The Greek Inflection Point
I completed this research during October/ November 2016.
Find below a collection of research pieces I produced during the end of 2016 on the Greek banking system, the Greek (sovereign and its restructuring at the time), and the National Bank of Greece.
My conclusions can be understood from the title of the first piece, that is to say, at an inflection point.
I did not wait for it to be obvious to make this claim, and that is evident by the fact that it took years for investors to catch wind of the fact that Greece was recovering.
NBG, the bank I chose to write about is up 100% since then.
Whomever wants to understand my line of thinking at the time should read the pieces below. The research can get very technical at times, with banking terms and the like - you have been forewarned!
The Greek Inflection Point
My thesis is that the Greek economic crisis has reached an inflection point and about to enter a more economically normalized situation with the potential of an economic boom. The nature of an inflection point is that it can only be confirmed retrospectively.
Greece is close to completing its targets under the four pillars of its Third Economic Adjustment program.
Pillar 1: Restoring Fiscal Sustainability
The Greek State has gone through a massive and painful restructuring, which resulted in a more lean state and a balanced budget.
The EU concept of loans-for-reforms has served as the backdrop for a state restructuring of epic proportions. I hypothesize that no political system or government could muster the will to pass its own people through such a bitter restructuring. This is why I believe the loans-for-reforms approach works and will continue to work across the EU, as countries under adjustment programs have no other options.
Greece has cut from government expenditure almost everything it could cut to attain the first pillar of the Greek economic adjustment program, which is restoring fiscal sustainability. This includes politically sensitive expenditures like pension reform.
Additionally, a contingent fiscal mechanism has also been legislated, which ensures additional measures are automatically imposed to address any potential deviations from target.
The public revenue administration has become fully autonomous from previously semi-autonomous and measures are being taken to increase compliance and revenue as well as reduce evasion.
Finally, the authorities have finalized a very comprehensive and ambitious reform of the pension system, which has already started generating significant fiscal savings.
Pillar 2: Safeguarding Financial Stability
The four systemic banks have been recapitalized for a third time since the crisis, in 2015, after the comprehensive assessment deemed they had capital shortfalls.
The banks are now capitalized for the “adverse scenario” and so are very robust to current economic conditions. Measures have been taken to allow the banks to manage their large stocks of non-performing loans and hence NPLs are expected to move downward going forward.
Banks are divesting from non-core and non-banking activities, streamlining operations and cutting costs which results in deleveraged balance sheets.
Balance sheet deleveraging and retaining earnings reduces the need for Eurosystem funding. It is expected that as the banks become less reliant to the ECB and the economy stabilizes, capital controls will lift and Greek depositors will have no reason to keep their deposits “under the mattress”.
Pillar 3: Growth, Competitiveness and Investment
A consultation process has been launched to review existing labor market frameworks, with the aim of achieving a stable setting that is supportive of job creation, competitiveness and social cohesion.
Further measures have been taken to reform product markets, the energy and electricity sectors and the liberalization of the electricity transmission operator. The liberalization of the gas market is also progressing.
The economically and politically significant privatization process has also made significant advances since the signing of the MoU.
The process has already kicked off with the selling of the Port of Piraeus and 14 regional airports. The Government has endorsed the “Asset Development Plan” and passed a great number of pending actions to facilitate the plan, including on major projects such as the “Hellinikon” airport.
Pillar 4: A Modern State and Public Administration
Since 2009, there has been a 26% reduction in the number of employees in the public sector. This program will focus on qualitative reforms and the depoliticisation of the administration.
Measures have been agreed to enhance the efficiency of the judicial system and improve the effectiveness of judicial procedures. The implementation of the National Strategic Plan against Corruption is continuing with further reforms and measures.
The country is also committed to strengthen the institutional and operational independence and effectiveness of key institutions and agencies like the Greek statistical authority (ELSTAT) and the Hellenic Competition Commission (HCC).
Debt Sustainability
The most important issue around the Greek program is the issue of Debt Sustainability.
The Eurogroup of May 25th 2016 agreed to assess debt sustainability in the following general guiding principles: 1) facilitating market access to replace over time public financed debt with privately financed debt 2) smoothening the repayment profile 3) incentivizing the country’s adjustment process even after the program ends and 4) flexibility to accommodate uncertain GDP growth and interest rate developments in the future.
The focus on restoring fiscal sustainability (Pillar 1 above) has nearly balanced the budget for Greece. As the economy further normalizes (Pillar 2 and 3 above), and tax revenue becomes more efficient the Greek budget will achieve a surplus and Greece will start to reduce its stockpile of government debt.
There is currently a public dispute between the IMF and the EU on whether Greek debt is currently sustainable or not, where the IMF says they need a debt restructuring now in order to be active in the Greek program and where Germany and other EU countries say they will never accept this. Of course, there is a political dimension to this where the ruling party in Germany is sinking in the polls one year before elections and cannot seem to give any more concessions to Greece.
What matters here is that both Greece and the EU want to come out of this Greek program with success. The debt can be made sustainable not only with a haircut on the debt outstanding but on measures like investments in Greece, central banking operations and other debt restructuring methods. My opinion is that the Greek debt issue is out of its crisis era and entering a more normalized situation.
The EU bailout mechanisms have evolved since the beginning of the Greek crisis – in the past Greece had to go through long lead times until the specificities of a package were concluded and also had to endure national and international political tactics until a bailout was received.
Today, the EU has established the ESM (European Stability Mechanism), which has rules and regulations and has a vested interest to lend money to a member state in turmoil and see it through its recovery.
The director of the ESM currently says that in case Greece cannot sustain its debt burden there are ways to help Greece achieve that without asking for a nominal debt haircut from the EU countries.
Context & Boom/Bust
The Greek economic crisis and the subsequent economic adjustment programs, accommodated with tremendous political, economical and social upheaval have operated as a stressor that induced a complete restructuring of the country.
The qualitative and quantitative detail within the third economic adjustment program of Greece shows the wide-ranging measures and changes being enacted in the country.
Due to that long and persistent stressor, the country looks different than it was pre- crisis.
Since the start of this crisis, not investing in Greek companies or Greek banks seemed like the right thing to do. Now, investors and participants seem not to care about the fundamentals.
They are behaving as if fundamentals don’t matter anymore. It is reasonable to assume that whenever this happens in the markets, something big will happen.
The reason investors were proven right when they chose not to invest in Greece during the readjustment period, was because the country was relieving the excesses of its past. It was a period of Bust.
Now that the bust has lost steam and things are turning up, the context is different.
“Necessity rules the world.”
“In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause - it is seen. The others unfold in succession - they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference - the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, - at the risk of a small present evil.” -Frédéric Bastiat
Bibliography & Sources
“Aggregate Report on the Comprehensive Assessment”, ECB, November 2015.
“Supplemental Memorandum of Understanding”, April 2016.
“Memorandum of Understanding, August 2015”.
“Debt Sustainability Analysis”
“Compliance Report, The Third Economic Adjustment Program for Greece, First Review”, June 2016.
“Updated Asset Development Plan”, April 2016.
“Financial Assistance Facility Agreement between the Hellenic Republic and the ESM”, 2015.
Eurogroup, ESM and other EU Statements.
Bank of Greece
Greek Ministry of Finance
ELSTAT
National Bank of Greece, Eurobank, Piraeus Bank and Alpha Bank investor presentations and financial statements.
National Bank of Greece, Eurobank, Piraeus Bank and Alpha Bank State Aid Cases, European Commission.
IAS39 and IFRS9.
The Greek Comprehensive Assessment of 2015
The Greek Comprehensive Assessment of 2015
One of the commitments within the MoU signed by the ESM, the Hellenic Republic and the Bank of Greece on August 19th 2015 was that the liquidity and solvency of the banking sector would be preserved.
Under that direction, the ECB has undertaken a forward-looking evaluation of each of the four core banks’ capital needs, known as the “Comprehensive Assessment” (CA) which included an Asset Quality Review (AQR) and a Stress Test (ST) with baseline and adverse scenario.
“The CA is based on updated macroeconomic data and scenarios that reflect the changed market environment in Greece and has resulted in aggregate AQR- adjustment of 9.2 billion to participating banks’ asset carrying value. Overall, the assessment has identified capital needs totaling, post AQR, 4.4 billion in the base scenario and 14.4 billion in the adverse scenario.”
“The ECB was requested to provide a forward-looking view of the capital needs of the four Greek systemic banks. The key objective was to review the status of the banks under a given set of macroeconomic scenarios.”
The Asset Quality Review
The AQR was a point-in-time assessment of the accuracy of the carrying value of banks’ assets as of 30 June 2015 and provided a starting point for the stress test.
Banks have reflected the adjustments from the AQR in their financial accounts.
Over and the above the 2014 AQR on Greek banks, the 2015 AQR has resulted in significant findings.
“This has primarily been driven by the deterioration in the macro-economic environment in Greece which has led to higher NPE volumes as well as lower collateral values and cash flow valuations which has led to material reductions in carrying values.”
AQR Impact
The AQR resulted in the four systemic Greek banks suffering additional provisions of €9.2 billion.
The AQR was divided into two parts: 1) Individually assessed provisions 2) Collective provisioning.
Individual Provisions
Broken down into 1) Credit File Review (CFR) and 2) Projection of Findings.
Under the CFR, a sample of non-retail debtors loan data was assessed for additional provisions. The CFR assessed the chosen samples of non-retail debtors in terms of performing classification status and need of additional provisions.
Under the “Projection of Findings” exercise, the findings from the CFR were projected to the remaining un-sampled debtors.
Reclassified NPE
The CFR resulted in €1 billion of additional provisions due to the reclassification of non-retail debtors. Under the CFR impairment triggers were hit that forced this reclassification. The “debt service coverage ratio” triggered 70% of the NPE loans that were reclassified. This means that these loans were reclassified to NPE status because their cash flows were reduced.
Existing NPE
The remaining debtors that were classified as NPE before the CFR exercise, and remained NPE – suffered a change of provisioning approach under the. 78% of the debtors were to be treated under the “gone concern” provisioning approach and 22% under the “going concern” provisioning approach. The total adjustment amounted to 1,713 million.
Collateral and Real Estate Valuation
Under the CFR and relevant only for “gone concern” debtors, there was a revaluation of collateral values which led to a downwards adjustment of 2,567 million.
Projection of Findings
The findings of the sample from the CFR were extrapolated to the unsampled population of each portfolio, which led to additional 1,949 million of provisions.
Collective Provisions
Under the collective provisions exercise, the AQR reviewed banks’ collective provisioning models. This review was applied to performing and non-performing exposures.
Retail NPE
The four participating banks were found to have insufficient levels of provisions, which led to an increase of 3,516 million in specific provisions.
88% of these provisions stemmed from Residential Real Estate (RRE).
These additional provisions resulted from the NPE reclassifications under the CFR which led to an increase in provisions as well as haircuts on RRE collateral which further contributed to higher provisions. The haircut on collateral values was 25%.
A Critique of the AQR
The ECB states that the AQR is a “point-in-time assessment”, which looks at the assets of the four systemic Greek banks and adjusts their carrying values to provide a starting point for the Stress Test.
Even though the ECB has attempted to pass this as a “point-in-time assessment”, the AQR results cannot be divorced from the fact that they are assumption based. This “point-in-time assessment” is based on future assumptions.
The ECB further states that, “while the banks reflected an important part of the AQR adjustment from the comprehensive assessment 2014 in their accounts, the worsening of the market conditions meant that additional AQR findings were not unexpected, particularly given the prudential nature of the exercise.”
The “worsening market conditions” the ECB refers to was a 1.3% drop in GDP which considering the political episode of 2015, is a monumental achievement.
Banking is inherently a leveraged business in which total assets are ~10x the equity of the bank. By this token, when one starts to tinker with the assumptions related to the carrying value of those assets, a bank can start to have insufficient equity very fast.
In a recession, “debt service coverage” cash flows from a loan are negatively affected for almost all borrowers in an economy. Further, real estate values are also negatively affected for almost everyone. Conclusively, the classification of loans to either performing or non-performing status and their subsequent impairments are based on collateral values (which are elusive as they cannot be accurately assessed) and expected cash flows which can only be approximately calculated dependent on market conditions.
As an example to the above, writing down loans related to the shipping sector (the quintessential mean reverting asset class) whenever a low cycle strikes, and to report values optimized to that low cycle – in order to then reverse those write downs shows how elusive accounting is. The fact that I note that it is elusive does not mean I have recommendations to make it less so. It just is inherently intractable.
For the prudent central banker that aims to capitalize banks sufficiently - even for depression scenarios - this exercise may have a purpose, but for investors this policy action has further implications.
Assumption 1 – Further drops in Collateral & Real Estate Values
Greek Real Estate values have suffered drops since the start of the Greek crisis of “great depression” severity and they have not achieved a rebound as they are being suppressed by near-term political and economical uncertainty as well as very significant property taxes.
However, values have dropped so low that considering a further across the board haircut of 25% on collateral values is extremely strict, to put it lightly.
Assumption 2 – Reclassification of Performing Exposures to NPE status
16% of the total non-retail debtors that were previously considered performing have been reclassified as NPE, which led to increased provisions. 70% of the triggers for this reclassification were from a reduction in the debt service coverage ratio.
Within these reclassified non-retail debtors, 63% of them were treated under the “gone concern” approach – which considers that the recoverable amount of the loan is the liquidated value of the collateral on that loan.
This assumes that 63% of these non-retail reclassified debtors will fully default and be liquidated. Considering the Greek economy has gone through an economic depression and those debtors have still not defaulted, it is highly unlikely that they will default going forward.
Assumption 3 – NPEs under the “gone concern” approach
For the remaining debtors that were not reclassified as NPE but remained NPE as the bank had classified them as such before the AQR, 78% were treated under the “gone concern” approach.
Similar to assumption 2, the “gone concern” approaches consider that the realizable value of the loan will be the liquidated collateral that supports that loan. To assume that on 78% of this sample would be to assume that the economy would worsen significantly from here.
Assumption 4 – That the Greek economy will double dip
Under Assumptions 1,2 and 3 above it is implicitly assumed that the economy will deteriorate further. The aforementioned assumptions cannot be assumed if the economy is not expected to materially deteriorate from the day the data was taken (June 2015).
As shown in Figure 1 above, taken from the “Aggregate report on the Greek Comprehensive Assessment 2015” document by the ECB, the Greek economy bottomed out during 2011-2012 and registered positive GDP growth Year on Year in early 2014.
It is true that the political environment up to the 2015 elections, which elected the SY.RI.ZA government and resulted in the battle between the government and the EU Institutions, affected the economy negatively.
However, it has been proven that the economy was running at a very low cycle and so was not very fragile to any political uncertainty.
The Greek banks are more than sufficiently capitalized, the Government budget after a massive restructuring of the state is nearly balanced and this has been achieved while the economy is running under deep recession situations.
Even so, the assumptions of the AQR consider that the above do not hold and that the macroeconomic environment will take another dive.
Results of the AQR
Breakdown of the sources of the Total AQR adjustment
1,002 million from reclassifications of non-retail debtors that were classified as performing but then reclassified by the AQR as NPE, with an increase in provisions.
1,715 million from a change in the provisioning approach to NPE to a higher percentage under the “gone concern approach” leading to an increase in provisions.
1,949 million was from a projection of findings of the CFR extrapolated to the unsampled population of each portfolio.
3,516 million from the fact that six retail portfolios were found to have insufficient levels of specific provisions. 88% of these provisions stemmed from residential real estate portfolios due to adjustments of residential real estate collateral and an increase in the stock of NPE.
888 million from additional IBNR identified as a result of the AQR. 133 million from additional CVA provisioning.
The Stress Test
The Stress test was performed under two scenarios, the baseline and the adverse scenario. Fundamentally, the AQR and the ST are the same thing – a reduction in the carrying values of the assets that the participating banks hold, under certain assumptions.
The scenarios considered span from 30 June 2015 to 31 December 2017, for a total 2.5 years.
The baseline scenario expects cumulative GDP growth of 6.3% while the adverse expects 6.9%.
The baseline scenario expects cumulative house price growth of -13% while the adverse expects ~24%.
The baseline scenario expects prime commercial property price growth of 3.5% while the adverse expects 9.1%.
Aggregate impact under the baseline and adverse scenarios
The aggregate impact of the stress test in terms of percentage point changes between June 2015 (post AQR) and year-end 2017 in the average CET1 ratio of the four participating banks is a decrease of 0.3% under the baseline and a decrease of 7.8% under the adverse scenario.
The banks were forced to provide the ECB with capital raising plans after the result of the CA, in which they had to raise the capital shortfall they resulted in having under the adverse scenarios.
The participating banks had to raise 15 billion in new capital and by doing so diluted its existing equity holders by ~100%.
Implications of the Greek Comprehensive Assessment of 2015
Preference and equity shareholders of the Greek banks were wiped out and new capital had to be raised by the banks. The asset values of each bank were written down to reflect the assumptions of the AQR, and by doing so lowering their reported book value.
As the AQR assumptions were very strict and reflected a significant macroeconomic deterioration in Greece, the carrying values of those assets would look much different in the scenario that the economy does not indeed follow that AQR path. The stricter the downside revaluation of the assets was in the AQR, the more severe the upward revaluation of the assets will occur when the Greek economy starts to recover.
We can induce from this that 1 euro in reported equity of a Greek bank is much more than 1 euro in reported equity because in this case, accounting does not correctly reflect reality.
Another significant implication from the CA is that Greek banks are now capitalized to reflect the adverse scenario, and so are overcapitalized for the current economic environment. In fact, they are now stronger than most European banks.
Bibliography
• Aggregate Report on the Greek Comprehensive Assessment 2015, ECB.
The National Bank of Greece
With the leftist SY.RI.ZA government in Greece in power since early 2015, the country declined to accept the “Institutions” offers for another Greek bailout program. Since early 2015 when the talks started until 27th June when the referendum decision was announced by the Prime Minister – the Greek banking system lost a further €36 billion.
As a consequence, banks became heavily reliant on Eurosystem funding. Before the Greek financial crisis commenced in 2010, the banking system had aggregate deposits of ~€300 billion, it now only had ~€150 billion.
On the announcement of the referendum, the ECB stopped accepting Greek Government Bonds (GGBs) as collateral for ELA (Emergency Liquidity Assistance) and so Greek banks were forced to close. After the referendum was taken, Greece commenced negotiations again and concluded to a number of agreements with the EU institutions. Besides further funding to the Greek state, at the Euro Summit of 12 July 2015 it was agreed that the 4 systemic Greek banks would go through a “comprehensive assessment”.
This assessment would include an AQR (Asset Quality Review) and a ST (Stress Test) to assess capital needs of the banks in scenarios where the Greek economy would further falter.
NBG 2015 Recapitalization
The National Bank of Greece (NBG) was assessed to have a capital shortfall of €4.5 billion on October 31st 2015 and the bank would have to draft a capital plan and submit it to the Single Stability Mechanism (SSM) of the ECB.
The SSM accepted the plan on November 13th and the actions included in the capital plan would have to be undertaken in one month.
In December 2015 the bank confirmed that the total share capital increase was partially covered by €2.2 billion through the issuance of 7.3 billion new shares. The bank’s preference shares were mandatorily converted to 1.6 billion common shares.
The share capital increase that remained after private means were exhausted, was fulfilled by a €2 billion Contingent Convertible (CoCos) bond as well as €676 million through the issuance of 2.25 billion in newly issued shares both acquired by the Hellenic Financial Stability Fund (HFSF).
NBG Revised Restructuring Plan
On 4 December 2015, the European Commission approved the additional State Aid of €2.7 billion to NBG under EU state aid rules, on the basis of a Revised Restructuring Plan (2015 Restructuring Plan) which can be revised as follows:
A restriction of the number of branches in Greece to 540.
Total Full time equivalent personnel in Greece to a maximum of 9,950 at the
end of 2018, while the number stands at 12,013 on June 30th 2016.
Restriction of total operating costs in Greece to 961 million for the Year 2017.
Restriction of the Loan/Deposits ratio in Greece at a maximum of 115%,
currently at 90%.
NBG will have to divest from certain non-banking activities like its insurance
arm.
NBG will have to sell its Private Equity Funds. The agreement has already
been signed and the bank is expecting regulatory approval.
NBG will have to reduce its international activities. The bank has yet to
commence preparations on selling its bank in South-Eastern Europe.
NBG will proceed with the sale of its shareholding in Finansbank. In December 2015, the bank agreed to sell Finansbank to the Qatar National Bank for a consideration of €2,750 million. As of the 2nd half of 2016 the transaction has been conluded.
The commitments included in the plan are highly beneficial to the earnings power and capital position of NBG. As the bank is forced to abide by those commitments, it will be transformed into a more focused and profitable company.
Eurosystem Funding and ELA
In August 2016, the bank had Eurosystem funding of €13.2 billion from a peak of €27.6 billion in Q2-2015. Through divestment of assets, retained earnings, a reduction in loans and an increase in deposits the bank is reducing its exposure to Eurosystem funding.
It is expected that as the political and economic uncertainty surrounding Greece is reduced, deposits that fled the Greek banking system will flow back and the bank’s reliance to the ECB will be reduced to more normal levels.
Since June 29th, the Greek banking system is still under capital controls which is another deterrent for foreign based income to flow into domestic banks as well as for Greeks to bring back their deposits.
Non-Performing Loans & the Greek Economy
It has been proven that the multi-year adjustment that Greece has been going through has made it extremely robust to external shocks such as the 2015 “bank holiday” event. In the 3rd quarter of 2015, GDP dropped by 1.1% and rebounded to a positive 0.2% in Q4. It seems that the Greek economy has lost all that it could.
Yearly and Quarterly GDP statistics show that the Greek economy bottomed out during 2010-2011 and first moved into positive quarterly GDP growth in 2014.
The 2015 episode briefly paused Greece’s economic rebirth but the robustness proven coupled with the conquering of budget and trade deficits bode well for a continuing recovery in Greece.
Uncertainty is still high considering the Bailout Review has yet to close and FDI is at a standstill because of this. It is reasonable to conclude that after the Bailout Review is closed the economic engine will start to work with new investments flowing.
The NBG Group boasts a provision coverage ratio of 75% on all 90+ DPD loans exposing the bank’s equity only to the remaining 25%, which are still carried on its books. The bank has more than sufficient collateral backing on those loans to secure it from any repayment issues.
Capital Position
As of Q2 2016, NBG has a Common Equity Tier 1 ratio of 16.2% (on a fully loaded basis) considering the CoCos have been repurchased back from the Greek State. Considering the CoCos are not repaid, the bank boasts a CET1 ratio of ~22%.
This high CET1 ratio has been achieved through a multi-year cycle of deleveraging its balance sheet and issuing new capital. The 2015 AQR forced it to raise €4.5 billion in new capital further increasing total capital and the restructuring plan forced it to sell assets, further increasing the total capital ratio.
Conclusion
After a powerful restructuring which transformed the bank to a more lean, efficient and core-focused institution, the now over-capitalized NBG is selling for less than half TBV and ~2x normalized earnings power.
After a multi-year painful restructuring, the Greek economy has now adjusted to exist within its means and is far more resilient to any external shocks.
The Greek economy was an over-leveraged (homes, businesses, banks and the state) economy, which at some point in the cycle only flourished on speculative investments and unsustainable capital formation. The country’s excessive government expenditure and debt problems reinforced the private sector contraction and caused a financial depression.
Today, all excesses have been reversed and all institutions in the economy are being slowly cured. The economy is running at a low cycle with economic variables turning up, rather than at peak with economic variables prone to a mean reversion.
Investors are making their assessments by blindly extrapolating the past rather than making unemotional judgments of the future.
Many fear that the ECB through the SSM will “force” the banks to write down more loans and so leave them with capital adequacy issues.
At this stage in the recession where almost all risky loans have become non- performing, 75% of their balance is covered by cash provisions, and where the bank has a CET1 ratio of >20%, it would take a severe financial depression to bankrupt NBG.
The Group’s current transformation would take it to ~€35 billion of risk-weighted assets and a CET1 of ~€7 billion, giving it a CET1 ratio of 20%. I calculate the group’s normalized pre-tax earnings power at ~€1 billion / 15% ROE on €7 billion of equity.
At the current price of €1.7 billion the stock could increase by 5x from current levels.
“We should be careful to get out of an experience only the wisdom that is in it, and stop there, lest we be like the cat that sits down on a hot stove lid. She will never sit down on a hot stove lid again and that is well, but also she will never sit down on a cold one either.” –Mark Twain