The BillyB, Aster & JR8 roundtable!
'A German news magazine set off a flurry of speculation among markets and caused the euro to fall sharply against the dollar after it reported discussions of a plan for Greece to leave the euro and return to the drachma - a move which would trigger a financial and political earthquake.
George Papandreou, the Greek prime minister, who also attended the clandestine gathering, said: "The meeting in Luxembourg was aimed at discussing various logical steps.
"But these wild scenarios are very negative for everyone, for the Greek public, for foreign interests who want to invest in Greece.
"These are groundless reports, provocations put out by irresponsible people aimed at speculation, at profiteering."'
http://www.telegraph.co.uk/news/worldne ... meron.html
So we can take it that all the rumours one has heard are true and that Greece is Royally screwed... er hang on we kinda knew that anyway didn't we...
George Papandreou, the Greek prime minister, who also attended the clandestine gathering, said: "The meeting in Luxembourg was aimed at discussing various logical steps.
"But these wild scenarios are very negative for everyone, for the Greek public, for foreign interests who want to invest in Greece.
"These are groundless reports, provocations put out by irresponsible people aimed at speculation, at profiteering."'
http://www.telegraph.co.uk/news/worldne ... meron.html
So we can take it that all the rumours one has heard are true and that Greece is Royally screwed... er hang on we kinda knew that anyway didn't we...
Greece appeals to Brussels for further financial aid
http://www.telegraph.co.uk/finance/fina ... l-aid.html
European leaders are preparing to let Greece use Brussels' emergency funding mechanism, the European Financial Stability Facility (EFSF), to roll over its maturing debts. The embattled Mediterranean nation needs to raise an estimated €22bn next year to meet repayments that are not covered by the current rescue package.
Well well.
Now it's not just bailing them out, it's providing ongoing funding for the country.
How long can this denial of reality go on!?
http://www.telegraph.co.uk/finance/fina ... l-aid.html
European leaders are preparing to let Greece use Brussels' emergency funding mechanism, the European Financial Stability Facility (EFSF), to roll over its maturing debts. The embattled Mediterranean nation needs to raise an estimated €22bn next year to meet repayments that are not covered by the current rescue package.
Well well.
Now it's not just bailing them out, it's providing ongoing funding for the country.
How long can this denial of reality go on!?
Greece angered by S&P rating cut
Investors in Greek debt may have to write-off 50pc of their loans "or more" if financial stability is to be restored to the beleaguered country, a leading rating agency warned.
Standard & Poor's said that "there is increased risk that Greece will take steps to restructure" its €110bn (£97bn) bail-out package which would result in a "distressed exchange" for bondholders. [aka DEFAULTING lol]
At the same time, the rating agency cut Greece's credit rating from B to BB- dragging its debt further into junk territory to reflect its more gloomy views.
http://www.telegraph.co.uk/finance/econ ... g-cut.html
Investors in Greek debt may have to write-off 50pc of their loans "or more" if financial stability is to be restored to the beleaguered country, a leading rating agency warned.
Standard & Poor's said that "there is increased risk that Greece will take steps to restructure" its €110bn (£97bn) bail-out package which would result in a "distressed exchange" for bondholders. [aka DEFAULTING lol]
At the same time, the rating agency cut Greece's credit rating from B to BB- dragging its debt further into junk territory to reflect its more gloomy views.
http://www.telegraph.co.uk/finance/econ ... g-cut.html
JR8 wrote:Greece appeals to Brussels for further financial aid
http://www.telegraph.co.uk/finance/fina ... l-aid.html
European leaders are preparing to let Greece use Brussels' emergency funding mechanism, the European Financial Stability Facility (EFSF), to roll over its maturing debts. The embattled Mediterranean nation needs to raise an estimated €22bn next year to meet repayments that are not covered by the current rescue package.
Well well.
Now it's not just bailing them out, it's providing ongoing funding for the country.
How long can this denial of reality go on!?
Just like Ireland. Whoever pushes these bailout packages through is either a complete moron or a bully or both. Very naive if they think a big bunch of Euro backing will attract investors to double digit return on bonds. There is no such thing as a free-lunch and people are getting more savvy to the fact that the bigger the are, the harder they fall. No one is too big to fail anymore.
aster wrote:The frigging 21st century Trojan Horse.
Dump them not only out of the Euro but also the EU I say.
Good one
Logic says they should leave, but the politics of it will resist that at all cost. It will be an epic and expensive battle (with our money
)
My other thought is the contagion has already spread. So if you were to throw out Greece, then I reckon you'd need to throw out Ireland Portugal too - if you are to have any chance of saving Spain from the same fate. Then I reckon the Spanish economy would need to put under EU-wide control for say 5 years to ensure the brutal restructuring that is required happens.
The other interesting thing is if Greece did leave the eurozone. Keep in mind that it took circa 1.5/2 years to implement the infrastructure changes needed to move from the legacy currencies to the euro. Quite how they could announce Greek withdrawal without the market going totally bonkers I have no clue!
BillyB wrote:Just like Ireland. Whoever pushes these bailout packages through is either a complete moron or a bully or both. Very naive if they think a big bunch of Euro backing will attract investors to double digit return on bonds. There is no such thing as a free-lunch and people are getting more savvy to the fact that the bigger the are, the harder they fall. No one is too big to fail anymore.
They're EU politicians, what do you expect. Do you recall Merkel's incredibly unwise threat re: bond-haircuts right before the initial Irish bail-out? Apparently that off the cuff comment alone caused the cost of the bail-out to rise by a couple of billion! So yes, such people have absolutely zero understanding re: the psychology of the markets etc.
I was going to copy/paste these blog articles, but you need to see the graphs really. Douglas Carswell's blog (a Tory MP, but one from the Redwood/Hannan mold, i.e. unusually intelligent), articles from 7/8/9 May. They're not long, only a few paras each. The stunning thing is that the PIGS are actually in much worse shape now than they were when the supposed 'bail-outs' started a year ago.
http://www.talkcarswell.com/
Just them, though I assume this is what the banks have wanted all along... target Greece, help them forge official figures to piss off the EU, squeeze them financially, and hope that for the first time someone gets kicked out of the Eurozone. And if that happens, party time.
Of course afterwards they would do it all again by targeting another country and focusing their efforts on them, picking off the weaker ones one by one...
Of course afterwards they would do it all again by targeting another country and focusing their efforts on them, picking off the weaker ones one by one...
From John Redwood's blog (another Tory MP). Worth checking his site every now and again as I reckon he must be right up there in the top few educated and intelligent UK politicians. And no, I do not mean that I necessarily agree with his views, just I stand in awe at his knowledge, insight, and ability to articulate it. And here once again he raised something I had not considered. Banks being required to hold more Tier 1 capital on their balance sheets, and the implications of that debt being downgraded. ....
http://www.johnredwoodsdiary.com/
------------------------------------------------
The Euro crisis
By johnredwood | Published: May 10, 2011
At the end of last week a wide ranging discussion about how to tackle the Greek debt crisis again led to German speculation that Greece was about to leave the Euro zone. The EU authorities moved quickly to deny that strongly.
Given that leaving the Euro and devaluing is not an option contemplated in EU circles, they are left with two other options. The first is to give or lend more money to Greece, in the hope that this will allow Greece to sort out her finances so that in due course she can carry on without access to extra EU money. The second is to find a way of allowing Greece to renege on part of her debt or to delay its repayment. The first route entails EU taxpayers paying more to keep Greece going. The second course involves bondholders, savers and banks who have lent Greece money, giving her relief at their expense.
Both of these approaches are based on a heroic assumpiton that this time round tiding Greece over for a bit longer would make all the difference, and she will then miraculously sort out her deficit after a long period when it simply got worse. It was this assumption that was behind the Spring 2010 EU loans to Greece.They were you may remember going to draw a line under the Euro debt crisis and solve the problems. This assumption was beind the agreement to extend the length of the loans in the autumn of 2010 when the package was renegotiated for the first time. Now it falls to be renegotiated yet again.
The truth is this model of financing a country and keeping it tied into the Euro system does not work. It threatens losses for the banking system of the whole Euro area, as European banks have been told by regulators to own more sovereign debt of Euroland countries. It is this very debt, thought to be a high class safe asset, that now is being buffetted by the markets and may not be repaid in full on time in the case of the weakest countries.
The UK should make it clear that any new Greek package is a matter for the Euroland zone alone, and should not allow general EU money to be used to perpetuate a myth that fiddling around with the terms and size of the borrowing is the answer to this problem. The answer for Greece is an economic policy that delivers growth, and more realistic levels of state spending.
We read that France is not keen to be more generous on the loans, whilet Germany seems to think tougher conditions on the very loans Greece wishes to relax would do the job for the third time of asking. There are limits to how long they can carry on trying to muddle through. The markets are not impressed, because they know the weaker countries of Euroland have to grow faster, generate more tax revenue, and cut spending sensibly. These countries need a work out, not a bail out. Being in the Euro makes their recovery more difficult. Having weak players in the Euro also makes the position of the stronger members of the Euro weaker. The richer countries will have to pay more of the bills of the weaker members if they are to keep everyone in the currency.
http://www.johnredwoodsdiary.com/
------------------------------------------------
The Euro crisis
By johnredwood | Published: May 10, 2011
At the end of last week a wide ranging discussion about how to tackle the Greek debt crisis again led to German speculation that Greece was about to leave the Euro zone. The EU authorities moved quickly to deny that strongly.
Given that leaving the Euro and devaluing is not an option contemplated in EU circles, they are left with two other options. The first is to give or lend more money to Greece, in the hope that this will allow Greece to sort out her finances so that in due course she can carry on without access to extra EU money. The second is to find a way of allowing Greece to renege on part of her debt or to delay its repayment. The first route entails EU taxpayers paying more to keep Greece going. The second course involves bondholders, savers and banks who have lent Greece money, giving her relief at their expense.
Both of these approaches are based on a heroic assumpiton that this time round tiding Greece over for a bit longer would make all the difference, and she will then miraculously sort out her deficit after a long period when it simply got worse. It was this assumption that was behind the Spring 2010 EU loans to Greece.They were you may remember going to draw a line under the Euro debt crisis and solve the problems. This assumption was beind the agreement to extend the length of the loans in the autumn of 2010 when the package was renegotiated for the first time. Now it falls to be renegotiated yet again.
The truth is this model of financing a country and keeping it tied into the Euro system does not work. It threatens losses for the banking system of the whole Euro area, as European banks have been told by regulators to own more sovereign debt of Euroland countries. It is this very debt, thought to be a high class safe asset, that now is being buffetted by the markets and may not be repaid in full on time in the case of the weakest countries.
The UK should make it clear that any new Greek package is a matter for the Euroland zone alone, and should not allow general EU money to be used to perpetuate a myth that fiddling around with the terms and size of the borrowing is the answer to this problem. The answer for Greece is an economic policy that delivers growth, and more realistic levels of state spending.
We read that France is not keen to be more generous on the loans, whilet Germany seems to think tougher conditions on the very loans Greece wishes to relax would do the job for the third time of asking. There are limits to how long they can carry on trying to muddle through. The markets are not impressed, because they know the weaker countries of Euroland have to grow faster, generate more tax revenue, and cut spending sensibly. These countries need a work out, not a bail out. Being in the Euro makes their recovery more difficult. Having weak players in the Euro also makes the position of the stronger members of the Euro weaker. The richer countries will have to pay more of the bills of the weaker members if they are to keep everyone in the currency.
aster wrote:Just them, though I assume this is what the banks have wanted all along... target Greece, help them forge official figures to piss off the EU, squeeze them financially, and hope that for the first time someone gets kicked out of the Eurozone. And if that happens, party time.
Of course afterwards they would do it all again by targeting another country and focusing their efforts on them, picking off the weaker ones one by one...
Hence my suggestion that you have to be ahead of market expectations. Take out Greece and as you say the dominoes will still fall. Go beyond what the market expects (surprise them by taking out PIG in one go) and you have hope of saving Spain.
But they're politicians, so it won't happen.
China (apparently) achieves what the PIGS could only dream of, taming a runaway economy...
http://www.telegraph.co.uk/finance/econ ... -high.html
----------------------------
'China's inflation eased slightly in April from a 32-month high as repeated interest rate hikes and other controls began to cool an overheated economy.
The country's consumer price index rose 5.3pc year on year in April, down from 5.4pc in March but well above Beijing's official four-percent target for 2011.
...
The International Monetary Fund has forecast China's inflation should fall to just above four percent by the end of the year on the back of Beijing's tough tightening policies.
Interest rates have been raised four times since October and the central bank has increased on numerous occasions lenders' reserve requirement ratio, which effectively limits the amount of money they can loan out.
--------------------------------------------
http://www.telegraph.co.uk/finance/econ ... -high.html
----------------------------
'China's inflation eased slightly in April from a 32-month high as repeated interest rate hikes and other controls began to cool an overheated economy.
The country's consumer price index rose 5.3pc year on year in April, down from 5.4pc in March but well above Beijing's official four-percent target for 2011.
...
The International Monetary Fund has forecast China's inflation should fall to just above four percent by the end of the year on the back of Beijing's tough tightening policies.
Interest rates have been raised four times since October and the central bank has increased on numerous occasions lenders' reserve requirement ratio, which effectively limits the amount of money they can loan out.
--------------------------------------------
The European banks could learn a thing or two about long-term stability and risk management from this. I think slow and steady is looking good in the race, as opposed to chasing anything that can make a risky short-term return;
http://www.bloomberg.com/news/2011-05-0 ... nking.html
http://www.bloomberg.com/news/2011-05-0 ... nking.html
During the financial crisis I recall reading that some banks - as soon as they received big $$$ from the gov't to put them back on their feet - tried to use the money straight away to buy out/take over their competitors (other banks) on the cheap? Was this really the case? 
P.S. Greece rioting again, what else is new? Now I know why people there aren't at work - they simply don't have time for such bullshit.
P.S. Greece rioting again, what else is new? Now I know why people there aren't at work - they simply don't have time for such bullshit.
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