NEW GREEK FINANCE MINISTER TELLS THE TRUTH

Greece Begins The Great Pivot Toward Russia

Submitted by Tyler Durden on 01/27/2015 21:50 -0500

Ten days ago, before the smashing success of Greece’s anti-austerity party, Syriza, we noted that Russia gave Greece a modest proposal: turn your back on Europe, whom you despise so much anyway, and we will assist your farmers by lifting the food import ban.

And, sure enough, Greece’s new premier Tsipras did hint with his initial actions that Greece may indeed pivot quite aggressively away from Europe and toward Russia in general and the Eurasian Economic Union in particular (as a tangent recall “Russia’s “Startling” Proposal To Europe: Dump The US, Join The Eurasian Economic Union”). Some previously noted examples of this dramatic shift in perspective:

Today we got further evidence that Tsipras will substantially realign his country’s national interest away from the west and toward… the east.

First, as Reuters reported, today the new premier halted the “blue light special” liquidation of Greece to those highest bidders who have the closest access to various printing presses and stopped the privatization of Greece’s biggest port on Tuesday, “signaling he aims to stick to election pledges despite warning shots from the euro zone and financial markets.”

One of the first decisions announced by the new government was stopping the planned sale of a 67 percent stake in the Piraeus Port Authority, agreed under its international bailout deal for which China’s Cosco Group and four other suitors had been shortlisted.

“The Cosco deal will be reviewed to the benefit of the Greek people,” Thodoris Dritsas, the deputy minister in charge of the shipping portfolio, told Reuters.

Europe, for one, will be most displeased that Greece has decided to put its people first in the chain of priority over offshore bidders of Greek assets. Most displeased, especially since the liquidation sale of Greece is part of the Greek bailout agreement: an agreement which as the Troika has repeatedly stated, is not up for renegotiation.

Syriza had announced before the election it would halt the sale of state assets, a plank of the 240 billion-euro bailout agreement. Stakes in the port of Thessaloniki, the country’s second biggest, along with railway operator Trainose and rolling stock operator ROSCO are also slated to be sold.

And it wasn’t just this open act of defiance that marked the new government’s anti-European agenda:

In a separate step, the deputy minister in charge of administrative reform, George Katrougkalos said the government would reverse some layoffs of public sector workers, rolling back another key bailout measure. “It will be one of the first pieces of legislation that I will bring in as a minister,” he told Mega TV.

The Germans were not happy: A German central banker warned of dire problems should the new government call the country’s aid program into question, jeopardizing funding for the banks. “That would have fatal consequences for Greece’s financial system. Greek banks would then lose their access to central bank money,” Bundesbank board member Joachim Nagel told Handelsblatt newspaper.

Well, maybe…. Unless of course Greece finds a new, alternative source of funding, one that has nothing to do with the establishmentarian IMF, whose “bailouts” are merely a smokescreen to implement pro-western policies and to allow the rapid liquidation of any “bailed out” society.

An alternative such as the BRIC Bank for example. Recall that the “BRICS Announce $100 Billion Reserve To Bypass Fed, Developed World Central Banks.”

And yes, the BRIC are going through their own share of pain right now as a result of plunging crude prices, but remember: crude is only low as long as the US shale sector is still vibrant. Once this marginal producer of crude with a $80 cost-breakeven is out of the picture, watch as Saudi Arabia tightens the spigots and Crude surges to $100, $150 or more. The question is whether Saudi FX reserves can outlast the Fed’s ZIRP, which is the only reason – think idiots junk bond investors desperate for any ounce of yield – why the bulk of unprofitable and cash flow-bleeding US shale can still operate.

Which naturally means that now Russia (and China) are set to become critical allies for Greece, which would immediately explain the logical pivot toward Moscow.

But wait, there’s more.

As Bloomberg reported, “Foreign Minister Nikos Kotzias is due in Brussels on Thursday to discuss possible additional sanctions on Russia over the conflict in Ukraine. Before the cabinet even meets for the first time tomorrow, the Greek government said that it disagreed with an EU statement in which President Donald Tusk raised the prospect of “further restrictive measures” on Russia.”

The punchline:

In recent months, Kotzias wrote on Twitter that sanctions against Russia weren’t in Greece’s interests. He said in a blog that a new foreign policy for Greece should be focused on stopping the ongoing transformation of the EU “into an idiosyncratic empire, under the rule of Germany.”

And when it comes to the natural adversary of any German imperial ambitions in recent history, Europe has been able to produce only one answer…

Greek Stocks Crash, Bonds Plummet, Banks Have Worst Day Ever

Submitted by Tyler Durden on 01/28/2015 06:53 -0500

In the two day 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 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.

Worse, Greek bank stocks right now are having their worst day ever.

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.