Greece & 30 June

Greece continues to pull proverbial rabbits from hats on its debt issue.  Friday was the deadline for EUR300m of the EUR1.6b due this month and they became the first country to miss an IMF debt repayment since the 2nd World War.  But they are clever… They discovered a mechanism buried in the IMF docs, not used since 1980’s (by Zambia), that allows them to bundle all the payments due this month until the end of the month.  So unable (or unwilling) to find the funds to pay EUR300m now, they will now somehow fund EUR1.6b in a few weeks or reach an agreement on terms for extensions, something the IMF has never done.

The other threat escalating is the Greek banking system itself as Greeks are withdrawing cash deposits at an alarming rate, averaging EUR400m per day and reportedly EUR700m on Friday’s deadline.  What makes that even more dangerous is that Greek banks already rely on nearly EUR81b in “Emergency Liquidity Assistance” from the ECB.  That was about 60% of total deposits over a month ago and will be much higher now after all of these withdrawals.  Without that assistance the banks would fail and the new “bail in” provisions would see another Cyprus style use of deposits to bail out the banks.

To give the new 30 June deadline a little more gravitas, renowned financial analyst Martin Armstrong has for some time now been calling a Wall Street crash between 30 June and 2 July according to his chart based analysis.  The Greeks just gave that date the geopolitical trigger…