Friday, July 3, 2015

3/7/15: Add ECB to IMF and Greek arrears can get ugly...


Ah, remember Brodsky's "Urania is old than sister Clio" bit? Well, not in finance. Apparently, or allegedly, as reported in press, Greece is now in arrears (err... default, or not or whatever) not only on IMF, but also on ECB. See this.

Which relates to 1993 loans, last repayment of which was due in June this year and amounted to EUR470mln. And which were not paid.

The gyrations of Greek and Troika positions are out of the league of the ordinary.

We had a threat to take EU to court over threats of forcing Grexit (see here). Which is quite bizarre (on the EU side), given the Institutions have already said that the very subject of the referendum is non-sensical as no deal exists to carry out referendum over (see here), though such statements did not preclude the EU leaders from calling for a 'Yes' vote in the referendum (see here).

And the EU and some internal Greek concerns about constitutionality of the Greek referendum (see here).

In simple terms, we have a mash of contradictions: a referendum that has no grounds in terms of its outcome is nonetheless of questionable constitutionality, though the voters should vote 'yes' regardless, because, presumably, an outcome that is not an outcome is preferred to a different outcome that is not a outcome... [someone should stop spinning the world around us]...

We also have IMF that was forced (by a leak) to release its (preliminary - aka... "we say so, but we don't say so") analysis of Greek debt sustainability (see simplified version here and full version from the source here). Surprise, surprise... those of us not paid lavish salaries by the IMF turned out to be right: Greek debt sustainability thesis is nonsense, a pipe dream made up of flour, feathers and water...

Meanwhile, the ECB - not to be outdone by the fellow jostlers or jousters - is entering a probabilistic game of guessing Greek banks solvency (condition for accessing ELA is solvency of the banks, which, until today was a concept of 0=insolvent, 1=solvent and is now 0.1%=solvent 49.9%='something of sorts' and the rest... err... well, we await holding our breath for a technical paper from the ECB staff on that one) on the basis of referendum outcome (see here).

Next turn will be for the EU or may be ESM/EFSF as ECB (rumoured above) default trigger for EFSF default is "Very Likely" and can only be 'corrected' for via a new deal agreement (see here).

Have fun deciphering the torrent of news, views and leaks that the Greek crisis has unleashed. In the mean time, the only conclusive statement to be made is that we are in a situation where headless chickens are trying to round up legless lambs... all performed in a quicksand pit...

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