ECB Warns of Contagion Risk If Greece Deal Not Reached Fast

A failure to reach an agreement on Greece’s aid program soon may drive yields on bonds issued by other euro-area countries higher, the European Central Bank said.

“In the absence of a quick agreement on structural implementation needs, the risk of an upward adjustment of the risk premia demanded on vulnerable euro-area sovereigns could materialize,” the ECB said in its twice-yearly Financial Stability Review published Thursday in Frankfurt. “The lengthy and uncertain process of negotiations between the newly formed Greek government and its creditors” has already contributed to bouts of extreme volatility in Greek markets, it said. Continue reading

“The Greek Endgame Is Here”: Probability Of IMF Default Now 70%, Says Deutsche Bank

As the farcical negotiations between Greece and its creditors unfold ahead of a June 5 IMF payment and as Alexis Tsipras is forced to spread false hope just to avoid a terminal bank run, a picture of the Greek endgame has emerged.

We’ve discussed the political implications of both an agreement or a Grexit and we’ve also taken an in-depth look at what a missed IMF payment means for the country’s EU creditors. On the political front, the troika is intent on sending a strong message to leftist political parties (such as Spain’s Podemos and Portugal’s “ascendant” socialists) that using the threat of a euro exit as a way to extract austerity concessions is not a viable negotiating strategy. What this amounts to is an attempt on the part of the “institutions” to subjugate the political process to economics. In terms of skipping a payment to the IMF — who, as a reminder, effectively paid itself earlier this month by allowing Greece to tap its SDR reserves to pay the bills — there are a number of cross acceleration concerns which you can review by referring to the following graphic: Continue reading

Defiant Greeks force Europe to negotiating table as time-bomb ticks

EMU creditors have Greece’s Alexis Tsipras by the scruff of the neck, but he has a knife to their throats

Europe’s creditor powers have started to wobble. Berlin, Paris and Brussels are coming to the grim conclusion that Greece may not capitulate as expected, and time is running out fast.

Athens is now warning openly that the “moment of truth” will come on June 5, when the country faces default on a €300m payment to the International Monetary Fund, unless the EU authorities hand over the next tranche of bail-out cash. Continue reading

Greece To Tax Bank Transactions, Says IMF “Won’t Get Any Money” On June 5

On Monday we got still more bad news for Greece. Around one-third of Angela Merkel’s Christian Democratic bloc opposes further aid for Athens meaning the Chancellor faces an uphill battle in convincing German lawmakers to keep Greece on life support. Meanwhile, a new report from the Hellenic Confederation of Commerce and Enterprises suggests that each day without a deal costs the Greek economy €22.3 million.

Not to put too fine a point on it, but Tuesday’s headlines are even worse. Continue reading

Are They About To Confiscate Money From Bank Accounts In Greece Just Like They Did In Cyprus?

Do you remember what happened when Cyprus decided to defy the EU?  In the end, the entire banking system of the nation collapsed and money was confiscated from private bank accounts.  Well, the nation of Greece is now approaching a similar endgame.  At this point, the Greek government has not received any money from the EU or the IMF since August 2014.  As you can imagine, that means that Greek government accounts are just about bone dry.  The new Greek government continues to insist that it will never “violate its anti-austerity mandate”, but the screws are tightening.  Right now the unemployment rate in Greece is over 25 percent and the banking system is on the verge of collapse.  It isn’t going to take much to set off a panic, and when it does happen there are already rumors that the EU plans to confiscate money from private bank accounts just like they did in Cyprus.

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Greece debt crisis: Bank run gains pace as default fears grow

SAVERS are clearing cash out of Greek banks as the prospect of total economic meltdown is just days away.

The broke country is on borrowed time before it goes bankrupt and is forced to exit the euro.

“People are taking more or less everything they have got out of their accounts for fear that the government will be dipping into them next,” a bank official told the Guardian.

But Greece has struggled to pay pensions, public sector wages and suppliers in recent weeks, which has sent alarm bells ringing through the country. Continue reading

Shape Of Greek Endgame Emerges: IMF Discussed “Cyprus-Like” Plan After Tsipras Warned Of Looming Default

As we said over the weekend, it’s all about Riga again for Greece. EU leaders will meet on Thursday and Friday in Latvia where PM Alexis Tsipras will try to secure a more favorable outcome than did FinMin Yanis Varoufakis who, last month in Riga, reportedly did more chiding and lecturing than negotiating, a performance that may ultimately cost him his job once all is said and done. The situation is far more urgent this time around, with Greece having tapped its IMF SDR account to make a payment to the Fund and with the banking sector running dangerously low on collateral that can be pledged for emergency liquidity. Continue reading

Germans are buying gold at a frantic pace.

It may be a sign they are worried about the future. People tend to buy gold when they fear economic disaster or a spike in prices.

The World Gold Council report released on Thursday said demand for total gold bar and coins spiked by 20% in Germany during the first quarter from the year before.

It’s unusual for gold to be a hot commodity in an economy as strong Germany’s is right now. And growth in Europe has regained momentum in recent months, outpacing even the sluggish pace experienced in the U.S. Continue reading

Euro Slides After Reports Troika Is Preparing Greek Plan B, C, & D Including Parallel Currency

 

Earlier we detailed reports that The IMF was preparing a contingency plan in the event of a Greek default, and furthermore that Andrea Merkel was under increasing pressure to “let Greece go,” and now, as Eurogroup ministers begin to gather for today’s crucial ‘deal-or-no-deal’ meeting, Die Welt reports The Troika has 4 scenarios for Greece  – one positive and three increasingly negative ranging from the need for further bailouts to paying staff in IOUs and issuing a parallel currency.

While Austria’s Hans Jorg Schelling sticks to his statement that:

“There’s nothing to it The Plan B was not discussed..”

It appears, yet again, another European elite was lying (because it was important), as now, as Die Welt reports (via Google Translate), hope is fading fast for a deal… Continue reading

Greece could use ‘parallel currency’ as desperation grows

As was said three years ago, this seems like the safest option in a worst-case scenario. If this backdoor method gains traction in Greece, it would no doubt help avoid a Russian and Chinese invasion via Athens and full economic breakup of the single currency bloc. Other embattled countries might string along.

 

European Central Bank board member floats the idea of an “IOU” system to pay civil servants if country runs out of euros

Greece could start using a “parallel currency” to pay its civil servants if it runs out of cash, one of the European Central Bank’s board members has suggested. His comments come as the country scrambles to reach a deal with international creditors and avoid a default.

Highlighting the desperate situation faced by the country, Yves Merch, a member of the ECB’s executive board and governor of Luxembourg’s central bank, told Spanish newspaper La Vanguardia that Greece could resort to using “exceptional tools” to pay its obligations.

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Varoufakis sidelined as Tsipras steps in to negotiate with EU directly

As Greece takes another step towards total capitulation to the German-dominated EU, or Fourth Reich, we begin to see who has the leverage. Although Greece always has the Russian trump card, this is a nuclear option that will likely irreparably damage relations for the country for generations to come. Greece likely realizes by turning towards the Kremlin, undermining and bringing down the entire EU, then possibly the global economy with it, will hold higher consequences. As said often before, Greece is going nowhere. The best case scenario for it is to be part of a newly structured second-tier currency bloc within the periphery of the EU — if it’s still called the EU by then.

 

He has been the subject of a spoof video from Germany showing him giving the middle finger. But now Greek finance [sic] Yanis Varoufakis is facing enemies closer to home after being overlooked by his own party.

Alexis Tsipras, the Greek prime minister, has stepped in to reshuffle Varoufakis’s team, which was supposed to be brokering the agreement, after negotiations took a nasty turn in Riga last week, according to the FT. Continue reading

Greece €400 Million Short For Wage And Pension Payments, Rushes To Pass Troika-Friendly Laws

According to Bloomberg, the Greek government is €400 million short of the amount needed for payment of pensions and salaries this month, citing a Kathimerini report.Surprisingly, this takes place even as Greece’s IKA, OGA pension funds have been informed by the government that amount needed for payment of pensions will be deposited today, while the Greece’s OAEE pension fund has said payment of pensions won’t be a problem.

In other words, someone is not telling the truth: either there is enough money or there isn’t. And if the latter case is valid, then either the government or the pensions are now openly lying to the population. Continue reading

Power play: Why is Greece flirting with the Russians?

Fear is running amok yet again that the cash-strapped Greek government will default on its loans to its European partners and the International Monetary Fund. While its fate is still unknown, one thing has become clear this week: Greeks are scrambling to find assistance from wherever they can find it—its own government’s coffers, and even with overtures to Washington and Moscow.

A signal of how dire the situation is: The far-left government passed an edict Monday requiring public agencies to turn over idle reserves to the Greek central bank to help plug fiscal gaps. In addition, come Friday, the euro zone’s finance ministers are likely to throw a tantrum once again when they meet in Riga, as Greece has yet to come up with a list of acceptable economic reforms.

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Greece orders raid on government coffers as cash dwindles

Government issues a decree forcing all state bodies to transfer funds to the central bank

The Greek government has ordered a mandatory transfer of cash reserves from state-owned enterprises to its central bank, in a desperate bid to gather enough cash to remain solvent.

Citing “extremely urgent and unforeseen needs”, the government issued the decree which will also apply to local government authorities. Continue reading