April 9th ???

[easyrider Senior Member Find all posts View Profile Close easyrider]

It looks like this next Thursday, April 9th, that Greece might default on the payment due the IMF. Greece has been in the process of Nationalizing its backs and even with the bailouts hasn't been able to abide by the austerity measures. While this default to the IMF is only in the millions, 485 million euros, the default can make the billions of dollars of bonds owed to the ecb and other banks worthless overnight. Some of these banks will be bankrupted causing a possible panic that could liquidate other banks as people pull their money out.

http://www.telegraph.co.uk/finance/e...F-payment.html


Greece does have a one month grace period according to Bank of America.

http://www.zerohedge.com/news/2015-0...nt-bofaml-says

If Greece misses the payment to the IMF on 9-Apr, this would not necessarily trigger an immediate default. Greece may have an implicit grace period of one month. 1 The sequence of events would be as follows: 1) IMF Staff immediately sends a cable urging the member to make the payment promptly; this communication is followed up through the office of the concerned Executive Director. The member is not permitted any use of the Fund’s resources, nor is any request for the use of Fund resources placed before the Executive Board until the arrears are cleared; 2) After 2 weeks, management sends a communication to the Governor for the member, stressing the seriousness of the failure to meet obligations and urging full and prompt settlement, and 3) After 1 month, the Managing Director notifies the Executive Board that an obligation is overdue.

How this plays out in US markets is because of globalization the banks are all tied together somewhat. The US banks have quite a bit of exposure to European debt. Europe is the USA's biggest trading partner. If they go into recession they won't be able to trade as effectively. Many American companies are dependent on Europe.

Whats your take on all of this ? Do you think a Greek default will be a disaster or be patched with a bailout ?

[tonyg Goomba & Super Moderator Find all posts View Profile Close tonyg]

Time to restructure cash to the mattress ? I think the Greeks will not default.

[bigfrank Administrator Find all posts View Profile Close bigfrank]

Does Citibank have any exposure?

[easyrider Senior Member Find all posts View Profile Close easyrider]

Yes. Citi Bank has indirect expose of over 70 trillion because of derivatives. Citi Bank has thought that they will be somewhat insulated from this default as they have kind of expected it. I think all of the major banks were expecting this. The expectation was this will be a Eurozone problem with a Eurozone bailout. I think Greece represents under 2% of the EU economy and if their debt to spending ratio is figured in they are actually a minus something.

Interestingly enough, this would be the first default to the IMF from any country which seem problematic.

Bank of America warned that a “critical sequence of events could unfold” once Greece misses a payment to the IMF. It would trigger a parallel default to the eurozone bail-out fund (EFSF) under the legal master agreement, and might force the EFSF to cancel its loan packages and demand immediate repayment. This in turn would trigger a default on Greek government bonds issued under the bail-out accord.
The situation is now critical. Even if Greece manages to cobble together enough money to cover the April deadline, it owes the IMF a further €200m on May 1 and €763m on May 12. A Greek official told EMU counterparts at a teleconference on Wednesday that the country has run out of money. "There is no way we can go beyond April 9," the official reportedly said.

http://finance.yahoo.com/news/could-...154500109.html

If we get closer to key deadlines without a clear solution, increased risks will likely make for illiquid FX market conditions as banks are unwilling to provide liquidity amidst systemic risk in EUR pairs. In effect this means that the Euro could both rally and fall sharply on any news headlines.

We caught a preview of what illiquid conditions can do to the Euro/US Dollar as it surged by over 400 points in under two hours following the recent US Federal Reserve interest rate decision. If “worse” truly turns to “worst” and the Greek government looks likely to default, the Euro could see substantially larger moves than what was seen post-Fed.

The recent chatter has been about an economic implosion in Europe. Other countries will end up like Greece, imo. Spain, Portugal and Itally all look bad economically as well.

I think bailout after political posturing.