ECB Pulls The Trigger: Blocks Funding To Greece - Full Statement

Zerohedge ^ | 1-4-2015 | Durden

[tcrlaf]

Just what the market had hoped would not happen...

*ECB SAYS IT LIFTS WAIVER ON GREEK GOVERNMENT DEBT AS COLLATERAL *ECB SAYS IT CAN'T ASSUME SUCCESSFUL CONCLUSION OF GREECE REVIEW

What this means simply is that since Greek banks are now unable to pledge Greek bonds as collateral and fund themselves, and liquidity is about to evaporate, the ECB has just given a green light for Greek bank runs... and all the worst parts of the bible (or merely a negotiating move to let Greece see just what kind of chaos this will create).

And now finally, after many years of investing in ECB repo collateral, pardon Greek debt, Greek banks finally will ask what the "fundamental" value of all that Greek government debt they bought really is. Judging by the Greek ETF's reaction, the answer is lower.

The only question now is whether the Greek Central Bank, which the ECB said is now sufficient to meet bank liquidity needs, is allowed to print Euros. If not, the Greek experiment at trying to stick it to Europe is about to crash and burn spectacularly.

Joking aside, what is really at stake now, if only for Greece, is everything: Syriza either folds, and cedes by withdrawing all demands, thus effectively ending its mandate less than 2 weeks after coming to power, or it exits the Eurozone.

[aMorePerfectUnion]

Casey Research points out a very interesting sidelight of the Greek financial crisis.

Last week the world woke up to the fact that Greece’s new government holds a geopolitical trump card: it can hold the EU ransom by threatening to break the fragile consensus on Russia.

The renewal of sanctions against Russia requires the unanimous support of EU members… which means Obama’s alliance against Russia needs Greek cooperation. What’s more, Greece has veto power over whether NATO can retaliate for an attack on any of its members. Article V, which states, “[A]n armed attack against one or more of them in Europe or North America shall be considered an attack against them all,” may only be invoked with unanimous agreement among NATO members.

Greece and Russia have close cultural and religious ties, and Russia is Greece’s largest trading partner. Russia’s ambassador to Athens didn’t waste any time congratulating Greece’s new prime minister, Alexis Tsipras, on his victory.

So it’s no surprise that Putin is using Greece as leverage. Russia has hinted that it will open its market to Greek food exports if Greece leaves the eurozone, and also that it would consider giving Greece financial aid. One can imagine other carrots being dangled, like an offer to hook up Greece to the Turkish Stream pipeline.

. . .

Syriza, which has close connections with Russia, admires Putin’s defiance of Western institutions. The new Greek foreign minister, Nikos Kotzias, has a relationship with Aleksandr Dugin, a Russian nationalist philosopher with close ties to Putin. As neo-eurasianists, they aim to pry a weak and divided Europe away from US influence. Syriza has openly campaigned for Greece to leave NATO, though they’ve toned down their hostility on that issue recently—presumbably to preserve it as a useful bargaining chip for the future.

Kotzias, who says he’ll work to prevent a rift between the EU and Russia, has already recognized the legitimacy of the Donetsk People’s Republic in eastern Ukraine and dismisses the Ukrainian government as a neo-Nazi junta.

. . .

The euro and the Ukraine crises are converging, and Putin is watching closely.

[Viennacon]

in your opinion, is this going to be Grexit? Are we seeing that begin now?

[Viennacon]

This is a BAD move for them. If Syriza is not bluffing, then its a Grexit. If they are, then support for them in Greece will collapse, and there is only one party remaining that the people will turn to... and something tells me that party does not bluff.