The BillyB, Aster & JR8 roundtable!

[Strong Eagle]

p.s. SE gotta pi$$ you off being a yank and having to bail out the Germans (I mean Greeks) eh?

As long as it is with printed money, I'm OK with that. It's like former Senator Evert Dirkson once said. "A billion here, a billion there, and pretty soon you're talking real money".

[aster]

This would kinda explain why nothing I post on the euro seems to make any impression on you!

Maybe it's because you're so fanatically against it that you use it as an excuse for everything that's wrong in Europe. Greeks were lazy, they overspent, they cheated, and yet according to you... it's the Euro that's to blame.

I think the Euro is a great thing, and if you have a common market then do you really expect to have a dozen dinky little currencies everywhere, fluctuating all the time like waves in a tumultuous sea? That would suck completely.

The only people out there who should hate the Euro - and do so in fact - are the banks. Europe was their money tree, their golden hen. Every corporate transaction, every tourist leaving his country... they were able to rip off and steal from almost everyone in Europe.

Who do you think sponsored the "Save the Pound" campaign in the UK? Take a wild guess.

p.s. How come you visited Egypt so much, diving?

No, only dived in Turkey but preferred white-water rafting when I was there.

Love Egypt because it's a great place to chill with guaranteed weather, so a 5-star hotel with free booze for the week/fortnight is ideal. Plus I love the hubbly bubbly they serve over there.

[BillyB]

So, it seems to me that the actual debt problems are ONLY in the range of 80 or 90 billion. Not a pittance but can be handled.

The real issue seems to be, once again, what happens if the default actually occurs? Now, all the credit default swaps come into play, and god only knows how many have been bought, and how many institutions have been stupid enough to sell them. You'd think AIG would have been a lesson.

The CDS really needs to be radically reined in. I can't buy an insurance policy on your life without a vested interest... why can I buy a CDS on your dumb ass investment even though I have no relationship to you whatsoever.

Its a good point SE.

The whole derivatives area needs even tighter regulation in my opinion. Leverage tends to magnify issues when things are bad, and derivatives are often used for the wrong reasons - e.g. To obtain cash flows or a premium (if you are a seller) that can be leveraged once more into other exotics, and so on and so forth. In a nutshell, if you are irrepsonsible and things turn bad you are way out of your depth and likely have huge exposure that you cannot repay because everything is so highly leveraged up.

[JR8]

This would kinda explain why nothing I post on the euro seems to make any impression on you!

Maybe it's because you're so fanatically against it that you use it as an excuse for everything that's wrong in Europe. Greeks were lazy, they overspent, they cheated, and yet according to you... it's the Euro that's to blame.

I think the Euro is a great thing, and if you have a common market then do you really expect to have a dozen dinky little currencies everywhere, fluctuating all the time like waves in a tumultuous sea? That would suck completely.

The only people out there who should hate the Euro - and do so in fact - are the banks. Europe was their money tree, their golden hen. Every corporate transaction, every tourist leaving his country... they were able to rip off and steal from almost everyone in Europe.

Who do you think sponsored the "Save the Pound" campaign in the UK? Take a wild guess.

p.s. How come you visited Egypt so much, diving?

No, only dived in Turkey but preferred white-water rafting when I was there.

Love Egypt because it's a great place to chill with guaranteed weather, so a 5-star hotel with free booze for the week/fortnight is ideal. Plus I love the hubbly bubbly they serve over there.

You're beyond redemption man!

Don't know how much you personally profit from the euro but I hope it is damned good. As it is financially raping a heck of a lot of people that actually live in Europe.

p.s. First time I went to Egypt I paid £230 for a week all-in at a 4* hotel in Sharm, lol. Frankly it's mostly chavs now IMHO unless you go to the dive camps down near the Sudanese border, and southern liveaboards.

[JR8]

Maybe it's because you're so fanatically against it that you use it as an excuse for everything that's wrong in Europe. Greeks were lazy, they overspent, they cheated, and yet according to you... it's the Euro that's to blame.

No, there is nothing 'fanatical', it is simply called being in disagreement so relax man.

Answer me this, would Greece be such an international problem today if they were not in the euro?

YES/NO?

[aster]

That's a tricky question, would it be an international problem? Well it certainly wouldn't for the Euro-zone nations because they wouldn't need to be looking at bail-outs.

Would it be a major problem for all Greek citizens? You betcha! They'd be like Iceland, with a currency that has gone to $hit and people's live savings eradicated. No international problem though if that's what you're asking.

Bottom line is that Greece got into trouble for:

- overspending
- overborrowing
- cheating about its finances
- being allergic to work

Now overborrowing was easier to do due to being part of the Euro, and as a result of that overspending was cake easy. It's like issuing a credit card to someone who then falls into a financial dunghole... Who's to blame? The issuer or the overspender?

[JR8]

Here's a stat for you to ponder

The cost of the London 2012 Olympics (est. £10bn) would fund the monarchy for 265 years.

[JR8]

'Eurozone crisis poses 'material and immediate threat' to UK stability'
Mervyn King


'Lalalalalalala.... lalalalalala. The euro is great!.... lalalalallaala'
Aster

[JR8]

The CDS really needs to be radically reined in. I can't buy an insurance policy on your life without a vested interest... why can I buy a CDS on your dumb ass investment even though I have no relationship to you whatsoever.

You're a US taxpayer ergo you're bailing out Greece.

That's 'why' you can buy CDS on them.

[JR8]

That's a tricky question, would it be an international problem? Well it certainly wouldn't for the Euro-zone nations because they wouldn't need to be looking at bail-outs.

Hey we agree on something! [shock] = If Greece were not in the euro, the Greek crisis would not a problem for the other euro-zone (and EU) members. The next step for me is believing that Greece would not be in the euro if the EU (primarily the Germans/French) had not wanted them to be. So in that respect the EU has brought this crisis upon itself. I think the term ‘bail-out’ needs to be used judiciously (as I keep reminding myself!) as the Grecian hull has more water in it than it had after the first ‘bail-out’ a year ago. As they say, you can’t borrow your way out of debt.

Would it be a major problem for all Greek citizens? You betcha! They'd be like Iceland, with a currency that has gone to $hit and people's live savings eradicated. No international problem though if that's what you're asking.

But if they weren’t in the euro why would we care? It seems a little chicken and egg to me. You seem to say well, ‘at least their assets are in a stable currency’, whilst I’m saying if they hadn’t joined that stable [cough] currency the value of their assets probably wouldn’t have just halved. lol, what an impasse...


Bottom line is that Greece got into trouble for:
- overspending
- overborrowing
- cheating about its finances
- being allergic to work

Agreed, but none of this is news. They were never going to become model German workers just because they got a new currency.


Now overborrowing was easier to do due to being part of the Euro, and as a result of that overspending was cake easy. It's like issuing a credit card to someone who then falls into a financial dunghole... Who's to blame? The issuer or the overspender?

Credit card issuers carry out a credit/risk assessment before issuing a card. Rather inexplicably the EU did not seem to do that on the PIGS, indeed they encouraged these rather basket-case economies to join the euro. Why do you think they did that? The only reason I can think of is that the EU (mostly run by damned commies) have a fixation of being a larger entity than the USA. It was of course one of Monnet’s founding goals to make the EU a political counterweight to the US. I think now, it has become an exercise in political vanity, ‘anything you can do we can do better (and bigger)’. Hell, in a sign of how they would let almost anyone in, there was even talk of them having Israel join! Considering how much the Eurocommies hate America and Israel it really was a case of size at any cost (lieterally, as it turns out). The trouble is that almost all politicians are so dumb and blinded by ego they haven’t the first clue about economics. Most have never had a 'real job', i.e. in the productive sector.

Example: Gordon Brown, Chancellor for 10 years has nil accounting or economics education at all, he read Ancient flipping History! Result, inevitable?

You clearly detest bankers, well I detest politicians! We each think of them as racketeering liars. Let’s toast to something else in common


p.s. Diving in Turkey. I don’t think I’ve heard anyone rate it to be honest. You’d be much better off giving it a go in the Egyptian Sinai. The Med is fished out so there is nothing to see. By the by my parents recently went to Cyprus and were surprised to find that there were zero seagulls (no fish = no seagulls!). If you were ok with diving itself (breathing underwater etc) then I’d certainly give it a go somewhere else!

[aster]

I don't think the Greeks can "work" their way out of this, especially when most prefer to go on some "work avoidance scheme" like rioting in the streets.

Of course if they weren't in the Euro, they wouldn't be a problem for everyone else. I think they were allowed in as nobody could have thought that you'd see a gov't falsifying financial data on a national level. Nor do I think people foresaw the level of work-avoidance prevalent there. Plus where are they economically? They can't produce anything worthwhile and are in like 66th place in the global ladder of exporters, so they rely mainly on tourism? Now this was always going to be a recipe for disaster, even I don't ever give Greece a look whatsoever when looking at where to go on holiday. Give me Egypt any day.

Of course if they weren't in the Euro, their citizens would see their life savings turn to $hit. As you mentioned, we wouldn't care though. After all, do we care about Iceland? Nope.

The creation of a common market was a great thing, and a natural progression of that was a common currency, which I also consider to be a great thing. The Euro isn't the problem, countries like Greece are. And of course the benchmarks for who should be part of the Euro-zone need to be re-looked, and a procedure to kick nations out should also be drawn. I say put a limit on budget deficits and enforce a law of automatically having to remove a country from the Euro that can't keep their figures straight.

What's this about Israel joining the EU? Oh no… we don't need another Greece, where instead of Germany it's the US doing the funding.

Yeah, I certainly don't like banks, with politicians right behind them. We should have a drink to that. Diving in Turkey was just a one-off, it was basically a trip full of activities as opposed to just chilling. I did prefer white-water rafting to diving though, much more fun IMO. I agree that Egypt would be incomparably better for diving, there's no place in the Med that can compare to Egypt.

[JR8]

So, it seems to me that the actual debt problems are ONLY in the range of 80 or 90 billion. Not a pittance but can be handled.

The real issue seems to be, once again, what happens if the default actually occurs? Now, all the credit default swaps come into play, and god only knows how many have been bought, and how many institutions have been stupid enough to sell them. You'd think AIG would have been a lesson.

The CDS really needs to be radically reined in. I can't buy an insurance policy on your life without a vested interest... why can I buy a CDS on your dumb ass investment even though I have no relationship to you whatsoever.

Back for a 2nd bite of the cherry on this one.

I think it comes down to whether you think politicians and regulators are wise enough to rein in the markets. I am not convinced. See the jaw-droppingly fawning speech Gordon Brown made to the City bigwigs 3 months before the City went tits-up as an example.

So where would the line be drawn. I couldn't take a derivative position unless I held the underlying? Would farming conglomerates forward selling soy-beans be the only ones allowed to sell (but presumably not short) soy-bean futures?

Would banks only be allowed to lend money that they held on deposit?

To me the issue is that governments have taken the political decision to not allow banks to fail. That to me is simply perverse and wrong.

[JR8]

I don't think the Greeks can "work" their way out of this, especially when most prefer to go on some "work avoidance scheme" like rioting in the streets.

Yep agreed again, there is no way out for them. The EU have no plan #B, that is how incompetent they are. Showering taxpayers money on Greece while running around like headless chickens.


Of course if they weren't in the Euro, they wouldn't be a problem for everyone else. I think they were allowed in as nobody could have thought that you'd see a gov't falsifying financial data on a national level.

Why did the politicians not consider that risk? The Greeks did not suddenly start behaving this way on joining the euro. It seems a risk assessment was not done, and the result is that it threatens to bring down the entire EU. Not so clever! The EU itself is riven with fraud, it is no surprise to me that some of the member states are too.

Nor do I think people foresaw the level of work-avoidance prevalent there.

So a bit like getting married for the 2nd time without a pre-nup, the triumph of hope over better wisdom. Really though, due diligence was not done, and as a result the EU has got the financial equivalent of the bubonic plague

Plus where are they economically? They can't produce anything worthwhile and are in like 66th place in the global ladder of exporters, so they rely mainly on tourism? Now this was always going to be a recipe for disaster, even I don't ever give Greece a look whatsoever when looking at where to go on holiday. Give me Egypt any day.

So why did France and Germany welcome them to their bosom? They do produce some lovely olive oils, and I have to say that of the Greeks I have met, they do seem like genuinely nice people (probably too nice for their own good, considering tying themselves to the Germans)

Of course if they weren't in the Euro, their citizens would see their life savings turn to $hit.

So you suggest, but when did they have a crisis like this before giving up the Drachma?

As you mentioned, we wouldn't care though. After all, do we care about Iceland? Nope.

Ironically I think Iceland were amongst the wiser in the action taken – letting banks fail

The creation of a common market was a great thing, and a natural progression of that was a common currency, which I also consider to be a great thing.

If that view were generally shared then politicians would have the confidence to allow citizens to vote on participation. But they never will.

The Euro isn't the problem, countries like Greece are.

Chicken and egg again. France/Germany welcomed them in, and now the citizens all paying the price. By the way which countries would you eject from the euro, if you had to do it this week?

And of course the benchmarks for who should be part of the Euro-zone need to be re-looked,

It’s a bit late now. They should have thought of that before it’s creation.

and a procedure to kick nations out should also be drawn. I say put a limit on budget deficits and enforce a law of automatically having to remove a country from the Euro that can't keep their figures straight.

Why do you think that even today EU politicians demand that Greece will not, cannot, leave the euro?

What's this about Israel joining the EU? Oh no… we don't need another Greece, where instead of Germany it's the US doing the funding.

That was several years ago, when politicians were still in the first flush of this vanity excercise.


Yeah, I certainly don't like banks, with politicians right behind them. We should have a drink to that. Diving in Turkey was just a one-off, it was basically a trip full of activities as opposed to just chilling. I did prefer white-water rafting to diving though, much more fun IMO. I agree that Egypt would be incomparably better for diving, there's no place in the Med that can compare to Egypt.

Hmmm. Diving is more my kinda thing, as ultimately I am in control of my own destiny which I would not be with rafting. Agreed, Egypt (the Sinai) is under-rated. Though the big resorts are getting decidedly chavvy!

[BillyB]

So, it seems to me that the actual debt problems are ONLY in the range of 80 or 90 billion. Not a pittance but can be handled.

The real issue seems to be, once again, what happens if the default actually occurs? Now, all the credit default swaps come into play, and god only knows how many have been bought, and how many institutions have been stupid enough to sell them. You'd think AIG would have been a lesson.

The CDS really needs to be radically reined in. I can't buy an insurance policy on your life without a vested interest... why can I buy a CDS on your dumb ass investment even though I have no relationship to you whatsoever.

Back for a 2nd bite of the cherry on this one.

I think it comes down to whether you think politicians and regulators are wise enough to rein in the markets. I am not convinced. See the jaw-droppingly fawning speech Gordon Brown made to the City bigwigs 3 months before the City went tits-up as an example.

So where would the line be drawn. I couldn't take a derivative position unless I held the underlying? Would farming conglomerates forward selling soy-beans be the only ones allowed to sell (but presumably not short) soy-bean futures?

Would banks only be allowed to lend money that they held on deposit?

To me the issue is that governments have taken the political decision to not allow banks to fail. That to me is simply perverse and wrong.

As you probably are aware, many ex-bankers move into politics, work for the Fed and the regulators. They work with, and pay handsomely, top academics who commission research papers supporting the self interested views of the bankers. E.g. Iceland dereg, concluding there is no need for derivatives regulation etc.

The highest level decision makers are unfortunately an exclusive and very powerful elite.

[JR8]

As you probably are aware, many ex-bankers move into politics, work for the Fed and the regulators.

Well, I'd regard the BOE and FSA as quangos rather than politics as such. I mean look at the previous Labour cabinet, and current Tory one, and count on the fingers of one hand how many of them have worked in Finance. Not very many. In fact most of them are financially illiterate. The only one I probably honestly look up to for financial insight and just that kinda aura of extreme intelligence coupled with humility is John Redwood.

They work with, and pay handsomely, top academics who commission research papers supporting the self interested views of the bankers. E.g. Iceland dereg, concluding there is no need for derivatives regulation etc.

The highest level decision makers are unfortunately an exclusive and very powerful elite.

This I agree with. But if increasing regulation of the derivative markets would fall under their control how would that change anything? And if they are are unaccountable (not voted in, not selected via Select Committees etc) then how might they be accountable to people who actually understand these products?

It is a tough one, but I don't see shutting down the derivative markets to specualtion is an answer.