Macro Digest: "Circus Greece" continues, pretend-and-extend version 5.0

The "pretend-and-extend" continues.... Now we will have details "next" week..... but Greece shouldn't even be able to borrow from ESM.... please see my Tweet from yday:

 

My Twitter feed link: https://twitter.com/Steen_Jakobsen

 

 

 

Bloomberg reports:

 

(BFW) *GREECE REQUESTS LOAN FOR DEBT OBLIGATIONS, FINANCIAL STAB ILITY

 

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BN 07/08 11:07 *GREECE WANTS TO EXPLORE STEPS TO ENSURE DEBT SUSTAINABILITY  BN 07/08 11:06 *GREECE REITERATES COMMITMENT TO REMAIN EUROZONE MEMBER: DOC.

BN 07/08 11:05 *GREECE SAYS IT WANTS TO CLEAR ARREARS TO IMF, BANK OF GREECE BFW 07/08 11:04 *GREECE COMMITS TO HONOR ALL OF ITS FINANCIAL OBLIGATIONS: DOC.

BN 07/08 10:53 *GREEK GOVT SAYS WILL SET OUT DETAILS OF PROPOSALS BY JULY 9  BN 07/08 10:52 *GREECE COMMITS TO TAX, PENSION REFORM MEASURES FROM NEXT WEEK  BN 07/08 10:52 *GREECE PROPOSES TO IMPLEMENT REFORM MEASURES FROM NEXT WEEK  BN 07/08 10:51 *GREEK LOAN REQUEST TO ESM DOCUMENT OBTAINED BY BLOOMBERG NEWS BFW 07/08 10:51 *GREECE REQUESTS LOAN FOR DEBT OBLIGATIONS, FINANCIAL STABILITY BFW 07/08 10:50 *GREECE REQUESTS 3-YR LOAN FACILITY FROM ESM, DOCUMENT SHOWS

 

 

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Greece Requests 3-Year Loan Facility From ESM, Document Shows

2015-07-08 10:54:53.744 GMT

 

 

By Eleni Chrepa and Nikos Chrysoloras

     (Bloomberg) -- Greece submits request for 3-yr loan facility from the European Stability Mechanism, according to document obtained by Bloomberg News.

 

  * Loan will be used to meet Greece's debt obligations, to

    ensure financial system stability: document

  * Greece proposed immediate implementation of measures,

    including tax, pension reforms as early as next week:

    document

  * Govt to detail its proposals for specific reform agenda on

    July 9 at latest: document

  * NOTE: Earlier, ESM Has Received Request From Greece for New

    Program Link

 

 

The feeling I get is that Merkel is about to do a "Kohl" – leading up to the introduction of the EURO in 1999, the Kohl and Mitterand agreed not to enforce the "stability and growth pact" from day one. (Mitterand: It can be done when needed)… that's the flaw of the EURO, a flaw which gets bigger and bigger every day, Kohl/Mitterand pro-actively decided to violate their own advisory board: The Delors Committee in doing so. The Delor report stated clearly that S&G was central to the survival of the EURO.

 

Now Merkel may, or may not, sign temporary deals Sunday for the "greater goods of Europe" – if so, she will have started the end of the EUR.  ESM stipulates clearly Greece shouldn't be able to access capital from it (although they did so earlier), the QE is at least in spirit against the EU Treaty and every pretend-and-extend deal ever done has weakened not only the believe in the EUR but also its integrity.

 

Doing a "Kohl" will be full circle to the "Socialist Union of Europe" – where politicians only consideration is keeping their powers by spending other people money without accountability to themselves, under a regime of no rules, no obligations and no accountability.

 

However doing a Grexit will give Greece, and Europe a chance to engage  normal business cycle. Yes, I fear a new "Kohl" more than a Grexit. The Grexit will do some damage but a "Kohl" will be the beginning of the end for EUR and EU.

 

 

 

Finally,

 

China!!!  The musical chair game have started – as in 1987 Asia is always more vulnerable than US and Europe.

 

 

 

I will not comment more on Greece this week. I will be flowing up and down relative to the noise from EU and Greece.

 

Safe travels,

 

Steen

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

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