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Greece - Do They Make it to June 17th?
Posted on 5/25/12 at 12:55 pm
Posted on 5/25/12 at 12:55 pm
Most central banks and financial institutions are already planning for a return of the drachma. Alexis Tsipras and his party are gaining popularity in Greece. This big deal here is the usually the French and Germans were always on the same side of the arguement with Sarkozy, now with Hollande the French have drifted to the side of Spain and Italy in demanding Eurobonds, bailouts, direct sovereign financing, etc.. Alexis has said several times that he'll basically throw the middel finger to Germany on the €400B of Greek debt.
So the question is this: If exit polls keep showing Syriza keeps growing in popularity and deposits continue to fly out, does Greece have a disorderly exit before the general elections? If Syriza wins, it would take a fair amount of giving in by Merkel for Greece to stay and I'm not sure they're going to bend anymore.
So the question is this: If exit polls keep showing Syriza keeps growing in popularity and deposits continue to fly out, does Greece have a disorderly exit before the general elections? If Syriza wins, it would take a fair amount of giving in by Merkel for Greece to stay and I'm not sure they're going to bend anymore.
2
Posted on 5/25/12 at 1:01 pm to BennyAndTheInkJets
My only thought is that I think the implications for Greece as a country and as a society are potentially disastrous, but that the direct impact (so no hypothetical "well now Spain and Portugal and Italy are going to do this too" contagion arguments) globally is and has been overblown dramatically.
Posted on 5/25/12 at 1:20 pm to kfizzle85
They are, the default would really hurt assets on the Bundesbanks, which is why they have been planning for a Greek exit. The rest of the PIIGS are different in that they actually have fuctioning governments, some prospects for growth, and access to private markets. Greece hasn't had any of these for a while.
The only global implication is that, as Willam Buiter has pointed out in several interviews, the ECB really has no clue the financial condition of their bank counterparties. The LTRO gave the ECB more information on bank needs than they've ever had. If bank conditions are a lot worse than we think and €400B in default makes a huge hit on balance sheets than we do have a problem. In that case Greek would literally be the straw for those European camels.
The only global implication is that, as Willam Buiter has pointed out in several interviews, the ECB really has no clue the financial condition of their bank counterparties. The LTRO gave the ECB more information on bank needs than they've ever had. If bank conditions are a lot worse than we think and €400B in default makes a huge hit on balance sheets than we do have a problem. In that case Greek would literally be the straw for those European camels.
Posted on 5/25/12 at 1:23 pm to BennyAndTheInkJets
Is the $400B pre-agreement (and writedowns) or post?
Posted on 5/25/12 at 1:43 pm to kfizzle85
Greece was a welfare experiment by the EU since the beginning and they knew it. They thought they could somehow mentor a whole country into being productive.
It just seems to me that they should just get this over with and get Greece out, because it should have never been in the EU or on the Euro in the first place.
ETA: I am aware leaving a currency is full of complications, but it just irks me. I took some classes EU classes in Greece in 2009 and the above was told to me point blank and now they are surprised they are where they are now.
It just seems to me that they should just get this over with and get Greece out, because it should have never been in the EU or on the Euro in the first place.
ETA: I am aware leaving a currency is full of complications, but it just irks me. I took some classes EU classes in Greece in 2009 and the above was told to me point blank and now they are surprised they are where they are now.
This post was edited on 5/25/12 at 1:45 pm
Posted on 5/25/12 at 2:15 pm to Teddy Ruxpin
Not sure surprised is the word I'd use. eta: Not trying to be a hater, you're right, just don't think they're surprised, just mad.
This post was edited on 5/25/12 at 2:28 pm
Posted on 5/25/12 at 2:45 pm to kfizzle85
quote:
Not sure surprised is the word I'd use. eta: Not trying to be a hater, you're right, just don't think they're surprised, just mad.
Ya, I actually debated using that word myself. I just find it alarming that so many so-called intelligent people could let warm fuzzy feelings cloud their judgment.
I also agree that I think them leaving has been severely overblown, but that is the world we live in. Everybody thinks whatever bad thing that happens to them is the worst imaginable or unique, and everything is a crisis.
Posted on 5/25/12 at 2:48 pm to BennyAndTheInkJets
This is what I wrote on 5/13 ( LINK): " Paul Kammenos of the Independent Greeks (i.e., ANEL) will likely be the key dealmaker over the next few weeks."
Maybe I was wrong.
I'm not sure what Kammenos wants, or why he is unable to strike a deal with New Democracy or PASOK, but it seems like a lost opportunity if they can't reach a deal. Those 3 parties won a majority of the seats in the last election, and all 3 oppose SYRIZA.
If SYRIZA is able to form a governing coalition next month without ANEL, I think that Kammenos is going to be kicking himself for not making a compromise deal with ND, PASOK, and Merkel.
Maybe I was wrong.
I'm not sure what Kammenos wants, or why he is unable to strike a deal with New Democracy or PASOK, but it seems like a lost opportunity if they can't reach a deal. Those 3 parties won a majority of the seats in the last election, and all 3 oppose SYRIZA.
If SYRIZA is able to form a governing coalition next month without ANEL, I think that Kammenos is going to be kicking himself for not making a compromise deal with ND, PASOK, and Merkel.
Posted on 5/25/12 at 8:17 pm to Doc Fenton
quote:
Is the $400B pre-agreement (and writedowns) or post?
Post writedown.
quote:
I'm not sure what Kammenos wants, or why he is unable to strike a deal with New Democracy or PASOK, but it seems like a lost opportunity if they can't reach a deal. Those 3 parties won a majority of the seats in the last election, and all 3 oppose SYRIZA.
If SYRIZA is able to form a governing coalition next month without ANEL, I think that Kammenos is going to be kicking himself for not making a compromise deal with ND, PASOK, and Merkel.
There are two things I've learned so far in conversation about Greek default.
1. Anything you read in the news about Greek politics is more than likely, I don't want to go as far as saying wrong, inaccurate. The long standing parties are as corrupt as the Italians and new parties are yet to be determined (my guess is either corrupt or Santorum crazy). I agree, if that deal would've happened earlier then it would be a very different situation now. My personal guess is there is no possible way with the current stakes that a coalition government can be made.
2. At this point the negotiations between the core players in the EU (Germany and France) have diverged compared to earlier and it has created a completely different dynamic in the Euro. Before you could kind guess how negotiations would work, now, man I have no fricking idea. Will Merkel bend? Will Hollande and Monti ask for more? Will there be a run on Spanish banks after more news that Bankia needs another €4B (Its at €19B now, my math says it will be at €32B before its all said and done). If Spanish bank deposits start to fly then all bets are off and shite literally just got real.
Posted on 5/26/12 at 12:17 pm to BennyAndTheInkJets
So is that 400B figure soveriegn + bank debt yeah? And really the issue with leaving the Euro is bank debt, not necessarily the sovereign anymore? I haven't really paid enough attention to this in the last few months with cfa and work. 
Posted on 5/26/12 at 8:59 pm to kfizzle85
quote:Hell of an interesting time for folks in your field.
So is that 400B figure soveriegn + bank debt yeah? And really the issue with leaving the Euro is bank debt, not necessarily the sovereign anymore? I haven't really paid enough attention to this in the last few months with cfa and work.
Posted on 5/27/12 at 2:30 pm to kfizzle85
quote:
And really the issue with leaving the Euro is bank debt, not necessarily the sovereign anymore?
I'm pretty sure this is the case. If it's a disorderly exit the SMP and other programs just bite the bullet on the sovereign. The bank debt gets really hairy, as in I'm not sure at all how that will work. Will ECB loans (MRO, LTRO, OT) be defaulted or will they redenominate the loans? Both of these scenarios are pretty much the same because if the drachma is reintroduced the amount of inflation will just be stupid in the first year. That's not even starting to get into the longer term, private debt as well as the cross-country payment balances that are still in place.
I'm in the same boat with the CFA. I'm really starting to hate the chick on the front of the Schweser books with her smug arse smile.
Posted on 5/27/12 at 2:38 pm to BennyAndTheInkJets
Could be worse you could have this ug instead:
Was out till about 3 last night and just had a giant brunch. About to finish off Fixed Income, then may just go lay in the pool. Failing today.
Was out till about 3 last night and just had a giant brunch. About to finish off Fixed Income, then may just go lay in the pool. Failing today.
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