Failcascade

Endgame ahead

Greece has been safed… again?

without comments

I’m not going to write a long and witty post on the latest Greek rescue package, since it’s getting kinda boring. I think by now even the EU bureaucrats have lost count how many times exactly Greece has been rescued.

The announcement came in the early morning hours, after weeks of failed talks and was rewardet by a 1 or 2 bps “spike” in the EURUSD, just to fade away within hours. Of course the markets in Europe opened with a another rally, which turned out to be… modest and short lived (a couple hours that is). The US markets didn’t even bother to rally, since by the time they opened, people managed to find their calculators and read the Eurogroup’s “plan”, just to figure out it really doesn’t make much sense. Surprise! Who’d have guessed?

Then again, the whole package isn’t finished anyway, since it still has to be ratified by every nation involved. And (among other things) assumes a “voluntary” haircut of 70% on Greek debt by private investors holding it. All within the next two weeks.

Good luck with that…

Then again, let’s just assume for some reason (magic!) creditors agree to those terms and everything will go as planned. How much exactly will those cuts matter? Thanks to thetrader.se, here’s something nice to look at:

We’re talking about the red part. The official sector debt can’t be cut, since the German Bundesverfassungsgericht (among others) would most likely throw a hissy fit the second anyone would suggest that. For now that is – in a couple years the recent ruling will probably be forgotten since nobody cares about laws and contracts anymore anyway and a official sector “forgiveness” seems inevitable. If the whole EU / Euro conglomerate still exists by then that is…

 

But in case they really pull it off and flush another 40 billion Euro down the toilet, here’s what the rescue package assumes the Greek economy will do during the next 10 years:

And here’s how their past projections turned out:

Yeah… I’m sure that will work just fine.

UPDATE, less than 24 hours later – fresh from Bloomberg:
EURO GROUP AGREES MAY NEED TO AUGMENT GREEK ACCORD: SCHAEUBLE.

Really? REALLY? Well that’s what I call a completely unpredictable turn of events!

Written by mo

November 27th, 2012 at 5:26 pm

Posted in Europe

Tagged with ,

Leave a Reply

%d bloggers like this: