– Greek Stocks Crash, Bonds Plummet, Banks Have Worst Day Ever (ZeroHedge, Jan 28, 2015):
In the two days after Syriza’s dramatic victory in the local Greek election, global investors assumed this loud cry against European policies would mean… more of the same, and as a result not much changed in the risk assessment of Greek assets. Then, overnight, following the previous report that not only does Syriza mean business but it is actively pivoting away from Europe (and toward Russia?), and everyone started paying attention, with a waterfall of selling engulfing not only the Greek stock market but also its bonds, which are crashing in the process sending the 3 Year yield to 16.4%, the highest since the restructuring, and the 10 Year either below or above 10%, depending on which data source is used (Bloomberg has them slightly below, others reporting 10-year bond yields up 50 basis points at 10.30%).
For those who missed our take from last night on Greece, it can be found here, while Reuters’ update this morning notes the following:
Prime Minister Alexis Tsipras promised “radical” change on Wednesday as his new government swiftly moved to roll back key parts of Greece’s international bailout, prompting a third day of losses on financial markets.
A swift series of announcements signaled the newly installed government would not back down from its anti-austerity pledges, setting it on course for a clash with European partners, led by Germany, which has said it will not renegotiate the aid package needed to help Greece pay its debts.
Even before the first meeting of the new cabinet, ministers had hit the airwaves to reassure voters they would honor campaign pledges to roll back the tough economic policies imposed under Greece’s 240-billion-euro bailout program.
The planned sale of a 30 percent stake in Public Power Corporation of Greece (PPC), the country’s biggest utility, was halted while ministers pledged to raise pensions for those on low incomes and reinstate some fired public sector workers.
“We are coming in to radically change the way that policies and administration are conducted in this country,” Tsipras told ministers at their first cabinet meeting.
Needless to say “radically changing” is the last thing all those US hedge funds, may they rest in piece, who bet all-in on the Grecovery in 2013 and 2014 is what they wanted to hear and the resultant decimation of Greek risk is as follows:
- Greek banks continue rout as 3-yr bond yield rises to 16.5%, highest since restructuring.
- 10-yr spread vs bunds widens to more than 1,000 bps
- FTSE/Athex banks index down 19%, taking decline since election to as much as 39%
- Piraeus Bank falls as much as 23.2%; volume-at-time is 286% of 30 day average
- Eurobank Ergasias falls as much as 22%; volume-at-time is 284%
- National Bank of Greece falls as much as 20.5%; volume-at-time is 394%
- Alpha Bank falls as much as 19.5%; volume-at-time is 324%
- Those four banks account for 0.54 points of Stoxx 600 decline; index down 0.6 points, or 0.2%, to 368.11
This is what the first three days of post-election Greece look like for local stocks: the biggest weekly (so far) drop ever.
Update: Greek bank stocks not liking Syriza’s victory, -38.5% this week, on track for biggest weekly fall ever: pic.twitter.com/fsectnGMMt
— Jamie McGeever (@ReutersJamie) January 28, 2015
Worse, Greek bank stocks right now are having their worst day ever.
Last one on Greek bank stocks for now – they’re having their worst day ever: pic.twitter.com/5PKMRiwRSq
— Jamie McGeever (@ReutersJamie) January 28, 2015
It’s amazing what happens when a country finally has a politician who truly puts the interest of the people ahead of those of the bankers or shareholders.
And of course, nobody ever said going cold turkey on years of European bailouts (bailouts which are used by Greece to mostly continue paying its obligations to the Troika) is going to be easy. If indeed Greece is intent on proceeding with the Icelandic route, we congratulate them… and wish them luck because the next 6-12 months are going to be painful. The good news: it’s all uphill from there.
When Putin told Greece if they left the European Union, they would receive much needed food, the handwriting was on the wall…………as I noted here over two weeks ago. As soon as Putin made the offer, it made sense. Nobody can go hungry, they will do anything to stop the pain.
I really hope Greece follows in the footsteps of Iceland and tells greedy gut bankers to go to hell.
When a country stops paying mind to the daily needs of its people, it is but a matter of time before it is over for the existing leaders. For some reason, I am put in mind of Hugo Chavez……….the man whose brainchild ruined the US dollar dominance forever……..
But I remember him for something very different. In the early 2000s, after the coup of GW Bush, many of our poor could not afford heating fuel for their homes…..Hugo Chavez sent it to them. Many of our poor didn’t freeze to death those Winters, thanks to Hugo Chavez, and nobody else. That is when I started following his actions, and how I landed on his 2010 introduction to the first electronic currency, the Sucre. Chavez was the head of a small organization, the South American Trade Alliance, and the Sucre made it possible for all member nations to trade directly with each other, using their own currency, leaving the dollar out.
When Russia and China adopted his system for a trade agreement between each other, I knew the end was coming for US domination of the world economy.
Today, 70% of world economies no longer conclude trades with the dollar. They use their own currencies, and an electronic currency like the Sucre, translates the value of each currency, making the need for any world reserve currency obsolete………..
From this, one would think all leaders would take note and pay attention to the requirements of their people. If they don’t, they will lose it all……….and it can’t happen soon enough. The Euro leaders better realize there are more people than greedy gut bankers……….
http://www.zerohedge.com/news/2015-01-28/batic-dry-index-666
Stanley, thanks for the link, this may be a low point, but they still miss the point, the depression has never ended, and saying this is the worst since 2012 and the worst since the recession invalidates the truth. The truth is commodities and transport prices are deflating…….thanks to greedy guts, and deflation (as you likely know already) is harder to overcome than inflation. In inflation, people buy today to avoid higher prices tomorrow. Now, they wait for lower prices…..I do, too. It is a mindset, and lower wages and horrible working conditions only fuel this stuff. It takes decades to get rid of it because it is in the mindset of most working people.
I have a friend who sent out 125 resumes a week after graduating Cum Laude from an excellent school. It took her 11 months to get a $12.00 an hour job. Fortunately, she worked her way through college, and she isn’t burdened with loads of debt. But, it was almost a year. They gave her a raise to $13.00 once they saw what a great worker she is…..but on her year anniversary, bringing in thousands of dollars a day……….they gave her a 60 cent raise. That is a slap in the face, and needless to say, they won’t hire enough people, so people keep leaving, and they try to put more and more on her. It is a vicious cycle. I told her to view it as an apprenticeship, she will go on to better things…..and I know she will.
It is so hard for decent people to get ahead, the corporations suck the life out of everyone. They have to go, somehow, they must go. I doubt if I will live to see it, but the day will come the US people will wake up like Greece (hunger does a lot, and over 20% of Americans suffer from it every month) and throw all the bastards out.
I only hope it happens soon. These bloodsuckers have to go.