Soros bets against Euro

[Jan Klimkowski]

Photos of rioting today against the imposition of Economic Shock Therapy (aka austerity measures) on the Greek people - largely ignored by MSM.

[Magda Hassan]

Finland To Support Portugal Bail Out In Exchange For Collateralization, Asset Sales


Submitted by Tyler Durden on 05/12/2011 07:35 -0400

And so the stealthy campaign by Europe to asset strip its debtor prison nation continues. After on Saturday it was made clear that Europe will force Greece to issue an effective DIP loan ahead of its own bankruptcy, collateralizing post-petition creditors, and pushing existing sub noteholders lower in the cap structure, so the same scheme will now be used by Europe to grant Portugal rescue funding in exchange for Finland's "agreement" to help save the country. Per Bloomberg: "Finland will back a bailout for Portugal provided the third euro member to require aid in 12 months agrees to conditions including state asset sales. In addition, Finland wants a guarantee that bailout donors will get their loans repaid before private investors, he said." Which simply said, means that as PIIGS, already held hostage by a monetary union which threatens with world extinction should it be unwound, and by bankers who promise to never lend money should they be forced to take even once cent in senior debt impairments, will next be forced to literally sell themselves off at n blue light special auctions, where the liquidation sale biggest bidders will be none other than the very same financial institutions who have put these countries in their terminal predicament. Incidentally, all this is coming to municipalities and local governments in the US very, very soon.
More from Bloomberg:

"We have reached a common understanding," said Katainen, who leads parliament's biggest party after April 17 elections. He made the announcement following talks with the Social Democrats, Finland's second-largest group since the vote.

The accord ends months of uncertainty over whether the northernmost euro member would try to block rescue measures for Europe's latest fiscal casualty. Voters in Finland have rewarded parties critical of bailouts, with the euro-skeptic True Finns winning record backing to become parliament's third-biggest group. Katainen has struggled to secure Finnish support for Portugal's rescue before a May 16 meeting of his European counterparts and ahead of next week's coalition talks.

Naturally this means that the political crisisin the country will worsen, now that Timo Soini of the True Finns, whose recent Op-Ed in the WSJ was editorialized beyond recognition, has said he is out of any coalition government.

True Finns leader Timo Soini said today he won't join coalition talks, after Katainen made a pro-bailout stance a condition for negotiations.

"It was a hard decision, we made it ourselves," Soini said at a press conference. "We will now do opposition politics."

Expect many more anti-bailout political victories in Europe over the next several months.
And a little more on the collateralization issue, already discussed previously:

Finland will also require collateral from any countries seeking assistance from the European Financial Stability Facility after Portugal, Katainen said in a joint press release with Social Democrat leader Jutta Urpilainen.

"The collateralization issue makes a lot of sense politically and for sovereign creditors, but this is shadow burden-sharing for some bondholders, who will fall further down the credit food chain," Sassan Ghahramani, president and chief executive officer of SGH Macro Advisors in New York, said by phone yesterday.

Yet the bottom line is that Europe has kicked the can down the street for at least a few more months. Next: expect to see comparable riots in downtown Lisbon to what now appears to be a monthly, if not weekly, tradition in Athens' Constitution square.
http://www.zerohedge.com/article/finland...sset-sales

[Jan Klimkowski]

Greece on the brink.

The bankers demanding a firesale of Greek publicly-owned assets.

A once proud nation bankrupted by international speculators.

With Portugal, Ireland and now, Spain, also in dire financial trouble, the streets of Europe may soon be ablaze.

As Greece Has Less Than Two Month Of Cash Left, An Insolvent ECB Sees A Widening Rift With Germany

Submitted by Tyler Durden on 05/22/2011 13:28 -0400

Today's EUR trading session which begins in about 4 hours, may be rather violent. While on one hand we have bond-negative news out of Spain, the biggest news once again comes out of the Swiss journal NZZ, which citing greek newspaper Kahtimerini, discloses that insolvent Greece has less than two months of cash left, or enough to last it until July 18, unless a new installment in the bailout tranche is approved for the country by the now headless IMF, and the suddenly insolvent ECB. Insolvent, because as Spiegel will report in its headline article tomorrow, and as we have noted many times before, the bank is suddenly finding itself lending out money collateralized by now virtually D-rated bonds: something not even Trichet will be able to spin off to the increasingly malevolent media. Per Dow Jones: "Skeleton risks amounting to several hundreds of billions of euros are on the balance sheet of the European Central Bank, magazine Der Spiegel writes in a preview of its edition to be published Monday. Those risks arise because banks, above all from Greece, Ireland, Portugal and Spain, have provided as collateral asset-backed securities that are unfit for central bank loans as their debt rating is low or non-existent, the magazine says." Alas, the European central bank's dirty laundry is being exposed just as a rift between the bank and Germany: its most solvent backer, is starting to develop. Also from Dow Jones: "German Finance Minister Wolfgang Schaeuble cautioned in an interview published Sunday that there shouldn't be a conflict with the European Central Bank over a possible restructuring of Greek debt. "If in the end it should come to an extension of bonds, of course, we need the approval of the IMF and above all of the ECB. Under no circumstances should it come to a conflict with the ECB," Schaeuble told Bild am Sonntag. "I advise all of us to use restraint in public debates about this question." Several ECB officials have rejected a restructuring of Greek debt and have warned of possible catastrophic consequences, while European finance ministers are slowly warming up to the possibility of some kind of restructuring as a last resort." Thus the crunch time for Europe's latest kick the can down the road round, once again centered on a bankrupt Greece, may be coming fast, and this time with a rather furious Germany.

From NZZ:

If experts from the EU, the International Monetary Fund (IMF) and the European Central Bank (ECB) do not give the go ahead for the next installment of the bailout package totaling 12 billion euros by the end of June give, then Greece will become insolvent on July 18, as the conservative Journal "Kathimerini" reported.

In the coming days Athens will fast track an aggressive privatization program. According to media reports, real estate should be taxed higher than before.

Further cuts in wages and pensions in the public sector and pensions are no longer excluded. In addition, state-run enterprises are privatized and will sell real estate, they said. The new savings program should be approved by parliament in early June.

Prime Minister Giorgos Papandreou noted in an interview with the Sunday edition of the newspaper "Ethnos" denying any form of debt restructuring. This would be no debate. Greece will repay all his debts, he said.

The head of the Euro Group, Jean-Claude Juncker, has proposed the privatization of state property Greece after the German model of trust. I would appreciate it if our Greek friends would start following the example of the German Treuhand privatization agency, a non-governmental, "Juncker said in an interview with the magazine" Der Spiegel ". This institution should be staffed with foreign experts. "The European Union will support the privatization program in the future as closely as we would conduct themselves," Juncker announced.

The potential revenue he estimated at "significantly more than the 50 billion proposed by the Greek government." The EU is also expected from Greece, "that the two major political groupings in the country put aside their petty disputes," said the euro-group leader: "Government and opposition parties should jointly declare that they are committed to the reform agreements with the EU . 'Only when Greece had consolidated its budget, one could initiate a "soft debt restructuring." Then we can consider to extend the maturities of public and private loans and interest rates lower, "said Juncker.

And regarding the €50 billion privatization prgoram by the Greek government, Alex Gloy of Lighthouse Investment Management asks:

Re: EUR 50bn privatization by Greek government has anybody dared to ask:

Who exactly is going to purchase those state-owned assets? Domestic buyers? Those are busy trying to get their Euros out of the country (s banks) before it's too late. Foreigners? Which foreigner would fork over dear Euros now only to find a Drachma-denominated (and quickly depreciating) asset shortly afterwards?

Who would invest in a country whose entire banking system is hanging on a thread (which the ECB is threatening to cut)?

Why buy assets that could be nationalized when a populist / communist government takes over after Greeks are (rightly) enraged about suffering endless austerity?

Why not ask Deutsche Telekom what they think about their 30% stake in OTE (Hellenic Telecom), bought for EUR 3.8bn (at EUR 27.50-29 per share, now: EUR 7.60). Buyer's remorse came at the end of 2011. Deutsche Telekom hat to write off EUR 1.3bn on their Greek (and Romanian) investment. DTE management must hate themselves for having given the Greek government a put option for additional 10% stake until end of 2011. Why hasn't the Greek government exercised yet? Don't they need the cash? Only explanation: the Germans are twisting some Greek arms to try to make that put option "expire". Full deal structure here.

All great questions, most of which bring even further credibility to the Andrew Lilico-proposed next steps for Greece.

[Jan Klimkowski]

Here's what right-wing, pro-free market, anti-Euro, Daily Telegraph believes will happen when Greeece defaults:

What happens when Greece defaults

When it comes to the topic of Greece, by now everyone is sick of prevaricating European politicians who even they admit are lying openly to the media, and tired of conflicted investment banks trying to make the situation appear more palatable if only they dress it in some verbally appropriate if totally ridiculous phrase (which just so happens contracts to SLiME). The truth is Greece will fold like a lawn chair: whether it's tomorrow (which would be smartest for everyone involved) or in 1 years, when the bailout money runs out, is irrelevant. The question then is what will happen after the threshold of nevernever land is finally breached, and Kickthecandowntheroad world once again reverts to the ugly confines of reality. Luckily, the Telegraph's Andrew Lilico presents what is arguably the most realistic list of the consequences of crossing the senior bondholder Styx compiled to date.

What happens when Greece defaults. Here are a few things:

Every bank in Greece will instantly go insolvent.

The Greek government will nationalise every bank in Greece.

The Greek government will forbid withdrawals from Greek banks.

To prevent Greek depositors from rioting on the streets, Argentina-2002-style (when the Argentinian president had to flee by helicopter from the roof of the presidential palace to evade a mob of such depositors), the Greek government will declare a curfew, perhaps even general martial law.

Greece will redenominate all its debts into "New Drachmas" or whatever it calls the new currency (this is a classic ploy of countries defaulting)

The New Drachma will devalue by some 30-70 per cent (probably around 50 per cent, though perhaps more), effectively defaulting 0n 50 per cent or more of all Greek euro-denominated debts.

The Irish will, within a few days, walk away from the debts of its banking system.

The Portuguese government will wait to see whether there is chaos in Greece before deciding whether to default in turn.

A number of French and German banks will make sufficient losses that they no longer meet regulatory capital adequacy requirements.

The European Central Bank will become insolvent, given its very high exposure to Greek government debt, and to Greek banking sector and Irish banking sector debt.

The French and German governments will meet to decide whether (a) to recapitalise the ECB, or (b) to allow the ECB to print money to restore its solvency. (Because the ECB has relatively little foreign currency-denominated exposure, it could in principle print its way out, but this is forbidden by its founding charter. On the other hand, the EU Treaty explicitly, and in terms, forbids the form of bailouts used for Greece, Portugal and Ireland, but a little thing like their being blatantly illegal hasn't prevented that from happening, so it's not intrinsically obvious that its being illegal for the ECB to print its way out will prove much of a hurdle.)

They will recapitalise, and recapitalise their own banks, but declare an end to all bailouts.

There will be carnage in the market for Spanish banking sector bonds, as bondholders anticipate imposed debt-equity swaps.

This assumption will prove justified, as the Spaniards choose to over-ride the structure of current bond contracts in the Spanish banking sector, recapitalising a number of banks via debt-equity swaps.

Bondholders will take the Spanish Banking Sector to the European Court of Human Rights (and probably other courts, also), claiming violations of property rights.
These cases won't be heard for years. By the time they are finally heard, no-one will care.

Attention will turn to the British banks. Then we shall see…

[Jan Klimkowski]

Zero Hedge names some of the snake oil salemen, the great dot conners, of the current rape of Greece.

Excerpts:

What a difference a year makes. It was just over a year ago that Greece received its first (and certainly not last) $1 trillion + bailout package from the EU, the ECB and the IMF. Just over 12 months later, all those who peddled Greek bonds to the rest of the world (ahem Germany) are now furiously backtracking, having finally realized what we, and everyone else with half a brain said from the beginning: it's over for Greece, for the eurozone in its current configuration, and for the single currency. But fine, let's kick the can down the road for a few more months, which will allow banks, with access to interest-free central bank capital, to literally steal Greece's soon to be privatized assets for pennies on the dollar, and then send the carcass, now picked dry, to the international bankruptcy court. In the meantime, we would like expose all the idiots, who like various anchors on Comcast's bubblevision channel, pitched Greek paper to hapless investors, only to see losses (this is not some speculative asset - this is fixed income) of over 40% in one year, and for some reason continue to have a podium from which to spread their lunacy, greed and outright stupidity.

Gabor Steingart, editor-in-chief, Handelsblatt
"As the largest financial newspaper in the Euro region, Handelsblatt wants to be a voice of reason during these turbulent times. (…) The Greeks are sinners, but they are repentant sinners. The rescue package agreed on by the international community this weekend takes this into account. However, governments alone cannot save Greece. A stabilization can only be achieved if Greece can access capital markets. What is needed is a contribution of major banks. What is also needed is a sign of trust by the citizens of Europe. This is the purpose of our action call "I am buying Greek government bonds". Last Friday, as a sign of responsibility, I have ordered EUR 5,000 Greek government bonds."

Hans Eichel, former German Finance Minister. Picture: Handelsblatt

"For the first time in my life I am buying government bonds Greek government bonds! Because we have to keep the Euro-zone together. The Greek population has to bring great sacrifices, there is no way around that. But we should show our solidarity."

Manfred Lahnstein, former German finance minister. Picture: Handelsblatt

"I am ready to buy a reasonable amount of Greek government bonds. I am doing this because I have confidence in the creditworthiness of Greece and the strength of European and international guarantees. I am doing so in order to also set a small sign against arrogance and thoughtlessness our Greek partners are treated with by parts of politics and media."

[Jan Klimkowski]

Greek and Irish politicians are getting desperate.

When they default, their secret policemen will transport them by helicopter above the furious people to their coward's flight to safety in some banana republic - such as Switzerland.

Given the nature of the collateral now being sought by the bankers (islands, state utilities, cultural treasures), and the inevitbality of default, the sooner Greek and Irish politicians are chased out of their country, the better for the people.

Via Zero Hedge:

Europe Goes From Worse To Horrible: Ireland Broker Than Expected, Greece Mulls Splitting Up Into "Good" And "Bad" Greece

Submitted by Tyler Durden on 05/29/2011 11:41 -0400

Greece hasn't even filed for bankruptcy yet and the "unexpected" consequences are already coming. In comments to The Sunday Times newspaper, Irish Transport Minister Leo Varadkar said the country will likely need another "unexpected" loan from the troica, after he became the first cabinet member to cast doubt in public on Ireland's ability to raise cash. In other words once on the temporary bailout wagon, always on the temporary bailout gain. Reuters reports: "I think it's very unlikely we'll be able to go back next year. I think it might take a bit longer ... 2013 might be possible but who knows?" Varadkar was quoted as saying. "It would mean a second program (of loans from the EU/IMF)," he said. "Either an extension of the existing program or a second program. I think that would generally be most people's view." We wonder how German taxpayers will fell now that they realize they have not one, not two, but three (and soon 5 or more) heroin addicts they need to clean, wash, scrub, and feed on a monthly basis (with their, and US money, but Americans continue to not care that the biggest source of capital for the IMF is them). And speaking of ground zero, Greece is now scrambling after the Independent said that even Sarkozy is now prepared to let the Greek chips falls where they may. Following earlier news that the troika believes that the privatization plan it itself set up is not ambitious enough, Greece which now realizes that Germany, the EU, IMF, and Franch all are prepared to let it go, the country is now coming up with last ditch ideas faster than a speeding bullet: according to Reuters: "A Greek paper reported on Sunday that the government was considering setting up a Spanish-style "bad bank" to clean up its lenders' accounts from "toxic" Greek bonds and make them more attractive to potential buyers." Of course since it is toxic Greek sovereign bonds we are talking about, this implies that the country will somehow be split into a "good" and "bad" version of itself. And who thought financial innovation only comes out of the US.

From Reuters:

A 'bad bank', formed to hold risky assets owned by a state guaranteed bank, could be set up to absorb the risky Greek bonds held by state-controlled lenders slated for privatization, such as the Savings Post Bank, To Vima said.

"With problematic, Spanish savings banks (cajas) as a model, the finance ministry is examining proposals to implement the idea in the country," it said, without citing any sources.

Spain's Bankia, created from the merger of seven cajas, said last month it would create such a unit in a bid to attract investors ahead of a stock market listing.

Probability of success: 0.0%

As for Ireland being broker than expected:

Deputy Prime Minister Eamon Gilmore told broadcaster RTE that fears of a domino effect from Greece's problems were overblown. The possibility of a Greek default has sent bond yields rocketing for indebted Ireland, Portugal and Spain.

"It's not a situation that if Greece defaults then there are immediately implications for Ireland," Gilmore said.

"If Greece defaults there are implications for the wider euro zone and obviously we are part of that."

Ireland, meanwhile, wants to tap investors for funding in 2012 before its 85 billion euros EU-IMF bailout runs out the following year.

But investors believe Ireland will be unable to return to the market and instead will have to tap the European Union's permanent rescue fund in 2013, which might require some restructuring of privately held sovereign debt.

Reflecting this medium-term risk, Ireland's two-year and five-year paper are yielding close to 12 percent, more than its 10-year bonds on the secondary market.

Some 50 billion euros of the existing EU-IMF bailout has been earmarked for sovereign funding requirements with the remainder set aside to prop up the country's ailing banks.

Earlier this month, the IMF said whatever was left over after recapitalizing the banks could be channeled to the sovereign if there was a delay in returning to markets.

At the end of March, the Irish government said the banks needed 24 billion euros to bulletproof their balance sheets but Dublin hopes some five billion euros can be raised from imposing losses on junior bondholders and asset sales, meaning that 19 billion euros of the 35 billion would be tapped.

Gilmor's best defense: "It is wrong to put Ireland in the same basket as Greece."And coming soon to a theater next to, the story of the deputy PM who cried not bankrupt wolf.

The US may be on vacation, but the EUR, at a third of its regular volume and with substantially more volatility, sure won't be come 5 pm EDT.

[Jan Klimkowski]

CIA predicts a Greek military coup could result from the Economic Shock Therapy applied to ordinary Greek families by German, French and British bankers, the IMF and the World Bank.

Of course, a people's revolution would leave the bankers and international finanical elites out of pocket.

A military coup would ensure that the bankers get paid and the people are further impoverished through the application of martial law.

I'm sure the CIA will backing the Greek military yet again.....

CIA Warns Of A Greek Military Coup, Rebellion, If Austerity Intensifies

Submitted by Tyler Durden on 05/30/2011 10:30 -0400

Finland Germany Greece International Monetary Fund Monetary Policy Newspaper Turkey


Turkish daily Hurriyet, which paraphrases German Bild, which in turn references a CIA report, warns that Greece could face a military coup if the "tough austerity measures and the dire situation" escalate any further. On the other hand, one can avoid this belabored hypertextual chain and simply look at what happens practically every day on Syntagma square where yet again we are witnessing record numbers of people protest against what everyone now realizes is a dead end regime (luckily, in a peaceful manner, for now).

More Captain Obviousness (thank you Grant Williams) from Hurriyet: "According to the CIA report, ongoing street protests in crisis-hit Greece could turn into escalated violence and a rebellion and the Greek government could lose control, said Bild. The newspaper said the CIA report talks of a possible military coup if the situation becomes more serious and uncontrolled." Luckily, following last year's Athens mob-inspired flash crash, and 2011's MENA revolutions, the market is rather desensitized to this sort of thing, and nothing short of fat-finger driven invasion of Greece by Turkey, in its humanitarian bid to reestablish the Ottoman Empire 2.0, could dent the /ES or EURUSD by more than 0.01%.

More:

Opposition parties have mostly refused to support the government in its quest to cut spending by trimming an overblown civil service and the sweeping privatization drive announced this week has attracted even stronger protests.

Meanwhile, the Dutch finance minister said his country, Germany, Finland and other EU members won't give Greece any more bailout money, if the debt-laden country fails to adopt further austerity measures.

Jan Kees de Jager said Saturday that "it's vital that Greece will live up fully" to conditions set by the International Monetary Fund if it's to receive the next batch of a 110 billion euros ($155 billion) bailout loan deal it agreed to last year, the Associated Press reported.

Last year, as the financial crisis battered Greece, Bild went as far as to highlight a suggestion by a conservative politician that Athens sell off some of its many islands to help pay off its debts.

What next: CIA reports that monetary policy could set off mass food price driven revolutions in North Africa?

[Jan Klimkowski]

International credit ratings agency Fitch has just declared a Greek default inevitable.

Note particularly that any imposition of a haircut on senior bondholders (ie any threat that this class of creditors has to share in the losses) will be viewed as a default event.

:flames:

If in Fitch's opinion, an announced exchange offer constitutes a DDE, the sovereign issuer rating will be lowered to 'C', indicating that default is highly likely in the near term
Fitch will place the issuer rating of the sovereign into default, specifically 'Restricted Default' (RD) upon closing of a distrssed debt exchange.
Fitch says a potential Greek debt exchange if voluntary, could still be considered a default event
Fitch says Greek debt exchange would be a default if bondholders terms were worse than original terms
Fitch says stressed sovereign debt exchange with worse terms is a technical default even if deemed voluntary

Source: Zero Hedge.

[Jan Klimkowski]

BREAKING: after another day of protest on the streets of Greece, PM Papandreou admits his government cannot pass the EU/IMF/World Bank austerity measures.

:jumpingjoy:

[Jan Klimkowski]

Allowing this archetypal Shock Therapist to hold the reins of power would be a catastrophe for Greece.

The comments from Papademos "The only sensible way forward" is to push ahead with ambitious and large-scale reforms, including the privatization of state assets, if correct, make his agenda crystal clear.

Federal Reserve Plant To Be Next Greek Finance Minister

Submitted by Tyler Durden on 06/16/2011 12:23 -0400

According to Greek TV, and this is not confirmed by the Greek government yet, Lucas Papademos ("L-Pap", or "The Plant") will replace "Goldman employee of the year" Giorgios Papaconstantinou, (or G-Pap the Second as he is known on Zero Hedge) who is now the sacrificial lamb of the complete failure that is the PASOK government in Greece. A quick glance at L-Pap's resume explains why the European banking cartel is delighted with this nomination: "He followed an academic career at Columbia University, as well as serving as Senior Economist at the Federal Reserve Bank of Boston in 1980. He joined the Bank of Greece in 1985 as Chief Economist, rising to Deputy Governor in 1993 and Governor in 1994. He was Vice President of the European Central Bank from 2002 to 2010." Take a wild guess whether The Plant will be on the side of his "constituency" or of the Criminal Banking syndicate in the upcoming plunder of Greece. And yes, this is quite bullish for the Ensolventzone Central Bank (and its currency) which was about to be saddled with tens of billions of defaulted debt pledged in its nether regions as cash collateral.

From Wikipedia:

Lucas Demetrios Papademos (Greek: Λουκ?ς Παπαδ?μος; born 11 October 1947 in Athens), is a Greek economist, former Vice President of the European Central Bank.

Papademos attended the Massachusetts Institute of Technology, gaining a degree in physics in 1970, a masters degree in electrical engineering in 1972, and a doctorate in economics, in 1978.

He followed an academic career at Columbia University, as well as serving as Senior Economist at the Federal Reserve Bank of Boston in 1980. He joined the Bank of Greece in 1985 as Chief Economist, rising to Deputy Governor in 1993 and Governor in 1994.

He was Vice President of the European Central Bank from 2002 to 2010.

He has been a member of the Trilateral Commission since 1998.

He is a member of the Academy of Athens, and a professor of the University of Athens.

And here are some of his recent thoughts on what Greece should do from Greek reporter:

A well-known adviser to Greece's government Saturday warned that a restructuring of Greece's debts would be not only be "undesirable" for the country, but would have negative spillover effects to other parts of the 17-nation euro zone.

Lucas Papademos, speaking at an event organized by the Central Bank of Cyprus in the coastal town of Limassol warned that any kind of debt restructuring would "undermine" the government's overhaul efforts.

"The only sensible way forward" is to push ahead with ambitious and large-scale reforms, including the privatization of state assets, he said.