Remember Greece, where everything is supposedly fixed, except that nothing is until Greek bondholders all agree to get nothing for something? Or in other words, where Germany is hoping it can assign blame to hedge funds for not allowing the 75% PSI trigger threshold to be reached so there is a faceless monster that can be accused to achieving Germany's political goals? No? As the following reminder from Germany's Economy Minister Roseler shows, whose report has been acquired by Bloomberg, if not German anger then certainly confusion, is seething: "For the Greek government, the programs “obviously have no priority,” the ministry said. “This is unacceptable from the German standpoint." Wait, you mean a record February collapse in the Greek economy is inadmissable? Sure enough, Greek CDS, contrary to expectations for a no trigger event, just hit an all time high earlier at 76 points up front (i.e., more buyers than sellers), as basis player are loading up on protection and preparing for the March 8 PSI deadline.
From Bloomberg:
Greece is reneging on programs to spur its economic competitiveness that it signed with Germany since July, calling into question its willingness and capacity to revitalize its economy, the Economy Ministry in Berlin said.
Economy Minister Philipp Roesler and other German officials started bilateral projects with Greece from creating a development bank to advising on the construction of the Trans Adriatic Pipeline and on improving tax collection, the ministry said in a report, a copy of which was obtained by Bloomberg News. Greece has failed to fulfill its pledges in most cases, it said.
Greece’s implementation of project targets “remains insufficient,” the ministry said in the report. Revamping Greece’s economy at the same time as cutting its debt “is decisive -- that’s why Germany agreed to its support for the programs.”
For the Greek government, the programs “obviously have no priority,” the ministry said. “This is unacceptable from the German standpoint.”
Greece’s economy may shrink by 4.4 percent this year, the European Commission forecast on Feb. 23.
Cue Venizelos with pleadings that all Greeks have to do is "work, work, work." Oh, and also that Greece just said a Commissioner, or as he is better known in Germany, a Kommissar, is unacceptable, even though this is now the key gating factor to Greece receiving more aid.
Luckily, a CDS trigger event is now not only expected but welcome, in stark contrast to a year ago. Because just like with Lehman's failure, the "system is ready" for any contingency.