Seeking Alpha

EU leaders fail to approve the disbursement of €12B in immediate aid to Greece,...

EU leaders fail to approve the disbursement of €12B in immediate aid to Greece, delaying a decision until July.  "I cannot imagine ... we would commit to finance Greece without knowing that the Greek Parliament has given a vote of confidence to the Greek government," says Jean-Claude Juncker. The confidence vote takes place Tuesday. Euro is off marginally at $1.428.
Comments (14)
  • Stone Fox Capital
    , contributor
    Comments (5581) | Send Message
     
    not really that shocking.
    19 Jun 2011, 10:47 PM Reply Like
  • rwdurham
    , contributor
    Comments (59) | Send Message
     
    Failing to approve the disbursement prior to a Greek "vote of confidence" does not sound like a good strategy to me if you are looking for a unified government to pass a tough austerity package in the face of significant citizen opposition.
    19 Jun 2011, 11:03 PM Reply Like
  • Schen1301
    , contributor
    Comments (99) | Send Message
     
    I hope my FXE puts pay off next week.
    19 Jun 2011, 11:03 PM Reply Like
  • Cliff Wachtel
    , contributor
    Comments (1764) | Send Message
     
    timing EUR shorting treacherous given ability of leaders to delay day of reckoning. need to have time to let this story play out, could yet take a while
    20 Jun 2011, 05:50 AM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    It is reasonable that the EU leaders have delayed approving the €12B in immediate aid to Greece pending the vote of confidence scheduled for this Tuesday in Greece. It is also prudent and appropriate that they say little that would be interpreted as coercion by Greek parliamentarians (it is therefore surprising that Jean-Claude Juncker said what he is quoted here as having said) and better to simply let the circumstances imply why the delay is taking place. That said, one should anticipate that the €12B in immediate aid will in the end be given.

     

    US Federal legislators should take note of the anxiety and skittishness all this is causing when they consider how the debate iover the Federal debt limit should take place and be resolved over the next four to seven weeks.
    19 Jun 2011, 11:14 PM Reply Like
  • Tack
    , contributor
    Comments (12440) | Send Message
     
    Bob:

     

    One thing I don't like about this --and I'm sure the markets won't either-- is the time gap announced, which seems to belie the supposed reason, that being the vote of confidence, rather than internal bickering of EU members. If the real issue were only the vote of confidence, they could make an announcement on Wednesday. Postponing until July is going to suggest to market that the deal's not done, whether that's the case or not.

     

    I'd look for a pretty negative reaction from European and U.S. market tomorrow.
    19 Jun 2011, 11:20 PM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    Tack –

     

    I think it is a given that Greece will get the €12B in immediate assuming that the Tuesday vote of confidence is passed and that it is over the terms (especially whether private holders of Greek sovereign debt will be expected to ‘voluntarily’ agree to a restructuring of their holdings) of the further €100B bailout package that the debate amongst EU and IMF leaders continues into July.

     

    You are correct, however, as many in the market will not be considering the details but only that the whole Greek situation remains up in the air.
    19 Jun 2011, 11:33 PM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    Tack -

     

    I note that the markets in Asia and Australia have opened for the week and appear to be taking matters well.
    19 Jun 2011, 11:59 PM Reply Like
  • Tack
    , contributor
    Comments (12440) | Send Message
     
    Bob:

     

    Well, Europe didn't much like the news, as I expected. U.S. futures down, too, although slightly less.
    20 Jun 2011, 09:22 AM Reply Like
  • joro_ianev
    , contributor
    Comments (371) | Send Message
     
    Finally some common sense. Why throw good money into a dark, deep pit if the Greeks will continue to support their massive public sector, pay themselves the 14th monthly wage and pensions and not bear any brunt for decades of irresponsible spending? Of course the Greek citizens will be against cuts. I would be too if the rest of Europe financed me!!! It will be another song when the money dries up.
    19 Jun 2011, 11:16 PM Reply Like
  • realornot
    , contributor
    Comments (1281) | Send Message
     
    Sure, they can kick the can down. They are creating a can that is so big and heavy. Not even Beckham can kick it without injuring him.
    IMO they are building a super massive Black Swan Event that is completely predictable by 2012.
    20 Jun 2011, 02:23 AM Reply Like
  • Cliff Wachtel
    , contributor
    Comments (1764) | Send Message
     
    as I noted in my Sunday post: "It's the bondholders, stupid (not Greece) that matter, Greece will get cash regardless of what they do in order to prevent default/global financial crisis, until banks have more time to hoard cash and govs have time to get bank bailout ready in order to prevent global financial collapse.

     

    In other words,
    Thus I suggest Greek vote is IN FACT irrelevant, EU/US (via the IMF) not letting Greece fail & ignite contagion until banks build up more cash and governments in EU and US (its banks about as exposed as those of core funding nations 'cause the geniuses were the ones who wrote most of the default insurance - worth about 30% of total PIIGS debt. Greece could vote against austerity, vote for sending themselves on a luxury cruise and send the the bill to the the ECB, they'll still get the cash, I suspect.

     

    Once bank bailouts round II is ready for a the wave of sovereign defaults that Greece will kick off (bond rates of other PIIGS will soar, cut them off from further bond sales) followed by insolvencies of banks holding this crap, including the ECB, followed by yet more bank insolvencies, etc. Taxpayers will fund it all again, fiat curencies w/b further debased, higher deficitis, etc because immediate global financial collapse an even worse prospect.

     

    Bailouts understandable, but I'd feel better knowing banks taking bailouts would give up corresponding share of ownership to govs in order to socialize future profits as well as the risks. Can't let banks fail, would crash global economy, so let's at least get the benefits of ownership taxpayers are paying for anyway.
    20 Jun 2011, 05:49 AM Reply Like
  • Angel Martin
    , contributor
    Comments (1282) | Send Message
     
    "Greece could vote against austerity, vote for sending themselves on a luxury cruise and send the the bill to the the ECB, they'll still get the cash, I suspect."

     

    Cliff, I totally agree with this. In the end it's only 12 bil to kick the can into the Fall, and the europe core has too much to lose not to do that.

     

    In my view, the moment of truth for the EU/euro will come when Spain needs a bailout, as the numbers would likely be at least 5 times that of Greece.
    20 Jun 2011, 09:41 AM Reply Like
  • sr1977
    , contributor
    Comments (318) | Send Message
     
    Perhaps another (although probably unlikely) possibility is that the unrest in the Greek populace boils over and we see rioting on a larger scale. Last week the riots were (at the time they were occurring) estimated at 100K, but that number was later revised to 20-30K - not enough to topple a government. Riots with 100-150K participants might be enough to overwhelm the local police and cause harm to government officials. Such a scenario would most likely trigger an immediate default, to say the least.
    20 Jun 2011, 08:00 AM Reply Like
DJIA (DIA) S&P 500 (SPY)