This is breaking news

These bastards donn’t want Greece to be free of debt – EVER – just as the banks don’t want you to pay off your credit card bill

The ECB Just Tightened The Screws On Greece

The European Central Bank has suspended the eligibility of Greek sovereign debt as collateral for its liquidity operations, starting from February 11th.

Bloomberg,

5 January, 2015

In a press release, the European Central Bank, who are having a governing council meeting today, explained their decision saying that it is currently impossible to assume a successful conclusion of the current Greek program. In other words, the ECB doesn't see Greece complying with existing bailout rules.

It is clear from the press release that the governing council also approved the Greek Central Bank issuance of Emergency Liquidity Assistance to the Greek banking system to cover any liquidity shortfall caused by today's move.

The move from the ECB today is a copy of the suspension of Greek debt that occurred in February 2012.

Following the 2012 suspension, the Greek central bank issued Emergency Lending Assistance (ELA) - a national central bank level liquidity operation outside of normal ECB monetary policy - to Greek banks that grew to total 106bn euros by August 2012.

ECB Pulls The Trigger: Blocks Funding To Greece - Full Statement

Zero Hedge,

5 January, 2015

Just what the market had hoped would not happen...

*ECB SAYS IT LIFTS WAIVER ON GREEK GOVERNMENT DEBT AS COLLATERAL
*ECB SAYS IT CAN'T ASSUME SUCCESSFUL CONCLUSION OF GREECE REVIEW

What this means simply is that since Greek banks are now unable to pledge Greek bonds as collateral and fund themselves, and liquidity is about to evaporate, the ECB has just given a green light for Greek bank runs... and all the worst parts of the bible (or merely a negotiating move to let Greece see just what kind of chaos this will create).

And now finally, after many years of investing in ECB repo collateral, pardon Greek debt, Greek banks finally will ask what the "fundamental" value of all that Greek government debt they bought really is. Judging by the Greek ETF's reaction, the answer is lower.

The only question now is whether the Greek Central Bank, which the ECB said is now sufficient to meet bank liquidity needs, is allowed to print Euros. If not, the Greek experiment at trying to stick it to Europe is about to crash and burn spectacularly.

Joking aside, what is really at stake now, if only for Greece, is everything: Syriza either folds, and cedes by withdrawing all demands, thus effectively ending its mandate less than 2 weeks after coming to power, or it exits the Eurozone.

Press Release From ECB

PRESS RELEASE

4 February 2015 - Eligibility of Greek bonds used as collateral in Eurosystem monetary policy operations

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

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.

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).

Greek minister flies to Germany for showdown over debt repayments

Syriza finance minister Yanis Varoufakis claims widespread support in eurozone over debt relief for Greece, but Angela Merkel stands firm

Greek finance minister Yanis Varoufakis leaves the European Central Bank, Frankfurt, on Wednesday. Photograph: Arne Dedert/dpa/Corbis

the Guardian,

5 January, 2015

Greece’s newly installed leftwing government is heading for a showdown with German leaders over plans to cut the debt repayments due from Athens this summer.

Greek finance minister Yanis Varoufakis flew to Berlin to prepare for meetings on Thursday with his German counterpart Wolfgang Schäuble. At the end of a four-day whistlestop tour of European capitals, he claimed he now had widespread support for his debt relief proposals.

Varoufakis, sticking to his casual no-tie policy, said a meeting with the European Central Bank chief, Mario Draghi, on Wednesday, was “fruitful” and Athens could count on the central bank’s support.

But the German chancellor, Angela Merkel, maintained that senior officials in Brussels, Paris and Madrid remained firmly committed to making European debtor countries repay their loans in full.

“I don’t think that the positions of the member states within the euro area with regard to Greece differ, at least in terms of substance,” Merkel told reporters in Berlin.

There were also reports the ECB would not allow Athens to use the central bank’s balance sheet to raise cheap bridging finance.

Meanwhile, Reuters reported it had seen a document prepared by Germany that made clear Berlin wants Athens to go back on its promises to raise the minimum wage, halt unpopular sales of national assets, rehire fired public sector workers and reinstate a Christmas bonus for poor pensioners.

“The eurogroup [of eurozone finance ministers] needs a clear and front-loaded commitment by Greece to ensure full implementation of key reform measures necessary to keep the programme on track,” it said.

Merkel’s intervention indicated that a diplomatic offensive by the new Greek prime minister, Alexis Tsipras, to ease bailout-aid requirements was failing to win converts.

Following a meeting with the European commission president, Jean-Claude Juncker, in Brussels, the Greek premier flew to Paris for talks with François Hollande. After talking for more than an hour and a half in the Élysée Palace, both agreed the EU must change tack to focus more on growth and jobs and called for dialogue on the Greek debt crisis

Hollande said Europe should show more solidarity, which he said “underscored that austerity as the only perspective and reality wasn’t tolerable anymore”.

However, he was more circumspect when asked about plans to cut Greek debt payments. “There is also respect for European rules, which are imposed on everyone, France too, and it’s not always simple. And then respect for commitments that have been made in connection to debts related to states,” Hollande told reporters with the Syriza leader at his side.

France, which has missed budget targets of its own, has offered to help Athens in debt talks but rejects cancelling the country’s debts and said it would not take part in any anti-Berlin front.

Tsipras said: “The debt must become viable, this is what we must discuss,” adding that he had put “realistic” proposals to EU partners in meetings over the past few days.

“I am convinced we can work together to get out of the crisis in Greece and to help Europe overcome the crisis,” he said.

Markets, which have rallied in response to the more moderate tone struck by Tsipras, remained steady. Greek banking shares rallied for a third day, with Bank of Piraeus up 20.8% and Eurobank up 10.7%. The Athens benchmark index ATG, which rose 0.9% on the day, has now recovered all the ground lost after the election of Syria.

But City analysts remained sceptical about the Greeks’ chances of wining a major debt write-off without German rapport and amid a lack of appetite for reversing EU austerity policies.

Tsipras wants easier terms of repayment on the country’s €240bn (£180bn) in bailout loans and to relax the austerity budget measures the country has been required to make. Athens has balanced its current spending but only after steep cuts to the minimum wage and state pensions, which Syriza argues has plunged the country into a debt spiral and undermined its recovery.

Varoufakis said debt payments should be forgiven until the economy and government finances are in better shape.

Stephen Lewis, the chief economist at broker ADM Investor Services, said: “While it might seem reasonable that the Greek government’s debt servicing costs be reduced if growth turned out weaker than expected, symmetry would demand that Greece pay more if growth turned out to beat forecasts.

“If the Greek debt burden could only move in one direction, that is, towards a lighter load, the European commission would be accepting the principle of debt forgiveness.”

After Tsipras met the presidents of the EU’s three main institutions in Brussels, sources close to the commission told Reuters that the Greek delegation discussed plans with Juncker to “jointly” create a four-year reform plan and talked about the “bridge agreement” that would give Athens time to formulate “a radical plan of reforms in key areas such as corruption, tax evasion and strengthening public administration.”

ECB tightens the screw on Greece with plan to cut funding earlier

Officials at the eurozone central bank has said a waiver that allowed Greece to swap its junk-rated debt for money would now expire on February 11, weeks ahead of schedule

Sealing it with a handshake? Syriza are on a charm offensive across the eurozone Photo: AP Pix

the Telegraph,

5 January, 2015

The European Central Bank has increased the pressure on Greece by bringing forward a ban on the debt-stricken country using its bonds as collateral for cash.

Officials at the eurozone central bank has said a waiver that allowed Greece to swap its junk-rated debt for money would now expire on February 11, weeks earlier than the previous deadline of February 28.

Stock markets fell sharply on the news, with the Dow Jones Industrial Average erasing all the gains it had made on Wednesday with a 0.8pc drop.

The ECB said the move was "in line with existing Eurosystem rules, since it is currently not possible to assume a successful conclusion of the programme review".

It came just hours after Greece's finance minister, Yanis Varoufakis, and Mario Draghi, the ECB president, met in Frankfurt.

Mr Varoufakis, who is due to meet his German counterpart Wolfgang Schaueble on Thursday, declared himself in charge of a "bankrupt country" and declined the offer of yet more loans from European creditors or financial assistance from Russia.

He also compared his country to a jobless worker with a mortgage.

"Would you give him another loan so he can make payments on his house? That cannot work. I’m the finance minister of a bankrupt country!" he told Germany's De Zeit newspaper.

Following meetings in the UK and France, Mr Varoufakis is in Germany to strike a deal with the eurozone's largest creditor nation about renegotiating the terms of Greece's bailout.

The finance minister also had a "fruitful exchange" with Mr Draghi.

"I presented [Draghi with] our government’s utter and unwavering determination that it can’t possibly be business as usual in Greece," Mr Varoufakis told reporters.

Despite more conciliatory tones coming from the far-Left party, Berlin's continued intransigence on Syriza's plans to stimulate the economy were laid out in a leaked document on Wednesday.

Ahead of a meeting of eurozone finance ministers on Thursday, Germany is expected to demand that Syriza drop its anti-austerity promises and continues to stick by its existing bailout arrangements.

Having had proposals for an outright debt-cancellation rejected by Brussels, Mr Varoufakis proposed Greece's repayment burden be lowered by having its debt interest linked to future growth.

Speaking to Italian newspaper La Repubblica, he said talks about such an arrangement had already begun with the IMF.

The claims were later denied by the Fund, who said they had not entered into any discussions with the anti-austerity government.

"There is an agreed framework for dealing with debt in the current program," said the IMF in a statement.

Mr Varoufakis also called for the ECB to provide a short-term loan to help keep the country's lenders afloat.

"The European Central Bank should support our banks so that we can keep ourselves above water by issuing short-term government bonds."

^Greece's^{finance minister spoke to ECB chief Mario Draghi in Frankfurt
(Source: Getty)}

In return, Mr Varoufakis assured German voters his government would seek to dismantle the "cronyism and corruption" that has held back the country for decades.

"Germans have to understand that it doesn’t mean we’re turning away from the reform path if we give an additional €300 a year to a pensioner living on €300 a month. When we talk about reforms, we should talk about cartels, about rich Greeks who hardly pay any taxes."

The finance minister ruled out any plea for financial aid from Russia, and called on the German Chancellor to put forward a "Merkel Plan" based on the post-war Marshall loans granted by the United States to rehabilitate Germany after the war.

"I believe the EU would benefit if Germany conceived of itself as a hegemon,"

said Mr Varoufakis. "But a hegemon must shoulder responsibility for others.

"Germany would use its power to unite Europe. That would be a wonderful legacy for Germany’s federal chancellor."

^{Who
owns Greek debt?}

fired public sector workers and reinstate a Christmas bonus for poor pensioners.