Well my earlier bet on LTRO as being around Euro650BN was wide of the mark!
The ECB's 3 year LTRO has just been announced as being Euro529BN, given to the 800 banks which have come forward with their begging bowls.
Wednesday, February 29, 2012
Happy LTRO Day
At 10:20GMT today we will know how much money has been borrowed under the ECB's LTRO scheme, which is being used to sandbag banks in the likely event of a sovereign debt default.
The ECB claims that the money will be used to stimulate growth, the reality is that it will be placed by the banks at the ECB to be used when the forthcoming Greek default causes a run on the banks.
For what it is worth, I am taking a non financial punt on LTRO being around Euro650BN.
The ECB claims that the money will be used to stimulate growth, the reality is that it will be placed by the banks at the ECB to be used when the forthcoming Greek default causes a run on the banks.
For what it is worth, I am taking a non financial punt on LTRO being around Euro650BN.
Tuesday, February 28, 2012
Barroso Speaks
Jose Barroso (President of The European Commission) has addressed the European Semester (no, I had never heard of it either), and stated:
"I insist we have to be clear about the goal, the goal is growth."
Would he care to explain to the people of Greece how their country will grow over the next few years, on the basis of the austerity programme that has been forced down their throats by the Troika?
He went on to say:
"national budgetary decisions are the responsibility of national parliaments and will remain so.."
Not in Greece they're not!
"..growth-boosting reforms are still lagging behind. I mean this in areas such as tax reform, pension reform, labour market reform and opening up the services and retail sectors.
Of course the picture is mixed across the Union, but these are the areas the Commission and Council will focus on in the Country-Specific Recommendations.
"I insist we have to be clear about the goal, the goal is growth."
Would he care to explain to the people of Greece how their country will grow over the next few years, on the basis of the austerity programme that has been forced down their throats by the Troika?
He went on to say:
"national budgetary decisions are the responsibility of national parliaments and will remain so.."
Not in Greece they're not!
"..growth-boosting reforms are still lagging behind. I mean this in areas such as tax reform, pension reform, labour market reform and opening up the services and retail sectors.
Of course the picture is mixed across the Union, but these are the areas the Commission and Council will focus on in the Country-Specific Recommendations.
I know these reforms can be difficult and sensitive."
Quite!
By the way, the title of his speech was "Unity in difference, strength in convergence"; clearly derived from Orwell's "1984" "Freedom is Slavery, War is Peace" etc!
Monday, February 27, 2012
The New Greek Treaty of Versailles
Gregor Gysi (parliamentary group leader of the Left Party) has just addressed the Bundestag, during the debate about the Greek bailout plan, and has compared the Greek bailout plan to the Treaty of Versailles:
"Bei der Krise in Europa greifen wir zu Versailles anstatt zu Marshall...."
"The crisis in Europe, we resort to Versailles instead of Marshall.."
Evidently he has been reading this site, as I said much the same thing two weeks ago:
"Let us be clear that the 50 page "agreement" (written in English) that the Greek political establishment has to agree, in order to receive Euro 130BN, will (if it is accepted) have the same consequences for Greece as the Treaty of Versailles did for the Weimer Republic"
"Bei der Krise in Europa greifen wir zu Versailles anstatt zu Marshall...."
"The crisis in Europe, we resort to Versailles instead of Marshall.."
Evidently he has been reading this site, as I said much the same thing two weeks ago:
"Let us be clear that the 50 page "agreement" (written in English) that the Greek political establishment has to agree, in order to receive Euro 130BN, will (if it is accepted) have the same consequences for Greece as the Treaty of Versailles did for the Weimer Republic"
Germany Trying To Sabotage Greek Bailout
I noted last week that "the IMF regards the EFSF as a busted flush, and has no intention of throwing any more money into the doomed project".
Unsurprisingly, the G20 have now stated categorically in their end of summit communique that no money will be forthcoming until the Eurozone puts more of its own money in, and that it is "essential" that the Eurozone boosts its own firewall first.
Meanwhile, as if deliberately trying to further humiliate and antagonise the Greeks, the German Finance Ministry has announced that more than 160 German tax collectors have volunteered for possible assignments in Greece.
Anyone would think that the Germans were deliberately trying to sabotage the bailout, and force the Greeks to walk away from it!
Given that German Finance Minister Wolfgang Schaeuble doesn't believe that the bailout will succeed, it is in Germany's interests that time and money are not wasted on it.
Unsurprisingly, the G20 have now stated categorically in their end of summit communique that no money will be forthcoming until the Eurozone puts more of its own money in, and that it is "essential" that the Eurozone boosts its own firewall first.
Meanwhile, as if deliberately trying to further humiliate and antagonise the Greeks, the German Finance Ministry has announced that more than 160 German tax collectors have volunteered for possible assignments in Greece.
Anyone would think that the Germans were deliberately trying to sabotage the bailout, and force the Greeks to walk away from it!
Given that German Finance Minister Wolfgang Schaeuble doesn't believe that the bailout will succeed, it is in Germany's interests that time and money are not wasted on it.
Sunday, February 26, 2012
Oil Shipment To Greece Stopped
"Greece relied on Iran for more than half of its oil imports during some months last year after traders and oil majors pulled the plug on supplies and banks refused to provide financing for fear that Athens
would default on its debt."
Unfortunately, Iran has just stopped a shipment of oil to Greece:
"Oil tankers that had come to transfer 500,000 barrels of Iranian oil to a refinery in Greece had to go back empty-handed after Iran refused to give the shipment,"
However, Hellenic have denied the veracity of this story :
"That has nothing to do with us ... all supplies from Iran have been processed normally,"
Well, they would have to deny this wouldn't they?
They are currently negotiating for supplies of oil from elsewhere, any admission that their supplies have been cut will negatively impact those negotiations and cause panic buying in Greece.
Beware denials and irrational optimism from Greek oil companies!
would default on its debt."
Unfortunately, Iran has just stopped a shipment of oil to Greece:
"Oil tankers that had come to transfer 500,000 barrels of Iranian oil to a refinery in Greece had to go back empty-handed after Iran refused to give the shipment,"
However, Hellenic have denied the veracity of this story :
"That has nothing to do with us ... all supplies from Iran have been processed normally,"
Well, they would have to deny this wouldn't they?
They are currently negotiating for supplies of oil from elsewhere, any admission that their supplies have been cut will negatively impact those negotiations and cause panic buying in Greece.
Beware denials and irrational optimism from Greek oil companies!
Saturday, February 25, 2012
The Official Greek PSI Website
The first press release from the Hellenic Republic Ministry of Finance, as per the official and newly created PSI website:
HELLENIC REPUBLIC MINISTRY OF FINANCE
Press Release
For Immediate Release
24 February, 2012
Athens, Greece. The Ministerial Council of the Hellenic Republic today approved the terms of invitations to be made to private sector holders outside the United States of bonds issued or guaranteed by the Republic and selected to participate in the exchange offers and/or consent solicitations to be made by the Republic in furtherance of the 26 October 2011 Euro Summit Statement and the 21 February 2012 Eurogroup Statement, referred to as the Private Sector Involvement. The bonds invited to participate in PSI (listed by series in Annex I) have an aggregate outstanding face amount of approximately Euro 206 billion.
The exchange offers and/or consent solicitations will permit private sector holders to exchange bonds selected to participate in PSI for (i) new bonds to be issued by the Republic on the PSI settlement date having a face amount equal to 31.5% of the face amount of their exchanged bonds, (ii) European Financial Stability Facility notes with a maturity date of two years or less from the PSI settlement date and having a face amount equal to 15% of the face amount of their exchanged bonds, and (iii) detachable GDP-linked securities issued by the Republic having a notional amount equal to the face amount of each holder’s new bonds. On the PSI settlement date, the Republic will also deliver short-term EFSF notes in discharge of all unpaid interest accrued up to 24 February 2012 on exchanged bonds. The terms of the new bonds, GDP-linked securities and EFSF notes are summarized in Annex II.
The consent solicitation relating to Greek-law governed bonds issued by the Republic prior to 31 December, 2011 (having an aggregate outstanding amount of approximately Euro 177 billion) will seek the consent of the affected holders to the amendment of these bonds in reliance on Law 4050/2012 (the Greek Bondholder Act) enacted by the Greek Parliament on 23 February 2012. The proposed amendments provide for the redemption of the affected bonds in exchange for the PSI consideration described above. Under the collective action procedures
introduced by the Greek Bondholder Act, the proposed amendments will become binding on the holders of all the Republic’s Greek-law governed bonds issued prior to 31 December 2011 identified in the act of the Ministerial Council approving the PSI invitations, if at least two thirds by face amount of a quorum of these bonds, voting collectively without distinction by series, approve the proposed amendments. One half by face amount of all the Republic’s bonds subject to the collective action procedures will constitute a quorum for these purposes. The Republic will also separately solicit consents in favour of equivalent amendments from the holders of its foreign-law governed bonds and its foreign-law guaranteed bonds in accordance with the terms of those bonds.
To satisfy regulatory requirements applicable in a number of jurisdictions, the Republic will invite the holders of certain series of bonds to participate in the Republic’s exchange offer but not its consent solicitation, and holders of the Republic’s Swiss-law governed bonds may not exchange their bonds but will be solicited to consent to their amendment. Holders will receive substantially the same consideration irrespective of whether they participate in the exchange offer and/or a consent solicitation. The Republic also intends to invite holders in the United States of America to participate in a concurrent exchange offer and consent solicitation on substantially the same terms. The Republic will not, however, deliver any EFSF notes to holders in the United States of America, who will instead be paid the cash proceeds realized from the sale of the EFSF notes they would otherwise have received.
The full terms of each invitation will be made available in electronic form only through www.greekbonds.gr. In order to participate in an invitation, holders will need to comply with the procedures and offer and distribution restrictions described in the Republic’s related invitation memorandum available online at www.greekbonds.gr.
The invitations will be subject to certain conditions, including a financing condition and a minimum participation condition. Under the financing condition, the Republic will not proceed with any of the transactions contemplated in the invitations unless it meets all of the conditions under the financing agreements entered into with the EFSF for the Republic to be entitled to receive the EFSF notes, which include the approval by EWG, at its absolute discretion, of such disbursements. In addition, unless bonds representing at least 90% of the aggregate face amount of all bonds selected to participate in PSI are validly tendered for exchange, the Republic will not be required to settle any of the exchanges. However, if the Republic receives consents to the proposed amendments that would result in at least 90% of the aggregate face amount of all bonds selected to participate in PSI (including bonds tendered for exchange) being exchanged on the terms proposed by the Republic, the Republic intends, subject to all other conditions being satisfied and in consultation with its official sector creditors, to declare the proposed amendments effective and to complete the exchange of all bonds selected to participate in PSI that would be bound by the proposed amendments.
If at least 75% but less than 90% of the aggregate face amount of all bonds selected to participate in PSI are validly tendered for exchange, the Republic, in consultation with its official sector creditors, may proceed to exchange the tendered bonds without putting any of the proposed amendments into effect. However, if less than 75% of the aggregate face amount of the bonds selected to participate in PSI are validly tendered for exchange, and the Republic does not receive consents that would enable it to complete the proposed exchange with respect to bonds selected to participate in PSI representing at least 75% of the aggregate face amount of all bonds selected to participate in PSI, the Republic will not proceed with any of the transactions described above.
Deutsche Bank AG, London Branch, and HSBC Bank plc have been appointed to act as Closing Agents for the invitations made outside the United States. Bondholder Communications Group LLC and Hellenic Exchanges, S.A. have been appointed to act as the joint Information, Exchange and Tabulation Agent.
HELLENIC REPUBLIC MINISTRY OF FINANCE
Press Release
For Immediate Release
24 February, 2012
Athens, Greece. The Ministerial Council of the Hellenic Republic today approved the terms of invitations to be made to private sector holders outside the United States of bonds issued or guaranteed by the Republic and selected to participate in the exchange offers and/or consent solicitations to be made by the Republic in furtherance of the 26 October 2011 Euro Summit Statement and the 21 February 2012 Eurogroup Statement, referred to as the Private Sector Involvement. The bonds invited to participate in PSI (listed by series in Annex I) have an aggregate outstanding face amount of approximately Euro 206 billion.
The exchange offers and/or consent solicitations will permit private sector holders to exchange bonds selected to participate in PSI for (i) new bonds to be issued by the Republic on the PSI settlement date having a face amount equal to 31.5% of the face amount of their exchanged bonds, (ii) European Financial Stability Facility notes with a maturity date of two years or less from the PSI settlement date and having a face amount equal to 15% of the face amount of their exchanged bonds, and (iii) detachable GDP-linked securities issued by the Republic having a notional amount equal to the face amount of each holder’s new bonds. On the PSI settlement date, the Republic will also deliver short-term EFSF notes in discharge of all unpaid interest accrued up to 24 February 2012 on exchanged bonds. The terms of the new bonds, GDP-linked securities and EFSF notes are summarized in Annex II.
The consent solicitation relating to Greek-law governed bonds issued by the Republic prior to 31 December, 2011 (having an aggregate outstanding amount of approximately Euro 177 billion) will seek the consent of the affected holders to the amendment of these bonds in reliance on Law 4050/2012 (the Greek Bondholder Act) enacted by the Greek Parliament on 23 February 2012. The proposed amendments provide for the redemption of the affected bonds in exchange for the PSI consideration described above. Under the collective action procedures
introduced by the Greek Bondholder Act, the proposed amendments will become binding on the holders of all the Republic’s Greek-law governed bonds issued prior to 31 December 2011 identified in the act of the Ministerial Council approving the PSI invitations, if at least two thirds by face amount of a quorum of these bonds, voting collectively without distinction by series, approve the proposed amendments. One half by face amount of all the Republic’s bonds subject to the collective action procedures will constitute a quorum for these purposes. The Republic will also separately solicit consents in favour of equivalent amendments from the holders of its foreign-law governed bonds and its foreign-law guaranteed bonds in accordance with the terms of those bonds.
To satisfy regulatory requirements applicable in a number of jurisdictions, the Republic will invite the holders of certain series of bonds to participate in the Republic’s exchange offer but not its consent solicitation, and holders of the Republic’s Swiss-law governed bonds may not exchange their bonds but will be solicited to consent to their amendment. Holders will receive substantially the same consideration irrespective of whether they participate in the exchange offer and/or a consent solicitation. The Republic also intends to invite holders in the United States of America to participate in a concurrent exchange offer and consent solicitation on substantially the same terms. The Republic will not, however, deliver any EFSF notes to holders in the United States of America, who will instead be paid the cash proceeds realized from the sale of the EFSF notes they would otherwise have received.
The full terms of each invitation will be made available in electronic form only through www.greekbonds.gr. In order to participate in an invitation, holders will need to comply with the procedures and offer and distribution restrictions described in the Republic’s related invitation memorandum available online at www.greekbonds.gr.
The invitations will be subject to certain conditions, including a financing condition and a minimum participation condition. Under the financing condition, the Republic will not proceed with any of the transactions contemplated in the invitations unless it meets all of the conditions under the financing agreements entered into with the EFSF for the Republic to be entitled to receive the EFSF notes, which include the approval by EWG, at its absolute discretion, of such disbursements. In addition, unless bonds representing at least 90% of the aggregate face amount of all bonds selected to participate in PSI are validly tendered for exchange, the Republic will not be required to settle any of the exchanges. However, if the Republic receives consents to the proposed amendments that would result in at least 90% of the aggregate face amount of all bonds selected to participate in PSI (including bonds tendered for exchange) being exchanged on the terms proposed by the Republic, the Republic intends, subject to all other conditions being satisfied and in consultation with its official sector creditors, to declare the proposed amendments effective and to complete the exchange of all bonds selected to participate in PSI that would be bound by the proposed amendments.
If at least 75% but less than 90% of the aggregate face amount of all bonds selected to participate in PSI are validly tendered for exchange, the Republic, in consultation with its official sector creditors, may proceed to exchange the tendered bonds without putting any of the proposed amendments into effect. However, if less than 75% of the aggregate face amount of the bonds selected to participate in PSI are validly tendered for exchange, and the Republic does not receive consents that would enable it to complete the proposed exchange with respect to bonds selected to participate in PSI representing at least 75% of the aggregate face amount of all bonds selected to participate in PSI, the Republic will not proceed with any of the transactions described above.
Deutsche Bank AG, London Branch, and HSBC Bank plc have been appointed to act as Closing Agents for the invitations made outside the United States. Bondholder Communications Group LLC and Hellenic Exchanges, S.A. have been appointed to act as the joint Information, Exchange and Tabulation Agent.
Friday, February 24, 2012
The "Bloodless" Greek Coup
"Source in EU Greece Task Force: growing concerns the 'prior actions' Athens has to enact to trigger bailout may be 'impossible' to meet."
Aside from the fact that people are now waking up to the fact that the austerity measures and financial targets being imposed on the Greek people are all but impossible to meet, it is also now dawning on people that, in all but name only, the Eurozone has enacted a (as yet bloodless) coup on the Greek people.
Greece has now been placed on "Special Measures" by the Eurozone and, for the next two years, irrespective of the wishes of the Greek people has now ceased to govern itself. Some Greek people now even have to pay for the privilege of working.
No one (aside from maybe those policy wonks who dwell in the bunkers of the Eurozone) seriously thinks that this stands a cat's chance in hell of working.
Why therefore go to all this trouble?
Simple, the decision has already been made to expel Greece from the Eurozone. However, those who have made the decision want Greece to pull the trigger!
Thursday, February 23, 2012
European Commission Forecast Worse Than Worthless
The European Commission, in its February 2012 forecast, has admitted that its November 2011 forecast for the Greek economy is in fact wrong.
"In 2011, economic activity was much weaker than anticipated in the autumn forecast."
Real output in Greece is expected to shrink by 4.3% compared with the November forecast of around 2.6%.
"Greece, Portugal and Spain account for 95% of the rise in unemployment in the EU since late 2010".
Unfortunately, the "success" of the Greek bailout "plan" rests on the reliability of the Commission's eight year forecast for Greece (which states that by 2014 Greece will return to growth). However, as the Commission has admitted, the forecast isn't worth the paper it is printed on.
"Greater spillovers from potential worsening conditions in Greece, due to the large exposure of the financial sector, are substantial."
Here is the Commission's February forecast, which will doubtless be out of date and worthless by mid year!
"In 2011, economic activity was much weaker than anticipated in the autumn forecast."
Real output in Greece is expected to shrink by 4.3% compared with the November forecast of around 2.6%.
"Greece, Portugal and Spain account for 95% of the rise in unemployment in the EU since late 2010".
Unfortunately, the "success" of the Greek bailout "plan" rests on the reliability of the Commission's eight year forecast for Greece (which states that by 2014 Greece will return to growth). However, as the Commission has admitted, the forecast isn't worth the paper it is printed on.
"Greater spillovers from potential worsening conditions in Greece, due to the large exposure of the financial sector, are substantial."
Here is the Commission's February forecast, which will doubtless be out of date and worthless by mid year!
Wednesday, February 22, 2012
Greeks To Pay For Working
It seems that some hapless Greek citizens will now have to pay for the privilege of working (that makes the UK government's Workfare scheme look positively generous).
Source The Press Project:
"Salary cutbacks (called "unified payroll") for contract workers at the public sector set to be finalized today. Cuts to be valid retroactively since November 2011.
Expected result: Up to 64.000 people will work without salary this month, or even be asked to return money. Amongst them 21.000 teachers, 13.000 municipal employees and 30.000 civil servants."
Source The Press Project:
"Salary cutbacks (called "unified payroll") for contract workers at the public sector set to be finalized today. Cuts to be valid retroactively since November 2011.
Expected result: Up to 64.000 people will work without salary this month, or even be asked to return money. Amongst them 21.000 teachers, 13.000 municipal employees and 30.000 civil servants."
Boom! - Greek Bailout Consigned To The Flames
It seems that, in the interests of their Eurozone overlords, the Greek government is going to postpone the April elections.
Apparently implementing the austerity measures required by the Eurozone is taking up so much time, that the "annoying" and time consuming matter of "democracy" has to be placed on the backburner.
Let me be perfectly clear, irrespective of whether the austerity programme had a cat's chance in hell of succeeding (which it didn't), by stifling the democratic process the unelected technocrat Prime Minister has now guaranteed that the social unrest caused by this foolish decision will consign the bailout and Greece to the flames.
Apparently implementing the austerity measures required by the Eurozone is taking up so much time, that the "annoying" and time consuming matter of "democracy" has to be placed on the backburner.
Let me be perfectly clear, irrespective of whether the austerity programme had a cat's chance in hell of succeeding (which it didn't), by stifling the democratic process the unelected technocrat Prime Minister has now guaranteed that the social unrest caused by this foolish decision will consign the bailout and Greece to the flames.
Greece Will Default
Fitch says that the Greek bond swap, if implemented, would constitute a rating default and result in downgrade to "restricted default".
For good measure they have just downgraded Greece from CCC to C.
For good measure they have just downgraded Greece from CCC to C.
Wheels Start To Come Off Greek Bailout
Unsurprisingly, less than 24 hours after the announcement that the bailout had been agreed and that the Greek crisis had been "solved", the wheels are now coming off the agreement.
There will be a G20 summit in Mexico on 25-26 February, where the EU will beg the IMF to increase its contributions to prop up its firewall.
Unfortunately, the IMF regards the EFSF as a busted flush, and has no intention of throwing any more money into the doomed project. In fact, according to the Telegraph, the IMF will threaten to pull the plug on its contribution to the Euro130BN bailout unless the Eurozone creates a Euro750BN fund.
The small problem with this idea is that Germany has no intention of creating such a fund, because it would increase Germany's exposure to default.
Olli Rehn, the EU's economic and monetary affairs commissioner, wants to merge the European Financial Stability Facility (EFSF) with a new European Stability Mechanism (ESM) which has yet to be created.
The fantasy value of this yet to be created ESM is Euro500BN.
However, as with the ludicrous "values" placed on the busted flush of the EFSF, it is safe to assume that the ESM will never reach that level.
As with all matters pertaining to the Eurozone firewall and the bailout, the "leaders" of the Eurozone are building castles in the air.
There will be a G20 summit in Mexico on 25-26 February, where the EU will beg the IMF to increase its contributions to prop up its firewall.
Unfortunately, the IMF regards the EFSF as a busted flush, and has no intention of throwing any more money into the doomed project. In fact, according to the Telegraph, the IMF will threaten to pull the plug on its contribution to the Euro130BN bailout unless the Eurozone creates a Euro750BN fund.
The small problem with this idea is that Germany has no intention of creating such a fund, because it would increase Germany's exposure to default.
Olli Rehn, the EU's economic and monetary affairs commissioner, wants to merge the European Financial Stability Facility (EFSF) with a new European Stability Mechanism (ESM) which has yet to be created.
The fantasy value of this yet to be created ESM is Euro500BN.
However, as with the ludicrous "values" placed on the busted flush of the EFSF, it is safe to assume that the ESM will never reach that level.
As with all matters pertaining to the Eurozone firewall and the bailout, the "leaders" of the Eurozone are building castles in the air.
Tuesday, February 21, 2012
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