As Europe Stares A Break Up In The Face And PIG Bonds Plunge, Its Finance Ministers Are Holding More Meetings
by Tyler Durden
The next two days will be very exciting in Europe: as noted previously, tomorrow Greece will experience a general strike, another parliamentary square blockade (with or without an evacuation tunnel involved) and most importantly, an MP vote on the Troica’s “bailout” measures. Yet the vote appears far from certain to pass affirmatively, just as the entire bailout hinges on some incomprehensible “voluntary” definition which may or may not trigger a “selective” rating agency default anyway. As a result the bonds of Greece, Ireland and Portugal are once again trading at all time record high yields as the market has zero confidence the Eurozone will succeed with this juggling act. In order to prevent a last minute breakdown of the Eurozone, its finance ministers are holding another emergency meeting later today hoping desperately that a deux ex machina will just fall into their laps: “Yields on 10-year Greek bonds climbed to 17.12 percent today, a record in the 17-nation euro-area’s history, before an emergency session of finance ministers in Brussels. They’re seeking to narrow differences on how investors share the cost of easing Europe’s biggest debt burden and to wrap up a new financing plan at a leaders’ summit on June 23-24, a year after Greece received a first bailout.” All this is just theatrics to avoid the impression, and reality, that Europe is now completely powerless: “Greece will default; it’s a question of when, rather than if,” said Vincent Truglia, managing director at New York-based Granite Springs Asset Management LLP and a former head of the sovereign risk unit at Moody’s. “It’s a basic solvency issue rather than a liquidity issue. Only a debt writedown will do.” Which incidentally is as we have been claiming since January of 2010. But it seems that for the currency experimentalists, reality is something best postponed (even at a cost of trillions of taxpayer money).
For those curious, here is Goldman’s Dirk Schumacher, who once used to be so cheery on the topic of Greek solvency, explaining what to look for at today’s emergency ministers meeting. Dirk is no longer cheery.