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This is what a country looks like when

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posted on Apr, 7 2010 @ 12:24 PM
it's economy is collapsing in front of our very eyes.

Bye-bye, Greece.


"And so the Greek funding crisis shifts to a liquidity crisis yet again. reports that Commerzbank, among many others, is now pulling its repos with Greek banks, essentially killing liquidity in the entire financial system. Cue Lehman Brothers and Sunday CDS trading. At least it's not Friday so OTC traders don't have to worry they will be pulled from their Hamptons retreat. The Greek website is reporting that according to sources, Commerzbank which is one of the biggest repo counterparties to Greek institutions, was dumping bonds in yesterday's sell off. Not only that, but it is now pulling repos, in essence starting a cascade of asset liquidation, in which banks, already experiencing a depositor run, will be forced to sell assets at any prices they can get just to fund their operations for one extra day.

A Google Translated version of the Bankingnews piece:

According to information Commerzbank was concerned about the Greek bonds accepted as guarantees of Greek bonds. Commerzbank has provided some liquidity to Greek banks are more concerned about the Greek bonds. Based on a reliable source in the recent past, foreign banks have applied to withdraw repo with Greek banks even offer powerful bonus.

The piece concludes:

Foreigners do not want to have in their portfolios Greek bonds. It is now clear. "


Yes Camile, the bond market DOES rule the world.

"Greek Curve Pancakes, 6 Month GGB Approaches 7%

Submitted by Tyler Durden on 04/07/2010 09:50 -0500

Ben Bernanke Failed Auction Greece Trade Balance

The curve below indicates that bond investors now believe that Greece will likely default in under 6 months, or at least the EMU will realize that Greece is a lost cause and cut it off, despite all rhetoric to the opposite. Actually, with the 3 month trading at a mindblowing 4%+, which we are fairly confident is a record for any country, let alone a EU and EMU member, one can claim that the country will not see July in its current political form. The 3M-6M spread of nearly 300 bps is an all time record for a developed country. Past the 6M point, you can see all the way to the Pacific. Note the curve shift from April 2009, when the 3M was trading at just over 1%. At this point the only question is whether the 3 Month will join the other points on the curve in the 7% ballpark.

We believe the sequence of next steps is now as follows:

1) Failed auction for Greece

2) Euro drops to sub $1.30

3) EU effectively isolates Greece and takes it out of the EMU in practive if not in theory

4) Euro tumbles to $1.15

5) Bernanke realizes the implications of a surging dollar for the US trade balance, and reinstates QE, cranks up the printing presses, sending the dollar plunging and the euro surging back to the $1.40 level"

posted on Apr, 7 2010 @ 01:01 PM
reply to post by leo123

This is one of those 'And so it begins...' threads which has very real substance. Good post!

The options could be:

a) Euroland sends Greece into exile in IMF territory

b) Euro takes the hit on the principle of solidarity *don't make me laugh*

c) Greece takes it all on the chin & decides to cut its losses by refusing all outside "help" (aka loans) and accepting a period of unprecedented austerity

I'd say a) to c) are in order of likelihood. I'd also say said order is the inverse of what makes sense in the long-term from the perspective of the Greek people. (But there's probably not a government in the entire western world that has what it takes to take the type of overwhelmingly unpopular, but eminently sensible economic decisions that would be required by c).)

posted on Apr, 7 2010 @ 01:46 PM

The curve blowout this morning in Greek debt has been cataclysmic; of course CNBS is only mentioning it in passing, and so far the European market isn't reacting "too badly."

We'll see about that - how much of their debt is now sitting on bank balance sheets with a mark-to-market loss of how many billions due to the coupon shift upward?

Oh no, we better not talk about the black hole opening up on bank balance sheets (again)..... that might be a problem eh?

Just remember that right up until Lehman blew up the market, while it had its ups and downs, didn't react "too badly" either.

posted on Apr, 8 2010 @ 08:17 AM

Goldman On Greece: "Could Turn Into The Endgame"

"Its not been a good week for Greece. Most seriously, the news yesterday that the four biggest banks are seeking help from the government following a drop in deposits of some EUR10bn pushes them into the danger zone which could turn into the end-game unless properly addressed. While the EU Summit spelled out how the crisis will be addressed (an IMF-led program co-financed by the Europeans), important uncertainties remain, including (1) whether the Greek government will agree to IMF conditionality; (2) how and when the European money will be disbursed and at what interest rate; and (3) whether the IMF/EU package will be big enough.

Yesterday the four big Greek banks asked for access to EUR14bn in loan guarantees from the government and EUR3bn in government bonds. It is not clear to me what the banks can do with the guarantee given the government’s own funding problems; the bonds can be repo’ed at the ECB. I suspect that they’ll need a greater share of the help in the form of bonds.

Good thing the IMF has arrived in Athens. I suspect that the government and the IMF have now have had the first round of discussions on the outline of conditionality. Conditionality will likely focus on two set of issues:

Structural reforms to regain competitiveness. This is very unpleasant stuff because without a productivity miracle, it’ll include a significantly lower nominal wages in the private sector. On our numbers, we may need to see them down by 15%-20%. We don’t quite know how to achieve this, but it’ll include lower wages in the public sector and liberalisation of the labour market in general; combined with a period of higher unemployment. I suspect that the government does not much like what the IMF is showing them in this area.
There’ll also be some requirements of further fiscal tightening. The government’s fiscal plans for this year are pretty good, although they may need some fine-tuning. Local paper Kathimerini reports today that several ministries and agencies are spending well ahead of plans. Specifically, the Ministry of Economy, Competitiveness and the Marine spent 18.2% of its total appropriation for this year during the first two months, the Interior Ministry 17.4% and the Ministry of Labour 17%. Some of the insurance agencies, including OAEE health insurance for self employed and social insurance, have disbursed 25%-40% of the budget for the whole year. If confirmed, this would imply a need for some additional cuts on the expenditure side. In addition, the IMF will be formulating further fiscal measures for the 2011 budget.

We’ll probably get lots of confusing noise in coming weeks on this front, but at the end of the day, I think we’ll get an IMF program (co-financed by the Euro-zone) before the end of the month. My guess continues to be a 18-months program worth some EUR20-25bn. The IMF will charge a bit over 3% and the Europeans probably 4%-5%. Unfortunately, that’ll cover only a small share of the government’s total financing requirement for the 18-months, so the overall debt sustainability will hinge on implementation of the conditionality - and on a multi-year extension of concessional financing. The combination of uncertainties in this respect and the need for continued commercial financing during the next 18 months to fill the (post IMF-EU) hole makes it difficult to see how the official sector will put the Greek concern to bed. (But they’ll take us through May.)

Meanwhile, I look forward to today’s ECB press conference. Trichet has the tricky task of explaining why the ECB’s introduction of a sloping scale of haircuts from January 2011 (which is virtually certain to imply higher haircuts for Greek sovereign debt) will not be bad for Greece and its banks. As I have long argued, the answer would be an explicit indication that securities of a sovereign Euro-zone member will never lose eligibility at the ECB all together, and that the assessment of creditworthiness will be based on a broader set of (transparent) parameters than just the credit ratings agencies. I hope they’ll go all the way, but I doubt it.

posted on Apr, 8 2010 @ 08:33 AM

"Never waste a good crisis! and when it comes to economic crisis dont waste it when it has a positive impact on..."

Here's one of the many (many) reasons I detest our government and other governments.

Economic Teachings for the Layman:
[1] Never trust a politician.
[2] Politics is not Economics.
[3] The Stock Markets are not indicators of economic health.
[4] Stock Markets are indicators of economic DEATH.
[5] (Insert common sense)

When TPTB says everything is fine, that's when you RUN!

Edit: Countries will never pay their debts. They add to them until the house of cards they are living in collapses and the peons have to pick it up.

[edit on 4/8/2010 by Tentickles]

posted on Apr, 8 2010 @ 08:39 AM
3 beeps from meltdown right now.


Freefall: Greek Bonds Tumble, 3 bps Away From Critical 450 bps Threshold, ASE Index Plunges 5%

"Panic in Greece as total freefall envelops both the bond and the stock market. The 10 Year is now at an absolute record 447 bps spread to bunds, or in the mid 7's in absolute terms. The stock market has tumbled by about 5% and Greek CDS have surged to a record."

posted on Apr, 8 2010 @ 08:47 AM
I almost hope the IMF/WB steps into not only Greece but eventually more developed countries only so the developed West can feel what its like to loose sovereignty to the global banking cartel just like LDCs. Then maybe disdain would motivate a citizens overhaul of this global slave-state. BURN IT DOWN! No justice no peace!

posted on Apr, 8 2010 @ 08:51 AM

Originally posted by Moonsouljah
I almost hope the IMF/WB steps into not only Greece but eventually more developed countries only so the developed West can feel what its like to loose sovereignty to the global banking cartel just like LDCs. Then maybe disdain would motivate a citizens overhaul of this global slave-state. BURN IT DOWN! No justice no peace!

I bet you have your gun next to your computer and a pack of camping toiletries behind you. (Don't worry I do too!)

I'm waiting for one developed country to fall so I can see what the other countries do to it. (Help it out or eat its rotting remains?)

This Greece situation is a good case study in FAIL Economics and its Cause and Effect. (hmmm good book title.)

posted on Apr, 8 2010 @ 07:01 PM
A miracle happened today. Did you catch it? A European Nation, with billions in debt stepped to the closest brink of National Default since Iceland..

And the Stock Market went UP.

It's only a matter of time before they default.. I don't believe they will get a bailout because its like throwing it into a blackhole. Simple fact is, the socialist Government is way beyond it's means. This will give rise to another problem: The adherent socialist of Greece will not stand for "Austerity" .. they will riot and topple the Government is the IMF or Euroland steps in to take control of their government.. much like what happened in Iceland.

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