Merkel Hides Behind The Troika Report, The Greeks Seethe, And The Drachma Advances

Frau Merkel takes a mini-vacation.  How could she not?  The Greeks love her?  The testosteronepit, via Zero Hedge:

..Athens was prepared for her. Both sides. Police had designated a “red zone” where demonstrating and loitering were prohibited. The Parliament, the prime minister’s mansion, and the presidential mansion were sealed off. Some metro stations were closed, some buses and trolleys were pulled out of service. Water cannons, 7,000 police in riot gear, crowd-control fences... it was all there.


As were 80,000 protesters—or 60,000—who’d been seething for days. It wasn’t just Merkel’s presence on their soil, but also the restrictions on their constitutional right of assembly. “FRAU MERKEL GET OUT,” a poster read. A group of school kids were taken into custody. Tear gas was used. Protestors were trying to tear down crowd-control fences. A melee broke out. Rocks flew. A Nazi flag was burned. But... “Strange thing about Greek demos is that they are part political protest, part village fete, small of meat on the BBQ everywhere,” ‏@teacherdude reported (screenshot).

So why the heck did Merkel dive into this? To express “her support for the difficult reforms,” government spokesman Steffen Seibert explained on Monday, and to “emphatically” point out “everything” that still needed to be done. It was the outline of her strategy. Accomplished politician, she’d try to satisfy both sides, those who want Germany to open the wallet even more, and those who don’t want to see their money disappear into a bottomless pit.
..
Merkel was the epitome of understanding. Greece is in a “very difficult period,” she said, but should “finish what it has started,” otherwise “things will be even harder.” It’s about “our children and grandchildren.” Then, brutally, she pointed at the sword of Damocles hanging over Greece: “Of course, we are not the representatives from the Troika.”
The mighty Troika. It will come out with a report that had been delayed, rescheduled, and re-rescheduled. It will spell out whether or not Greece complied with the agreed-upon 89 “structural reforms.” It’s a huge report, worked on for months, a shield for politicians to hide behind, even for Merkel [Greece Prints Euros To Stay Afloat, The ECB Approves, The Bundesbank Nods, No One Wants To Get Blamed For Kicking Greece Out].

And what was the purpose of her visit, a reporter asked. “I came here to understand the situation on the ground,” she said. “Close contact leads to greater understanding. What the visit means to Greeks, I don’t know.”

So it went. No answers of any kind. They strolled to the Presidential Mansion and said hi to President Karolos Papoulias before heading to the Hilton for a meeting with business leaders from both countries. Chancellors have to bring home the bacon. They travel with a delegation of executives and meet local tycoons to do business. With privatizations on the docket in Greece, surely there’d be some sweetheart deals to be made. And by 7:18 p.m., she was waving goodbye from the door of the plane.

She’d given nothing away. Other than platitudes. No assurances that Greece would remain in the Eurozone, though it was her “hope and wish” that Greece should try. A broken record. There was no promise that the next bailout tranche of €31.5 billion would be disbursed, ever. Greece, which has been paying its bills only selectively, will run out of money entirely by the end of November, and barring a miracle, would have to revert to the drachma.

The Landlord came by to check upon her "investment."  The disdain for her new tenants was palpable.  Towards her, her new tenants felt the same.  Their new "arrangement" will not be comfortable.

The crescendo to all this ugliness will be bloody, both literally and figuratively.  All action going forward will illicit equally strong reactions.

Presenting Spain's Economic Collapse In Context

Short, but not sweet from ZeroHedge.  Bonus bad graph included..

We have presented many charts over the last few weeks showing the collapse in retail sales in Spain, along with surging unemployment, bankruptcies and non-performing bank loans. But to do justice to the situation, you’ve got to put it in context of the last 150 years, and JPMorgan's Michael Cembalest provides just such context. Spain’s adventure in the Eurozone(Starting in 1986) has sent it into an economic tailspin the likes of which have not been seen, with the exception of the Spanish Civil War, since the 19th century. At that time, the Spanish empire was at the tail end of its colonial decline, and was an under-regulated, agrarian, closed economy subject to frequent crises. The chart shows the details, highlighting the economic declines during revolutions, depressions and agricultural epidemics. Spain’s recent decline has now matched them.

 

Deja Vu: Pasok Is Warming Up To Coalition With Only New Democracy

Ahh, the great PASOK flip-flop.  Nice..  Sensible Greeks, you have every reason to believe the two parties that brought you to the brink of financial DOOM will find the way back to prosperity!  Good for you;  Here's a participation ribbon!  Rest up, Riot Dog; You'll be busy soon enough!  Zero Hedge.  Excerpts:

One of the biggest caveats from yesterday's Greek election result was that Pasok announced it would only participate in a broad coalition government that includes Syriza. Obviously Syriza promptly turned down the offer, which has now put the ball back in the court of the Pasok leader - Venizeloz. Being a career politicians, and knowing quite well what the final outcome of the Greek fiasco would be, it was only a matter of time before the former minister of defense, finance, and yes, sport, would flip flop, and hint that a government of just ND and Pasok would also work, as the alternative is just too harsh to even consider. In other words, we may shortly get a repeat of the precisely same leadership that brought Greece to 23% unemployment and a completely destroyed financial and economic system, with Veni back in the role of finance minister once again.

And:
Does this mean a Greek government just may happen, evading a 3rd Greek election in as many months? We will know for sure by tomorrow night, when Pasok said is the deadline by which a new government has to be formed. As for bets on the longevity of the new cabinet, we have no idea what the spread is, but we take the under.


What's the definition of insanity?  Happy fun times are just ahead with your "new" old leaders, Greece!  Opa!  When you take back to the streets, remember to hydrate?  It's gonna be a long, hot summer!

Eurozone critical mass: How it could all go down this summer with Italy and Finland exiting and banks in flames

Interesting theory as to how the Eurozone may spin down/spin out of control and implode/explode..  The Extinction Protocol.  Excerpts:

 Here’s how the Eurozone crisis might come to a head over the summer: a “Spanic,” followed by a “Quitaly,” followed by a “Fixit.” A fresh panic in Spain might be followed by rising demands for Italy to quit if it doesn’t get the same terms its fellow Mediterranean country has been offered, followed by a Finnish departure from the euro that might finally bring the whole saga to a climax. It would be a rough ride — and you wouldn’t want to be holding many assets other than dollars or gold or possibly Swiss francs while it was playing itself out. But at least it might bring a resolution to the crisis. Almost a quarter of the euro’s 17 members have now needed outside help, and Cyprus will probably join the list soon. It is hardly a great record for a monetary experiment, which, let us remember, was meant to bring greater stability — not less. So how could this play out over the summer. Here’s how the sequence might work: First, the Spanic (for a panic in Spain). We’ve just seen one rescue package for the troubled Spanish banks. But who says 100 billion euros is enough? This is a country that is sliding into deep recession, and where the government is cutting spending fast — which is only going to deepen the recession.
..
 Imagine how that is going to feel to the Italians. The Spanish get borrow money at half what it costs them — and this at a time when very high borrowing cost are pushing your country into the fifth recession since the nation joined the single currency. Worse, Italy has to stump up around 22% of the Spanish rescue — borrowing money at 6% to give to its neighbors at 3%. That isn’t going to go down well.  Finally a Fixit (for a Finnish exit). The crisis will finally come to a head when one country decides to get out. Finland is the most likely. Why? Because it is a small nation with a strong economy. It is easy to head for the door. Finland would be better off on the first day, just as Estonia was when it decided to leave the ill-fated ruble zone created after the collapse of the old Soviet Union. It doesn’t particularly have to worry about the impact on the European Union, in the way that Germany would if it opted out. If a country such as that leaves, it is effectively game over, but no one can really say that of a tiny place such as Finland. And it has a strong anti-euro political grouping; the True Finns scored well in the last election and may well improve their position in the polls. Finland is already demanding collateral for its portion of the Spanish loan. That could well turn into a deal-breaker — no collateral, so we’re out of here. Once one country leaves, it is much easier for the next to leave, in much the same way as it is easier to be the second person to leave a really bad party than the first.

(Emphasis from the article)European Banks will be wiped out: Few large eurozone banks would be left standing and the banking sector could face a €370bn (£298bn) loss if the euro crisis results in the single currency bloc breaking apart, according to one of the first in depth analyses of what might happen if the eurozone disintegrates. The analysis by Credit Suisse estimates that up to 58% of the value of Europe’s banks could be wiped out by the departure of the “peripheral” countries – Greece, Ireland, Italy, Portugal and Spain – from the eurozone. Even if the single currency remains intact some €1.3tn of credit could be sucked out of the system as banks retrench to their home markets, unwinding years of financial integration, the Credit Suisse analysis warns his represents as much as 10% of the credit in the financial system. “We find that a Greek exit could be manageable … but in a peripheral exit, few of the large listed eurozone banks would be left standing,” the Credit Suisse report said. The banking sector could need capital injections of as much as €470bn if the three scenarios considered by the Credit Suisse analysts – a Greek exit, an exit of the periphery countries and a situation where banks retrench domestically – happen at once.
And:(My emphasis)
The Credit Suisse analysts insist they are not expecting the euro area to break up – or for Greece to leave – but they believe it is likely there will be a dramatic reduction in cross-border business – leading to less loans for businesses and individuals. The International Monetary Fund has estimated that some €2tn of credit could be lost through a euro zone break up and the Credit Suisse analysts point out they have only analysed the impact on banks they research.

Remember the good old days of say, January, when any mention of Greek, Spanish, or Italian bailouts, defaults, or anyone at all leaving the European Union was so far fetched it wasn't even discussed?  Wow, six months later, and here we are..  So what does that say about the real magnitude and urgency of Credit Suisse's analysis?  Is this close to an accurate assessment, or a vastly under-estimated threat?