Menu Close

Greece: Back to the [Groundhog Day] Future

This is a syndicated repost published with the permission of True Economics. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.

Follow the money. Find the profits!

Liquidity is money. Regardless of where in the world that money originates, eventually it flows to and through Wall Street. So if you want to know the direction of the next big moves in stocks and bonds, just follow the money. Lee Adler's Liquidity Trader tracks and shows you the monetary forces that drive markets, like the daily real time Federal Withholding taxes shown in this chart. Follow the money. Find the profits! Try it for 90 days, risk free!

Couple of weeks back I posted a detailed list of ECB ELA hikes since February 2015. So here’s an updated table:- Feb 5, 2015 = EUR59.5 bn
– Feb 12, 2015 = EUR65.0bn
– Feb 18, 2015 = EUR68.3 bn
– Mar 5, 2015 = EUR68.8bn
– Mar 12, 2015 = EUR69.4bn
– Mar 18, 2015 = EUR69.8bn
– Mar 25, 2015 = EUR71.0bn
– Apr 1, 2015 = EUR71.7bn
– Apr 9, 2015 = EUR73.2bn
– Apr 14, 2015 = EUR74bn
– Apr 22, 2015 = EUR75.5bn
– Apr 29, 2015 = EUR76.9bn
– May 6, 2015 = EUR78.9bn
– May 12, 2015 = EUR80.0bn
– May 21, 2015 = EUR80.2bn
– May 27, 2015 = EUR80.2bn
– Jun 2, 2015 = EUR80.7bn

Now, that implies 3 weeks cumulative ELA rises of EUR700mln and reserve cushion on ELA below EUR2.5bn by my estimate. And for all that, Greek Central Bank recoverable assets are currently at EUR41 billion. Ugh… Oh… the proverbial noose is tightening… but on who’s neck?

The neck is somewhere in here – within the Greek Target 2 liabilities debate, liabilities that continue to rise, prompting a fine, but esoteric debate:

I side with Karl Whelan on this. What is material is Sinn’s assertion that the Greek residents’ “stock of money sent abroad and held in cash having already ballooned to 79% of GDP”. And Greece is facing big bills on debt redemptions and wages and pensions in the next 3 months (see timeline here: http://trueeconomics.blogspot.ie/2015/04/24415-greek-debt-maturities-through-2016.html) or:

One thing is clear from all of this: Credit Swiss estimate of 75% chance of a deal being done this month on Greek ‘programme’, while the CDS markets are pricing in 75% probability of Greek default over the next 5 years:

And we have equally conflicting ‘proposals’ on how such  programme might be arranged: http://www.zerohedge.com/news/2015-06-02/greece-troika-submit-conflicting-eleventh-hour-deal-proposals which can be summarised as “the bottom line seems to be that, fed up Syriza’s unwillingness to concede its election mandate, the troika will now write the agreement for Greece and Tsipras can either sign it or not. Apparently, the IMF has scaled back its demands for EU creditor writedowns (another loss for Athens) but remains skeptical of the entire undertaking.”

If this is true, the entire ‘new deal’ being offered to Greece amounts to a new can being kicked down the same road.

Map of the road? [note: the below table excludes short-term debt]

h/t to @NChildersMEP 

So to sum up today on the Greek front:

  1. ELA is running tight, just as deposit flights goes on;
  2. Target 2 liabilities continue to mount;
  3. Probability of default remains material at present;
  4. Choices available to Greek authorities are Plan A: horrible and Plan B: terrible; and
  5. Absent debt write down, even the best case scenario still leads to high risk of a political crisis in the short run and a default in the medium (3 years) term.
It’s Back to the Future, in a Groundhog Day-like sorts of the Future…

Join the conversation and have a little fun at Capitalstool.com. If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

RSS
Follow by Email
LinkedIn
Share

Discover more from The Wall Street Examiner

Subscribe now to keep reading and get access to the full archive.

Continue reading