S&P Downgrades Greece, Suggests Worst Case Scenario With Bank Runs And "Capital Controls"And the hits keep coming. On the heels of a demand for repayment of ECB’s profits from GGB bond gains and to extend the T-Bill limit to give the nation time to negotiate with EU leaders (i.e. a Bridge Loan) which Jeroen Dijsselbloem already dismissed earlier in the day, S&P just piled on…

GREECE RATINGS CUT TO B- FROM B BY S&P; MAY BE CUT FURTHER
This downgrade comes just 5 months after upgrading Greece because “risks to fiscal consolidation in Greece have abated.” EURUSD is not moving much (having already cratered after US payrolls) but Greek stock ETFs are sliding once again. What is scariest, is that a day after we first noted the increasing whsipers of capital controls and bank runs, S&P itself mentions this! In our view, a prolongation of talks with official creditors could also lead to further pressure on financial stability in the form of deposit withdrawals and, in a worst-case scenario, the imposition of capital controls and a loss of access to lender-of-last-resort financing, potentially resulting in Greece’s exclusion from the Economic and Monetary Union. This means that now not only the ECB but the rating agencies are doing everything in their power to institute a Greek bank run in order to either make the government withdraw its demands, or, if that doesn’t work, lead to a new government. This follow the news from earlier in the day:

`WE DON’T DO’ BRIDGE LOANS, DIJSSELBLOEM SAYS ABOUT GREECE
and now this:

GREEK GOVT SEES IT NECESSARY TO INCREASE T-BILL LIMIT: OFFICIAL
GREEK GOVT GOAL IS FOR BRIDGE PROGRAM WITH CREDITORS: OFFICIAL

As Bloomberg reports, Greece doesn’t want more funds from its bailout program, apart from return of EU1.9b of ECB profits on GGBs, govt official says in e-mailed statement. Official also says: Greek govt goal is a bridge program, to give time for negotiations with creditors As govt doesn’t want more bailout loans, considers it necessary to be granted ability to issue T-bills beyond current EU15b limit After bridge program granted, Greek govt will formulate fiscal strategy for next 4-5 yrs and national reform plan Official asked not to be named in line with policy and then this… Full Story