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The only question now is whether the Greek Central Bank, which the ECB said is now sufficient to meet bank liquidity needs (via the ELA which the ECB has not yanked... yet: it has given Greece until February 28 before this final prop is yanked and Greece is left to drown), is allowed to print Euros. If not, the Greek experiment at trying to stick it to Europe is about to crash and burn spectacularly.
Joking aside, what is really at stake now, if only for Greece, is everything: Syriza either folds, and cedes by withdrawing all demands, thus effectively ending its mandate less than 2 weeks after coming to power, or it exits the Eurozone.
Unless you believe that economics is voluntary and outcomes arbitrarily mandated from on high, then what happens on a Grexit is all of the medicine that Germany and the EU want Greece to take over many years, will all be administered all at once. Default will turn chronic misery into acute agony.
This is how it will likely pan out.
Banks in Greece have been given the go ahead to access an additional €10 billion in emergency funding from the Bank of Greece, according to a government official. This is a push-back from Athens demonstrating its intent to roll back austerity measures.
"Greece does not aim to blackmail anyone but will not be blackmailed either," the government official, cited by Reuters, said.
Emergency Liquidity Assistance funds will be sourced from the Greek Central Bank. Previously it was capped at €15 billion, and this has been raised to €25 billion.
originally posted by: crazyewok
I have a family member that works for a big German bank.
They have said that Germany has been preparing not just for Greece but a Spanish and Italy default and are well prepared and willing to take the hit just to prove a point that you don't # with the Germans and they are the power behind the euro.
With an increasingly vitriolic tone, the new Greek government has come out swinging today with leader Alexis Tsipras making it clear that he will implement the election pledges the people of Greece voted for:
* A NEW GREEK GOVT WILL BARGAIN TOUGH, AND PUT A FINAL END TO THE TROIKA AND ITS POLICIES
* WE MANAGED TO DECONSTRUCT THE EUROPEAN STATUS QUO THAT WANTS MORE AUSTERITY AND LESS DEMOCRACY
It took one week, Tsipras chides, to get European leaders to talk about the real problems and Greece will negotiate hard to "put an end to Troika."
The Greek situation summaries Greece by Deutsche Bank's George Saravelos have consistently been among the best in the entire sellside. His latest Greek update, which is a must read for anyone who hasn't been following the fluid developments out of southeast Europe, which fluctuate not on an hourly but on a minute basis, does not disappoint.
But while his summary of events is great, what is of far greater significance is his conclusion, namely that ultimately Europe will fold: "we consider the most likely outcome to be a Eurogroup offer of a new Third program" and "given that the current program expires this February the offer to negotiate a new Third program may provide political room for the government to sit on the negotiating table. At the same time such an offer is very likely to be attached to strict conditions, with the willingness to accommodate t-bill issuance an open question. Developments overnight suggest that this has become less likely, imposing maximum pressure on the government to reach agreement within a matter of weeks."
If DB is right, and if Europe folds, the question then is what concessions will the ECB and the Eurozone be prepared to give to Italy, Spain and all the other nations where anti-European sentiment has been on a tear in recent months, and especially in the aftermath of Syriza's stunning victory.
That didn't take long: just hours after Greece entered the ECB countdown mode, with now just 23 days until midnight on February 28, when the ECB is set to yank the final pillar of liquidity support, the ELA - as it has warned before - it is time to start contemplating Plan B, or rather plan Z. A plan, which as described by Nordea's analyst Jan von Gerich, would be quite unpleasant for that nearly extinct class of Greeks, bank depositors, because the "plan", or rather blueprint, is a well-known one: capital controls....
...Of course, the ECB knows very well that should a bank run commence then the days of the Tsipras government - capital controls or not - are numbered. Which is precisely why yesterday it tried to precipitate one. And since, as we noted earlier, the only marker of Greek leverage is the response of the global capital markets, today's pre-determined market ramp, which started with the SNB's intervention in the EUR and has since transformed into a wholesale central bank binge fest across all assets (except gold of course), the corresponding reaction in risk is precisely meant to smash any trace of leverage the new Greek finmin may have hoped he had.