**Official PIIGS Collapse Thread**

http://www.zerohedge.com/news/scandal-greece-receive-negative-cash-second-bailout-it-funds-insolvent-european-banks
Tyler Durden, 2/22/12.

Earlier today, we learned the first stunner of the Greek "bailout package", which courtesy of some convoluted transmission mechanisms would result in some, potentially quite many, Greek workers actually paying to retain their jobs: i.e., negative salaries. Now, having looked at the Eurogroup's statement on the Greek bailout, we find another very creative use of "negative" numbers. And by creative we mean absolutely shocking and scandalous. First, as a reminder, even before the current bailout mechanism was in place, Greece barely saw 20% of any actual funding, with the bulk of the money going to European and Greek banks (of which the former ultimately also ended up funding the ECB and thus European banks). Furthermore, we already know that as part of the latest set of conditions of the second Greek bailout, an 'Escrow Account" would be established: this is simply a means for Greek creditors to have a senior claims over any "bailout" cash that is actually disbursed for things such as, you know, a Greek bailout, where the money actually trickles down where it is most needed - the Greek citizens. Here is where it just got surreal. It turns out that not only will Greece not see a single penny from the Second Greek bailout, whose entire Use of Proceeds will be limited to funding debt interest and maturity payments, but the country will actually have to fund said escrow! You read that right: the Greek bailout #2 is nothing but a Greek-funded bailout of Europe's insolvent banks... and the Greek constitution is about to be changed to reflect this!
The smoking gun quote:
The Eurogroup also welcomes Greece's intention to put in place a mechanism that allows better tracing and monitoring of the official borrowing and internally-generated funds destined to service Greece's debt by, under monitoring of the troika, paying an amount corresponding to the coming quarter's debt service directly to a segregated account of Greece's paying agent.
[Durden]As for the priority of payments - it is more than clear:
Finally, the Eurogroup in this context welcomes the intention of the Greek authorities to introduce over the next two months in the Greek legal framework a provision ensuring that priority is granted to debt servicing payments. This provision will be introduced in the Greek constitution as soon as possible.
So there you have it: the Second Greek bailout is nothing but the first Greek bailout of Europe's banks! And the Greek constitution is about to be changed to reflect that.
Congratulations Greece - you just got royally raped by your own unelected rulers and you didn't even know it.

http://www.wsws.org/articles/2012/feb2012/gree-f22.shtml
Greek Deal: More Pain for Workers, No End to Europe's Crisis, Julie Hyland.

The €130 billion-plus (US$172 billion) package of loans agreed by euro zone finance ministers will not protect Greece from bankruptcy. It merely postpones the inevitable, while European and international finance capital use Greece as a testing ground for their scorched-earth policy of savage austerity being rolled out across the continent.
Nothing is guaranteed as yet. Under the plan, holders of privately-held Greek bonds are to be asked to participate in their “voluntary” restructuring, accepting losses of up to 53 percent. It will not be clear until March whether this has been accepted. Moreover, Monday’s package is entirely dependent on further spending cuts of €3 billion: only if this is achieved in a “timely and effective manner” will aid be forthcoming from the European Union (EU).
This demand is made under conditions in which Greece has been mired in recession for five years, due to the austerity measures enforced by the Greek political establishment and the “troika”—the EU, International Monetary Fund and European Central Bank.
Working people are suffering a social catastrophe.[See previous articles]......
The crisis is so severe that workers are going without pay for months, amid rising poverty and homelessness. Greek manufacturers are paying cash for imported raw materials because they cannot obtain credit.
Yet an additional €20 billion is expected to be needed to recapitalise Greek banks—making a total of €50 billion—due to the flight of capital from the country. There is also to be a massive extension of privatisation projects, up from five to 35, meaning the wholesale sell-off of state land and buildings.
To enforce this, control over Greece’s economy has been placed entirely in the hands of the troika, in what the BBC’s Gavin Hewitt described as a “humiliating and unprecedented intrusion into Greece’s sovereignty.”
European Commissioner for Economic and Financial Affairs Olli Rehn confirmed that a separate account is to be created for the latest bailout package. This is to ensure that debt and interest payments to the banks take priority over government funding of public services and wages.
An “enhanced and permanent presence” of debt inspectors is to be put on the ground in Athens—the de facto enforcement of demands, led by Dutch Finance Minister Jan Kees de Jager, for the troika to be given a “permanent position” within Greece.
To seal this dictatorship of finance capital, EU ministers are demanding that the Greek constitution is rewritten to enforce its austerity measures. As it stands, the constitution cannot be revised for a further year, although the interim coalition government of New Democracy, Pasok and the extreme right LAOS party, is expected to promise such a revision.........
The latest bail-out package is broadly acknowledged to be a “suicide pact”, by which the Greek population is subject to ever greater penury while the troika prepare contingency plans for a supposedly “orderly default.”
Many are forecasting that D-Day will be around March 20, when Greece is due to repay €14.5 billion of debt. By this time it is hoped that February’s G20 meeting and an EU summit on March 1 will have agreed to double the capacity of the various European rescue funds, so as to reduce the risk that a financial crisis would spread across the continent’s weaker economies and banks.
The government parties and the troika are now preoccupied with how to contain the explosive social and political tensions building up in Greece and prevent them from erupting across Europe.....
The Guardian cited an unnamed Greek official stating of the troika, “They want us to do what Pinochet did in Chile, fire civil servants and take very painful steps overnight… If we didn’t live in a democracy we could do that. The fact is people react, they will resist and that’s why we can’t do these things overnight.”.........
The policies of the troika aim at imposing the same agenda [as in Chile} in Europe: utilising the economic crisis as the basis for a social counter-revolution, with Greece acting as the laboratory.
This assault cannot be achieved by democratic means. The latest opinion polls show that support for the coalition parties has plunged to a record low, with New Democracy on 19 percent, PASOK 13 percent and LAOS down to 5 percent.
It is for this reason that German Finance Minister Wolfgang Schäuble suggested that elections in Greece be postponed, and a “technocrat” administration made up of wholly unelected figures working directly for the banks and speculators be installed.
Their concern is that an election would deliver a decisive rebuff to the ruling parties and their austerity policies and expose the absence of any support for the ruling elite. Not only would this embolden social resistance in Greece itself, but elsewhere in Europe where, in Spain and Portugal mass protests have been held against the austerity programmes being imposed.

Nothing has been done since July 21 of last year.

There. Is. No. Deal.

Greece will default March 20....

Last Monday, a deal seemed to have emerged: That’s what the announcement sounded like. In fact, it looked so much like a done deal—it was spun so decisively as a done deal—that I was all set to write something snarky like, Greece Takes It Greek Style: “Thank You Troika, May I Have Another” Bailout On Its Way. (What can I say: I’m a vulgar bastard.)

http://gonzalolira.blogspot.com/2012/02 ... reece.html

The more rational in the financial system, academia, and the media wish this to stop, and know it will end badly, but a powerful few will have no restraints.

And so the dance must continue while the music keeps playing. The stewards of society, the Congress, the President, the media, the Fed, none have the moral sense and courage to merely stand up and say, "Stop. Enough. Stop beating your victims. Stop abusing the public."

Well, some may say it. Tavakoli, Yves, William Black, Elizabeth Warren, Barry Ritholz, and others have all said it, well, and many times.

And among the powerful Obama may say it. Romney, Santorum, and Gingrich may say it. But they do not mean it, and will do nothing substantial about it. And that is a national tragedy.

-jessescrossroads

And since ALL participants have been lying their asses off
about how little exposure they have to this clusterfuck....
well, let's just say we won't be debating whether this is
a Depression any more.

But then . . . then we all started looking at the fine print of the deal. And that’s when everyone who follows this stuff started to realize that the deal wasn’t a deal—merely the illusion of a deal.

And that July 21 itself was merely the continuation of March 5, 2009....

Existing Home Sales: Distressed Property Sales Propped Up, Revisions Were Huge

February 23, 2012 10:10 am

http://www.thedisciplinedinvestor.com/b ... nvestor%29

And the 'October Agreement' was an addendum to the July 21.
Note that the FedRes and other G-4 CB's were ALL OVER the
Markets on these two day:

‘We recommend all investors carefully consider the proposed offer, in that it is broadly consistent with the October agreement’. That’s not true for one thing: but as a recommendation, it’s somewhat limp. Further, there is still a body of hardline ezone sovereigns who don’t want to do the deal – and in Germany itself, a growing rearguard campaign to stop it.

And Gonzalo is on top of his form here:

The idea that Greece can now toddle off and have a liberal democratic general election without any of these being issues is Brussels space-cadet stuff at its most tragi-comic.

http://www.zerohedge.com/news/behold-greek-debt-slavery-do-checklist-permitting-it-bail-out-europes-insolvent-banks
Tyler Durden, 2/23/12.

Yesterday, in our daily list of shocking discoveries of just how far forward Greece is willing to bend over, we realized that not only will Greece not receive a penny (or is that a drachma?) from Europe, but it itself will have to fund the European bank bailout via a Greek-funded Escrow account. In today's 'insult to rape' chronicles, we discover that before Greece is even given permission to bail out Europe's banks, its creditors first demand that the province of Bavaria Sachs, formerly known as Greece, satisfy a checklist of 38 specific conditions, which the now fully colonized nation will have to complete before the end of the month (so in about 5 days), before it is permitted to transfer taxpayer cash to French, German, Italian and Spanish banks. How anyone, even the world's most degraded debt slave, is willing to subject themselves to such humiliation is simply inconceivable.
The FT has the subhuman degradation details:[link, quote follows]......
[Durden]And so forth.
Sarcasm aside, that this is merely a strawman loophole for Germany to say on March 1 that Greece has not completed the measure is beyond glaringly obvious. Which explains why the idiot algos who have taken this development as good news have sent the EURUSD to nearly 3 month highs.
It also goes without saying that one should wait for Tom Stolper to go long the EURUSD before shorting the pair with infinite LTRO funded (in exchange for compressed methane as collateral) leverage.

http://www.zerohedge.com/news/greece-issues-exchange-offer-terms-raises-minimum-acceptance-threshold-75-66-%E2%82%AC10-billion-buys-p
......Buys PSI Killer, Tyler Durden, 2/24/12.

Three days ago we recoiled in terror at the stupidity of Greek leaders, when we learned that the Greek exchange offer would be deemed satisfactory if only 66% of bondholders accept it as valid, as it would mean an immediate abrogation of UK-law bonds which have a 75% minimum covenant threshold as specified in the indenture. Apparently this was a "small oversight" on behalf of the gross amateurs in charge of this process as according to the just released full exchange offer doc, this threshold was mysteriously raised to the proper minimum acceptance threshold of 75%. Of course, it is needless to say that at least 25% of Greek bondholders will decline the offer, either in the current Greek law exchange, or the forthcoming UK-law one, which would throw the whole process into a tailspin. Because here is the kicker, from the release: "if less than 75% of the aggregate face amount of the bonds selected to participate in PSI are validly tendered for exchange, and the Republic does not receive consents that would enable it to complete the proposed exchange with respect to bonds selected to participate in PSI representing at least 75% of the aggregate face amount of all bonds selected to participate in PSI, the Republic will not proceed with any of the transactions described above." So here's the math: if one has 25% +1 of the €177 billion in Greek-law bonds, they can smash the entire process (and give Germany a way out, wink wink). At today's price of about 20 cents on the dollar, this means that one can hold Greece, and thus Europe (assuming Europe wants Greece in the Eurozone and Germany itself is not the biggest shadow hold out) hostage for less than €9 billion. Or better yet, since the total bonds subject to PSI are about €206 billion, this means UK law bonds of just €29 billion are part of the deal, and one can buy a blocking stake there, at roughly 30 cents on the euro, for a meager €2 billion in cash out today. Furthermore since many hedge funds already have built up blocking stakes, this almost certainly means that Greece will not get the requisite needed votes to pass the exchange. Wondering if these hold-outs are actively shorting the market knowing they can bring Europe to its knees with virtually no capital at risk? You should be.
And 75% is just the absolute minimum threshold: somehow Greece thinks it has a realistic chance of getting 90% to agree to get raped, run over, and crammed down by 4 other classes of senior noteholders:
[Quote follows]
And that, ladies and gentlemen, is the German "out", because since Greece will at best get an absolute minimum passing threshold, Germany will just say Nein and call the process abusive.
As posted before, here is the walkthru for the transaction, just replace 66% with 75% in the minimum threshold case.[Interesting flow chart re the PSI follows]
The full terms of the post-reorg bonds are below but they are completely meaningless as it is almost certain that we will not get to there.[We shall see, stranger things have happened. Scribd document follows]

sorry about the bad abbreviation in the title, but I wanted to fit it in if i could.

Since the European colonial state of southern Bavaria Sachs (formerly known as the insolvent Hellenic Republic) no longer even pretends to be anything less than a pass-thru funding colony of its creditors, said creditors (European banks and various insurance companies) are about to send out the first group of colonial scouts in the form of German tax collectors. Also, since as reported previously, Greece will literally have to collect taxes to fund the Second "bailout package", which is merely a front for on ongoing Greek bailout of European banks (recall that it is Greece who is partially funding the bailout Escrow Account), said tax collectors will assist their Greek counterparts (who will rather likely miss their quote of becoming 200% more efficient in 2012) in collecting money from Greek citizens to pay off German banks. If in the process a few (or all) bars of gold end up missing, so be it.

I feel so bad for the Greek people I could just cry.

For future reference, this would be right at home in the PIIGS thread, just to keep the discussion focused.

http://www.zerohedge.com/news/mark-grant-greek-annexation
Tyler Durden, 2/25/12.

"He also said that the European Commission, the EU's executive arm, would be installing its own officials at Greek ministries to provide technical assistance and monitoring on a permanent basis on the ground in Athens."
This [the above]is a quote from the article attached. I think it can be now said that Greece has been annexed by Europe. There is a separate article today where Germany is going to send some of its tax collectors to Greece. As Germany is refusing to increase the funds for the ESM or the EFSF; the IMF is demanding it as a precondition of additional aid. The G-20 meeting appears not to provide any further funds for Europe until Europe has provided more themselves. It is getting down to a "shut-up or put-up" moment for Germany as there is obvious serious dissension in the German Parliament on the next round of the Greek bailout package and also difficulties in the Parliaments of Finland and the Netherlands.
My advice is to put all of the headlines aside because they are not accurate. No deal has actually been struck and there is just the possibility of one at present. The PSI is also nowhere near certain. There has certainly been a proposal made with innumerable and probably impossible conditions to be met by Greece including a demand for a Constitutional change, which under the current Constitution, cannot even be voted on until 2013. I often wonder if Europe really wants to bail Greece out or if Germany is not forcing so many conditions that they are trying to have them exit the Euro on their own so the Germans are not seen as the Lord High Executioner; to quote Mr. Gilbert & Sullivan.
[ZH: close - Germany is likely hoping that Greek creditors holdouts, as discussed here a month ago, will block the PSI transaction, and as a result push Greece into insolvency. This would achieve the German goal, and further shift the blame on "evil speculative hedge funds" (we can already see the Nancy Pelosi statement), who however will receive assurances from the proper channels that nothing bad will befall them even as they are blasted in public.]
The debt payment of March 20 looms for Greece while the IMF now says they will not discuss their part of the Greek loan until March 13. If the IMF only funds $17.4Bn as suggested by the German Finance Minister then the Eurozone will have to come up with even more money which no nation in Europe has yet approved. At then end it is going to get quite messy in my opinion with so many forces converging at the March 20 juxtaposition. You may hold what opinion you like about all of this but I urge caution and some additional cash on your table as this may not play out how anyone expects it.
"Very few beings really seek knowledge in this world. Mortal or immortal, few really ask. On the contrary, they try to wring from the unknown the answers they have already shaped in their own minds -- justifications, confirmations, forms of consolation without which they can't go on. To really ask is to open the door to the whirlwind. The answer may annihilate the question and the questioner." -Anne Rice