-based banks (i.e. the ones in reach of Federal Reserve life preservers) were minor. Sovereign wealth funds are large players in this. When we think of huge sovereign wealth funds held by major hydrocarbon exporters then the pucker factor rises.
One implied result of the BIS paper is that it will be extremely difficult or impossible for Federal Reserve emergency liquidity operations to stem a panic, even if the Fed is inclined to do so. AEP in the Telegraph article stated this more directly. The real problem is that modern bailout operations have large fiscal components as well as monetary components. Looking at the Bundestag’s chronic heartburn with Greece and the EFSF is educational. Alternatively, consider how well proposals for a larger TARP type program aimed primarily at foreign entities would be received by the US Congress. And especially in 2016.
…click on the above link to read the rest of the article…
Greek PM To Meet With Putin Amid Cash Crunch
Greek PM To Meet With Putin Amid Cash Crunch
With Greece digging around in the couch cushions to try and scrape up €2 billion by Friday in order to make payments to the IMF, the ECB, and Goldman, and with celebrity FinMin Yanis Varoufakis doing his absolute best to sink the entire ship with a series of epic PR faux pas, one is left to wonder just where Athens will turn when Berlin and Brussels finally reach the end of their ropes with what increasingly looks like gross incompetence in the Aegean. We may have gotten the answer to that question today via Reuters:
Greek Prime Minister Alexis Tsipras will visit Moscow on April 8 after being invited to talks by Russian President Vladimir Putin, a Greek government official said on Tuesday.Greece’s government has previously said Putin had invited Tsipras to visit Moscow on May 9 and it was not immediately clear if that trip had been changed. It would be Tsipras’s first official visit to Moscow since being elected in January.
There you have it. As Syriza faces the unenviable proposition of either completely giving up on its campaign promises or plunging the Greek economy and banking system into a drachma death spiral, it appears as though Athens is playing the one card it has left, which is threatening to effectively surrender itself to the Kremlin. As Reuters notes, this wouldn’t be the first time Greece has (maybe) inadvertently created speculation around the possibility that Moscow could end up being the White (or Red) Knight:
…click on the above link to read the rest of the article…
It’s Time for Angela Merkel to Stand Up
It’s Time for Angela Merkel to Stand Up
I need to start of off the bat with an update to this piece, which I started writing yesterday, since I now know that Angela Merkel actually did invite Alexis Tsipras on Monday. It only took her two months…. But that doesn’t take away anything from my point that Merkel has been sorely lacking and missing, it just goes to prove that point.
And if she doesn’t get her act together very quickly (why not ask Tsipras to be in Berlin tomorrow morning?!), this will, I’ve said it before, go down as her main legacy. She will be known as the person who let Europe slip into war, for no good reason whatsoever. Here’s what I started off with last night (Oz time):
The increasing ugliness of the ‘negotiations’ between the Greek Syriza government and the rest of the eurozone, which is ruled by the German government, needs to be halted and put in reverse. There is an urgent need for a detente, for cooler heads and for trust. And there is only one person who can act to create these things: Angela Merkel. But Merkel is nowhere to be found or seen.
The increasing ugliness of the propaganda war the west is waging against Russia and its president Vladimir Putin, also needs to be halted. There is an even more urgent need there for a detente, for cooler heads and for trust. There is only one person who can act to create these things: Angela Merkel. But Merkel is AWOL.
There are German voices in the Putin case that call for reason and quiet, and that have labeled people like NATO head Stoltenberg, NATO General Breedlove and US State Department ‘Assistant’ Victoria Nuland more or less insane. But Merkel’s voice is not among them, nowhere to be heard.
…click on the above link to read the rest of the article…
Europe Has A Modest Proposal For Greece: “Don’t Pay Wages For One Or Two Months”
Europe Has A Modest Proposal For Greece: “Don’t Pay Wages For One Or Two Months”
The Greek liquidity, pardon “cash flow” problems are so bad, not only Zero Hedge, but also Bloomberg has launched a daily maturity tracker of how much money Greece has to pay either to the IMF or to prefund T-Bill rollovers. This is what Bloomberg blasted out earlier today:
Greece is preparing for another week of hurdles that ends with a ~EU2b repayment on March 20. Most economists say that it will be difficult for Greece to get past end of March without fresh EU funds. Here’s a timeline of the most important events scheduled this week:
- Monday, March 16: Greece to repay about EU577m in IMF loans
- Wednesday, March 18: Greece’s debt agency PDMA to sell 13- week treasury bills
Which explains why as we reported yesterday, Greece passed a law to plunder pension funds, one which would allow the government to fully invest reserves of pension funds and other public entities kept in Bank of Greece deposit accounts in Greek sovereign notes.
None of this is news: that Greece will run out of cash absent another check from the Troika, pardon Instituions, pardon creditors, is clear. The only question is what happens after, if Europe indeed leaves Greece hanging.
Today, the Greek media is ablaze with just what Europe’s proposed solution to this issue may be. As Protothema and Capital report, the Troika proposed that Athens halt the payment of salaries and pensions for one to two months. This, according to Europe, would promptly tackle the problem of liquidity and find a solution to Greek problem of how to pay back bailout loan tranches to creditors when suffering from liquidity problems.
…click on the above link to read the rest of the article…
Germans Furious After Varoufakis/Tsipras Admit “Greece Will Never Repay Its Debts”
Germans Furious After Varoufakis/Tsipras Admit “Greece Will Never Repay Its Debts”
The Greco-Germanic war of words continues… Having pissed off The Greeks with his “Troika” remarks, Germany’s Schaeuble went on today to more ad hominum attacks by reportedly calling the Greek FinMin “foolishly naive.” The Greek ambassador has ‘officially’ complained to “friend and ally” Germany about the personal insult. But The Greeks had the last laugh, as first Varoufakis and then Tsipras explained respectively that “Greece would never pay back its debts,” and “Greece cannot pretend its debt burden is sustainable.” The German response, via tabloid Bild, “there must be an end to this madness. Europe must not be made to look stupid.”
As Bloomberg reports, Germany and Greece confirmed Thursday that the Greek ambassador in Berlin made an official protest late Tuesday to the German Foreign Ministry over comments made by Schaeuble.
Schaeuble and his Greek counterpart Yanis Varoufakis have traded barbs in recent weeks, with Schaeuble on Tuesday suggesting that Varoufakis needed to look more closely at an agreement that Greece signed in February: “He just has to read it. I’m willing to lend him my copy if need be.”
…click on the above link to read the rest of the article…
The ECB’s Noose Around Greece: How Central Banks Harness Governments
The ECB’s Noose Around Greece: How Central Banks Harness Governments
Remember when the infamous Goldman Sachs delivered a thinly-veiled threat to the Greek Parliament in December, warning them to elect a pro-austerity prime minister or risk having central bank liquidity cut off to their banks? (See January 6th post here.) It seems the European Central Bank (headed by Mario Draghi, former managing director of Goldman Sachs International) has now made good on the threat.
The week after the leftwing Syriza candidate Alexis Tsipras was sworn in as prime minister, the ECB announced that it would no longer accept Greek government bonds and government-guaranteed debts as collateral for central bank loans to Greek banks. The banks were reduced to getting their central bank liquidity through “Emergency Liquidity Assistance” (ELA), which is at high interest rates and can also be terminated by the ECB at will.
In an interview reported in the German magazine Der Spiegel on March 6th, Alexis Tsipras said that the ECB was “holding a noose around Greece’s neck.” If the ECB continued its hardball tactics, he warned, “it will be back to the thriller we saw before February” (referring to the market turmoil accompanying negotiations before a four-month bailout extension was finally agreed to).
The noose around Greece’s neck is this: the ECB will not accept Greek bonds as collateral for the central bank liquidity all banks need, until the new Syriza government accepts the very stringent austerity program imposed by the troika (the EU Commission, ECB and IMF). That means selling off public assets (including ports, airports, electric and petroleum companies), slashing salaries and pensions, drastically increasing taxes and dismantling social services, while creating special funds to save the banking system.
…click on the above link to read the rest of the article…
Greeks Face First Product Shortages As Cash Runs Out, “It’s Worse Than In 2012”
Greeks Face First Product Shortages As Cash Runs Out, “It’s Worse Than In 2012”
Just when you thought it was getting better (or so you would believe if you listened to the mainstream media’s punditry) Greece faces what ekathimerini reports is a “situation worse than in 2012.” From well-known Belgian beer to electronics equipment, the first occurrences of shortages in imported goods and raw materials have arisen as a result of Greek enterprises’ inability to pay with cash in advance.
Hundreds of people jostled for free vegetables handed out by farmers in a symbolic protest earlier on Wednesday, trampling one man and prompting an outcry over the growing desperation created by economic crisis.Images of people struggling to seize bags of tomatoes and leeks thrown from a truck dominated television, triggering a bout of soul-searching over the new depths of poverty in the debt-laden country.
“These images make me angry. Angry for a proud people who have no food to eat, who can’t afford to keep warm, who can’t make ends meet,” said Kostas Barkas, a lawmaker from the leftist Syriza party.
Other lawmakers from across the political spectrum decried the images “of people on the brink of despair” and the sense of “sadness for a proud people who have ended up like this“.
People have seen their living standards crumble as the country faces its sixth year of recession that has driven unemployment to record highs.
…click on the above link to read the rest of the article…
Why Japan is Not Greece or EU For that Matter
Why Japan is Not Greece or EU For that Matter
QUESTION: Hello Martin
There are a few writers who speculate the the yen will be the first currency to fall (because Japan has been tied into QE and flat interest rates for decades already, and their manufacturing is suffering). How do you think the currency situation will play out for Japan?
thank you, best wishes
M
ANSWER: This is the classic example of people who keep touting fiat and money supply as if it was the beginning and end to everything. I have stated that ALL money is fiat even when a government fixes the price of gold for they are dictating its value. The floating exchange rate has its advantages. It is truly the check against government for money is simply the expression of confidence in the total productivity of a nation. It is not gold – it is the people.
Japan rose to the 2nd largest economy with a tiny island, no gold, and no resources. It did so proving Adam Smith was correct based upon the total productivity of its people. Inflation does not correlate to money supply. If it did, thenALL commodities would be higher today. Inflation is a matter of confidence and as long as people know someone else will freely accept whatever money might be at that moment, then they will accept it as well. Disturb that confidence and you get inflation all the way up the scale to hyperinflation, which also involves the collapse in confidence in banks and people spending everything as fast as they get it – the opposite of deflationary hoarding.
Interest Rates are also a reflection of INFLATION. You would never lend money with a rate of return BELOW the purchasing power of money at the time you expect a return. Therefore, rates have been flat in Japan because of the massive deflation that is also the hallmark of hoarding (savings).
…click on the above link to read the rest of the article…
SPIEGEL Interview with Greek Prime Minister Tsipras: ‘We Don’t Want to Go on Borrowing Forever’
SPIEGEL Interview with Greek Prime Minister Tsipras: ‘We Don’t Want to Go on Borrowing Forever’
Alex Tsipras seems almost inconspicuous as he stands in his enormous office in Athens’ Maximos Mansion, and very relaxed. Greece’s new, 43-year-old leftist prime minister, a thorn in the side of German leaders in Berlin, has a soft handshake. On the conference table is a pad of paper bearing the government coat of arms along with neatly written notes in preparation for our interview.
Tsipras wants to explain himself and the policies of his government, he says, adding that he hopes to answer questions openly and honestly so that people in Germany understand him better. Now, he says, is the ideal time for such a discussion, coming as it does after the negotiations with Brussels and shortly before Athens intends to present its new reform plans to European Union finance ministers on Monday.
The prime minister has given us an hour for the interview. He speaks Greek as he explains his plans in a deep, yet quiet voice, even laughing occasionally while leaning back comfortably. His self-confidence does not come across as arrogant, seeming instead to be rooted in his firm conviction that his position is the right one. He knows, he says, that life is full of compromises and that compromises are also vital for his country’s cooperation with the European Union. “We must leave disaster of all kinds behind us,” Tsipras says. “That, too, is why I wanted to speak with you.”
SPIEGEL: Mr. Prime Minister, most of your European partners are indignant. They accuse you of saying one thing in Brussels and then saying something completely different back home in Athens. Do you understand where such accusations come from?
Tsipras: We say the same things in Germany as we do in Greece. But sometimes, problems can be viewed differently, depending on the perspective. (He points to his water glass.) This glass here can be described as being half full or half empty. The reality is that it is a glass filled half-way with water.
…click on the above link to read the rest of the article…
Is the IMF About to Make Greece an Offer It Can’t Refuse?
Is the IMF About to Make Greece an Offer It Can’t Refuse?
“The bailout programs that were proposed for Greece and approved for Greece were much too one-sided. They relied too much on sacrifices on the part of Greece and not enough sacrifices on the part of Greece’s creditors.”
These words belong to a Brazilian economist called Paulo Nogueira Batista Jr. who represents 11 Central and South American countries on the IMF board. During a recent interview with private Greek television broadcaster Alfa TV, he made the following rather startling — but much ignored — assertions (none of which will be to the German government’s liking):
- The first Troika-sponsored program, in 2010, was presented as a bailout of Greece but was in reality a bailout of Greece’s private creditors. Greece received enormous amounts of money but almost all of it was used to allow the exit of French, German and other Northern European banks from their positions, which were paid at par without any contribution to the restructuring of the Greek economy.
- Any solution to Greece’s debt crisis should include a significant restructuring of debt with its official European creditors. Without a restructuring, it’s very hard to envisage Greece extricating itself from its economic and social crisis.
- The Greek government should respect the IMF’s preferred creditor status. Any debt restructuring should affect other creditors that do not have this preferred creditor status. In other words, whatever Greece tries to do, it should forget about attempting “to restructure its debt with the IMF.”
…click on the above link to read the rest of the article…
