This is harsh, but very true.
Possibility of a Greek default in next week
- Thread starter Tehanu
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This is harsh, but very true.
I actually think the Greeks are capable of it. There is a lot of talk about Greeks being lazy bums and Germans as hard working. But the thing is stats show Greeks are pretty hard workers.
http://blogs.wsj.com/marketbeat/2012/01/10/greeks-and-italians-work-harder-than-americans/
They are well educated and seem to be quite good at running businesses as well. The main thing they seem to be perennially bad at is running a country. Greeks are good workers and good businessmen it is just because the country is run so horribly they are horribly unproductive. Seriously they can't even do austerity properly. Clearly Greeks have the *ability*. They need to stand up and grasp their future with their own hands. People blame the legacy of the Ottomans for the perennial dysfunction but even the Turks have moved past that system and are doing well economically!
I don't think the Troika have bad intentions. It is they are treating the Greeks like children because they see how incompetent the leadership is. Part of the Troika's browbeating has been just to get the Greek government to do the basics. I think if the Greeks prove they have the ability to run their country, the Troika will ease up on them a lot.
Still I think default is the best option. The banks deserve to get screwed anyway. The problem is, if it is not prepared for well, it could cause chaos - mainly in Greece. I suspect the European banking system in general can handle it as Germany/France have been preparing for the event.
The austerity measures are making the Greek economy worse. Increased taxes, reducing salaries are contracting the economy. 5.7% GDP contraction for the past 12 months doesn't engender any hope that these new measures will turn this around. The economy has been in recession for 5 years. How do the latest measures help?
As many people have alluded to, the Greeks are insolvent. They need to default, but those needs are not consistent with what is best for the EU and their French & German banks. Don't get swayed that these measures are good for Greece. They are designed to prop up the EU & Euro.
Argentina broke free, by defaulting in early 2000's, after countless IMF bailouts, austerity measures. They unlinked their currency from the USD, and eventually came to private arrangements with their debtors for around 30 cents in the dollar some years later. However it was not without a lot of pain and hardship. But at least they took control over their own destiny and were forced to stand on their own two feet.
Sometimes in any relationship, other people can see what those in the partnership cannot.
I am very empathetic to the Greek people, who have been pounded by poor economic stewardship over many years and are the victims. In the end, democracy, protests will win out, but the end solution won't make the Germans & French happy.
As many people have alluded to, the Greeks are insolvent. They need to default, but those needs are not consistent with what is best for the EU and their French & German banks. Don't get swayed that these measures are good for Greece. They are designed to prop up the EU & Euro.
Argentina broke free, by defaulting in early 2000's, after countless IMF bailouts, austerity measures. They unlinked their currency from the USD, and eventually came to private arrangements with their debtors for around 30 cents in the dollar some years later. However it was not without a lot of pain and hardship. But at least they took control over their own destiny and were forced to stand on their own two feet.
Sometimes in any relationship, other people can see what those in the partnership cannot.
I am very empathetic to the Greek people, who have been pounded by poor economic stewardship over many years and are the victims. In the end, democracy, protests will win out, but the end solution won't make the Germans & French happy.
As expected, Greece will introduce a retroactive collective action clause.
http://www.minfin.gr/portal/en/resource/contentObject/id/7ad6442f-1777-4d02-80fb-91191c606664
Yup, they definitely gave a heads up to the ECB whose new bonds are not subject to the CAC. If private sector involvement is too low < 66%, Greece will default. Above that number the CAC can force all bond holders to accept the writedowns.
The problem is the ECB's moves to save itself (1) decrease the chances of private sector involvement and (2) increases the chances of Greek bonds being mired in legal challenges for years even if they reach the magic 66%.
Really, how many own goals can the eurozone make? Though I have heard that the reason why the ECB needed to it was because its capital reserves are so low but accepting the Greek writedown would wipe it out and force the national central banks to recapitalise it. Hey, people have been warning the ECB about this for ages while it was buying up junk to save the eurozone...
http://www.minfin.gr/portal/en/resource/contentObject/id/7ad6442f-1777-4d02-80fb-91191c606664
Yup, they definitely gave a heads up to the ECB whose new bonds are not subject to the CAC. If private sector involvement is too low < 66%, Greece will default. Above that number the CAC can force all bond holders to accept the writedowns.
The problem is the ECB's moves to save itself (1) decrease the chances of private sector involvement and (2) increases the chances of Greek bonds being mired in legal challenges for years even if they reach the magic 66%.
Really, how many own goals can the eurozone make? Though I have heard that the reason why the ECB needed to it was because its capital reserves are so low but accepting the Greek writedown would wipe it out and force the national central banks to recapitalise it. Hey, people have been warning the ECB about this for ages while it was buying up junk to save the eurozone...
i want to know what nutjob economist thought this was a good idea?
i mean, it's delaying the inevitable - you can't escape it and the current course of action(s) only make the problems worse.
i mean, it's delaying the inevitable - you can't escape it and the current course of action(s) only make the problems worse.
Just out of interest, who is supplying all the cash for this bailout?
Hope its not my super fund....
Hope its not my super fund....
Xerox?????
but inflation is good
If you have assets and/or debt, and don't hold cash, some inflation is not such a problem...
Ronald H. Marcks (Jens O. Parsson) wrote Dying of Money on this topic.
He said something like "Everyone loves the early stages of inflation". I forget the remainder but it started with "But...."
It's an out of print book and I suspect it is available as a PDF download. If you can find it, let me know.
It is a paper on hyperinflation.
He said something like "Everyone loves the early stages of inflation". I forget the remainder but it started with "But...."
It's an out of print book and I suspect it is available as a PDF download. If you can find it, let me know.
It is a paper on hyperinflation.
Got to page 23, long essay!!
There are different game plans for inflationary and deflationary environments (by the way a couple of % inflation is actually good)
But is the structural near term risk inflationary or deflationary?????
But is the structural near term risk inflationary or deflationary?????
Problem is the 2nd stage of inflation is always sharp and with very sharp teeth ,unemployment-high end Businesses going bellup Australia wide and this Government still thinks they can balance the books within 2 years it's always far too little,far too late..
Looks like there has been a Greek Credit Event.
Looks like there has been a Greek Credit Event.
It was clearly a default - if you wipe out 75% of the value of the bonds and are forced to use retroactive legislation (the CACs) to force unwilling bond holders to accept the loss, it is fairly obviously a credit event. The only real question was would the German government lean on the ISDA to prevent it from declaring a default. The German government rhetoric over the last couple of months made it clear they weren't going to do that.
It may have been worse if the ISDA hadn't declared a default. Then the whole CDS market would have collapsed as everyone realised their hedging contracts weren't worth the paper they were written on and the interest rates charged to all the periphery nations would have risen, as happened late last year.
Of course now we are going to see a lot of legal action. It will be a good time to be a lawyer, especially in the UK. The markets are expecting that the Greeks will eventually default on the new bonds too.
Looks like there has been a Greek Credit Event.
look at the last graph in that article.
Nothing to see, move along, move along
Well, here's the first bank to take a hit:
http://www.bloomberg.com/news/2012-...-injection-after-isda-triggers-greek-cds.html
Still, while I expect some chaos as above, the European banking system will generally survive. Everyone's been expecting a Greek default for a while now - hence the run down in the CDS you were pointing to.
China and the blowing of the commodity bubble (especially if the rumours of commodities being used as collateral for Chinese property development deals is true) is where the spark for the next major crisis is likely to come from in my opinion.
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