S&P Greek imminent default

femur61

Sorry for the long link don't know how to shorten it. Basically S&P have said Greece will default is imminent. http://in.reuters.com/article/2012/01/16/greece-sp-idINDEE80F0GU20120116?feedType=RSS&feedName=businessNews&utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+reuters%2FINbusinessNews+%28News+%2F+IN+%2F+Business+News%29

This is may be more scaremongering but Greece has a noose aroung the rest of the fiancial world.

later12

Far more startling than this is the Mario Monti article in today's Financial Times

http://www.ft.com/cms/s/0/4385a59e-4061-11e1-8fcd-00144feab49a.html#axzz1jhMn6wvP

He singled out S&P citing “one negative” political risk factor: “European policymaking and political institutions”, not his technocratic government.

Rome would push the German government to realise it was in “its own enlightened self-interest” to lend more of its fiscal weight to lowering borrowing costs of Italy and other highly indebted governments. The single currency had brought “huge benefits …and maybe [to] Germany even more than others,” he said.

Wonderful news for the Euro and for peripherals to have a strong dissenting voice from such a crucial member state; this is the sort of influence that unfortunately Enda Kenny or Coehlo from Portugal could never realistically hope to wreak on Europe.

touts

femur61 wrote: »

Sorry for the long link don't know how to shorten it. Basically S&P have said Greece will default is imminent. http://in.reuters.com/article/2012/01/16/greece-sp-idINDEE80F0GU20120116?feedType=RSS&feedName=businessNews&utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+reuters%2FINbusinessNews+%28News+%2F+IN+%2F+Business+News%29

This is may be more scaremongering but Greece has a noose aroung the rest of the fiancial world.

I think it's inevitable at this point. The Greeks just have no interest in sorting out their economy. However what is "very soon" and "imminent" is hard to say. I doubt it will be later today or even later this month. Sometime in 2012 looks almost certain. The only question is how they spin it. It could be a major extension on the pay back period out to something like 90 years like the reparations Germany had after WW1 (but apparently they think only they should get a deal like that). If that happens the markets will scream default but our leaders will calmly say this is not a default it is just extending the payback period blah blah blah. However it plays out I imagine Nicholas, Angela, Enda, Mario and co will be like captains on a sinking ship shouting back to us that everything is OK, not to panic, the situation is under control, go back to our cabins, as they row away on their massive pensions lifeboat.

sarumite

touts wrote: »

The Greeks just have no interest in sorting out their economy.

Thats simply not true. They aren't meeting their deadlines, however the kind of austerity they have imposed to date is far beyond what the Irish government has had to implement. I have some friends in Greece who say they are now working almost twice the hours for less than half the wages they were earning only 4 years ago. The Greek government has had to tackle PS unions head on as austerity has forced them to make large pay cuts and job cuts, something the Irish government has thus far avoided.One of the major problems for Greece is that their economy is contracting massively which is then requires more austerity which results in an even contraction leading to a cycle that they currently cannot get out of.

Lantus

greece is a unique case because their country was so badly structured it is just beyond a joke. A voluntary tax system with no checking or regulation with so many loopholes you can avoid tax at every turn. Coupled with a massive state system that enjoyed huge salaries based on borrowing money from someone else. The greek people need a total game change for their country and a lot of growing up to do.

Greece would be better off in the long run reverting back to it's own currency and porbbaly so would europe.

Alternatively they should send in a team of germans to run the country. With german precision and attention to detail they should have the place going smoothly again in no time at all (a decade or two?)

murphaph

Lantus wrote: »

Alternatively they should send in a team of germans to run the country. With german precision and attention to detail they should have the place going smoothly again in no time at all (a decade or two?)

Without a cultural shift among the Greek people, that would be completely futile. Nordic countries run the way they do because of Nordic peoples, not their governments, which merely represent the peoples views (more or less).

HellFireClub

Lantus wrote: »

greece is a unique case because their country was so badly structured it is just beyond a joke. A voluntary tax system with no checking or regulation with so many loopholes you can avoid tax at every turn. Coupled with a massive state system that enjoyed huge salaries based on borrowing money from someone else. The greek people need a total game change for their country and a lot of growing up to do.

Greece would be better off in the long run reverting back to it's own currency and porbbaly so would europe.

Alternatively they should send in a team of germans to run the country. With german precision and attention to detail they should have the place going smoothly again in no time at all (a decade or two?)

We've been at the same milarkey here in this country, with an unsustainable tax base that many didn't have to contribute any income tax to for years, then on the other hand, a system of governance that has delivered the highest paid, yet the most indifferent, inflexible, uncooperative, change-allergic, unyielding and belligerent civil servants in the developed world.

We're now taking nursing home beds out from under elderly long term nursing patients, yet we are still trying to convince ourselves that the absolutely rediculous Croke Park Agreement that was knocked together previously by an utterly discredited government, is sacrosanct and cannot be touched, and sure if we do have to go near it again, we'll have to approach it through negotiation?!? You'd have to ask who is running the show here in this country and making the decisions. If the ICTU or SIPTU want to run the place, let them go up for election and be accountable to the people who are ultimately paying the bill for their members wages.

We aren't too far at all behind Greece in terms of the state of this place I think.

RichardAnd

sarumite wrote: »

Thats simply not true. They aren't meeting their deadlines, however the kind of austerity they have imposed to date is far beyond what the Irish government has had to implement. I have some friends in Greece who say they are now working almost twice the hours for less than half the wages they were earning only 4 years ago. The Greek government has had to tackle PS unions head on as austerity has forced them to make large pay cuts and job cuts, something the Irish government has thus far avoided.One of the major problems for Greece is that their economy is contracting massively which is then requires more austerity which results in an even contraction leading to a cycle that they currently cannot get out of.

Wonderful. I eagerly await the introduction of the 6 day working week

Atilathehun

Lantus wrote: »

greece is a unique case because their country was so badly structured it is just beyond a joke. A voluntary tax system with no checking or regulation with so many loopholes you can avoid tax at every turn. Coupled with a massive state system that enjoyed huge salaries based on borrowing money from someone else. The greek people need a total game change for their country and a lot of growing up to do.

Greece would be better off in the long run reverting back to it's own currency and porbbaly so would europe.

Alternatively they should send in a team of germans to run the country. With german precision and attention to detail they should have the place going smoothly again in no time at all (a decade or two?)

The current Greek government, you could say, was appointed by Merkel:eek:
So too Italian government:eek:

History, tells us, that when Germany invites itself to run other european countries, sh1t can happen big time!!!

sarumite

Atilathehun wrote: »

The current Greek government, you could say, was appointed by Merkel:eek:
So too Italian government:eek:

You could say it, though you would be wrong. Neither the Greek government nor the Italian government could be appointed without the approval of their respective democratically elected parliments.

History, tells us, that when
Germany invites itself to run other european countries, sh1t can happen big time!!!

According to Godwin, history also tells us that someone on internet forums will eventually mention Hitler. My guess is we are not too far off that on this particular thread :rolleyes:

halkar

Everytime Greece has to make payments on their loans the word Default appears again. It is not the first time, it won't be last either.

later12

sarumite wrote: »

You could say it, though you would be wrong. Neither the Greek government nor the Italian government could be appointed without the approval of their respective democratically elected parliments.

In fairness, one cannot realistically deny the influence of the core European leaders, particularly Merkel and Sarkozy, whose crisis policy contributed greatly to changes in Italian and Greek governments. I'm not saying that these policies are inherently bad, but there was an influence, most markedly in Italy.

sarumite wrote: »

According to Godwin, history also tells us that someone on internet forums will eventually mention Hitler. My guess is we are not too far off that on this particular thread :rolleyes:

You do realise that's you? You're the Godwin recipient?

sarumite

later10 wrote: »

You do realise that's you? You're the Godwin recipient?

Yeap. I do. though when someone makes a pretty obvious reference to WWII Germany it seemed like the obvious next step. I wanted to go there so we could get it out of the way as soon as possible.

sarumite

later10 wrote: »

In fairness, one cannot realistically deny the influence of the core European leaders, particularly Merkel and Sarkozy, whose crisis policy contributed greatly to changes in Italian and Greek governments. I'm not saying that these policies are inherently bad, but there was an influence, most markedly in Italy.

I would argue market conditions had more of an affect on Italian politics than Merkel. Do you believe that had Italian borrowing stayed at below 5% we would still have had Mario Monti?

later12

sarumite wrote: »

I would argue market conditions had more of an affect on Italian politics than Merkel. Do you believe that had Italian borrowing stayed at below 5% we would still have had Mario Monti?

Oh yes; I wouldn't deny the significance of the markets at all, there was more than one single influence, and there is a certain degree of connection between a number of them: e.g. a little triangle of antagonism between Italian debt values and ECB bond purchases and political friction.

I guess the point I'm making is that in the absence of a true fiscal union, I'm a little uneasy at the influence that European institutions can directly or indirectly effect over peripheral states - and vice versa.

I don't mind them exercising that influence at all, as long as they are willing to purchase it with some reciprocal effort or gesture. As I mentioned earlier, Mario Monti's article today goes some way toward addressing this point.

cson

murphaph wrote: »

Without a cultural shift among the Greek people, that would be completely futile. Nordic countries run the way they do because of Nordic peoples, not their governments, which merely represent the peoples views (more or less).

And by extension Ireland is run the way it is because of the Irish people; corruption, parish politics and keeping up appearances have all been facets of this country. People lament Fianna Fail yet a majority of the people elected them consistently and by a considerable distance. It's all coming/has come home to roost now.

Sand

And by extension Ireland is run the way it is because of the Irish people; corruption, parish politics and keeping up appearances have all been facets of this country. People lament Fianna Fail yet a majority of the people elected them consistently and by a considerable distance. It's all coming/has come home to roost now.

And how about Africa? Their problems are far worse so Africans must be far worse morally than Irish people. Right?

The problem Ireland faces is that of systems of governance. The consistution centralises power. Policymaking is hidden. Corruption without oversight is a given.

later12

Sand wrote: »

A
The problem Ireland faces is that of systems of governance. The consistution centralises power. Policymaking is hidden. Corruption without oversight is a given.

All of those things are relatively pliable. Access to politics is free and open. We live in a democratic society. It's pretty hard to shift the blame away from the people.

You can't quite make the equivalent political environment argument for Africa.

Sand

Well all the Irish people on this thread who consider themselves corrupt, dishonest, shortsighted and always trying to get one over on their fellow citizens please feel free to step up and identify yourselves...

I remember reading an interview with a journalist who noted that when he started working at an Irish paper (I think the Independant) that he was warned never ever to use the words "We" or "Us" in his articles. It apparently led to lazy generalisations and bad journalism.

I prefer to focus on what are the problems with the Irish political system which shapes the culture. Those problems can be solved and miraculously, Irish people will suddenly become more honest. Wallowing in self loathing offers no solutions. Whats the point of reforming our political systems when the Irish people are so inherently dishonest and immoral?

Re: The Greek Default

This isnt a specifically Greek issue. The EU and the ECB has been heavily involved in Greek affairs since at least May 2010 and indeed for many months before. The EU/ECB program has failed. Quite simply the EU/ECB didnt want to deal with the real issues, and didnt want to entertain the drastic sort of solutions required. The Greeks have implemented the sort of budget cuts which would make David Begg and co squeal.

Given the Greeks have been following the ECB playbook for the best part of the past two years the ECB has to accept its plan was at best unrealistic. Will the ECB and the core learn lessons? Probably not - instead theyll go down the moralising route once more.

later12

Sand wrote: »

Well all the Irish people on this thread who consider themselves corrupt, dishonest, shortsighted and always trying to get one over on their fellow citizens please feel free to step up and identify yourselves....

if we take recent political history, I don't see how many of us cannot see ourselves as having been part of the mess.

Some prominent boards mantras notwithstanding, we did go mad, we did party, we did ignore ominous indicators. The period leading up to the Irish economic crisis of 2008 was only the latest in a time series of poor governance and poor choices by the people of Ireland, stretching all the way back beyond the state's inception.

I mean, can you really be blaming all of this on inanimate institutions, on an 80 year old constitution? I don't see how anyone can believe our fate to be so copperfastened when our legislature and our democracy are so thoroughly open.

later12

Just to get back to the OP, supposedly we're going to hear of an IIF-Greece deal of 32c today.

http://www.businessweek.com/news/2012-01-18/dollar-slides-as-signs-of-economic-recovery-curb-safety-demand.html

Demand for the euro increased as Bruce Richards, chief executive officer of New York-based Marathon Asset Management LP, said Greece is nearing a deal with bondholders that would give them cash and securities with a market value of about 32 cents per euro of government debt.

Interesting day for a Portuguese bond auction.

They're selling €2.5 billion in short term debt this morning. There was a time last Summer when a short term Portuguese sale would have been unthinkable in the same breath as a Greek default deal. Progress?

Liam Byrne

cson wrote: »

murphaph wrote: »

Without a cultural shift among the Greek people, that would be completely futile. Nordic countries run the way they do because of Nordic peoples, not their governments, which merely represent the peoples views (more or less).

And by extension Ireland is run the way it is because of the Irish people; corruption, parish politics and keeping up appearances have all been facets of this country. People lament Fianna Fail yet a majority of the people elected them consistently and by a considerable distance. It's all coming/has come home to roost now.

Lament = mourn :eek:

From the rest of your post can I presume you meant "lambast" or similar ?

Liam Byrne

Sand wrote: »

I remember reading an interview with a journalist who noted that when he started working at an Irish paper (I think the Independant) that he was warned never ever to use the words "We" or "Us" in his articles. It apparently led to lazy generalisations and bad journalism.

And it is. I'm sick to death of being told that "we" got greedy or "we" partied or "we" need to pay other people's bills.

In fact, it's not just lazy and bad to make those generalisations, it's deliberate political misrepresentation in order to try to justify taxing us more and spreading both the blame and the cost.

And just because of having the audacity to live on the same island as those who did! In any other context it would be viewed as racist.

Anyone who uses those phrases isn't making a credible argument.

Sand

later10 wrote: »

if we take recent political history, I don't see how many of us cannot see ourselves as having been part of the mess.

Some prominent boards mantras notwithstanding, we did go mad, we did party, we did ignore ominous indicators. The period leading up to the Irish economic crisis of 2008 was only the latest in a time series of poor governance and poor choices by the people of Ireland, stretching all the way back beyond the state's inception.

I mean, can you really be blaming all of this on inanimate institutions, on an 80 year old constitution? I don't see how anyone can believe our fate to be so copperfastened when our legislature and our democracy are so thoroughly open.

Can we blame 80 years of poor governance and poor choices on the 80 year old consistution and set of institutions under which they were made?

Why yes, I believe we can.

Our democracy and legislature is *anything* except open. All information and decisions are hidden.

hmmm

Liam Byrne wrote: »

Anyone who uses those phrases isn't making a credible argument.

"We partied" is not an unfair description, despite this being unfair on a lot of the population who didn't. The Irish electorate repeatedly voted in a FF government which implemented policies that drove the boom. I didn't hear a single party suggesting as part of their election manifestos that we should reign in spending, not lower taxes, not increase pensions or social welfare. Instead, they all fell over each other to offer the Irish electorate what they were demanding.

later12

Sand wrote: »

Can we blame 80 years of poor governance and poor choices on the 80 year old consistution and set of institutions under which they were made?

Why yes, I believe we can.

But where did that constitution come from? It did not write nor implement itself, nor does it sustain and uphold itself.

The Irish constitution in its frequently updated format, is a relic of a the tribal, antiquated (even by the standards of the day), retrograde worldview that broadly characterised the constitution's progenitor: the Irish people.

Our democracy and legislature is *anything* except open. All information and decisions are hidden.

I'm not talking about openness in a political transparency context, but in terms of popular elections, judicial review and other access to the courts, and compatibility with European and international law.

We are an open and a free democracy and if the people really wanted a reformation and worked to that end, it would be theirs. But despite all the bombast and swagger of republican ideals, I think most Irish people are pretty conservative and broadly content with the political landscape as it stands.

Voltex

Its funny cause I only had this discussion with my wife this evening about the "whole celtic tiger passed us by"...but the reality is that we all experienced it in some form or fashion..either by low personal taxation..100% mortgages..massive s.w benefits...numerous job offers...in fact I just worked out, that if I had my 3 kids back in 2004-2008 Id be taking in approx €800 p/m in child related benefits..total madness!!
Unfortunatley for me my boys were born 07,09,11...so i never quite enjoyed the glory days!

Sponge Bob

Greece finally cuts a deal barring "loose ends".

http://www.athensnews.gr/portal/1/52461

The average coupon rate of the new bonds would be 4.25 percent in an ascending structure of time intervals over a 30-year maturity period, starting with a 3.5 percent coupon for the 2012-2014 period, 4 percent for the 2015-2020 period and 4.6 percent for the period after 2020.

In real terms, the losses incurred by investors on the net present value (NPV) of the new bonds would amount to 68 percent of the face value of the old ones, assuming a current discount rate of 10 percent. The NPV loss or "effective haircut" is used by investors to estimate the opportunity cost of selling rather than keeping the new bonds at the time of the bond swap.

But two additional factors are meant to raise the "attractiveness" or the real value of the new bonds compared to the old ones, the sources said.
Firstly, Papademos has reportedly agreed to change the jurisdiction of the new bonds from Greek law - which covers the bulk of privately held Greek bonds (over 190bn euros) - into English law.

English law overwhelmingly favours the bondholders rather than the debtor in any claim arising from a possible future credit crisis, haircut or default of Greece, while at the same time ensuring that the bonds will remain denominated in the currency in which they are issued (euro) in case the country is forced to exit the eurozone or the currency union collapses.

Secondly, the IIF has requested from Greece's EU-IMF creditors that the bond swap will exchange every 100 euros of old bonds with 35 euros of new bonds and 15 euros of top-rated EFSF bonds with two-year maturity.

GSF

Liam Byrne wrote: »

And it is. I'm sick to death of being told that "we" got greedy or "we" partied or "we" need to pay other people's bills.

In fact, it's not just lazy and bad to make those generalisations, it's deliberate political misrepresentation in order to try to justify taxing us more and spreading both the blame and the cost.

And just because of having the audacity to live on the same island as those who did! In any other context it would be viewed as racist.

Anyone who uses those phrases isn't making a credible argument.

well you failed to show the rest of us the error of our ways in time, so you must share some of the blame too. Like a missionary that couldnt persude the locals to stop sacrificing each other, Liam couldnt persude the general populace that they'd regret their spendthrift ways

GSF

later10 wrote: »

Just to get back to the OP, supposedly we're going to hear of an IIF-Greece deal of 32c today.

http://www.businessweek.com/news/2012-01-18/dollar-slides-as-signs-of-economic-recovery-curb-safety-demand.html


Interesting day for a Portuguese bond auction.

They're selling €2.5 billion in short term debt this morning. There was a time last Summer when a short term Portuguese sale would have been unthinkable in the same breath as a Greek default deal. Progress?

The Greece default is a given. Portugal looks increasingly certain (the markets are putting it at something close to 66% probability). Out of the original three that will only leave Ireland.

later12

GSF wrote: »

The Greece default is a given.

Of course it was a given. But the magnitude of the write down, and the coupon on offer were not. And the Portuguese sovereign debt auction with a yield of less than 5% on a coverage of about 2:1 was potentially a positive development in that context.

On the topic of the thread, 4.25% is a good, not a great deal on the coupon.

A striking similarity between Brady Bonds and the Greek-EFSF system that has been established. And that can only be a good thing. Pity we weren't here 18 months ago.

coolshannagh28

Draghi has obviously dragged the ECB kicking and screaming up to the plate and they have backstopped all the recent bond auctions . A step forward but not without risk .

GSF

coolshannagh28 wrote: »

Draghi has obviously dragged the ECB kicking and screaming up to the plate and they have backstopped all the recent bond auctions . A step forward but not without risk .

its just inflating the whole ponzi scheme. Lending the european banks money to buy soverign debt from Italy, France & Spain will work for a while until the fundamentals re-emerge