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Greek bank deposits will be protected by EU until January 1, 2016…then all deposits can be ‘Cyprused’

Greek deposits will be protected under Dijsselbloem “firewall”…that is until January 1, 2016 hits and Greece becomes subject to a bank resolution process supervised and enforced by the BRRD. Then deposits can be haircut.

Alex Christoforou

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Post originally appeared on Zerohedge.

Earlier today, tucked away from the public’s eyes, there was another round of drama involving Greek securities this time focused on Greek senior bank bonds which promptly tumbled back to post-referendum/pre-bailout #3 levels.

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The catalyst was Friday’s pronouncement by Jeroen Dijsselbloem who said depositors will be shielded from any losses resulting from the restructuring of the nation’s financial system, but that senior bondholders would certainly be impaired and probably wiped out. In other words, once again the superpriority of various classes has been flipped on its head with general unsecured liabilities ending up senior to, well, senior bank claims.

As Bloomberg reported earlier today, while “Greece’s third bailout will spare depositors in any restructuring of the nation’s financial system, senior bank bondholders may not be so lucky, according to comments from Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem. The bondholders will be in line for losses if Greek lenders tap into any of the financial stability funds set aside in the new bailout.”

“Bondholders were overly optimistic because bail-in of senior bonds was not explicitly mentioned before,” said Robert Montague, a senior analyst at ECM Asset Management in London. “Today they were brought back down to earth with a bump.”

Which is bad news for bondholders, but the biggest losers will once again be depositors who represent the vast bulk of unsecured Greek bank liabilities.

Going back to Friday’s statement by the Eurogroup president, he specifically said that “the bail-in instrument will apply for senior bondholders, whereas the bail-in of depositors is explicitly excluded.”  Which is confusing considering that bank stocks were broadly unchanged and in some cases rose. Of course, this makes no sense because as even a first year restructuring associate will tell you, according to traditional waterfall analysis, even the lowliest bond impairment means an equity wipeout. And yet, Greek bank equities are still trading at far more than just tip/nuisance value. Which, to repeat, makes no sense.

But that is not surprising: little of what Europe is doing with Greece makes any sense. Other agree:

It is not clear how they will make it possible to bail-in bonds while excluding deposits, but as we have seen in other problematic situations, where there is a will there will be a way,” said Olly Burrows, London-based financials analyst at brokerage firm CRT Capital. “We call Dijsselbloem’s solution a bail-up: part bail-out, part bail-in and part cock-up.

And yet, it appears that following the weekend, Europe realized that it is now openly flaunting the conventional restructuring protocol.

As a reminder, Greece’s euro-area creditors made adoption of the European Union’s Bank Resolution and Recovery Directive, or BRRD, a precondition of the bailout. The directive, which makes it easier to impose losses on senior creditors, should rank senior unsecured bondholders and depositors equally, said Olly Burrows, London-based financials analyst at brokerage firm CRT Capital.

This is something which Dijsselbloem may not have been aware of when he said that one senior class would be impaired while another pari passu group of liabilities, i.e., depositors, would be protected. As noted above, that makes no sense.

Which is probably why earlier today, Bloomberg followed up with a report that a recapitalization of Greek banks will exclude all depositors from losses until the EU’s Bank Recovery and Resolution Directive rules go into effect on Jan. 1, citing an EU official.

Needless to say this was vastly different to Dijsselbloem’s blanket guarantee statement, and suggests that depositors will indeed be bailed-in (if mostly those above the €100,000 insured limit, although as European history has shown, rules will be made up on the spot and we would not at all be surprised if deposits under the insured limit are also confiscated), but not right now: only after BRRD rules come in place on the first day of 2016.

Europe’s eagerness to promise depositor stability is transparent: the finmins will do everything in their power to halt the bank run from banks which will likely be grappling with capital controls for months if not years. Still, absent some assurance, there is no way that the depositors would be precluded from withdrawing all the money they had access to, which in turn would assure that the €86 billion bailout of which billions are set aside for bank recapitalization, would be insufficient long before the funds are even transfered.

According to an Aug. 14 Eurogroup statement an asset quality review of Greek banks will take place before the end of the year,

“We expect a comprehensive assessment of the banks – so-called Asset Quality Review and Stress Tests – by the ECB/SSM to take place first,” European Commission spokeswoman Annika Breidthardt tells reporters in Brussels. “And this naturally takes a few weeks.”

In other words Europe is stalling for time: time to get more Greeks to deposit their cash in the bank now, when deposits are “safe” and while everyone is shocked with confusion at the nonsensical financial acrobatics Europe is engaging in.

But once Jan.1, 2016 rolls around, it will be a vastly different story. This was confirmed by the very next statement: “I must also stress that, depositors will not be hit” in this year’s review, she says.

In this year’s, no. But the second the limitations from verbal promises of deposit immunity expire next year, everyone who is above the European deposit insurance limit becomes fair game for bail-in.

Dijsselbloem concluded on Friday that “Depositors have been excluded from the bail-in because in the first place it’s concerning SMEs and private persons. But it is only concerning depositors with more than 100,000 euros and those are mainly SMEs. That would again lead to a blow to the Greek economy. So the ministers said we will exclude them explicitly, it would bring damage the Greek economy.

Right, exclude them… until January 1, 2016. And only then impair them because Greece will never again be allowed to escape a state of permanent “damage” fo the economy.

As for Greeks and local corporations whose funds are parked in a bank and who are wondering what all this means for their deposits, here is the answer: for the next 4.5 months, your deposits are safe, which under the current capital control regime doesn’t much matter: it’s not as if the money can be withdrawn in cash and moved offshore.

However, once January 1, 2016 hits and Greece becomes subject to a bank resolution process supervised and enforced by the BRRD, all bets are off. Which likely means that as the Greek bank balance sheet is finally “rationalized”, any outsized deposits will be promptly Cyprused.

For our part, we tried to warn our Greek readers about the endgame of this farcical process since January of this year: we will warn them again – capital controls or not, pull whatever money you can in the next few months because once 2016 rolls around, all the rules change, and those unsecured bank liabilities yielding precisely nothing, and which some call “deposits” will be promptly restructured to make the Greek financial balance sheet at least somewhat remotely viable.

References:

http://www.zerohedge.com/news/2015-08-17/greek-deposits-become-eligible-bail-january-1-2016

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‘Hell on Earth’: MSF doctor tells RT of rape, violence, inhumane conditions in Lesbos refugee camp

One toilet for over 70 people, rape, and mental health issues – a doctor from Doctors Without Borders (MSF) and an aid worker told RT about the dire conditions in the overcrowded Moria refugee camp in Greece.

Alex Christoforou

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Via RT


One toilet for over 70 people, rape, and mental health issues – a doctor from Doctors Without Borders (MSF) and an aid worker told RT about the dire conditions in the overcrowded Moria refugee camp in Greece.

The overcrowded camp on the island of Lesbos, built to accommodate 3,100, houses around 9,000 people. “It’s a kind of hell on Earth in Europe,” Dr. Alessandro Barberio, an MSF clinical psychiatrist, said, adding that people in the camp suffer from lack of water and medical care. “It is impossible to stay there,” he said.

According to Barberio, asylum seekers are subjected to violence “during night and day.””There is also sexual violence”which leads to “mental health issues,” he said, adding that all categories of people at the camp may be subjected to it. “There is rape against men, women and children,” and the victims of sexual violence in the camp often have nightmares and hallucinations, Barberio told RT.

Asylum seekers in Moria “are in constant fear of violence,” and these fears are not groundless, the psychiatrist said. “Such cases [of violence] take place every week.”

There is “one toilet for 72 people, one shower for 84 people. The sanitation is bad. People are suffering from bad conditions,” Michael Raeber, an aid worker at the camp, told RT. They suffer from mental health problems because they are kept for a long time in the camp, according to Raeber.

“There is no perspective, they don’t know how their case will go on, when they will ever be able to leave the island.” The camp is a “place where there is no rule of law,” with rampant violence and drug addiction among the inhabitants, Raeber said.

In its latest report, MSF, which has been working near Moria since late 2017, criticized the unprecedented health crisis in the camp – one of the biggest in Greece. About a third of the camp population consists of children, and many of them have harmed themselves, and have thought about or attempted suicide, according to the group.

Barberio was behind an MSF open letter on the state of emergency in Moria, released on Monday, in which he writes that he has never “witnessed such overwhelming numbers of people suffering from serious mental health conditions.”

Calling the camp an “island prison,” he insisted that many of his patients in the camp are unable to perform basic everyday functions, “such as sleeping, eating well, maintaining personal hygiene, and communicating.”

A number of human rights groups have strongly criticized the conditions at the camp and Greece’s “containment policy”regarding asylum seekers.

Christina Kalogirou, the regional governor of the North Aegean, which includes Lesbos, has repeatedly threatened to shut down the facility unless the government improves the conditions. On Tuesday, government spokesman Dimitris Tzanakopoulos said that Greece will move 2,000 asylum seekers out of the severely overcrowded camp and send them to the mainland by the end of September.

Greece, like other EU states, is experiencing the worst refugee crisis since WWII. According to International Organization for Migration estimates, 22,000 asylum seekers have arrived in Greece since the start of this year alone.

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Erdogan accepts Syria DMZ off-ramp, in deal with Putin (Video)

The Duran – News in Review – Episode 111.

Alex Christoforou

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The deal struck in Sochi averts a large scale Syria’s offensive on Idlib, as Turkey gives it guarantee to monitor what will effectively become a demilitarized zone.

According to the agreement, troops from Russia and Turkey will enforce a new demilitarized zone (DMZ) in Idlib, from which ISIS/Al Qaeda rebels will be required to withdraw by the middle of next month.

Speaking alongside Erdogan, Russian President Vladimir Putin said the 15 to 20 km-wide zone would be established by October 15th. The DMZ would require a complete “withdrawal of all radical fighters” from Idlib, including the rebranded Al-Qaeda affiliated Hay’et Tahrir al-Sham (HTS).

Putin also noted that heavy weapons would be withdrawn from the DMZ by all opposition forces by October 10th, which is a move supported by the Syrian government.

The Russian President described the agreement as a “serious result” further saying that “Russia and Turkey have confirmed their determination to counter terrorism in Syria in all its forms”.

Erdogan said both his country and Russia would carry out coordinated patrols in the demilitarized zone:

“We decided on the establishment of a region that is cleaned of weapons between the areas which are under the control of the opposition and the regime.”

“In return, we will ensure that radical groups, which we will designate together with Russia, won’t be active in the relevant area.”

According to Al Jazeera Iran’s foreign minister has hailed an agreement between Turkey and Russia to avert an assault on the Syrian rebel-held Idlib province, as an example of “responsible diplomacy”.

An agreement to halt plans for an offensive on the last major rebel-held stronghold was announced in the Black Sea resort of Sochi on Monday after a meeting between the Russian President Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan.

On his Twitter account, Zarif wrote: “Intensive responsible diplomacy over the last few weeks-pursued in my visits to Ankara & Damascus, followed by the Iran-Russia-Turkey Summit in Tehran and the meeting (in) Sochi-is succeeding to avert war in #Idlib with a firm commitment to fight extremist terror. Diplomacy works.”

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the agreement reached in Sochi, which for now avoids full scale conflict in Idlib, Syria. Who won, who lost, and which interests were met with the DMZ agreement?

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Via Xinhuanet

An anticipated Syrian military offensive on the northwestern province of Idlib is on hold after Turkey and Russia reached a deal following Ankara’s guarantee on behalf of the rebel groups, experts said.

The deal was reached Monday by Turkish President Recep Tayyip Erdogan and his Russian counterpart Vladimir Putin in Sochi, Russia, as the two sides agreed to create a demilitarized buffer zone in Idlib, the last rebel stronghold.

This agreement brings Turkey to a position of giving a guarantee on behalf of the rebel groups, the experts said.

“Moscow is convinced that it would not be able to handle the burden of a humanitarian tragedy in case of a military offensive in Idlib,” said Metin Gurcan, a Turkish security analyst with the Istanbul Policy Center of Sabanci University.

Russia has also secured its airbases in northern Syria, including its airbase in Hmeymim as a guarantee by Turkey under the Sochi agreement, he said.

Gurcan recalled a trilateral summit of Turkey, Iran and Russia held in Iranian capital Tehran early September, which ended without agreement as Erdogan’s call for a ceasefire in Idlib was rejected by Moscow and Tehran.

Erdogan’s proposal for a ceasefire by all parties in Idlib was rejected by Putin on the grounds that those groups were not represented at the table there, he said.

“Now Turkey has given a guarantee on behalf of radical groups which Putin earlier said that ceasefire cannot be discussed because they were not represented at Tehran meeting,” Gurcan said.

Now everyone is curious how Turkey has given guarantee to Moscow and how will those radical groups accept a proposal for demilitarization by surrendering heavy weapons and withdrawing from the demilitarized zone, Gurcan noted.

“Ankara has given this promise relying on its military power on the ground and on its capacity to convince armed opposition groups,” he said.

Turkish army has reinforced its presence in Idlib in the past few months, and Turkey has 12 military outposts with 1,200-1,300 troops on the border line of the province separating the rebel stronghold from the pro-Iran militia-controlled South of Aleppo and the government-controlled southeast, Gurcan said.

Rebel groups, including the Free Syrian Army, in the region are gathered with Turkish backing under the banner of the “National Front for Liberation.”

Putin and Erdogan agreed on Monday in Sochi to create a 15-20 km buffer zone along the line of contact between rebels and regime troops by Oct. 15.

The agreement entails the “withdrawal of all radical fighters” from Idlib as well as “heavy weaponry from this zone,” Putin said at the joint press conference after signing the deal with Erdogan.

By the end of the year, transportation routes between the key port of Latakia and Aleppo as well as the city of Hama must be restored, Putin added.

The Russian leader also said all heavy weapons had to be withdrawn from the zone by Oct. 10, according to Erdogan’s proposal.

Ankara has been warning against any military offensive by Russia-backed Syrian regime forces in Idlib, warning that it would lead to a humanitarian crisis and refugee influx to the Turkish border.

Turkey and Russia, along with Iran, are guarantors of the Astana deal which declared ceasefire in four de-escalation zones in Syria, including Idlib.

Turkey will deploy more troops in Idlib province after the Sochi deal, Turkish Foreign Minister Mevlut Cavusoglu said on Tuesday.

“We will need extra troop reinforcements. Turkey and Russia will patrol on the border areas. Civilians and moderate (opposition) will stay here,” Cavusoglu said.

Another outcome of the Sochi deal is that Turkey and Russia prevented a possible attack by the United States in Idlib, Naim Baburoglu from Aydin University said.

He recalled that the U.S. was giving signals that it wanted to intervene in the situation in Idlib, if Syrian government troops launch an assault on the rebel stronghold.

Washington recently threatened to take swift and decisive actions against any use of chemical weapons in Idlib.

“This agreement showed that the U.S. has room for maneuver only in the east of Euphrates and Manbij region,” Baburoglu said.

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Pat Buchanan: “The Late Hit” On Judge Kavanaugh

Wha exactly is professor Ford’s case against Judge Kavanaugh?

Patrick J. Buchanan

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Authored by Patrick Buchanan via Buchanan.org:


Upon the memory and truthfulness of Christine Blasey Ford hangs the Supreme Court nomination of Judge Brett Kavanaugh, his reputation and possibly his career on the nation’s second-highest court.

And much more. If Kavanaugh is voted down or forced to withdraw, the Republican Party and conservative movement could lose their last best hope for recapturing the high court for constitutionalism.

No new nominee could be vetted and approved in six weeks. And the November election could bring in a Democratic Senate, an insuperable obstacle to the elevation of a new strict constructionist like Kavanaugh.

The stakes are thus historic and huge.

And what is professor Ford’s case against Judge Kavanaugh?

When she was 15 in the summer of ’82, she went to a beer party with four boys in Montgomery County, Maryland, in a home where the parents were away.

She says she was dragged into a bedroom by Brett Kavanaugh, a 17-year-old at Georgetown Prep, who jumped her, groped her, tried to tear off her clothes and cupped her mouth with his hand to stop her screams.

Only when Kavanaugh’s friend Mark Judge, laughing “maniacally,” piled on and they all tumbled off the bed, did she escape and lock herself in a bathroom as the “stumbling drunks” went downstairs. She fled the house and told no one of the alleged rape attempt.

Not until 30 years later in 2012 did Ford, now a clinical psychologist in California, relate, in a couples therapy session with her husband, what happened. She says she named Kavanaugh as her assailant, but the therapist’s notes of the session make no mention of Kavanaugh.

During the assault, says Ford, she was traumatized. “I thought he might inadvertently kill me.”

Here the story grows vague. She does not remember who drove her to the party. She does not say how much she drank. She does not remember whose house it was. She does not recall who, if anyone, drove her home. She does not recall what day it was.

She did not tell her parents, Ford says, as she did not want them to know she had been drinking. She did not tell any friend or family member of this traumatic event that has so adversely affected her life.

Said Kavanaugh in response, “I categorically and unequivocally deny this allegation. I did not do this back in high school or at any time.”

Mark Judge says it never happened.

Given the seriousness of the charges, Ford must be heard out. But she also needs to be cross-examined and have her story and character probed as Kavanaugh’s has been by FBI investigators as an attorney for the Ken Starr impeachment investigation of Bill Clinton, a White House aide to George Bush, a U.S. appellate judge and a Supreme Court nominee.

During the many investigations of Kavanaugh’s background, nothing was unearthed to suggest something like this was in character.

Some 65 women who grew up in the Chevy Chase and Bethesda area and knew Kavanaugh in his high school days have come out and spoken highly of his treatment of girls and women.

Moreover, the way in which all of this arose, at five minutes to midnight in the long confirmation process, suggests that this is political hardball, if not dirt ball.

When Ford, a Democrat, sent a letter detailing her accusations against Kavanaugh to her California congresswoman, Anna Eshoo, Ford insisted that her name not be revealed as the accuser.

She seemingly sought to damage or destroy the judge’s career behind a cloak of anonymity. Eshoo sent the letter on to Sen. Diane Feinstein, who held it for two months.

Excising Ford’s name, Feinstein then sent it to the FBI, who sent it to the White House, who sent it on to the Senate to be included in the background material on the judge.

Thus, Ford’s explosive charge, along with her name, did not surface until this weekend.

What is being done here stinks. It is a transparently late hit, a kill shot to assassinate a nominee who, before the weekend, was all but certain to be confirmed and whose elevation to the Supreme Court is a result of victories in free elections by President Trump and the Republican Party.

Palpable here is the desperation of the left to derail Kavanaugh, lest his elevation to the high court imperil their agenda and the social revolution that the Warren Court and its progeny have been able to impose upon the nation.

If Kavanaugh is elevated, the judicial dictatorship of decades past, going back to the salad days of Earl Warren, William Brennan, Hugo Black and “Wild Bill” Douglas, will have reached its end. A new era will have begun.

That is what is at stake.

The Republican Senate should continue with its calendar to confirm Kavanaugh before Oct. 1, while giving Ford some way to be heard, and then Kavanaugh the right to refute. Then let the senators decide.

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