Greece Offered $61 Billion in Standby Loans; Someone in the Know Already Profited

 @ibtimes
on April 11 2010 3:33 PM

Notwithstanding the fact that markets have rallied on

  1. A rumor of a potential bailout for Greece a few months ago
  2. Confirmation a bailout was being discussed
  3. A framework of the bailout version #1
  4. A framework of the bailout version #2

And late Friday and most likely Monday, a more precise bailout.... it is almost sad to see the Greek problem go away being kicked down the road.  Each time we talk of more moral hazard the markets rally; at this point it seemed best to leave Greece hanging so we could get a new rally on a new bailout news item every 2-3 weeks...

That said, smart money investment banks who have close ties to global governments already knew this late Friday.  (I cited it on the blog as well)  It is hard to find a good intraday chart of the Athens Exchange, but I cut and paste what was available from the exchange website below... as you can see, the smart people got whiff of the news as a market that was doing nothing all day, suddenly spiked 3% in the closing hour. 

Once again fellow peons, the stock market is all about analyzing, PE ratios, profits, and homework.  It has nothing to do with having the right people placed in the right places to take advantage of all the information leaks... nope, not one bit.  Will anyone look into this to see who profited? Nah - it was just a random walk down Wall Street as Mr. Malkiel would say.   Wonderful analysis by a few oligarchs I am sure.

Anyhow, back to the news Goldman Sachs & JPMogan knew Friday at about 2 PM (allegedly)

  • European governments offered debt- burdened Greece a rescue package worth as much as 45 billion euros ($61 billion) at below-market interest rates as they try to end its fiscal crisis and restore confidence in the euro. 
  • Forced into action by a surge in Greek borrowing costs to an 11-year high, euro-region finance ministers said they would offer as much as 30 billion euros in three-year loans in 2010 at around 5 percent. That’s less than the current three-year Greek bond yield of 6.98 percent. Another 15 billion euros would come from the International Monetary Fund. 
  • With the euro facing the sternest test since its debut in 1999, the 16-nation bloc maneuvered around rules barring the bailout of debt-stricken countries, aiming to prevent Greece’s financial plight from spreading and to mute concerns about the currency’s viability. Germany also abandoned an earlier demand that Greece pay market rates. 
  • “This is a huge amount,” said Stephen Jen, managing director at BlueGold Capital Management LLP in London and a former IMF economist. “This is more than a bazooka. They have gone nuclear on the issue of Greece. In the short run the market is short Greek assets so we’ll get a rally in those.” 
  • The teleconference of euro-region officials, which included European Central Bank President Jean-Claude Trichet, left open was how much Greece might need in 2011 and 2012, the final years covered by today’s decision.
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