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Greek Banks Cut Off By ECB

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Fresh rumour reported by Karl Denninger that Greek banks have just been cut off by the ECB. As I did a quick search, I also see Reuters run with the same story.

Flash off the rumor mill, unconfirmed — it appears the Greek banks were just cut off by the ECB.

If this is true then this is the latest “Gun up the nose” game by the Germans and ECB, and is almost-certain, in this political climate, to blow up their face (and quite possibly with shooting involved on the part of the Greeks too.)

This instantly hit the Euro and US stock market, which had been having a reasonably decent day.

If true and confirmed then Greece has been effectively orphaned.  This appears to be a facial attempt to stick a tourniquet on Greece’s neck, as with elections due next month cutting off Greek banks now will basically guarantee they all detonate.

Expect the incipient bank runs to resume en-masse within hours if not minutes.

Time to critical mass is now measured in days if not hours, and if acceleration occurs the weekend is the perfect time for Greek authorities to drop the hammer in the form of a bank holiday and capital controls as they will have no choice irrespective of the critical damage that will result from them doing so.

More as I’m able to learn and/or confirm it.

Update: Just repeated on CNBC – ECB stopping monetary policy operations with “some” Greek banks.  Hmmm…. what’s “some” gents?

More updates: Flying tweets from all sides on this and on a rumored withdraw limit.  Who knows what the truth is — or if this was a trial balloon.  Note that the time to drop a hammer like this that is “least disruptive” is when banks are CLOSED — like, for example, the weekend.

Reuters reports as follows;

(Reuters) – The European Central Bank has stopped monetary policy operations with some Greek banks as they have not been successfully recapitalized, euro zone central bank sources said on Wednesday.

The ECB declined to comment.

The ECB only conducts its refinancing operations with solvent banks. With no access to ECB funds, the banks concerned must go to the Bank of Greece for emergency liquidity assistance (ELA).

It was unclear exactly how many banks were affected.

One person familiar with the matter said four Greek banks’ capital was so depleted they were operating with negative equity capital. According to its own rules, the ECB cannot provide liquidity to banks in such a situation.

The ECB said earlier on Wednesday it continued to support Greek banks.

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Opps, Egypt Cuts Israel Off from 40% Of Its Natural Gas Supply

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Its all kicking off now. Egypt out of the blue has just cut Israel off from the natural gas supply. Currently 40% of Israel’s supply comes from Egypt. Apparently it was people power to forced this move after constantly attacking the pipeline.

Egypt’s energy companies have terminated a long-term deal to supply Israel with gas after the cross-border pipeline sustained months of sabotage since a revolt last year, a stakeholder in the deal said on Sunday.

Ampal-American Israel Corporation, a partner in the East Mediterreanean Gas Company (EMG), which operates the pipeline, said the Egyptian companies involved had notified EMG they were “terminating the gas and purchase agreement”. 

The company said in a statement that the Egyptian General Petroleum Corporation and Egyptian Natural Gas Holding Company had notified them of the decision, adding that “EMG considers the termination attempt unlawful and in bad faith, and consequently demanded its withdrawal”

It said EMG, Ampal, and EMG’s other international shareholders were “considering their options and legal remedies as well as approaching the various governments”.

Before the sabotage, Egypt supplied about 40 percent of Israel’s natural gas, which is the country’s main energy source.

Israeli officials have said the country was at risk of facing summer power outages due to energy shortages.

Companies invested in the Israeli-Egyptian venture have taken a hit from numerous explosions of the cross-border pipeline and are seeking compensation from the Egyptian government of billions of dollars.

Ampal and two other companies have sought $8 billion in damages from Egypt for not safeguarding their investment.

As usual ZeroHedge has a very interesting view point.

The only question Israel may want to answer now is whether it wants to get cozy with Russia, whose nat gas it may suddenly be very, very attractive. And for that to happen, it means a huge softening in its anti-Iran tone, which in turn will have a huge impact on regional geopolitics, and specifically the risk of war in Iran, and thus the price of Brent. All of this, of course assumes, Israel does not immediately retaliate against Egypt, recently a big recipient of US aid, not to mention tear gas, and start a pre-emptive two front pre-war…

 

Source: ZeroHedge

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