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Sudden stop in Greece; Puerto Rico: we're bankrupt too! Dudley: September liftoff still in play

Today’s most shared:

  • Denial is not just a river in Egypt, but the much-anticipated #Grexit is upon us, and it's all over but the shouting. If you're Greek, you might say that an attempt at an honorable surrender was rebuffed by a diktat of red ink. If you're German, you'll say that your best attempts to prevent a rupture were met with backsliding and bad faith. Sometimes, there just isn't political space for a deal. What Merkel was asking of Tsipras was political suicide, and vice versa. Even if the economics of Grexit are disastrous for everyone.
  • The discussion is now a blame game. Since the 'referendum' would inevitably have triggered a bank run and hostile response, it can be viewed as a bit of political Kabuki theater, with Tsipras triggering a default while pretending to point the finger at the EU for not allowing 'the people' to decide. By the time the referendum happens, capital controls and shortages will be in full effect. These effects are hard to reverse, and a functioning banking system cannot be restored without applying the full faith and credit of the ECB. The pain of Grexit will be a fait accompli. The referendum will serve to either close ranks behind Tsipras, or throw him out. Even if he loses, it would be more economically sensible to introduce a new currency, devalue and begin recovery, than to try to restore confidence in the failed system and accede to harsh austerity.
  • The key questions are whether Greeks can pull together and move on outside the eurozone without chaos and civil war; and the effect on policies of other eurozone countries afflicted with depression. The notion that Greeks are somehow uniquely culpable and ill-equipped to be part of the eurozone seems misguided. The failure to come up with policies to deal with economic disruption without creating a rupture will not instill confidence in the euro project.
  • Puerto Rico, the US's own Greece, says it's bankrupt. Fortunately or not, the US has a transfer union and can't throw them out.
  • Dudley says Fed's rate liftoff is still on.
  • Regulators going after Wall Street for swaps fixing.
  • China's bubble deflating.
  • KKR to pay $30m for overcharging investors.
  • Bill Gross takes stock.
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First Red Ink, Then Tsipras’s Call for Greek Referendum

Wall Street Journal
Greek Prime Minister Alexis Tsipras began leaning toward a risky referendum last week after creditors tore up a set of economic proposals he hoped would unlock rescue funds, people close to him say.

shared by @Frances_Coppola, @HamzeiAnalytics, Huffington Post

Eichengreen: Path to Grexit tragedy paved by political incompetence
Many of us doubted that it would come to this. In particular, I doubted that it would come to this. The implication is clear. Never underestimate the ability of politicians to do the wrong thing. I will try to remember next time.

shared by @WhelanKarl, @Frances_Coppola, @fwred, @GTCost, reddit/Economics

Münchau: The road to Grexit and beyond

Financial Times
When a shock you predicted actually happens, it still feels like a shock. Alexis Tsipras was right to walk away. But it was a momentous decision nevertheless when the Greek prime minister rejected an offer that would have allowed it to pay its debt to the International Monetary Fund and the European Central Bank.

shared by @WhelanKarl, @GTCost, @BrankoMilan, @pdacosta, @TimDuy, @ProfSteveKeen

Schäuble says Greece default, euro exit looks inevitable
French prime minister takes a different view, urges Greece to resume negotiations

shared by @crampell, @DavidBeckworth

The Greeks deserved better than this
For some time it appeared that Greek Prime Minister Alexis Tsipras, or at least some of the people advising him, felt Greece had something to gain from being in a take-it-or-leave-it situation with lenders as the pressure would be on the other side.

shared by @TheStalwart, @SonyKapoor, @M_C_Klein, @MOstwald1, @brianmlucey

Tsipras’ Bailout Referendum Sham

Naked Capitalism
Tsipras calls for a bailout referendum that is almost certain to be moot. So what is this really about?

shared by @MOstwald1, @edwardnh, @DuncanWeldon

Some stuff you should know about Greece before you lose your s***

The Reformed Broker
In this roughly 200-year period, Greece has been in default to its creditors during roughly 90 of these years, or half the time. To a person with any historical awareness, being told that Greece is on the verge of a default is like hearing Dean Martin is on the verge of a martini.

shared by @firstadopter, @derekhernquist, @MichaelKitces, @reddy

Greek default and Grexit now increasing in probability

Credit Writedowns
At this point, default within the eurozone is the best case scenario for Greece. Grexit is still a distinct possibility. All potential best case scenarios are out the window. Below is my assessment on how we got here.

shared by @DavidBeckworth, @Frances_Coppola, @pdacosta, @M_C_Klein

As it happened - Yanis Varoufakis’ intervention during the 27th June 2015 Eurogroup Meeting

Yanis Varoufakis
The Eurogroup Meeting of 27th June 2015 will not go down as a proud moment in Europe’s history. Ministers turned down the Greek government’s request that the Greek people should be granted a single week during which to deliver a Yes or No answer to the institutions’ proposals – proposals crucial for Greece’s future in the Eurozone.

shared by @SonyKapoor, @paulmasonnews, @OpenEurope, Huffington Post

Stiglitz: Europe’s Attack on Greek Democracy

Project Syndicate
The rising crescendo of bickering and acrimony within Europe might seem to outsiders to be the inevitable result of the bitter endgame playing out between Greece and its creditors.

shared by @HamzeiAnalytics, @Frances_Coppola, @pdacosta

The euro: It can’t happen, It’s a bad idea, It won’t last. US economists on the EMU, 1989 - 2002

European Union
The euro: It can’t happen, It’s a bad idea, It won’t last. US economists on the EMU, 1989 - 2002

shared by @crampell, @foxjust, @greg_ip

Panic Among Hedge Fund Investors in Greece

New York Times
The question of what happens when the markets open on Monday is particularly acute for the hedge funds that held onto their Greek investments.

shared by @firstadopter, @mercenaryjack, @ReformedBroker, @edwardnh

Puerto Rico’s Governor Says Island’s Debts Are ‘Not Payable’

New York Times
Gov. Alejandro García Padilla said that his administration would probably seek significant concessions from its creditors on a $72 billion debt load.

shared by @jamessaft, @MParekh, @mims, @prchovanec, @JamesGRickards

Puerto Rico Has No Easy Path Out of Debt Crisis

Wall Street Journal
The Outlook: Puerto Rico’s long-simmering debt crisis is about to come to a boil, and most observers don’t see any easy way for the U.S. commonwealth to fix the mess.

shared by @ModeledBehavior, @DividendMaster, @AntDeRosa, Business Insider

SEC Charges KKR With Misallocating Broken Deal Expenses
The Securities and Exchange Commission today charged Kohlberg Kravis Roberts & Co. (KKR) with misallocating more than $17 million in so-called “broken deal” expenses to its flagship private equity funds in breach of its fiduciary duty. KKR agreed to pay nearly $30 million to settle the charges, including a $10 million penalty.

shared by @danprimack, @peterlattman, Business Insider, @jsphctrl, @WSJdeals, @Ian_Fraser

Double bubble trouble in China

Financial Times
The deleveraging of the Chinese economy has always seemed likely to be a long and troublesome saga, lasting many years or even decades if it is to prove successful. The latest episode involves a sudden collapse in domestic “A” shares, which have dropped by 19 per cent in less than a fortnight, and have triggered what has been widely described as an “emergency” easing in monetary policy this weekend.

shared by @darioperkins, @Frances_Coppola, @prchovanec, @GTCost

Gross Gets Personal: ‘I Just Wanted to Run Money and Be Famous’

At Pimco, Bill Gross built a reputation as the world’s best bond trader. Now, at Janus Capital, he’s managing a much smaller fund—all while being measured against his younger self.

shared by @firstadopter, Business Insider, Here Is The City, @DavidKeo

Fed’s Dudley: September rate rise ‘very much in play’ amid stronger data

Financial Times
A Federal Reserve interest-rate hike will be “very much in play” at the central bank’s September meeting if the recent strengthening of the US economy continues, according to one of America’s top central bankers.

shared by @BCAppelbaum, @FGoria, Crossing Wall Street, @TimDuy

NY bank watchdog sinks teeth into Isdafix rigging

Financial Times
New York’s banking regulator is probing an emerging benchmark trading scandal relating to the suspected manipulation of US interest rate swaps, according to people familiar with the matter.

shared by NYT Dealbook, Business Insider, @FGoria, @JoeSaluzzi

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