Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-57145 Mon, 06 Jul 2015 17:03:49 GMT It Is NOT Priced-In, Stupid! | David Stockman http://implode-explode.com/viewnews/2015-07-06_ItIsNOTPricedInStupidDavidStockman.html What has transpired in a relative heartbeat is that one of the four central banks of the world that matter is suddenly on the ropes. In the hours and days ahead, the ECB will be battered by desperate actions emanating from Athens, as it struggles with a violent meltdown of its banking and payments system; and it will be simultaneously stymied and paralyzed by an outbreak of public confusion, contention and recrimination among the politicians and apparatchiks who run the machinery of the Eurozone and ECB superstate.

...

But this time there is a decent chance that even the concerted central banks of the world will not be able to contain the panic. That's because the blind confidence of the caribou soccer players will be sorely tested by the possibility that the ECB will be exposed as impotent in the face of a cascading crisis in the euro debt markets.

We saw an article this morning that assured the Greek crisis would be "contained." That reminded us of 2007... and sent shivers up our spine...

]]>
iehi-feed-57143 Mon, 06 Jul 2015 14:51:26 GMT Greece votes No -- now what? http://implode-explode.com/viewnews/2015-07-06_GreecevotesNonowwhat.html But despite predictions by Greek ministers that a new bailout deal could be just days away, other than Mr Macron and his French colleagues, there are few elsewhere in the eurozone who predicted a resounding No would lead to much more than continued stalemate. If that is the result of overwhelming rejection of creditors' terms, it would mean a slow march to Greece exiting the eurozone.

...

The key date in the crisis is now July 20, when Greece owes €3.5bn on a bond held by the ECB. If Athens defaults on that bond, it would be almost impossible for the ECB to continue accepting collateral from Greek banks, and the €89bn in emergency liquidity assistance (ELA) would be withdrawn, devastating Greece's banking sector.

...

Greece could be left in limbo for months, circulating a parallel currency while technically still in the eurozone. EU lawyers have already been working overtime to figure a way out of that dilemma.

]]>
iehi-feed-57140 Mon, 06 Jul 2015 13:17:52 GMT Thomas Piketty: "Germany has never repaid its debt" http://implode-explode.com/viewnews/2015-07-06_ThomasPikettyGermanyhasneverrepaiditsdebt.html iehi-feed-57139 Sun, 05 Jul 2015 23:41:04 GMT After Resounding "No" At Polls, Eurozone Central Bank Now Controls Destiny of Greece's Battered Banks http://implode-explode.com/viewnews/2015-07-05_AfterResoundingNoAtPollsEurozoneCentralBankNowControlsDestinyofG.html A resounding ‘no' from Greece (Washington Post).]]> iehi-feed-57136 Sun, 05 Jul 2015 15:40:10 GMT Greek Default Would Nuke Entire European Sovereign Market http://implode-explode.com/viewnews/2015-07-05_GreekDefaultWouldNukeEntireEuropeanSovereignMarket.html [The ESM] loaned Greece €145 billion. If Greece defaults, the ESM, a Luxembourg corporation owned by the 19 European Monetary Union governments, will have to declare loans to Greece as nonperforming within 120 days. Accounting rules and regulators insist that financial institutions write off nonperforming assets in full, charging losses against reserves and hitting capital...

How do you get a triple-A rating on a bond backed entirely by loans to junk-rated sovereign borrowers? Well, the governments guarantee the bonds, and because they are unfunded off-balance-sheet liabilities, they aren't counted in their debt burdens--unless borrowers default... The strength of these guarantees is untested. Would the German Bundestag vote tomorrow to raise €35 billion by selling Bunds, the government debt, to cover Germany's share of ESM losses on Greek bonds? That seems improbable...

A hard default would produce other losses to be covered. The ECB would have to be recapitalized after it writes off the €89 billion it has loaned the Greek banks to keep them liquid. The ECB would need to call for a capital contribution from its shareholders--the governments.

And don't forget that Greek banks owe the Target2 bank clearinghouse, a key link in the interbank payment system, an estimated €100 billion. The governments are on the hook to make good that shortfall, too. The cash required to cover these contingencies would have to be funded with new bond sales.

]]>
iehi-feed-57128 Sat, 04 Jul 2015 14:40:05 GMT Good On You, Greece----But Don't Waver Now (Part 2) | Stockman http://implode-explode.com/viewnews/2015-07-04_GoodOnYouGreeceButDontWaverNowPart2Stockman.html iehi-feed-57117 Fri, 03 Jul 2015 04:51:52 GMT Greek banks only have 500 million euros left http://implode-explode.com/viewnews/2015-07-03_Greekbanksonlyhave500millioneurosleft.html iehi-feed-57114 Thu, 02 Jul 2015 22:08:06 GMT NSA phone tap of Angela Merkel reveals she knew Greece's debt was unsustainable in 2011 http://implode-explode.com/viewnews/2015-07-02_NSAphonetapofAngelaMerkelrevealssheknewGreecesdebtwasunsustainab.html iehi-feed-57106 Thu, 02 Jul 2015 00:54:35 GMT Greece crisis: Eurozone rules out talks until after referendum http://implode-explode.com/viewnews/2015-07-01_GreececrisisEurozonerulesouttalksuntilafterreferendum.html iehi-feed-57105 Wed, 01 Jul 2015 14:14:41 GMT Spiegel: We Are Living in the Anti-Europe http://implode-explode.com/viewnews/2015-07-01_SpiegelWeAreLivingintheAntiEurope.html iehi-feed-57099 Wed, 01 Jul 2015 01:26:07 GMT Attorney Craig Brand And Max Keiser Talk About Abuse Of Asset Forfeiture Laws http://implode-explode.com/viewnews/2015-06-30_AttorneyCraigBrandAndMaxKeiserTalkAboutAbuseOfAssetForfeitureLaw.html iehi-feed-57098 Tue, 30 Jun 2015 21:25:43 GMT The road to Grexit and beyond http://implode-explode.com/viewnews/2015-06-30_TheroadtoGrexitandbeyond.html If the Greek referendum on Sunday goes ahead and concludes in a No vote, Grexit probably beckons. If the result is a Yes, there will be initial confusion. A vote to accept the bailout may be interpreted as a vote in favour of remaining in the eurozone. In that case I would expect the Greek government -- whoever that may be after a Yes vote -- to maintain the regime of capital controls and introduce a parallel currency, denominated in euros.

A parallel currency scenario could split into three directions: Grexit within a short time; a regime where Greece defaults but maintains the capital controls indefinitely; and a scheme where the controls are eventually lifted and Greece remains in the eurozone.

...

My biggest concern is a political one. What happens if the Greek electorate voted Yes but Greece is still forced out of the eurozone because the creditors and the ECB left them no other choice?

This scenario would be the most toxic of all. It will imply that a monetary union without political union can only exist in violation of basic principles of democracy. It will come to be perceived as a totalitarian regime.

]]>
iehi-feed-57096 Tue, 30 Jun 2015 21:10:55 GMT Europe's Attack On Greek Democracy - Stiglitz http://implode-explode.com/viewnews/2015-06-30_EuropesAttackOnGreekDemocracyStiglitz.html iehi-feed-57092 Tue, 30 Jun 2015 13:35:38 GMT A New Mode of Warfare: The Greek Debt Crisis and Crashing Markets - Michael Hudson http://implode-explode.com/viewnews/2015-06-30_ANewModeofWarfareTheGreekDebtCrisisandCrashingMarketsMichaelHuds.html iehi-feed-57084 Mon, 29 Jun 2015 15:17:08 GMT Greece in shock as banks shut after snap referendum call http://implode-explode.com/viewnews/2015-06-29_Greeceinshockasbanksshutaftersnapreferendumcall.html iehi-feed-57083 Mon, 29 Jun 2015 15:11:34 GMT The Day The Euro Died http://implode-explode.com/viewnews/2015-06-29_TheDayTheEuroDied.html Freezing ELA means that Greece can now only regard itself as a "user" of the Euro rather than a full member of the currency union. There is no legal means for countries to leave the Euro, but it seems that they can be frozen out...The ECB's statement makes no mention of bank solvency: the liquidity freeze responds to the failure of the talks and the decision by the Greek government to call a referendum. The freeze is therefore an overtly political move. The independence of the ECB has been shattered.

The "irrevocability" of the Euro is no longer credible. Using liquidity restriction to force a country to introduce capital controls is tantamount to suspending its Euro membership. So the sovereign debt of other distressed Eurozone countries will now carry a risk premium because of the possibility of membership suspension...

The Euro can no longer be regarded as a "single currency". It has been revealed for what it really is, a system of hard currency pegs between 19 -- or perhaps now 18 -- sovereign countries. And a system of hard currency pegs is fragile. The risk that the Eurozone will unravel is substantially increased.

]]>
iehi-feed-57077 Sun, 28 Jun 2015 18:25:39 GMT Greece Will Close Banks to Stem Flood of Withdrawals http://implode-explode.com/viewnews/2015-06-28_GreeceWillCloseBankstoStemFloodofWithdrawals.html Greece will keep its banks and stock market closed on Monday and place restrictions on the withdrawal and transfer of money, banking executives said Sunday night, as Athens tries to keep its financial crisis from growing worse.

The government's decision to close banks temporarily and impose other so-called capital controls came hours after the European Central Bank said it would not expand an emergency loan program that has been propping up Greek banks in recent weeks while the government was trying to reach a new debt deal with international creditors.

]]>
iehi-feed-57075 Sun, 28 Jun 2015 14:14:22 GMT Greece: Why There Can Be No Winners in the Grexit Game http://implode-explode.com/viewnews/2015-06-28_GreeceWhyThereCanBeNoWinnersintheGrexitGame.html iehi-feed-57073 Sun, 28 Jun 2015 02:12:33 GMT Russia's Pivot to China Is Real http://implode-explode.com/viewnews/2015-06-27_RussiasPivottoChinaIsReal.html iehi-feed-57065 Fri, 26 Jun 2015 21:27:55 GMT French Justice Minister: Snowden and Assange Could Be Offered Asylum http://implode-explode.com/viewnews/2015-06-26_FrenchJusticeMinisterSnowdenandAssangeCouldBeOfferedAsylum.html