[cobran20]

wulfgar, on 31 January 2012 - 12:42 AM, said:

Depends who you are. In the case of Greece it cannot afford to upset the central banks. Greece is totally dependent on trade with the very entities it would have to shaft.

I'd say that Greece is curently doing an excellent job at upsetting central banks and private creditors. We should know relatively soon, whether they're going to pay any money back.

[wulfgar]

cobran20, on 31 January 2012 - 04:44 AM, said:

I'd say that Greece is curently doing an excellent job at upsetting central banks and private creditors. We should know relatively soon, whether they're going to pay any money back.

The Greek claims it's willing to pay them something back, but only 30% of what they owe. Many creditors seem prepared to take 50%, but it will be interesting to see if they take 30%.

30% is about what the Greek debt is selling for at the moment so there is really nothing much in this offer for the creditors.

Basically the Greeks want to take a debt of over E200 B reduce to face to 100 billion. But they wish to take this a step further and drop the coupon rate from the original yield of say 4 to 4.5% to 3 to 3.5%. In reality this takes offer down to the present MV of the debt of 70 billion.

The EU offer is a 30 billion fund to hold the MV to 70 billion. But this is useless, because the new bonds couldn't rise in value, nor will they fall in the immediate present, if the EU sets a bar on the price. But there's absolutely no reason to hold these smelly Greek bonds for transient investors, so these will all sell up. Any form of Greek government debt will remain completely illiiquid, I can't see liquidity returning.

As for the 130 billion or so Greece owes the EFSF and the IMF, the haircut doesn't apply because these are on something similar to repo.

[cobran20]

More Banks to Tap ECB for Much More in Emergency Funds

Quote

SINGAPORE (MNI) - More European banks are set to tap the European Central Bank for emergency funds worth twice as much or more than they did in December in the first round of funding, the Financial Times reported Tuesday.

The paper quoted an unnamed senior banker as saying banks could tap as much as E1 trillion in the ECB auction and quoted three chief executives of European banks as saying they would double or triple the amount they took in the first funding exercise.

The first auction in December resulted in E489 billion in emergency funds to more than 500 lenders. The FT said that as well as more money being dispersed in three-year loans, this round could also see more banks involved.

The funds are being loaned at 1%.

[cobran20]

Latest news on stalling tactics!

link

Quote

Greek officials launched a vociferous behind the scenes attack on European Union and International Monetary Fund negotiators as talks in Athens over the country's mounting debts appeared to stall.

Prime minister Lucas Papademos told aides that a crisis meeting of party leaders would be called as early as Thursday to thrash out a response to an increasingly intransigent negotiating team sent by Brussels, which is demanding severe austerity measures before sanctioning a further €130bn (£109bn) of bailout funds.

Papademos, the economist temporarily heading a transition government in Athens, wants party leaders backing his administration to make further concessions to bring talks to a swift end.

Papademos and his team of aides returned in sombre mood on Tuesday from a round of talks in Brussels and Frankfurt at the offices of the European Central Bank (ECB), despite relief that a German proposal to install an EU commissioner in Athens, with special oversight of Greek finances, had been quashed.

One aide said: "All round there is an understanding that the situation is quite dramatic. Our discussions in Brussels were tough and honest with things being laid out in an austere manner.

"We understand how difficult it is for MPs who are now faced with the hard option of voting through another round of austerity measures but the stakes are very high and one of our greatest concerns is that they don't understand just how high they are."

Athens is holding parallel talks with private creditors over a 50% writedown of its debts while also meeting a troika of negotiators from the EU, IMF and ECB over a new bailout fund. Greece must obtain agreement for further bailout funds to be released before it can conclude the deal with its private creditors. Talks with private creditors, which are expected to slice an estimated €100bn from Greece's €350bn debt pile, have faced difficulties following objections from banks that they are being asked to take bigger losses than they expected after a deterioration in the outlook for the Greek economy.

However, finance minister Evangelos Venizelos put on a brave face publicly and said that he believed an agreement on the debt swap was close. "We are one step [away]. I would say it is a formality away from finalising (the debt relief agreement)," Venizelos told a news conference. "The next few days will determine what happens over the coming decade."

On the negotiations over the bailout funds, Greek MPs have objected to demands by the troika for further wage cuts and reductions in the minimum wage.

"The troika doesn't appear to be willing to accept any concessions whatsoever on reducing the minimum wage and scrapping bonuses," said the government aide. "No political party is willing to move either, saying wage cuts are a red line they are simply not going to cross. You tell me how this is going to be resolved. We have no idea and we're very worried."

The deadlock in Athens followed poor unemployment data for the eurozone that revealed a widening split between the continent's rich north and indebted south.

Figures for December showed unemployment at a record high of 10.4%. Spain's unemployment stands at a staggering 22.9% and Greece's is not far behind at 19.2%. Germany's unemployment rate fell to 6.7% in January, separate figures showed, a new record low since figures for a unified Germany were first published, while Austria boasted the eurozone's lowest jobless rate at 4.1%, followed by the Netherlands at 4.9%.

[boz]

cobran20, on 31 January 2012 - 04:44 AM, said:

I'd say that Greece is curently doing an excellent job at upsetting central banks and private creditors. We should know relatively soon, whether they're going to pay any money back.

r u really thinking that?
I see that not even 10 year in the future we'll know whether greece will be paying their debt back or not.
untill creditor hold papers saying greece owns them money and untill greece debt would hit zero (which would be never happen like 95% of countries in the world) you can't get an answer to your point

[Solomon]

Quote

"We understand how difficult it is for MPs who are now faced with the hard option of voting through another round of austerity measures but the stakes are very high and one of our greatest concerns is that they don't understand just how high they are."

At stake is the entire world's economy, I would suggest.
This may be just emotional fear, but it also has substance.
If but only one domino might fall, the contagion mightn't be so concerning, but there are now several countries lining up to be toppled by debt.
Greece is still the guinea pig. If it doesn't work, the others have no hope.

The flow-on effect is the great fear of those who know exactly what the result will be.
Looks like the people of Greece are going to end up total paupers before they're finished with them.

[wulfgar]

Quote

despite relief that a German proposal to install an EU commissioner in Athens, with special oversight of Greek finances, had been quashed.

That was an idea with promise!

[Mr Medved]

Romania's government collapses after protests



http://news.yahoo.co...-151141275.html

[Solomon]

Mr Medved, on 07 February 2012 - 10:30 AM, said:

Romania's government collapses after protests
http://news.yahoo.co...-151141275.html

Quote

Boc's resignation came as Romania is starting to feel the effects of the widespread cuts that the government put in place in exchange for a euro20 billion ($26 billion) loan from the International Monetary Fund, the European Union and the World Bank in 2009, to help pay salaries and pensions after its economy shrank by more than 7 percent.

In 2010, Boc's government increased the sales tax from 19 percent to 24 percent and cut public workers' salaries by a quarter to reduce the budget deficit.

Jeffrey Franks, the head of the IMF mission to Romania, said Sunday he is confident that economic reforms the fund demanded in exchange for the loan would continue, even if the current government steps down.

Here's the cruncher people!
It doesn't matter what government you get, you will still have to take your medicine, as dished out by the Financial Guru's of the world who now what's best for you.
And on and on it will go.

[wulfgar]

Solomon, on 07 February 2012 - 11:55 AM, said:

Here's the cruncher people!
It doesn't matter what government you get, you will still have to take your medicine, as dished out by the Financial Guru's of the world who now what's best for you.
And on and on it will go.

I don't understand, Romania has the RON its own currency.............surely they can inflate their way out of trouble? Even better they can change currency like they did back in 2005. It used to be called the ROL...and it was!

[cobran20]

We and the US looking pretty, whilst Greece & Portugal are at the other extreme!
Country Default Risk

Quote

Below we highlight the current sovereign debt credit default swap (CDS) prices for 39 countries around the world, as well as their year to date changes.

As shown, every country except one (Portugal) has seen its default risk decline in 2012. European countries have mostly seen the biggest drops in default risk, with Belgium leading the way with a drop of 31.6%. Greece -- while it still has by far the highest default risk -- has seen its default risk fall the third most in 2012 with a decline of 25.5%. (France ranks second at -25.7%.) The US currently has the lowest default risk out of all the countries shown by a wide margin.

[cobran20]

Long article - click the link.

Why Europe’s Plan to End the Debt Crisis Can't and Won't Work

[cobran20]

This is what the Germans are reading/thinking:

Der Spiegel

Quote

Whether it be an escrow account or a budget commissioner, the latest demands by Germany show just how absurd negotiations over Greece's future have become. It is high time to bring an end to this tragicomedy.

For the past two years, Greece has wrangled with the euro-zone states and the International Monetary Fund (IMF) over its so-called "rescue." Austerity measures have been agreed to, aid has been paid and private creditors have been forced to accept "voluntary" debt haircuts. Despite all this, Greece is in even worse shape today than it was then. Its economy is shrinking, the debt ratio is rising and the country and its banks have been cut off from capital markets. There isn't even the slightest sign that the situation might improve. Something has gone very wrong with this rescue.

But none of the protagonists seem to have grasped this. They continue to negotiate as if things are business as usual, they let one "final ultimatum" after the other pass and they persistently fail to realize that their discussions have started to verge on the absurd. It would be a lot better to end this farce.

For weeks now, the Greek government has been negotiating with private creditors and the troika comprised of the IMF, European Union and European Central Bank (ECB) over a second bailout package. But it is already clear that this aid package will not save the country. It appears it will only delay a Greek insolvency -- and it will serve to create new hardships for the country's population.

It is time for politicians to admit that their carrot and stick strategy has failed. The idea that the country can be freed from its debt quagmire though austerity programs and aid pledges tied to conditions just isn't going to work. It won't even work if private creditors forgive part of the country's debt.

Broken Promises

For months, Greek government politicians as well as the so-called rescuers in Berlin, Paris and Brussels have all been deceiving themselves. Each supposedly final rescue package is followed by yet another, and austerity pledges aren't being adhered to.

That has a lot to do with domestic political considerations. German Chancellor Angela Merkel and French President Nicolas Sarkozy must convey to their voters that they have the situation and, especially the Greeks, under control. Meanwhile, the government in Athens must, out of self-preservation, limit the burdens to its own people as much as possible.

That's why both sides repeatedly agree to promises that everyone knows they will not be able to keep. The current rescue package, for example, officially agreed at the euro summit at the end of October, already has to be improved because it has become too small.

The Greek economy is shrinking faster than assumed. And the austerity plan Greece approved last summer under pressure from its euro-zone partners is also failing to live up to expectations. That's no wonder, either, because €50 billion of the €78 billion in total savings pledged was tied to proceeds from privatizations that, not surprisingly, have failed to generate the profits expected.

Out of Thin Air

The truth is that it must have been obvious to all parties concerned, including the Germans, that the figures were pulled out of thin air. What kind of investor would invest so much money in a country that, for the foreseeable future, will be stuck in a serious economic depression?

The supposed rescue efforts have culminated in the latest German proposals. The German government would like to send a "budget commissioner" to Athens to keep an eye on the Greeks. If that doesn't work, then the Germans also want, at the very least, to be able to impound Greek accounts if they don't pay back their debts through an escrow account.

The suggestions have justifiably provoked outrage. Quite apart from the humiliation these measures would entail for the Greeks, Athens would almost certainly find a way to circumvent them. In the end, Germany would wind up turning an entire nation into its enemy without even gaining anything.

Greece Must Go Bankrupt

Perhaps, the Greece rescuers on both sides of the negotiating table should try being honest for a change. Here's the truth: If the country is to lastingly reduce its mountain of debt and, at some point, be able to borrow money on the capital markets again, then it needs a comprehensive debt haircut. In other words, it needs to go bankrupt.

And it's not just private creditors who will have to forego a large part of their outstanding Greek debts. It is also other European countries and the European Central Bank. That would be expensive for taxpayers across Europe, and it would also be economically risky. Indeed, no one knows what consequences a Greek bankruptcy would have for other crisis-ridden countries like Portugal, Ireland or Italy. But at least it would be an honest solution.

Of course, things wouldn't stop there. The euro-zone states would also have to build a bigger firewall around the remaining crisis countries in order to prevent contagion. They would have to help some banks that get into trouble as a result of a debt cut. And they would have to provide Greece with a real opportunity to get back on its feet and start growing under its own steam -- in other words, a kind of Marshall Plan.

All this would be very expensive, and German taxpayers would also be forced to do what they have feared from Day One -- which is to pay for Greece. But this solution has two major advantages. The payments would be limited, and they would actually help Greece.

And unlike everything that has been negotiated up until now, the solution would also be worthy of being called a rescue package.

[wulfgar]

Quote

Despite all this, Greece is in even worse shape today than it was then. Its economy is shrinking, the debt ratio is rising and the country and its banks have been cut off from capital markets. There isn't even the slightest sign that the situation might improve. Something has gone very wrong with this rescue.

When an economy built on borrowing money ceases to be able to borrow and then the economy contracts, this is a surprise?

If people borrow to consume, then of course their standard of living will be materially higher than when they can't borrow.

We have another Journalist who doesn't get it?

[cobran20]

Latest stunt to avoid the unavoidable!

Greece to get extra year to achieve primary surplus-party official

Quote

ATHENS, Feb 9 (Reuters) - Greece will be given one extra year until 2015 to produce a primary surplus of 4.5 billion euros under the terms of a new bailout agreement with the European Union and the IMF, an official at one of the Greek coalition parties said on Thursday.

Previously Athens had to achieve the surplus, which excludes interest payments, by 2014 so this gives the government a little extra breathing space on tackling its budget problems.

Under the deal, the government must also specify additional austerity measures worth 10 billion euros in June for the 2013-2015 period, the party official said, requesting anonymity.

Budget cuts for 2012 included 400 million euros from public investment and 300 million from the defence budget, he added.

The agreement also covers help for banks which have been hammered by their large holdings of Greek government debt, the value of which is being slashed under the bailout deal, and a steady loss of deposits.

Banks with major problems would be recapitalised with common voting shares while those with lesser problems would be recapitalised with bonds convertible into shares with restricted voting rights, the official said.

Earlier the three coalition parties failed to agree on cuts to supplementary pension payments, preventing a deal with Greece's international lenders.

However, Prime Minister Lucas Papademos said they had settled all other issues and would aim to overcome the remaining hurdle before euro zone finance ministers meet in Brussels at 1700 GMT on Thursday.

[cobran20]

That will teach them not to dabble in black magic again!

How 'magic' made Greek debt disappear before it joined the euro

Quote

The new fiscal treaty that 25 of the 27 EU member states agreed to this week is meant to ensure that in future no country has a budget deficit of greater than 3% of GDP. That same 3% rule was first enshrined in 1992, in the Maastricht Treaty, which led to the creation of the euro in the first place.
But some countries did not respect it. In the case of Greece, not even from the beginning. Greece cooked the books to join the euro in the first place.

[wulfgar]

Quote

A deal is essential to finalising the new Greek bail-out, which must be completed before a €14.4bn bond comes due on March 20 or Greece would become the first developed economy to default in nearly 60 years...

I thought the Greek president said he was close to a deal with the private creditors?

Time is ticking out, he's only succeeded in an interest bill of 500 million instead of the 250 million the haircut would have resulted in on March 20.

[cobran20]

Greek lawmakers approve austerity bill as Athens burns

Quote

(Reuters) - Greece's parliament approved a deeply unpopular austerity bill Monday to secure a second EU/IMF bailout and avoid national bankruptcy, as buildings burned across central Athens and violence spread around the country....
... Before the vote, Finance Minister Evangelos Venizelos told parliament that the alternative to the international bailout - bankruptcy and a departure from the euro zone - would be far worse for Greeks.

"The choice is not between sacrifice and no sacrifices at all, but between sacrifices and unimaginably harsher ones," he told a stormy debate.

The EU and IMF say they have had enough of broken promises and that the funds will be released only with the clear commitment of Greek political leaders that they will implement the reforms whoever wins an election potentially in April.

Euro zone paymaster Germany ratcheted up the pressure on Sunday. "The promises from Greece aren't enough for us any more," German Finance Minister Wolfgang Schaeuble said in an interview published Sunday in Welt am Sonntag newspaper.

"Greece needs to do its own homework to become competitive, whether that happens in conjunction with a new rescue program or by another route that we actually don't want to take," he said.

When asked if that other route meant Greece quitting the euro zone, Schaeuble said: "That is all in the hands of the Greeks themselves. But even in the event (Greece leaves the euro zone), which almost no one assumes will happen, they will still remain part of Europe."

The bill sets out 3.3 billion euros ($4.35 billion) of extra budget cuts for this year alone.

It also provides for a bond swap to ease Greece's debt burden by cutting the real value of private-sector investors' bond holdings by some 70 percent. Greece would have missed a February 17 deadline to offer a debt "haircut" to private bondholders if the vote had not been passed.

Many Greeks believe their living standards are collapsing already and the new measures will only deepen their misery.

[wulfgar]

Quote

It also provides for a bond swap to ease Greece's debt burden by cutting the real value of private-sector investors' bond holdings by some 70 percent. Greece would have missed a February 17 deadline to offer a debt "haircut" to private bondholders if the vote had not been passed.

So Greece is offering to swap "lock in loss" bonds for the older issues at about the current market value. What's the good in that for the investor? If they refuse they still have bonds that can be enforced in their own domestic markets paying a much higher rate of interest.

They need something 70% agreement amongst the private investors to make this pass. They will probably get that from the Euro banks, while the hedge funds won't have a bar of it.

I notice it is the bourgeois who've been on the debt gravy train for years who are protesting.

[Solomon]

I see one of two things happening now.
Now that the decision is made the people will buckle down and get on with it.
or;
They will collapse into anarchy.

My concern is that they will have to do this all again in the future in order to stave off the dogs at the door.
How long with the 170bn euro's last?
Each time they have to come to the table, the people are going to be less and less compliant.
I wouldn't be a politician in Greece if you paid me. Oh! That's right they do.
Is there a Greek mafia?