Oh, More Lies From Greece?

Gee, why am I not surprised?

A split has opened in the eurozone over the terms of Greece’s second €109bn bail-out with as many as seven of the bloc’s 17 members arguing for private creditors to swallow a bigger writedown on their Greek bond holdings, according to senior European officials.

Thus the high-speed sell-off of about half of the rally in the last few minutes.  What’s the punchline?

Because of the recent economic downturn and Greece’s slow implementation of austerity measures, officials estimate Athens’ funding needs over the next three years have grown beyond the €172bn forecast this summer. The scale of the shortfall will be determined by international lenders over the next few weeks.

Wait a second….it was originally €100 billion, right?  Then it was €172 billion?  And now it’s how much?

Oh, we don’t know yet.  But we’re back to the same game again – the banks have been lying about their exposure, claiming it’s “only” 21% when the market says its twice that or more.  The Greeks have been saying 100 billion, then 172, and now…. who knows!

Remember, there’s an emergency €8 billion payment that needs to be made now so paychecks don’t bounce.  It looks like that’s delayed for at least another week, and one must wonder if there will indeed be bounced checks to be immediately followed by riots.

Of course the original claim that all was well was good for a 30% increase in bank stock prices over the last few days.  If that turns out to be a lie expect a 50% – and maybe a 100% – decline.

Incidentally, credit wasn’t narrowing today while the market was screaming higher.  You don’t think some of the smarter folks might have known about this before the FT reported it, do you?

Want a market crash folks?  This is how governments cause them – keep allowing banksters to lie and plant false hopes in the minds of investors.  They’ll either leave when you bankrupt them all or when they get tired of the crap and just refuse to play any more in an obviously-rigged casino.

Discussion (registration required to post)