Soros bets against Euro

[Jan Klimkowski]

The European Central Bank is accepting Greek trash at face value.

And so the bubble is pumped up a little more, ensuring that when it inevitably bursts, the blowback pain will be still greater.

The piece below is from Zero Hedge, who is now calling Greece "Greekman Brothers". This is a homage to Lehman and the move in the Shock Therapy cycle from investment-bank-bailout-then-bankruptcy to sovereign-nation-bailout-then-collapse-cum-default:

ECB Will Accept Junk-Rated Greekman Brothers Debt As Collateral

Did the ECB just learn the last bastion of rating agency insanity, aka Moody's, is about to downgrade Greece? Today Trichet decided to abandon all caution, and has proceeded to officially recognize all Greek toxic garbage as collateral for ECB-backed loans. Looks like the ECB president has been paying careful attention during Bernanke 101 in which his transatlantic colleague has been advocating the collateralization of a sovereign currency with all sorts of gamma decaying substances, for well over a year now. Now Ben is starting to get woefully behind the curve in the devaluation race. In the meantime, using simple math, we wonder: if Greece, which as so many have pointed out is only 2.7% of European GDP, ended up costing 110 billion euros, does that mean that a full blown bailout of Europe will be over $5 trillion? Surely this is a bargain compared to the $20+ trillion that the rescue of the US ended up costing. Looks like a slam dunk relative default pair trade to us.

More from Bloomberg:

The European Central Bank said it will accept all Greek government debt as collateral when lending to banks, indefinitely suspending minimum credit-rating thresholds to support a 110 billion-euro ($145 billion) bailout of the debt-strapped nation.

The decision came after Greece reached agreement yesterday on the conditions for the three-year package of loans from the International Monetary Fund and its euro-region allies. Under the plan backed by the ECB, Greece pledged another 30 billion euros in budget cuts to bring a deficit of 13.6 percent of gross domestic product back within the EU limit of 3 percent in 2014.

“The ECB is a key player in the rescue package designed to help Greece and it is clearly buying insurance against the likelihood of further multiple downgrades of the Greek debt, something that might lead to a halt of ECB financing to the Greek banks,” said Silvio Peruzzo, an economist at Royal Bank of Scotland Group Plc in London.

Now finally Moody's corrupt analysts can go ahead and downgrade Greece without any concerns that doing what is right will end up popping the ponzi, something they have sworn not to do when they signed their ethics waiver.

Greekman Brothers, a euphemism for Greece that has taken trading desks by storm due to the country's amazing comparability to another ill-fated organization, now also has full implicit support of its entire banking sector.

The ECB decision “removes the risk of a liquidity crisis in the euro zone due to rating downgrades, said Luca Mezzomo, head of macroeconomic fixed-income research at Intesa Sanpaolo SpA in Milan. “Greek banks refinance about 12 percent of their assets at the ECB, a situation that in the future will have to be corrected, but certainly not during the implementation of an emergency plan of support.”

In the meantime, Goldman's Francesco Garzarelli, director of macro and markets research, has released the company's latest trading axe: Goldman is now buying bunds, and telling its sophistiated clients to sell them. Goldman salespeople riot as they realize they will alienate whatever few names they have remaining in their rolodex when this most recent Goldman-sponsored trade blows up in everyone's faces.

http://www.zerohedge.com/article/ecb-wil...shold-prog