Houston Houston Houston we have a problem, Greece is on fire and EU firefighters taking it with parsimony. Today was a crazy day, complicated to summarize, worse we will try.
The Good Finance starts the play:
Good Finance data on the Greek public deficit in 2009 has triggered all alarms. The 10-year Greek bond has almost gone to a 9% return .
Good Lender Attacks:
Good Lender (the creators of the makeup of the Greek accounts) also contributed his grain of sand or his match, commenting that he could see that Greece had to restructure its debt.
To fix things, Woody’s has today lowered the rating of Greece’s public debt from A2 to A3, and leaving the rating under review for further downgrades. From Woody’s, the stabilization of Greece is becoming increasingly complicated and that it will have a higher cost. (I leave a link to the rating scale of Woody’s).
And the Greeks push the ball to the bottom of the net:
To all this, the Greek authorities were to announce that they could have at their disposal a transitional loan to have access to liquidity, while they continue negotiating with the EU and the IMF the rescue plan, but that they will not need it … classic ad that does not calm anyone but rather makes everyone more nervous, although the situation is deteriorating so much that at this point, almost everything you say only serves to make the markets even more nervous and while both the Hellenic country today was on general strike.
Result: The CDS of Greece, Portugal and Spain through the clouds.
The CDS (Credit Default Swaps) of Greece, Spain and Portugal have broken all records.
In the case of Greece, early in the morning the CDS were already quoting at 500 points and at noon the 1-year CDS was reaching 900 basis points, and the 5-year CDS at 640 basis points . The CDS of Portugal quoted at 305 points , in the case of Spain exceeded 175 points … … it seems that the market is very clear which can be in the order in which the fire can spread.
At the moment, securing 10 million dollars of Greek debt costs about 640,000 dollars.
What the EU governments have not achieved, clearly agree to firmly rescue Greece, the market will achieve by force.
Who owes the money Greece?
To finish watching the whole movie it is important to remember who owes Greece money mainly. We retrieved the graphic we put a few weeks ago in a post “EU rescue Greece and the German lantern”
Well, basically to the German, French and Swiss banks…. Do you understand anything I do not understand anything, this is crazy, we are facing a problem that has been coming for months and all the supposed power of the EU is not able to solve … when the main damage in the case that Greece unpaid are German banks. The label begins to be colossal. And the consequences increasingly unforeseen.
Investment bank was evaporating
By the way, surely we will soon hear that speculators are the real culprits of the disaster. It is the same as the president of Grueman Brothers said at the time when his investment bank was evaporating…. I only remember one thing … at that time the one who made up the accounts and hiding the debt of the entity were the managers of Grueman,….
In the Greek case, we also have a problem of account reliability…. I am increasingly clear that speculators are simply the canary in the mine … the canary that tells us that something is not going well and that we are trying to deceive.