Posts tagged 'Greece'

How does that bail-in instrument work again?

Following the results of the Asset Quality Review and Stress Tests before the end of the year, the bail in instrument will apply for senior debt bondholders whereas bail in of depositors is excluded.

Eurogroup statement on Greece, August 14th

Which ‘instrument’ might that be for wiping the senior bonds of under-capitalised Greek banks? Read more

Shocking Greek thirtysomethings

You can see what we were going for…

You can follow the ASE, off 22 per cent at pixel, here. There’s more from markit here: Read more

Yanis and his Plan B, in the FT

As I was handing over the reins of the finance ministry to my friend Euclid Tsakalotos on July 6, I presented a full account of the ministry’s projects, priorities and achievements during my five months in office. The new payments system outlined here was part of that presentation. No member of the press took any notice.

But when a subsequent telephone discussion with a large number of international investors, organised by my friend Norman Lamont and David Marsh of the official monetary and financial institutions forum, was leaked despite the Chatham House rule that we agreed with listeners, the press had a field day. Committed to unlimited openness and full transparency, I granted OMFIF permission to release the tapes.

While I understand the press’s excitement emanating from elements of that exchange, such as having to consider unorthodox means of gaining access to my own ministry’s systems, there is only one matter of significance from a public interest perspective.

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I’m Yanis Varoufakis and I approve the release of this secret plan [updated]

UPDATE: Yanis also approves this statement “on the FinMin’s Plan B Working Group & the parallel payment system” which includes such lines as “Ever since Mr Varoufakis announced the existence of the Working Group, the media have indulged in far-fetched articles that damage the quality of public debate.”


Katie Martin over at Fast did the needful and typed out Yanis’s words so we wouldn’t have to. Read more

Anecdotes can’t tell you how an economy is doing: Greek vacation edition

Greece has endured a Depression-level collapse over the past few years, with employment and real national income both about 25 per cent below their pre-crisis peaks. As if that weren’t bad enough, capital controls, introduced in response to the Eurosystem’s refusal to act as a lender of last resort to Greek banks that had passed the ECB’s stress tests, have led to reports of shortages at grocery stores and gas stations.

Yet none of this was visible when we visited the country over the past few weeks, even in the large cities. The point isn’t that Greece is doing just fine — far from it. Rather, it’s an illustration of the dangers of relying on anecdotes and personal experience when evaluating an economy of many millions of people. Read more

IMF Debt Sustainability Assessments of Greece (and others)

In this guest post, former IMF staffer Peter Doyle castigates the institution’s flip-flopping over Greece…

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Mpesa: the costs of evolving an independent central bank

We started this post before a Greek deal rendered the discussion of a digital parallel currency moot. Nevertheless, it’s still worth looking to the Kenyan M-pesa for a better understanding of why it’s dangerous to treat fintech solutions as panaceas for economies struggling with productivity, poor credit profiles, tax collection issues and overall corruption without understanding what’s really at stake.

Kenya is often presented as an example of a country which has flourished thanks to mobile money adoption — the poster child that “digital payments can make the world a better place”.

But often forgotten is Kenya’s unique circumstances. The M-pesa mobile money system, owned and operated by Safaricom which is 40 per cent owned by Vodafone, was allowed an unchallenged monopoly in the country for a very long time. Read more

No really, here’s how we’d restructure Greece’s debt, by the IMF

Here is another very strange, and short, document. Click to read.

It’s an update to the Greek debt sustainability analysis by IMF staff — yes one of those analyses again — which was originally published just before Greece’s July 5th referendum. Read more

Greece is gimped, and yet the euro rots…

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Reform fatigue and the Greek banks

Barclays have assessed the Greek banks which, prior to Monday’s “deal,” were in a precarious position.

Since the crisis hit Greece more than five years ago, we estimate that Greek GDP has regressed to levels not seen since 1998 and is still falling. The impact of this has been dramatic on the banking system. The banks have lost nearly 25% of their deposit base since December 2014. Confidence has evaporated on the banking system, leading to the imposition of tight capital controls immediately after the call for a referendum by the Greek government on 26 June, as a fully-fledged bank run hit the banking system. Profitability and asset quality have also turned for the worst in 2015. Despite the super-capitalisation of Greek banks under the second programme, banks will in all likelihood now require further capital injections to deal with rising nonperforming assets

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A compromise

From the FT’s live story:

Eurozone leaders have reached a compromise deal over a Greek rescue plan after an agreement thrashed out by Angela Merkel, François Hollande and Alexis Tsipras was unanimously backed by other leaders.

At a press conference after the all-night talks the German chancellor said the deal was worth €86-87bn over three years. She added that trust with Greece “needed to be rebuilt.”

Is it enough to keep Greece in? Read more

Politics not fintech will determine a Greek parallel currency’s success

Earlier this week we gave fintech people a brief guide to the Greek crisis in a bid to explain why payments technology is unlikely to be part of any solution there.

On bitcoin specifically: why on earth would Greece want to replace the euro, a currency it already thinks too restrictive, with another which would be even more constraining and give Greeks even less control over monetary affairs!? Read more

Let’s talk about… the 1953 London Agreement on German External Debts

At length. Because haven’t you heard?

Germany is a hypocritical creditor.

It won’t give Greece the debt relief which it received itself in the 1950s.

Thomas Piketty said it. So it must be true:  Read more

El-Erian: It’s about the ECB…again

The writer is Mohamed El-Erian, chief economic adviser to Allianz and chair of US President Barack Obama’s Global Development Council.

Wondering why European peripherals are relatively well behaved while virtually all other risk assets have sold off this morning?

It need not be about irrational or misinformed markets. Instead, it is consistent with expectations of additional market intervention by the European Central Bank.

Concerns about China and Greece are fueling increased risk aversion. Equities are selling off, hard duration (including German and US government bonds) is rallying, commodities are getting crushed, and emerging market currencies are under pressure. Read more

You’ve reached Syriza’s central committee, unfortunately nobody is currently available to take your call…

Via the inbox… reports of disappointment on a BNP Paribas conference call about Greece: Read more

A not very golden crisis

Here’s a puzzle. Neither the Chinese stock slide or the Greek ‘no’ vote are having much of an effect on the gold price — odd given that the goldbug narrative that gold always performs well in a crisis:

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A summary of the Greek crisis for the benefit of fintech people

They say crises define movements and people.

If that’s the case, purveyors of fintech payment solutions could soon be defined as those who stood ready to exploit a Greek national bankruptcy crisis for the benefit of “onboarding” users. Read more

“I shall wear the creditors’ loathing with pride” [updated]

Yanis resigns.

By blog, naturally - Read more

How we would have restructured Greece’s debt, by the IMF

Here is an earnest, but very strange, document. Click to read.

It’s a Greek debt sustainability analysis by IMF staff. Yes, one of those analyses. A preliminary one, but in many ways the DSA to end all DSAs. Read more

Greece shows ECB’s stress tests were nonsense

Remember the Comprehensive Assessment? You know, the European Central Bank’s report in October 2014 that said three Greek banks were adequately capitalised to survive a stressed scenario thanks to their fundraising efforts earlier in the year, while the fourth was only off by five basis points?

We ask because the ECB seems to have forgotten. Otherwise, we can’t think of why the euro area’s central bank is choking off Greek lenders and effectively forcing the Greek government to impose capital controls. (Immense thanks to Karl Whelan for making this point at our panel at Camp Alphaville.)

To see the oddity, it helps to explain what central banks are for. Read more

Defaulting on the IMF: a stupid idea whose time had come

This belief — that an implicit official sector guarantee has quietly settled over every sovereign debt instrument issued by every geopolitically significant country on the planet — is a fallacy. The moral hazard implications of allowing this idea to prosper are staggering. More importantly, the official sector lacks the resources to make good on such an implicit guarantee, even if it wanted to do so.

– Lee Buchheit, ‘Sovereign fragility’, 2014

Coming home to roost now though, isn’t it? Read more

BREAKING: Last minute Greek emergency session at Camp Alphaville

We too can rip up our promised programme to respond to the evolving wants and desires of the Camp Alphaville polis.

As of pixel time, Wednesday’s “The Untouchables: The Saga of Weird Emerging Market Sovereign Bonds” debate becomes the “Last minute Greek emergency session” panel — to be moderated by our resident sovereign default expert Joseph Cotterill (who also doubles up as the FT’s private equity correspondent).

Joseph will be joined by:

  • Paul McNamara, Investment Director, Emerging Markets, GAM Holding AG
  • Gabriel Sterne, Head of Global Macro Research, Oxford Economics
  • Rodrigo Olivares-Caminal, Professor of Banking and Finance Law, Queen Mary University London

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Monday’s Greek bond yields charted and preserved for posterity

Courtesy of Tradeweb, a summary of the Greek bond yield action this Monday:

Yields on the 10-year Greek government bond surged to their highest levels since November of 2012, according to data from Tradeweb. The bid yield on the 10-year Greek bond closed at 15.429%, the highest yield since November 30, 2012, when it closed at 16.262%. Today’s closing yield was up 462 bps from the close on Friday at 10.814%. This is the largest one-day yield increase since Tradeweb began trading Greek government bonds in November of 2001. The next closest one-day move by order of magnitude was on March 7, 2012, when the 10-year bond surged 388 bps amidst the Greek debt swap to avoid default.

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El-Erian: The Graccident, as captured by the FT’s front page

The writer is chief economic adviser to Allianz and chair of US President Barack Obama’s Global Development Council

Sensing that this could be “history in the making” for Greece and for Europe, I decided a few weeks ago to keep physical copies of the FT (yes, I still get a physical copy!). While the inside of the paper contained rich reporting and comprehensive analysis, the headlines on the front page ended up providing a great feel for what transpired in this horrific tragedy. Read more

We know what the euro is doing to Greece…

But, as the foreign press corp does its best to hurry some much needed euro into the Greek economy, we should also look at what Greece is doing to the euro.

Here’s Nomura’s head of FX, Jens Nordvig, on what to watch where the single, now more parlous, currency is concerned: Read more

Greece: Analyst views on capital controls, bank holidays

We’ll be slamming up the best of our collective inbox on matters Greece as and when the good stuff pours in.

Catching up on the last few hours, here’s JP Morgan’s Greg Fuzesi:

In light of the deepening crisis in Greece, a key question is how the ECB will respond to any signs of contagion to the rest of the Euro area. At the end of today’s policy statement about the ELA decision, the ECB said that “the Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area.” The ECB added that “the Governing Council is determined to use all the instruments available within its mandate.”

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Greece: bank analysts and eurowatchers on what to expect on Monday (UPDATED)

For the latest on the ECB’s liquidity position on Greece, see our post here.

Meanwhile, here’s some instant analysis by way of the FT Alphaville collective inbox:

UPDATE: Capital controls and a bank holiday now confirmed; full research pack from Buiter, Barr and others available in the usual place. Read more

“The Governing Council stands ready to reconsider its decision”

The decision being to keep emergency liquidity to Greek banks going at its level last week. From the ECB’s Sunday statementRead more

“The Eurogroup has been open until the very last moment…”

After that late-night announcement in Athens of a July 5th referendum, the response on Saturday…

In one sense, Greece’s full membership of the euro is, quite literally, already being consigned to the footnotes of history.

Capital outflows, then and now

From Deutsche on capital outflow (lots of very crucial capital outflow) from Greece vs the periphery, 2012 vs now:

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