Thread: Greece Deputy PM Warns Of Tanks In The Streets, Mass Suicide

Greece Deputy PM Warns Of Tanks In The Streets, Mass Suicides, If Second Bailout Voted Down By Greek Parliament

Submitted by Tyler Durden
06/26/2011 19:13 -0400
327 comments

With just days left until the crucial vote on passing the Greek mid-term austerity package, the assured destruction rhetoric used by the Greek status quo has hit fever pitch. Just to make sure the message is not lost on the broader population that Europe's banks will not admit defeat in a vote that could end the kleptocratic cartel's hegemony for ever, Greece's Deputy Prime Minister Theodoros Pangalos has blasted suggestions that it would be better for his country to abandon the euro and return to the drachma as an "immense stupidity". He didn't stop there. For dramatic impact, the Greek vice PM also said that the country would devolve into complete anarchy, with tanks roaming the streets, a population on the verge of civil war, with mass suicides, just for dramatic impact, should bankers not get their way. More or less in line with the Hank Paulson script that is regurgitated every few years when the Ponzi system is on the verge of imploding yet again.

From AFP: http://www.eubusiness.com/news-eu/greec ... -debt.aw9/

"Those who say this are extremely stupid. While they may be analysts, university professors or economists, saying that is an immense stupidity," Pangalos told daily Spanish newspaper El Mundo in an interview published Sunday.

Debt-wracked Greece has been told by European peers that it cannot hope to continue receiving aid from a 110-billion-euro rescue package agreed with the EU and the IMF last year without biting budget reforms and privatisations.

The Greek parliament will vote on an austerity package this week but some economists have argued that Athens needs to restructure its debt and leave the euro to become economically competitive again.

"Returning to the drachma would mean that on the following day banks would be surrounded by terrified people trying to withdraw their money, the army would have to protect them with tanks because there would not be enough police," said Pangalos.

"There would be riots everywhere, shops would be empty, some people would throw themselves out the window ... And it would also be a disaster for the entire European economy."

And since we continue to live in bizarro world, the inverse truth is that this is likely a far more accurate description of reality should the mid-term package be voted through in just a few day, although with the country on a general 2 day strike beginning Tuesday, everyone will be able to celebrate with the bankers right in front of the Athens parliament once again. http://www.zerohedge.com/article/greece ... june-28-29

As for austerity, something tells us Pangalos will be the first casualty should Greece finally truly implement some "leaner" policy measures.

China Says It Will Bail Out Insolvent European Countries

Submitted by Tyler Durden
06/26/2011 14:00 -0400
266 comments

As expected, China is the new IMF. No surprise there.

* CHINESE PREMIER WEN TELLS BBC WILL LEND TO EUROPEAN COUNTRIES HAVING TROUBLE BORROWING

All this means is that China will do everything in its power to prevent the ECB from launching an outright unsterilized monetization episode, which will double the amount of importable inflation (plunging EUR) to hit the Chinese domestic economy, and destabilize the already shaky stability, so critical for the Chinese communist party. And since the USD and the CNY are pegged, this has the added benefit of devaluaing the CNY instead even more if not against the USD, then against the CNY, which is now importing European sovereign risk and will continue to do so, until China finds itself in the same lock out as half of Europe currently.

As for the IMF popularity contest, better known as "who is thst most feminine", it has just been relegated into complete historic obscurity and irrelevance. Which is sad because Lagarde may have actually had something worthwhile to contribute. Too bad her organization was just been rendered obsolete.

More empty rhetoric from Wen, courtesy of Reuters:

Chinese Premier Wen Jiabao said on Sunday he had no intention of pursuing a trade surplus and that he wanted balanced, sustainable trade growth for his country.

He was speaking during a tour of MG Motor's Longbridge factory in Birmingham, central England, during a three-day trade and political mission to Britain.

"China has no intention to pursue a trade surplus. What we want is to have balanced and sustainable growth of trade," he told the BBC through an interpreter.

He also said China would lend European countries experiencing trouble borrowing, just as it announced it would do for Hungary earlier this week.

We get it: China will not pursue a trade surplus... It will just happen purely accidentally for the next decade.

http://www.zerohedge.com/article/china- ... -countries

What If Greece Says No?

Submitted by Tyler Durden
06/26/2011 21:38 -0400
189 comments

With Greece set to dominate the news flow once again in the upcoming week, the question on everyone's mind is what would happen "if Greece says no", preferrably with some more nuance than just "the end of the world." So for everyone inquiring, here is SocGen's Michala Marcusen with a full timeline of the "what if" scenario.

From Societe Generale

The Greek Parliament is due to vote on the Medium-Term Fiscal Strategy (MTFS) on June 28 and the associated implementation law on June 30. If all goes well, the Eurogroup will then meet on July 3 to finalise a new 3-year program for Greece. If the Greek Parliament votes No (a scenario to which we attach a 30% probability), the much need next €12bn tranche of the EU/IMF would be blocked and Greece would be left grappling for funding in a political vacuum pending a likely general election. In such a scenario, the EU would have to take aggressive action to stem contagion; and this could include reactivating the ECB’s SMP. Even in a best case solution, the euro area debt crisis seems likely to run from one issue to the next with the over-arching solution of a new credible fiscal policy infrastructure coming into place only very slowly.

If all goes well …

A yes vote in the Greek Parliament to the MTFS will no doubt bring a sign of relief, and the immediate focus will shift to the Eurogroup meeting on July 3.

What shape will the new program take? We expect the Eurogroup to define a 3-year package effectively removing the need for Greece to access bond markets before 2015. While there is no final number as of yet, a package of €85-120bn seems likely split between new EU/IMF loans worth €40-70bn, Greek privatisation receipts of around €25bn and private creditor participation of €20-30bn.

How will private creditors participate? At last week’s Eurogroup meeting a subtle change to ESM seniority, making loans to Greece, Portugal and Ireland exempt from the rule (pending approval by national parliaments) brought a small first concession to private creditors. However, press reports suggest that private creditors (and this mainly concerns banks, who hold the bulk of the shorter dated Greek paper) want more enhancements before agreeing to some form of maturity extension. An additional concern is not to trigger a credit event in the process, which the ECB rightly fears could have unintended consequences. Press reports last week (Bloomberg) suggested a solution under which banks roll over 70% of the expiring amount, placing 50% in Greek 30- year paper and 20% in very high quality securities that would then back the Greek bond.

One idea that has popped back up in the debate, but only to quickly disappear again is lending to Greece to buy back its bonds cheaply in the markets. The idea hold substantial appeal from an economics points of view in that it would partially help solvency as opposed to just funding. Politically, however, the idea has been met with substantial resistance, and notably in Germany. This could nonetheless be one of the last minute jokers in finalising a deal for Greece.

Also, keep in mind that the voluntary private creditor solution put in place for Greece could well serve as a blueprint for Portugal (the EU/IMF agreement on Portugal, explicitly notes that Portugal should negotiate with private creditors to maintain their exposure to Portugal).

Will Greece fail at the first hurdle? Any new package for Greece comes with strict conditionality and with a review by the “troikaâ€

Spanish Banks Hiding Over $70 Billion In Bad Real Estate, El Confidencial Finds

Submitted by Tyler Durden
06/27/2011 08:19 -0400
30 comments
many links on this post

That the Spanish savings banks, or cajas, have long been a source of instability is well-known to everyone with more than a passing knowledge of the pitfalls of the Spanish economy. Last year, in "The Ticking Time Bomb That Are The Spanish Cajas", we said "Cajas are likely hiding losses on home loans by taking non-performing mortgages out of securitized pools. Absent this unsymmetrical onboarding of risk, the overall deterioration of the broader pool would have become ineligible as collateral in ECB refi operations." We also noted that at 264 bps, Spain CDS "is cheaper than a deserted Salamanca hotel." (it is 320 bps today and soon going much wider). So now that Ireland (of all bankrupt countries) is slinging feces in a desperate attempt at distraction and pointing fingers at Spain, it is logical that the mainstream media would once again remind the world that Spain's financial system is effectively hollow, and that the greatest mystery in the financial world continues to be that Spanish CDS is not trading 2 or 3 times wider than where it is now. As Bloomberg says "Spanish banks have 50 billion euros ($70.7 billion) in unrecognised problematic real estate assets, El Confidencial reported, citing a report by the Boston Consulting Group. The consulting group estimates that Spanish banks need between 20 billion euros and 30 billion euros in additional capital and that Spain’s bank rescue fund, known as the FROB, could end up taking over 20 percent of the banking industry, El Confidencial added." But not before the second European Stress Test finds that all Cajas, just like last year, are perfectly capitalized, in what will be the latest daily lie out of Europe.

From El Confidencial (google translated):

The Spanish financial sector has a real estate problem "unrecognized" of 50,000 million euros, which must be added to the 180,000 reported to the Bank of Spain, according to a report by Boston Colsulting Group (BCG). In this situation, the consultant estimated that the actual capital requirements are between 20,000 and 35,000 million, and that could be made ??up to FROB 20% of the sector.

Among the toxic assets include land and homes foreclosed, developer and builder credit delinquent or substandard, and delinquent mortgages. This increase will require additional provisions providing for 30,000 million , as all banks and only 50,000 million has accrued to date (27% of the troubled assets recognized). With these estimated 80,000 million, would cover 35% of the total toxic assets, which would be the expected loss due to BCG.

The study, conducted for the AEB, a scenario 'healthy' for the sector in 2015 in which all institutions are sound and privatized by then, and have returned to levels of efficiency and profitability similar to those before the crisis. In this scenario, provides a credit line with the new rules, which require between 20,000 and 35,000 million of additional capital , based on the performance of the economy.

The reason is that "we think the provisions already made ??by entities in late 2010 will not be enough to cover all future losses on the assets, "the report said. He adds that "the development of business not in all cases will generate positive results enough to offset these declines."

And what is more striking still, BCG estimates that not all entities generally achieve sufficient capital to repay the FROB 1 , ie, public injections given in the form of loan, share, last year. And that the percentage increase in state hands in 2015, the deadline to repay the aid.

What's more, it also provides that "new institutions, including banks , may enter into equity gap "in the coming years as it expects two to three years over credit crunch and margins under pressure, than the effort on provisions already mentioned.

At that juncture, the big question is whether banks will be able to capture private money or not, which depends on the price transparency, the "equity story" and possible guarantees to provide the state (active protection scheme or ' bad bank ').

Otherwise, the FROB can be up to 20% of capital in the sector in 2015. The final amount will depend on whether the entities that have announced they will go public or attract private capital (especially Bankia) are successful.

All in a day's work for the Ponz.

http://www.zerohedge.com/article/spanis ... cial-finds

Moody's Warns Of "Severe Greek Bank Cash Shortage" Due To Accelerating Deposit Flight

Submitted by Tyler Durden
06/27/2011 09:12 -0400
93 comments

We have long been warning that by fat the biggest risk to the Greek banking system is not whether or not its retains its access to the ECB funding window (it will, probably even in the case of a Greek bankruptcy through covert pathways), but domestic confidence in the financial institutions as expressed by deposits, or rather, the lack thereof. Today, as part of its Weekly Credit Outlook, Moody's issued for the first time a very stark warning that should the rate of attrition in domestic deposits (and to see where these are going merely look at the daily EURCHF chart) persist, or accelerate, the results would be disastrous. To wit: "a sustained decline of deposits by more than 35% (roughly equal to the consolidated banking system’s liquid assets and ECB funding availability) within a short period of time, would cause a severe shortage of cash among banks." Bottom line, it is unclear if even the existing deterioration in the deposit base can ever be undone due to the banks unprecedented reliance on the ECB for day to day funding, now that the bulk of domestic Greek capital is stashed away, safely, somewhere in the Swiss Alps: "With the decline in customer deposits, we expect Greek banks to find it increasingly challenging to reduce their ECB funding dependence, which is their primary objective based on their funding plans committed to the Central Bank of Greece."

From Moody's:

Our discussions with rated Greek banks last week and public information lead us to estimate that private-sector customer deposit outflows in the banking system amount to around 8% since the beginning of 2011, which is a key credit negative for Greek banks. The potential for further deposit outflows constitutes a major liquidity risk for banks as depositor sentiment is affected by negative political developments and Greece’s capability for timely repayment of its debt obligations. We expect Greek banks to find it increasingly challenging to lower their dependence on ECB repo funding as deposit balances continue to decline.

Private-sector deposits have been declining since late 2009, while outflows in May and June accelerated, as shown in the exhibit below. Greece’s heated political tensions (government reshuffling and resistance to the new austerity package) and the uncertainties regarding the Troika’s (European Union, European Central Bank, and International Monetary Fund) commitment to continue funding support to Greece are driving deposits elsewhere.



However, the roughly 8% deposit decline so far in 2011 also reflects the “cash-burnâ€

EU Working On Greek "Plan B" If Austerity Plan Voted Down

Submitted by Tyler Durden
06/27/2011 10:57 -0400
51 comments


Just out from Reuters:

* EU WORKING ON CONTINGENCY PLAN IN CASE PARLIAMENT REJECTS AUSTERITY PLAN
* SEVERAL OPTIONS FOR GREEK CONTINGENCY PLAN RULED OUT, INCLUDING EU BRIDGING LOAN - SOURCES
* ONE OPTION IN CONTINGENCY PLAN WOULD BE FOR A THIRD PARTY TO EXTEND A NEW LOAN TO GREECE

But, but, didn't Schaeuble just say there is no "Plan B"... or was that just the now traditional weekend lie to get the EURUSD to spike higher on nothing but an endless barrage of lies. In other news, here comes the (heavily collateralized) Greek Debtor in Possession loan we predicted a month ago.

More from Reuters: http://www.reuters.com/article/2011/06/ ... L620110627

European Union officials are working on a contingency plan for Greece if its parliament rejects an austerity program and the country cannot receive the next instalment of EU/IMF emergency loans, three euro zone sources said on Monday.

The sources said planning had been going on for several weeks and was designed to ensure Greece gets the liquidity needed to avoid default in the absence of the next, 12 billion euro tranche of its emergency loan package, due by mid-July.

As well as preventing default, the aim is to head off any contagion spreading from Greece to Ireland, Portugal and Spain, and the potential knock-on impact on Europe's banking system, with French and German banks large holders of Greek debt.

The plan is distinct from a French proposal for private sector involvement in a second Greek bailout program and is being discussed despite European Commission President Jose Manuel Barroso and other senior EU officials repeatedly saying that "there is no Plan B for Greece."

"There's been thinking about contingency for some time, for several weeks," one senior euro zone finance official involved in the Greek bailout told Reuters. The other sources seconded that line, saying there was "active planning" to step in if the Greek parliament rejects the austerity program.

"In this sort of situation, you can't afford not to think about what might happen next," the first source said.

The sources would not confirm in detail what the current plan involved, but said several options had already been dismissed, including an EU bridging loan to Athens.

"This option was discussed a few days ago, before the Eurogroup meeting in Luxembourg (on June 19-20), but I understand it's now been ruled out," a second source said.


http://www.zerohedge.com/article/eu-wor ... voted-down

Greek Army Threatens Military Coup Sparking Fears of Military Uprisings And Civil Wars Breaking Out Across All Of Europe

Monday 27-Jun-2011

Greek Army Threatens Military Coup Saying “We Will Not Be Sold To Foreign Powersâ€