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Goat

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Everything posted by Goat

  1. Yes, obviously. If they wanted to go down that route they'd have to account for the Euro's created to the ECB, which the can't do in which case it'd be impossible to use your Greek bank card outside of Greece so you'd have a de facto separate currency altogether.
  2. That can be read two ways: Greece has its own facility in Holargos, northern Athens, which can print notes and mint coins. In theory, this can be used for a new drachma. The ECB said that it has been responsible for printing €10 notes for the whole eurozone. I read that as saying they have printed for the whole EZ but not that they are the only source for the whole EZ.
  3. Are you sure about that? They were the only country to produce them last year but there's a dozen different countries producing them this year.
  4. Disagree, you could withdraw the old notes from circulation very quickly if you needed to, at which point the old style Greek notes become worthless, or Drachma, which is pretty much the same thing.
  5. True, but my guess is that the GCB wouldn't be able to print more than a couple of hundred million worth before the ECB redesigned the €10 note and made the Greek press obsolete - a drop in the ocean compared to the size of the debt and stock of Euro notes (maybe 0.1% and 0.05% respectively). Unless the ECB did something really stupid (like refuse to honour "Y" notes) there's nothing here that's going to destroy confidence. Actually I think the biggest problem with a Grexit is that any future bailout for any EZ member becomes politically impossible, meaning that the next crisis is virtually assured to force other EZ members out.
  6. Presumably they could retire the design of the note in question relatively quickly and replace it with something the Greeks don't have plates for. AFAIK Greece only has the right to print (and presumably the plates for) the €10 note, it's hard to tell but last year they produced €940m and this year's planned production leads me to think that's about their total capacity. Unless they have the physical ability to print notes in the larger denominations I can't see how they could print enough to make the slightest difference to anyone.
  7. Debunked, who by? What makes you think that? I can't think of any competent economist who would argue such a thing.
  8. However the total amount of ELA remains unchanged so the banks remain shut.
  9. By, 2012 the non-greek banks had largely rid themselves of their greek exposure, it was the 2010 bailout that allowed them to do this. Edit: http://faculty.chicagobooth.edu/anil.kashyap/research/papers/A-Primer-on-the-Greek-Crisis_june29.pdf Greece was lent new money in 2010, but as Karl Otto Pohl former head of the German central bank observed at the time much of that money was used to repay the obligations owned by the French and German banks. The new lending was advertised by the politicians across Europe as a rescue for Greece. But it was at least as much a deal to buy time for the banks and other owners of Greek debt to avoid a default. The European Central Bank meanwhile became more deeply committed to stabilizing financial markets. ECB President Mario Draghi famously said in July 2012 that “within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” Draghi’s statement immediately led to a drop in borrowing costs for governments across Europe and the pressure on Greece temporarily subsided. By continuing to allow banks everywhere to use Greek debt as collateral, the ECB also created conditions that supported the trading of Greek debt. By this time the French and German banks had shed their exposure to Greece so that they would no longer be directly harmed if there was a default. So the stealth rescue of the non-Greek banks was completed with little public attention and the narrative that all the problems were self -inflicted by the Greeks became more pronounced
  10. I think the point (from Slawek's earlier post) is that non-greek banks wrote down about €20bn in 2012, compared to Swiss/French/German exposure of €140bn (probably ~ €200bn total EZ exposure) in 2010 that's not that great a hit, particularly if the MV of those bonds was lower than the face value (likely IMO).
  11. Fair enough, wikipedia says ~ 50% and ~ €100bn, although I suspect by 2012 the majority of those bonds were not in the hand of banks but instead in Greek pension schemes.
  12. How much was written off? I suspect you'll find the amount is relatively small compared to the total debts.
  13. The bankers don't have any major exposure to Greek debt, it's all in the hands of the Eurozone taxpayers. The initial bailout in 2010 was botched, instead of writing off the debt to a supportable level it was tranfered from the banks to the various EU institutions. Germany wants to avoid a write off because IMO admitting that they've lost €50bn on the deal would be the end of Merkel.
  14. I think the difference is that there's no prospect of any of the 50 United States leaving the union, if Greece can be forced out of the Euro why not Italy, Spain, Portugal etc?
  15. http://www.telegraph.co.uk/finance/economics/11714655/Greek-banks-down-to-500m-in-cash-reserves-as-economy-crashes.html Telegraph reporting that Greek banks down to last €500m, no prospect of them opening Tuesday or anytime soon. Food, fuel and medicine starting to run short, another week of this and I guess it'll start to become a humanitarian disaster. Yes or no on Sunday I can't see how they can organise a deal to get the banks open next week, even if they could you'd have bank runs as every last Euro is withdrawn and inevitable collapse. My guess is Drachma within 7-10 days.
  16. No, what they're doing is trying to hide the fact that the money is lost by playing a game of extend and pretend and hoping the default happens on someone else's watch.
  17. Reality check, the European banking system isn't that important, worst case scenario do your banking through London or Geneva.
  18. Exactly, although I'm not sure to what extent this is already included in the Greek government's debt. If the collateral is Greek govt bonds that should be included in the Greek debts, presumably at least some of the collateral represents holdings of financial assets other than Greek bonds but this does seem to be a potential further loss on top of the existing EZ loans.
  19. The IMF is a special case, the ultimate priority creditor and lender of last resort, they don't lend amounts that can't be repaid and you'd be mad to try and stiff them. Where Argentina gets interesting is that because their bonds were written under US law a bunch of private creditors managed to persuade a US court that a write off was invalid; this gave rise to various efforts to enforce the debt that has been unsuccessful, hence my point about the difficulty of enforcing debts against soverign nations. Actually, I did gloss over an important bit of leverage that the creditors do have, the above ruling makes it very difficult for the Argentines to use the US banking system because any Argentine government funds passing through it would be liable to siezure to pay the creditors. Whether a US court would be willing to enforce a ruling by the ECJ is an interesting question and the Greek's might be at risk if they tried to use the European system (parts of it anyway), with a bit of care I doubt it'd be that much of an issue unless London, Geneva, US and EZ all decided to gang up on them. The IMF is the only organisation they really need to deal with since it's obvious that the EZ aren't going to provide any more funds. Outside of the Euro they can deal with the IMF directly and negotiate with the EZ from a position of strength; instead of following whatever timetable the Germans impose they can in effect pay the EZ whatever they like, when and if they feel like it. Of course they'll have to put up with some more austerity, but it'll be in the form of external devaluation and rises in the cost of imported goods rather than a counter productive destruction of the economy as a whole.
  20. Sounds plausible, my £200bn was for the EZ as a whole, although the precise loss will depend upon exactly how a default plays out. They're potentially on the hook for several tens of billions more from the ECB's emergency liquidity scheme.
  21. But as we've already discussed it's well nigh on impossible to enforce those claims. Incidentally I think a lot of the Greek bonds are written under the law of England and Wales, which could give rise to some interesting legal complications; hypothetically, if the bonds include a "no superior creditor" clause you could end up with a situation where the ECJ rules that the EZ creditors have priority, whilst our high court rules that they don't, or possibly that they are even subordinate. Good luck sorting that mess out. 5 years and waiting. In any event that racket's over, the tax collectors know nobody has any money, so they don't bother asking anymore.
  22. They've been talking about debt relief since 2012 but it's not going to happen. Merkel & Co. can't admit the truth to their electorates, which is that they've lost €200bn of their money trying to prop the Greeks up (or bailing out their banks, whichever takes your fancy), so the name of the game is extend and pretend: keep rolling over the debts, pretend they can be repaid and hope the inevitable collapse happens on someone else's watch. It seems to me that VT have decided not to play that game.
  23. Not 100% sure but I guess you're talking about shielding Greek private overseas assets. In which case the applicable legislation would be that of the member states in which the assets are held, it would be a big call for the EZ member states to start re-writing their property laws to sieze private bank balances, and I suspect a lot of these are held in London anyway. I suspect that might be a red herring on AEP's part, I've left a post to that effect in the comments section although I'm not overly hopeful of getting a reply.
  24. Interesting thoughts by AEP: http://www.telegraph.co.uk/finance/economics/11712098/Europe-has-suffered-a-reputational-catastrophe-in-Greece.html “Those who say we have a secret plan for Greece to exit euro are lying,” he swore, with an impressively straight face..... Yet one might suspect - and I have not made up my mind - that he and Syriza’s inner circle concluded in April that they could not do business with an EMU regime that acts solely as the enforcement arm of the creditors. They may have concluded that demands for further fiscal contraction were economic lunacy - a view shared by the Nobel fraternity and the US Treasury - and that no serious debt relief was on the table, and therefore they would do better to default and restore a Greek sovereign currency. If so, they cannot admit it. They must make it appear that the decision was forced upon them, just as France’s Leon Blum had to tell white lies to free his country from the Gold Standard in 1936. Syriza officials are fully aware that the likely consequence of a “No” vote would be a parallel currency - or IOUs - along with the nationalisation of the banks along the lines of the “Icelandic Model”. Syriza’s Left Platform has already drawn up plans along these lines. Variants almost certainly exist in the Greek finance ministry. Such action implies a return to the drachma in short order. The Greeks would continue to insist that the country remains a member of the euro, with full legal rights - blaming the creditors and EU bodies for acting illegally. Only by doing so could they ensure that the full losses from Grexit fall on the ECB and the EMU bail-out funds, while the assets of Greek citizens remain legally protected in foreign accounts, free to return later to rebuild a new banking system. If you were of a suspicious mind, you might wonder whether Mr Tsipras has not in fact lured European leaders and officials into a legal trap, and that they have fallen for the bait. His Byzantine negotiating tactics may make perfect sense after all. Just a thought.
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