Greece Heading For The Bust?

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Includes: GREK
by: Constantin Gurdgiev

With capital controls starting to creep in and with a big peak in debt redemptions looming, as per chart below, Greece is now entering the last stage of pre-default financial acrobatics.

Source: FT.com

The country bonds are now re-tracing previous peaks (more on this here):

Source: @Schuldensuehner

And as cash transfers from the local governments to the Central Bank (see link above), plus continued depositors flight are blowing an ever widening hole in Greek balance sheets, the ECB is seriously considering to cut substantially Greek banks' access to liquidity. The cut will have to be along the ELA lines (ELA governing rules are available here). Meanwhile, Greek banks' shares are tanking, down some 50% in a month and a half:

Source: @ReutersJamie

All of which has, as a backdrop, pretty ominous (though entirely correct) ECB talk about the options for Greek default.

This is going to be an eventful day or two, folks.

Update 1: A handy chart summing up ECB's 'headache'

Source: @Schuldensuehner

And as @Schuldensuehner notes: "Grexit costs rise by the minute" as country Target2 liabilities have reached EUR110.4 billion, "mainly driven by ELA for banks."

Source: @Schuldensuehner