http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_19907_16/05/2012_442482
( now we have the four inadequately capitalized banks identified as Alpha , National , EuroBank and Piraeus - and wasn't this a nice bit of trickery / thuggery by the ECB to spur a further bank run under the circumstances , including the ECB initial decision not to name the banks inadequately capitalized ? )
ECB to stop lending to local banks
Lenders will have to use funds from local mechanism for now 
The ECB suggested that the local banks that have not yet boosted their capital sufficiently, as is the case with the majority, will have to temporarily resort to the Bank of Greece and its emergency liquidity assistance (ELA) to ensure an adequate cash flow. “Once the recapitalization process is finalized, and we expect this to be finalized soon, the banks will regain access to standard Eurosystem refinancing operations,” the European Central Bank stated. Panayiotis Thomopoulos, the head of the Hellenic Financial Stability Facility (HFSF), stated on Wednesday that the 18 billion euros destined to bolster the capital base of the four main commercial lenders will be transferred via the deposit of bonds to National, Alpha, Eurobank EFG and Piraeus by Tuesday or Wednesday next week. The credit market in Greece is fuming at the delay in the recapitalization process. Although the relevant government decision was approved before Easter (April 15), and the European Financial Stability Facility (EFSF) has forwarded 23 billion euros to the HFSF to this end, these funds have not yet reached the local banks. Had the process been already completed, banks would not only have been able to tap into the liquidity of the Eurosystem, but the 18 billion euros in bonds would have stabilized the local credit market and reduced anxiety. Bank officials suggest the delay is simply unjustifiable. Worse, deposits are continuing to shrink as Greek citizens’ fears about the course of the economy grow, with rumors circulating in foreign media that local banks have set a 50-euro ceiling on cash withdrawals, which is completely unfounded. Bank sources said the situation remains under control, but add that caution should be exercised to avoid any statements that would generate panic.
and...
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http://www.telegraph.co.uk/finance/financialcrisis/9270884/Debt-crisis-Greek-euro-exit-looms-closer-as-banks-crumble.html
( Note the quiet bank runs isn't just Greece , but Spain and Italy as well. which must have Germany , BUBA and Merkel sleeping poorly)
7:50PM BST 16 May 2012
235 Comments
Economists warned that the Greek financial system could crumble within weeks or days unless the European Central Bank steps up support.
President Karolos Papoulias told party leaders that banks had lost €700m in withdrawals on Monday alone as citizens rush to pre-empt capital controls and a much-feared return to the Drachma.
He cited central bank warnings that "great fear" might soon escalate to panic. The leaked details lend credence to claims that capital flight by both savers and firms have reached €4bn a week since the triumph of anti-bailout parties on May 6.
Steen Jakobsen from Danske Bank said outflows are becoming unstoppable, not helped by open talk in EU circles of `technical’ plans for Greek withdrawal.
"This has a self-fulfilling prophecy built into it and I don’t think we can get to June. The fuse is burning and the only two options now are a controlled explosion where Germany steps in to ensure an orderly exit, or an uncontrolled explosion," he said.
http://www.zerohedge.com/news/quantifying-plan-z-dry-powder-greek-ela-borrowing-capacity
Quantifying The Plan Z Dry Powder - This Is The Greek ELA Borrowing Capacity
We already posted a full run down from JPM on what the immediate costs from a Greek EMU exit would be (starting at €400 billion and going higher), but one point that bears repeating is just how much borrowing capacity Greece has under the ELA in the aftermath of today's news that the ECB is leaving Greek banks to fend for themselves until such time as the Greek recapitalization payment is wired over to Greece, which the ECB has defined simply as "soon." The answer: woefully inadequate, and certainly not enough to backstop the remaining Greek deposits of €170 billion as of the end of March (likely far less now), at €65 billion. And that's an upside estimate: as JPM says "The true maximum amount that Greek banks can borrow via ELA is likely though to be significantly smaller because not all loans are accepted as collateral via ELA." Remember: this is all just one giant game of chicken - Greece's Syriza has bet the farm that the cost from a Greek fallout is just too big to Europe and the terms of the hated "Memorandum" will be adjusted, while to Europe, on the other hand, the outcome to Greece, at least according to Europe and the IIF's Dallara will be "between catastrophic and armageddon." So... Who blinks first?
From JPM:
Greek banks have run out of ECB eligible collateral already and can only access Bank of Greece’s ELA, but even with ELA, the collateral,typically loans, is not unlimited. They have already borrowed €60bn via ELA which, assuming 50% haircut corresponds to around €120bn of loan collateral. Outstanding loans are €250bn, so Greek banks have a maximum of €130bn of remaining loan collateral which allows for a maximum of €65bn of additional borrowing from Bank of Greece’s ELA. This corresponds to around 40% of Greek bank deposits which stood at €170bn as of the end of March. The true maximum amount that Greek banks can borrow via ELA is likely though to be significantly smaller because not all loans are accepted as collateral via ELA. The alternative is for Greek banks to be allowed to issue more government guaranteed paper but the ECB can, with a 2/3rd majority, block a steep and unsustainable increase in Bank of Greece’s ELA. This would effectively cut Bank of Greece off from TARGET2.
Once TARGET2 starts unwinding, with amassive €644 billion claim on the Eurosystem by the Bundesbank, and the realization that an imploding heretofore "contingent" and suddenly all too real liability amounting to 25% of German GDP means an in-kind collapse in living standards, then the simmering German anger will go truly parabolic.
One thing is certain: at least JPM is "hedged."
and.....
http://www.zerohedge.com/news/did-draghi-just-give-greece-all-clear-leave
Did Draghi Just Give Greece The All-Clear To Leave?
ECB President Draghi just admitted that while the ECB Governing Council would like Greece to stay, they will not take any further extraordinary measures to save it and will do everything they can to preserve their 'pristine' balance sheet - which sounds a lot to us like - 'we are not lending/printing/supporting your financial system anymore as you are far too big a risk (and are asset-stripped) and to be honest, it might be better if you just left - since we have encumbered all your assets anyway'.
Bloomberg: Draghi Signals ECB Won’t Keep Greece in Euro Area at Any Cost
European Central Bank President Mario Draghi indicated that while his “strong preference” is that Greece stays in the euro area, the bank won’t compromise on its principles to prevent an exit.
“The ECB will continue to comply with the mandate of keeping price stability over the medium term in line with treaty provisions and preserving the integrity of our balance sheet,” Draghi said in a speech in Frankfurt today. Since the euro’s founding treaty does not envisage a member state leaving the monetary union, “this is not a matter for the Governing Council to decide,” Draghi said.The comments are the closest Draghi has come to conceding Greece could leave the euro region. Greece faces a fresh election on June 17 that may boost parties opposed to the conditions of its international bailouts, raising the specter of its exit.“The Governing Council’s strong preference is that Greece will continue to stay in the euro area,” Draghi said.
As a reminder, when thinking of Europe, the shorthand rule is: assets. And specifically, the lack thereof. Why is the ECB scrambling to collateralize every imaginable piece of trash that European banks can procure at only some valuation it knows about? Simple - quality, encumbrance and scarcity. When one understands that the heart of Europe's problem is the rapid "vaporization" of all money good assets, everything falls into place: from the ECB's response, to Europe's propensity for infinite rehypothecation, to the rapidly deteriorating financial system. It also explains why America will be increasingly on the hook, either via the Fed indirectly (via FX swaps <http://www.zerohedge.com/news/european-fx-swap-line-usage-ny-fed-rises-f...), or indirectly via the IMF (such as two days ago when US taxpayers for the first time funded the first bailout check <http://www.zerohedge.com/news/us-taxpayers-commence-bailing-out-ecb-gree... the ECB using Greece as an intermediary).
and half truths / trickery ? promises / threats / lies / attempts to bankrupt Greece are coming - things just getting started my friends....
http://hat4uk.wordpress.com/2012/05/16/greece-on-the-brink-chaos-and-fakery-as-the-final-act-begins-to-unfold/....
GREECE ON THE BRINK: Chaos and fakery as the final act begins to unfold.
With signs of growing panic in the markets and Greek banking system, dirty tricks via post seem to be the order of the day in Athenian politics. The Establishment Parties and the EU continue to develop scenarios suggesting that the sky will fall in if Greeks vote to leave the eurozone, although opinion polls continue to show that – while support is moving increasing towards the anti-Troika Parties – the electorate has no strong desire (35% at most) to leave the EMU. It seems to The Slog, however, that if the Greeks can hold on and keep their heads, inflexible austerity as a strategy will be a dead duck in the eurozone by the time they come to vote again on June 16th anyway.
Large numbers of politically aware Greeks are this afternoon (Wednesday) discussing the as yet unseen contents of a letter allegedly from Prime Minister Papademos to President Karolos Papoulias. Mentioned in the transcript of the Coalition discussions, the note is rumoured to give a true picture of the Greek banking and economic situation. To not many observers’ surprise, the letter reputedly depicts Greece as a country flat on its back roughly five yards from an oncoming truck.
However a growing section of the political class suspects that the letter is a fake.
“I’ve seen it,” says one source on the political Left, “and it isn’t signed by Papademos. Our perspective is that it’s more crude scare-tactics, a new attempt by Venizelos and New Democracy to terrify the voters.”
The ‘scaremongering’ explanation is that expounded by The Slog last Sunday – a piece that got enormous hits here, and went viral in Greece. But Sloggers should note that the piece contained the important phrase, ‘Maybe the first few months will be very tough’. This isn’t going to be a breeze, but nobody – not in Brussels, Berlin, Washington or Beijing – has anything to gain from a post-eurozone Greek collapse. It’s just that Brussels, Mario Draghi and Wolfie Schäuble have a great deal to lose from the exit….hence the media terrorism. As Marketwatch notes this morning:
“Germany will realize the risks involved, eat its words and come up with a mega bailout. Instead of a ‘Grexit’ we’ll see a “Grashall Plan” — as a Marshall Plan for Greece will quickly be dubbed — to reflate its economy and keep the euro staggering on for a couple more years, at least.”
This morning – after a long gap – I had a conversation with the Slog’s Bankfurt Maulwurf on this topic. I’ve spent most of the morning checking out what he said – which was dramatic – and with luck the story may stand up more solidly later today.
But as we saw in March, clever plans can screw up badly. So the Greeks need to accept that, if the second election brings anti-Troikaism to power in Athens, things will be bumpy at first. And there are myriad signs of this already.
Greek 2023 bond yields rose past 30% for the first time this morning. Q1 in 2012 was the first during Greece’s ongoing crisis that saw more enterprises shutting down than opening, according to figures released on Tuesday by the Development Ministry’s General Secretariat for Commerce. Data showed that 8,361 new enterprises went into business in the January-March period, while 10,315 ceased operation.
Central bank chief Provopouluos told President Karolos Papoulias that savers withdrew at least 700 million euros last Monday. He was expecting outflows of a further 800 million euros by the close of business Wednesday.
But the Greek electorate needs to calm down. The tide of austerity is turning into the flow of stimulus in both Brussels and Berlin; and oddly, the Greeks could, if they remain firm, get their best-of-both result of rejecting the Troikanaut approach and staying in the euro. It’s a choice that remains theirs to achieve if they think through just how much Berlin-on-Brussels-by-Frankfurt doesn’t want them to exit….and leave a large hole of unpaid eurodebt behind.
The Slog view remains that the eurozone will melt down anyway in the light of the Spanish (then Italian and French) problems. But already yesterday at a press conference after their first meeting, German Chancellor Angela Merkel and French President Francois Hollande said they would consider measures to spur economic growth in Greece. Fine, they added ‘as long as voters there committed to the austerity demanded to stay in the euro’ as an oxymoronic attempt to look as if they were on the same page of the hymn book: but this is not a demand Merkel can any longer enforce. Austerity is now seen by many of the German soft and hard Left as a chronic policy failure. The SPD would reverse it if returned to power – and to make their point clear, the Hard German Left torched the car of Greek task force leader Horst Reichenbach outside SW Berlin in Glienicker last Sunday night. An extreme-Left group claimed responsibility in a letter to theBerliner Morgenpost newspaper the following day.
But fakery is everywhere in Athens. To complicate matters further – and in a probable attempt to discredit Independent Greeks – the office of President Papoulias on Tuesday issued a statement saying that he’d given a document on Sunday by the leader of Independent Greeks, Panos Kammenos, containing “various scenarios for the formation of a government”. Kammenos insists that he did no such thing, and had written no such document. (Venizelos is seen in the transcripts of Coalition talks attempting a similar trick at the expense of Alexis Tsipras and Syriza.)
The document was all over the media by late Monday, with Kammenos appearing to back a coalition government in the event of a “national emergency”, but the person Kammenos insisting he knew nothing about the document.
Emerging from the melee for a concluding paragraph, clear minds must face what Berlin has created here. Its blind rigidity about austerity coupled with blind-eye support for banking madness and mendacity has created an EU in which, bizarrely, the markets don’t trust Brussels and EU citizens don’t trust Germany. The Merkel Government then compounded the crime by using a hypocritically moralising tone of voice depicting Germans as thrifty and ClubMed citizens as lazy Untermenschen. Along the way, she and her Dr Strangelove Wolfgang Schäuble (in alliance with the doggerel idiot Herman Van Rompuy) have pulled off a quite amazing feat: the alienation of bond dealers, Mario Draghi, ClubMed Governments, the British and, ultimately, the French electorate.
The launch of a vigorous suit against Goldman Sachs (alongside more honesty from the outset about the need to acknowledge past mistakes, and the promotion broadscale debt forgiveness) could’ve made Brussels and Berlin the permanent heroes of this crisis. That they funked it completely reveals the profundity of their incompetence, and illiberal scheming on the side of big State big business – rather than in support of the European citizen.
The result will be a kaleidoscope of problems with which their successors throughout Europe will have to deal for many years to come – the outcome of which remains both murky and gloomy. I am glad to see a free Greece, but I do not want a Far Left Government in Athens. I will be happy to see baseless austerity ditched, but the details of growth are still absent. I am delighted to see German trumphalism reined in, but the innate imbalance of the eurozone remains a problem not even tackled let alone solved. I would be glad to see the eruozone collapse, but I don’t want either a return for Franco-German emnity or the banking tidal wave that will hit Britain’s shores afterwards. I’m glad to see the nasty imp Sarkozy make an exit, but Hollande’s brand of wishy-washy spendiste socialism isn’t going to take France anywhere except to debtors’ prison.
As new recruits to Brussels were informed over many years, “Your basic job is to keep Germany distracted and within its borders”. Both those aims of the EU having failed, I find it even harder now to see any point at all to the European Union.
and.....
Plug-pulling in Athens
First, a detail from the FT’s take on Greece’s political turmoil:
Several Athens bankers voiced concern on Tuesday over a sustained outflow of deposits of more than €5bn since May 6, reflecting increased political uncertainty.
That works out at an average of €700m per business day, up to May 15.
Second… via the WSJ, Greece’s president has released further minutes of meetings to scrabble together a coalition government. That’s all academic now. But the details that President Papoulias revealed about one day (May 14) of deposit outflows aren’t:
The situation is difficult for banks. Up to the time I got them at 4pm, withdrawals exceeded €600m, arriving at €700m.
The President also noted an increase in buy orders for German bonds. In these circumstances that means German euros. Those were estimated at another €100m, according to our Google Translate hack of the transcript:
There are not added, and all those who took orders banks to convert German government bonds and other such things. And estimate that they will be totaling approximately 800 million euros.
FOTIS KOUVELIS (President of the Democratic Left): All together?Karolos Papoulias (President of the Republic): Yes, all together.
Papoulias also said something along the lines that Greek central bank chief George Provopoulos told him this was not a bank run, but a “great fear” that could turn into a panic.
________________OK — not really a surprise to see deposit withdrawals and a flight from Greek euros now, with a euro exit in the air, you might think. But in a way it is.The amazing thing about the Greek banking system since 2009 is not just the 25 to 30 per cent of deposits that have left, but the 70-75 per cent which have stayed. They have stayed through two years of Greece transparently getting closer to leaving the euro and turning these deposits into drachma. We’re being serious. It’s a real challenge to prospect theory. Up to €170bn remained in banks at the end of March.Although deposits clearly do respond to politics — the Greek President made that fairly clear this week — they have tracked the rate of Greece’s economic decline since 2009 pretty closely too. Maybe that says something about general pressure on Greek household wealth, as a driver of deposit flows. In any case, depositor flight has beenwhat Gabriel Sterne, an economist at Exotix, has previously called a ‘bank jog’. Something to think about. What it becomes now with a month to go before fresh elections is another question.But our main point is really about the emergency liquidity assistance from the Greek central bank which replaces lost deposit funding. ELA came to about €60bn at the last count though it is clandestine by nature.In light of all the above, we should go back to what the European Central Bank’s Luc Coene said earlier this week to the FT:No, we don’t have a choice. We do not provide ELA to insolvent banks.Coene is simply repeating longstanding ECB policy. But in the case of Greece, the ECB board approves (so can not approve) the national central bank’s use of ELA on a short-term basis.The strains that could be placed on this system were captured pretty well by JPMorgan’s Flows & Liquidity analysts in a note published last week:Greek banks have run out of ECB eligible collateral already and can only access Bank of Greece’s ELA, but even with ELA, the collateral, typically loans, is not unlimited. They have already borrowed €60bn via ELA which, assuming 50% haircut corresponds to around €120bn of loan collateral. Outstanding loans are €250bn, so Greek banks have a maximum of €130bn of remaining loan collateral which allows for a maximum of €65bn of additional borrowing from Bank of Greece’s ELA. This corresponds to around 40% of Greek bank deposits which stood at €170bn as of the end of March. The true maximum amount that Greek banks can borrow via ELA is likely though to be significantly smaller because not all loans are accepted as collateral via ELA. The alternative is for Greek banks to be allowed to issue more government guaranteed paper but the ECB can, with a 2/3rd majority, block a steep and unsustainable increase in Bank of Greece’s ELA. This would effectively cut Bank of Greece off from TARGET2 and force it to eventually issue its own money.
There’s surely not much question that the Greek government would like some of its banks to survive after it leaves the eurozone.
The question is whether, and why, the ECB would pull the plug if the bank jog does accelerate. We sort of know why from what Coene said. But JPMorgan mention the Greek central bank’s liabilities to the other eurozone central banks within Target2.
Currently the liability is around €100bn. This is a pretty big hole to punch in the balance sheet and to divide among countries according to the ECB’s capital key. We suppose allowing a steep ELA increase would punch an even bigger hole, but this is already a huge price for driving Greece out of the euro.But increasingly it seems it would be the driver.Additional reporting by Kate Mackenzie.
http://www.athensnews.gr/portal/1/55512
Welcome to the Athens News live news blog, where we will be covering all the developments ten days after the 2012 general election - and the first day of the second election campaign
10.55pm An opinion poll published yesterday for the Attica prefecture shows that Syriza could take a combined 32 percent in area's five constituencies: Athens A, Athens B, Piraeus A, Piraeus B and Attica.
The figures below show the share that the parties could expect in poll (excluding abstentions, don't knows, spoiled votes etc).
The poll was conducted by the statistics department of the Athens University of Economics and Business (AUEB) for Extra3 TV.
Welcome to the Athens News live news blog, where we will be covering all the developments ten days after the 2012 general election - and the first day of the second election campaign
10.55pm An opinion poll published yesterday for the Attica prefecture shows that Syriza could take a combined 32 percent in area's five constituencies: Athens A, Athens B, Piraeus A, Piraeus B and Attica.
The figures below show the share that the parties could expect in poll (excluding abstentions, don't knows, spoiled votes etc).
The poll was conducted by the statistics department of the Athens University of Economics and Business (AUEB) for Extra3 TV.
Syriza: 31.9%
New Democracy: 13.8%
Independent Greeks: 12.8%
Pasok: 8.7%
Communist Party: 6.8%
Golden Dawn: 5.8%
Democratic Left: 5.5%
Recreate Greece: 3.5%
Ecogreens: 3.4%
Popular Orthodox Rally (Laos): 3%
Drasi: 2.5%
Democratic Alliance: 1.2%
Anticapitalist Left (Antarsya): 0.6%
Social Pact: 0.4%
9.30am Good morning! The country's party leaders finally agreed yesterday that they couldn't agree on creating a coalition which means that the country is headed for new elections, most likely on June 17.
What's on the agenda for today?
- 1pm: The president will convene a meeting of the party leaders.
- He will first ask them if they can form a caretaker government that would have the sole responsibility to lead the country to elections.
- If that fails, the constitution gives the president the right to entrust the chief of one one of the country's top three courts - the supreme administrative court, the supreme civil and criminal court or the court of auditors - with forming a cabinet. He or she would become caretaker prime minister
- Papoulias will subsequently dissolve parliament, shortly after it meets for the first time on Thursday
and....
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_16/05/2012_442328
Schaeuble rules out renegotiation of Greek bailout
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German Finance Minister Wolfgang Schaeuble stressed on Wednesday that it was not possible to re-negotiate an international aid plan for Greece.
"This is an aid programme that was prepared down to the last detail, we cannot re-negotiate it,» Schaeuble told Deutschlandfunk radio after Greek political leders said they were unable to form a new government, suggesting that new elections would be held.
"Greece must be ready to accept the aid» offered by the European Union, the International Monetary Fund and the European Central Bank, Schaeuble said.
"Those who win the elections will have to decide if they accept the conditions or not,» he added.
Greeks voted in May 6 polls and dealt a sharp rebuke to mainstream parties that had negotiated with the so-called EU-IMF-ECB troika, implicitly rejecting stiff austerity measures in exchange for a second financial rescue package.
Schaeuble said EU members wanted Greece to remain in the 17-nation eurozone but underscored that it was «a sovereign decision by the Greek population."
"Speculating about what Greece will choose does not help» matters either, the German minister said.
Schaeuble had raised concern last week when he said the eurozone could survive a Greek exit, a situation EU leaders refused to even consider a year ago.
On Tuesday, German Chancellor Angela Merkel and French President Francois Hollande underscored their intention to help Greece stay in the eurozone and said they were mulling new measures to boost growth in the debt-stricken country.
and wish well words from the tall tan lady.....
IMF: Exit from euro could be orderly
European governments make plans for the effects of a possible return to the drachma
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Following the collapse of talks between the country’s political leaders on Tuesday and the decision for a fresh election to take place next month, the world appears to be warming to the idea of a Greek eurozone exit. The risk of the next government being reluctant to fulfill Greece’s bailout commitments, meanwhile, prompted the International Monetary Fund to suggest the country could ditch the single currency in an orderly manner.
“If the country’s budgetary commitments are not honored, there are appropriate revisions to do, which means either supplementary financing and additional time or mechanisms for an exit, which in this case must be an orderly exit,” IMF chief Christine Lagarde said in an interview yesterday.
“It is something that would be extremely expensive and would pose great risks, but it is part of options that we must technically consider,” she said.
“It is a severe setback for the urgently needed confidence in Greece’s readiness to reform,” German Foreign Minister Guido Westerwelle said. Greece cannot avoid “tough and painful reforms,” he added.
His colleague, Finance Minister Wolfgang Schaeuble, warned, “The fundamental question that the second program for Greece is about is agreed and not negotiable in its economic parts, and is not being negotiated.”
However, he added that “if we can help with additional, bilateral measures, that is an entirely different question.”
Other finance ministers have also started contemplating a Greek exit, with Francois Baroin saying on Tuesday that France has lent 50 billion euros to Greece and that the nation’s banks can absorb Greek losses.
His counterpart, Jan Kees de Jager, said the Dutch government has studied the scenario of a possible Greek exit but insisted the aim is for Greece to stay in the common currency.
On the other hand, the president of the Eurogroup, Jean-Claude Juncker, described all talk of a Greek exit on Monday as “propaganda,” while Charles Dallara, the head of the Institute of International Finance, admitted he is probably part of a small group that does not take Greece’s exit from the eurozone as a foregone conclusion.
“I believe that the cost to Greece, the cost to Europe and the cost to the entire global economy may still be enough to cause Greek politicians and European politicians to pause before they pull the trigger on a Greek exit,” said the man who negotiated Greece’s privately held debt restructuring earlier this year.
