As Greece celebrates the inauguration of its anti-austerity government, the euphoria should be tempered with a bit of realism. Although new Prime Minister Alexis Tsipras, who named his son “Ernesto” after Cuban revolutionary Ernesto “Ché” Guevara, and the vast majority of his new Coalition of the Radical Left (SYRIZA) government have good left-wing and pro-labor credentials, the same cannot be necessarily said of the man Tsipras chose to be Greece’s new finance minister. Yanis Varoufakisis a citizen of Australia who was educated in Britain and worked as a professor at the University of Texas. Europe has witnessed such dual nationals with conflicting loyalties take power in countries in Eastern Europe, most notably in Ukraine, where American Natalie Jaresko became finance minister in order to deliver International MonetaryFund (IMF) and European Central Bank (ECB) austerity “poison pills” to Ukraine. Continue reading »
Following finance minister Varoufakis’ insistence that Greece will not accept more debt (or what EU calls a “bailout”) and talks with the Eurogroup chief end, Greek bond yields have surged (and prices dropped) with 3Y GGBs back over 19% – the highest since the crisis. Greek bank stocks – after yesterday’s exuberant penny stock squeeze – are falling once again.
*GREECE’S VAROUFAKIS SAYS WILL NOT ASK FOR BAILOUT EXTENSION
*VAROUFAKIS SAYS WILL NOT ACCEPT SELF-PERPETUATING CRISIS
*VAROUFAKIS SAYS DISCUSSED EURO AREA, NEW DEAL FOR GREECE
*DIJSSELBLOEM SAYS UNILATERAL STEPS IS NOT THE WAY FORWARD
*DIJSSELBLOEM SAYS GREECE SHOULD CLARIFY ITS POSITION (we think they did!)
*GREECE’S VAROUFAKIS SAYS WILL CONVINCE EU PEERS ON NEW DEAL
As Eurogroup chief Jeroen Dijsselbloem (of “template” foot in mouth infamy) heads to Athens for talks today, Bloomberg reports the new Greek Finance Minister Yanis Varoufakis has a clear message for his European overlords of the past: “We don’t want the 7 billion euros…We want to sit down and rethink the whole program.” While this exposes the nation’s banking system to further runs, yesterday’s revelation that Russia could step in with financing should they need it, leaves Dijsselbloem and Shulz with less and less leverage even as Spain’s chief economic advisor warns, if Greece doesn’t play along, “there will be problems on all fronts.”Continue reading »
Most of you, dear [German] readers, will have formed a preconception of what this article is about before you actually read it. I am imploring you not to succumb to such preconceptions. Prejudice was never a good guide, especially during periods when an economic crisis reinforces stereotypes and breeds biggotry, nationalism, even violence.
In 2010, the Greek state ceased to be able to service its debt. Unfortunately, European officials decided to pretend that this problem could be overcome by means of the largest loan in history on condition of fiscal austerity that would, with mathematical precision, shrink the national income from which both new and old loans must be paid. An insolvency problem was thus dealt with as if it were a case of illiquidity.Continue reading »
[The SYRIZA] party believes that the new government in Ukraine came to power as a result of a coup, and call it a junta.
“We should not accept or recognize the government of neo-Nazis in Ukraine,” the Athens News Agency quotes Tsipras who believes that the Ukrainian people should decide their future themselves. Continue reading »
*RUSSIA WOULD WEIGH FINANCE FOR GREECE IF ASKED, SILUANOV: CNBC
With fire and brimstone spewing from Germany over the potential for Greece to veto any and everything, it seems Russia may just have stymied Europe’s leverage over the newly democratic nation. Continue reading »
Two days ago, Zero Hedge first, and shortly thereafter everyone else, pointed out something stunning: the biggest surprise to emerge so far out of the new anti-Troika/austerity Greek government was not so much its intention to proceed with the first test of “Odious Debt” – this was largely known in advance – but its dramatic pivot away from Germany and Europe, and toward Russia.
As we noted before, not only has Greece already blocked all ongoing privatization processes, a clear snub of Merkel and the Troika which demands the piecemeal blue light special sale of Greece to western buyers as part of the “bailout”, but is also looking at plans to reinstate public sector employees and announce increased pensions for those on low incomes: further clear breaches of the Troika’s austerity terms.
But the most important message that Tsipras is sending to Europe is that (after meeting the Russian ambassador first upon his election) Greece is now effectively a veto power when it comes to future Russian sanctions! Continue reading »
Things in Greece are bad. So bad, that the outgoing government of Antonis Samaras decided to not only leave the new inhabitants of the official residence of the Greek prime minister, the Maximos Mansion, without power, and without the WiFi password, but they decided to “borrow” all the soap in the toilet as well.
“We sit in the dark. We have no internet, no email, no way to communicate with each other”, said an employee of the Office, who has worked for various government for years. “That’s never happened before.” It shows that Samaras’ team have “no manners and no decency.” Continue reading »
“When it gets serious, you have to lie,” were the infamous words of one J-C Juncker and today – following the 40-50% collapse in Greek Bank equity capital this week,ECB’s Bank Supervision boss Nouy has come out to calm everything down:
*NOUY SAYS GREEK BANKS ARE ‘PRETTY STRONG’, HAVE STRENGTHENED THEIR BALANCE SHEETS *ECB’S NOUY SAYS GREEK BANKS WILL SURVIVE CURRENT CRISIS
Which, translated for the elites means, “sell-sell-sell.” And then – just to add even more pressure, S&P puts Greece on Watch Negative.
Greek default risk has surged in recent days and today as it becomes clear what Syriza expects from Europe, short-term CDS are at post-crisis highs with 5Y CDS implying a 76% probability of default (based on standard recovery assumptions – which may be a little high in this case). Given the domestic bank dominance in the buying of domestic government debt, Greek banks are getting hammered as everyone’s favorite hedge fund trade is an utter bloodbath. Greek stocks overall are down and GGBs are tumbling once again – back at 16 month lows (given back all the ECBQE hope bounce). Perhaps not surprising moves, given new Greek Finance Minister Yanis Varoufakis reality-exposing comments yesterday, “the problem with the bailout is that it wasn’t really a bailout… it was an extend and pretend, it was a vicious cycle, a debt-deflationary trap, which destroyed our social economy.”
It didn’t take long for Syriza to start making changes in Greece. While these may be minor at the margin compared to the debt “issues”, as KeepTalkingGreece reports, Alexis Tsipras and his junior coalition partner Panos Kammenos pushed the Fast Forward button to restore a series of so-called “reforms”, that is austerity measures imposed by the country’s lenders, the Troika – among the left-wing reforms are: scrapping planned privatizations, scrapping fees in public hospitals and prescriptions, restore “the 13th pension” for low-pensioners and other actions that SYRIZA had promised before the elections. And the iron barricades in front of Parliament have been removed.
In the two days after Syriza’s dramatic victory in the local Greek election, global investors assumed this loud cry against European policies would mean… more of the same, and as a result not much changed in the risk assessment of Greek assets. Then, overnight, following the previous report that not only does Syriza mean business but it is actively pivoting away from Europe (and toward Russia?), and everyone started paying attention, with a waterfall of selling engulfing not only the Greek stock market but also its bonds, which are crashing in the process sending the 3 Year yield to 16.4%, the highest since the restructuring, and the 10 Year either below or above 10%, depending on which data source is used (Bloomberg has them slightly below, others reporting 10-year bond yields up 50 basis points at 10.30%).
Ten days ago, before the smashing success of Greece’s anti-austerity party, Syriza, we noted that Russia gave Greece a modest proposal: turn your back on Europe, whom you despise so much anyway, and we will assist your farmers by lifting the food import ban.
“This is not blackmail,” explains new Greek Finance Minister Yanis Varoufakis, “we simply want to end this seemingly never-ending Greek Crisis.” In what must be worryingly calm and simple to comprehend words for Brussels, Varoufakis tells CNBC’s Michelle Caruso-Cabrera, “this is what happens when you humilate a nation and don’t give it any hope.” Carefully noting that membership in the Euro is not imperative, Varoufakis concludes “bankruptcy cannot be dealt with by borrowing more,” asking rhetorically, “how can I look the German and Finnish taxpayer in the eye and tell them you know I can’t really pay you the money I have already borrowed from you…” but lend me more so I can pay back the ECB?
As Varoufakis explains, he believes Europe is willing to negotiate haircuts – anything else appears a waste of time.
#2) Markets reacted positively to last Thursday’s announcement because Draghi doubled the amount of QE that he leaked to the press on Wednesday. Financial media pegged QE at 600 billion euros on Wednesday and 1.2 trillion euros on Thursday. Once again, Draghi played the Narrative game like a maestro. Continue reading »
Over two years ago, we first highlighted Yanis Varoufakis’ perspectives on the destruction of Greece and Europe’s bogus growth pacts. Since then he has grown in both reason and popularity as his no-nonsense discussons of the mis-design of the euro (and potential solutions) have made him the front-runner to be Syriza’s new finance minister. Never one to mince words or play politics, Varoufakis tells Channel 4’s Paul Mason in this brief (but chilling for Brussels) interview, what his party would do if it gets into government in Greece, and admits the prospect of power in Europe is “scary”. As he sums up, “we are going to destroy the Greek oligarchy system,” and with it, we suspect, much of the narrative that holds the fragile European Union together…
As Varoufakis previously explained,
The Troika is trying to suffocate us and to put pressure on the democratic choice by telling us: either you follow our requirements, or you will be cast into hell. Continue reading »
Despite all the fear-mongering by Nea Demokratia (ND), Syriza’s victory over the incumbent is dramatically larger than expected (exit polls indicate a potential 12 point margin vs 7 point spreads in the run-up). However, as JPMorgan details, the fear-mongery was very evident in bank deposit runs as proxied outflows surge EUR8 billion last week – more than all of December and the rest of January combined…
Via JPMorgan Flows & Liquidity
Greek deposit outflows rise sharply this week
The monthly Bank of Greece balance sheet data for the month of December revealed a significant increase in Greek bank ECB borrowing which rose by €11bn in December to €57bn (including €1bn of Emergency Liquidity Assistance). This is more than the €3bn deposit outflow reported for December. It is thus likely that Greek banks had to borrow even more in December to offset not only their lost deposits but likely reduced access to private repo markets, as it happened before during Greek crisis.Continue reading »
UPDATE: Greek Government official admits electoral defeat by Syriza
As AP reports,
A senior official in Greece’s governing conservatives has conceded defeat to the radical left Syriza party in Sunday’s national elections.
“We lost,” Health Minister Makis Voridis told private Mega TV. “The extent of that result is not yet clear.”
Voridis, the conservative party’s parliamentary spokesman, says the government’s austerity policies, implemented to secure vital international bailouts, “make sense” but were cut short before they could bear fruit.
An exit poll on state Nerit TV projects Syriza winning by a wide margin.
The first Greek exit polls are out and here they are:
According to the initial exit polls, in first place, with some 35.5%-39.5% of the vote is Syriza, a huge lead over the second placing New Democracy which has 23-27% of the vote – far more than polls had indicated previously – and a spot which essentially assures Tsipras’ party an absolute majority in parliament and the ability to take as hardline an approach as he wishes.