Greece Has the Eurozone by the Cajones and I Can Prove It
Everyone pretty much has most of their money out of the Greek banks.So, no need for capital controls. The Eurozone will likely keep funding the Greek banks. If they don't, and the ATMs are shut off, then Greece will have to fund the banks with Drachmas. If that happens, the Greek bonds, billions of dollars of them, that were used as collateral in swaps deals and loans, up until Feb, 2015, would all be worthless. Billions upon billions of dollars in swaps could be in danger. The holders of the bad swaps, the risky swaps, would have to put up billions more in collateral and if they couldn't, it would be a panic. A Euro panic.So, the Eurozone will have to fund the Greek banks and write off the debt, as the IMF said they need to do. Greece needs to call the bluff of the Germans. They ain't got nuthin'. The IMF warned the Eurozone to cut that Greek debt!
So, here is proof that the Eurozone used Greek treasury bonds as collateral for mega swaps prior to February, 2015. This is a press release saying that from that date forward, Greek bonds would no longer be used as swaps. But they already have been used for years. They are Europe's version of mortgage backed securities and they could cause Eurozone to experience a credit crisis as banks fail to trust each other:
4 February 2015 - Eligibility of Greek bonds used as collateral in Eurosystem monetary policy operations
The Governing Council of the European Central Bank (ECB) today decided to lift the waiver affecting marketable debt instruments issued or fully guaranteed by the Hellenic Republic. The waiver allowed these instruments to be used in Eurosystem monetary policy operations despite the fact that they did not fulfil minimum credit rating requirements. The Governing Council decision is based on the fact that it is currently not possible to assume a successful conclusion of the programme review and is in line with existing Eurosystem rules.
- ECB’s Governing Council lifts current waiver of minimum credit rating requirements for marketable instruments issued or guaranteed by the Hellenic Republic
- Suspension is in line with existing Eurosystem rules, since it is currently not possible to assume a successful conclusion of the programme review
- Suspension has no impact on counterparty status of Greek financial institutions
- Liquidity needs of affected Eurosystem counterparties can be satisfied by the relevant national central bank, in line with Eurosystem rules
This decision does not bear consequences for the counterparty status of Greek financial institutions in monetary policy operations. Liquidity needs of Eurosystem counterparties, for counterparties that do not have sufficient alternative collateral, can be satisfied by the relevant national central bank, by means of emergency liquidity assistance (ELA) within the existing Eurosystem rules.
The instruments in question will cease to be eligible as collateral as of the maturity of the current main refinancing operation (11 February 2015).
For media queries, please contact William Lelieveldt, tel.: +49 69 1344 7316.
Notice that I highlighted the sentence explaining that marketable debt was being curtailed as collateral. The ECB got rid of all Greek bonds. This is not about the ECB operations. This is about the Eurozone operations. When a loan is made by a bank, a swap is given to protect the bank and potentially screw the borrower (think Detroit).
But if the collateral is bad, the bank is in trouble, and that is what is happening in Europe. The big banks have Greek debt as collateral. Now it is junk, which is why the ECB established QE, to bail out the big banks of Europe.
Remember, Greek bonds or any bonds considered pristine and of high quality (or at least investment grade) are used as collateral, as gold was once used as collateral. Debt being used as collateral is not a new thing, but is much bigger now than it ever was. And Greek bonds were pledged over and over in rehypothecation. Rehypothecation is the pledging of the same collateral over and over. But the ECB stopped that with this press release.
So, to summarize, it is likely that Greek bonds will be forever destroyed in value if the Eurozone fails to write off Greek debt and forces a Greek exit from use of the euro. The bonds are used as collateral, and others are owned by the ECB. Others are owned by individual nations in the Eurozone, and others are privately owned.
They will become worthless if Greece exits the Eurozone, The Grexit may be too much for the Eurozone to bear and if it is watch the Eurozone write off Greek debt so that Greece wins and the banksters lose. That could be a model for bigger Euro nations and the banksters know it.
Whether Greece's exit can cause a full blown credit crisis is hard to say, but certainly other nations chafing under the heavy hand of Eurozone and German financial oppression, like Spain for example, could create havoc and a credit crisis if they were to exit and maybe get a huge haircut on the debt they owe. And no one knows if the Grexit from the Eurozone could derail the European economy. It very well could.
What a great way to get your debt forgiven. The bankers didn't "bank" on sovereign leverage. Sovereignty is the ultimate winner over empire although it sometimes takes time.
The Achilles Heal of the New World Order bankers concerning the Eurozone is that sovereign nations can simply threaten change currencies, eliminate the Euro, and make their bonds useless, forcing a haircut on their debt. Sovereign nations acting in their own best interests should do that. Spain and Italy should do that.
Iceland became free of the banksters, arrested them, and its economy is doing better.
Greece appears to have the Eurozone by the cajones and that Eurozone may prove to be very fragile and susceptible to a credit crisis. That is a Spanish word, by the way.
Treasuries Are Gold