# Greece - Is it saveable?



## phantomcamel

There are jitters about the impact Greece's debt has on the markets. Portugal, Spain, Italy & Portugal don't look much healthier. 
Is Greece heading into the abyss or is it saveable?
"The SPIEGEL" reports that Europe is considering an European equivalent to the IWF to combat financial problems of their member states http://www.spiegel.de/politik/ausland/0,1518,682596,00.html (sorry, in German ), but this will not materialise until years to come.
Will Greece be saved by it's neighbours or are they likely to split from the EU?
Your thoughts!


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## Mofra

The bigger Euro economies share their currency with Greece and therefore (rightly or worngly) cannot let Greece fail. There is some clause in the EU constitution (article 122 from memory, could be wrong) that allows countries to assist each other in times of catostrophe, which could be used as a way to circumvent the normal bail out provisions that are set as a condition of joining the EU.


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## So_Cynical

Greece - is it save-able? ... who cares :dunno:


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## c-unit

you'd hope so, because the US is next!


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## refined silver

While Germany and others don't want to save it, they know Spain, Italy, etc are next if they don't (and UK and US but they are not so worried about that).

Also German (and other EU) banks hold a huge amount of Greek bonds. Heads I win, tails you lose


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## Broadway

Imo, these debt issues of smaller countries is baked into the markets. There's not alot more juice to squeeze from this issue, except maybe to stay short euro. But even here, the pros are likely out of most of their euro shorts already.


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## Uncle Festivus

c-unit said:


> you'd hope so, because the US is next!




Should that read UK? The UK will be the next debt defaulter.....


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## doctorj

Uncle Festivus said:


> Should that read UK? The UK will be the next debt defaulter.....



CDS spreads don't seem to indicate the markets are more concerned about the UK than Western Europe...  It seems like all the anti-uk trading is taking place in the forex market.

This is probably due to the fact that the UK can and does issue most of its debt in a currency it controls unlike the case of Greece & the Euro.  It's highly unlikely that the UK will default (Greece haven't defaulted either, despite all the press).


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## Uncle Festivus

doctorj said:


> CDS spreads don't seem to indicate the markets are more concerned about the UK than Western Europe... It seems like all the anti-uk trading is taking place in the forex market.
> 
> This is probably due to the fact that the UK can and does issue most of its debt in a currency it controls unlike the case of Greece & the Euro. It's highly unlikely that the UK will default (Greece haven't defaulted either, despite all the press).




It will default in that it will find it hard to service it's debts due to, um, it's high debts......faced with increasing taxes and cutting back services (a familiar theme globally now) the 'new normal' is austerity......esp when they don't actually produce much these days. The devaluing currency, pound, tells the sad story.


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## doctorj

Uncle Festivus said:


> It will default in that it will find it hard to service it's debts



Eh?


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## Timmy

Uncle Festivus said:


> It will default in that it will find it hard to service it's debts




WTF?  Do we redefine words to suit preconceptions now?


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## Dowdy

The question is not "is it saveable?". 

It should be "Should it be saved"

If it's saved it gives the other EU countries a free pass to invest recklessly with a guarantee to be saved if it goes the other way. 

Not a great way to run a business and definitely not a way to run a country.


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## phantomcamel

Mofra said:


> The bigger Euro economies share their currency with Greece and therefore (rightly or worngly) cannot let Greece fail. There is some clause in the EU constitution (article 122 from memory, could be wrong) that allows countries to assist each other in times of catostrophe, which could be used as a way to circumvent the normal bail out provisions that are set as a condition of joining the EU.



 Yes, but are France & Germany able to pull the rest of the EU out of the mud? If Greece is helped, then there might be others joining the line  I think it is one of those "You damned if you do, you damned if you don't" situations. The news back from Europe certainly doesn't read encouraging...


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## phantomcamel

doctorj said:


> ...the fact that the UK can and does issue most of its debt in a currency *it controls *unlike the case of Greece & the Euro.  It's highly unlikely that the UK will default (Greece haven't defaulted either, despite all the press).



 Do they really control their currency - i'm not really sure if anyone really controls there currency anymore?!


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## phantomcamel

So_Cynical said:


> Greece - is it save-able? ... who cares :dunno:



 Melbourne


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## phantomcamel

Uncle Festivus said:


> It will default in that it will find it hard to service it's debts due to, um, it's high debts......faced with increasing taxes and cutting back services (a familiar theme globally now) the 'new normal' is austerity......esp when they don't actually produce much these days. The devaluing currency, pound, tells the sad story.



 I'm with you... I think they will see a lot of more turmoil in Greece before anything gets better; the country has just come to about a full stop with strikes - I don't think the general public gets it yet how bad the situation is!


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## Riddick

I have a plan:

The greeks have been pretty hopeless for quite sometime (maybe since the spartans left the scene) but they do have a nice country, for those that have ever been there.

So:

1. declare bankruptcy.

2. engage an administrator.

3. have the administrator value the various assets encompassed by the national borders e.g. the acropolis, some of the islande etc.

4. sell those assets to raise the capital needed to pay off the debts.

5. pay off the debts.

6 draw a circle around those bits that are left and call that greece.

7. Then I can own santorini and move in with my friends, afford a couple of servants and so forth.

it's a win - win as far as I can see, so let's start the bidding heh?


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## phantomcamel

Riddick said:


> I have a plan:
> 
> The greeks have been pretty hopeless for quite sometime (maybe since the spartans left the scene) but they do have a nice country, for those that have ever been there.
> 
> So:
> 
> 1. declare bankruptcy.
> 
> 2. engage an administrator.
> 
> 3. have the administrator value the various assets encompassed by the national borders e.g. the acropolis, some of the islande etc.
> 
> 4. sell those assets to raise the capital needed to pay off the debts.
> 
> 5. pay off the debts.
> 
> 6 draw a circle around those bits that are left and call that greece.
> 
> 7. Then I can own santorini and move in with my friends, afford a couple of servants and so forth.
> 
> it's a win - win as far as I can see, so let's start the bidding heh?



 I would suggest to auction the assets on eBay... start with .99 cents - no reserve


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## Riddick

phantomcamel said:


> I would suggest to auction the assets on eBay... start with .99 cents - no reserve




yeh an ebay auction would be awesome.

maybe greece could have a telethon and get a bunch of has-beens, never- wases, never-will-be's, obscure 70's 'stars' and just plain old talentless oxygen thieves to spruik their wares to raise money, blankets and tinned goods.

A possible list of acts could include:

- The cast of friends fighting rabid lions in a spiked pit full of acid.
- Britney Spears being used as a Pinada
- lindsay lohan juggling chainsaws
- kylie minogue being force fed barbed wire.

just a thought.


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## doctorj

Dowdy said:


> The question is not "is it saveable?".
> 
> It should be "Should it be saved"



Or does it need to be saved?  Greek one year CDS spreads continue to narrow...


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## Soft Dough

phantomcamel said:


> I would suggest to auction the assets on eBay... start with .99 cents - no reserve




Highest bidder = Krudd07

Guess he wants somewhere with plenty of ports to send the boat people to.


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## Julia

Soft Dough said:


> Highest bidder = Krudd07
> 
> Guess he wants somewhere with plenty of ports to send the boat people to.



And to retire to once he has retired from the position he currently seeks at the United Nations.

Better still, perhaps all Australians could contribute for a bid at the auction for Santorini in order to send Mr Rudd off there for an early retirement.  He could still have his Parliamentary Pension from Australia:  it would be a small price to pay for his departure.    Therese could keep working for a while to bolster the family income.


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## Riddick

Julia said:


> And to retire to once he has retired from the position he currently seeks at the United Nations.
> 
> Better still, perhaps all Australians could contribute for a bid at the auction for Santorini in order to send Mr Rudd off there for an early retirement.  He could still have his Parliamentary Pension from Australia:  it would be a small price to pay for his departure.    Therese could keep working for a while to bolster the family income.




Actually it was me that put in the highest bid for Santorini. I'm thinking KRuddy can have Malia in Crete - voted the worst place in greece even by locals. I think he would fit right in by all accounts.

Santorini is waaaayyy too nice for the likes of him although he waould also fit in at the acropolis as it has, apparently, the highest density of rats in the nation.


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## Soft Dough

Riddick said:


> Actually it was me that put in the highest bid for Santorini. I'm thinking KRuddy can have Malia in Crete - voted the worst place in greece even by locals. I think he would fit right in by all accounts.
> 
> Santorini is waaaayyy too nice for the likes of him although he waould also fit in at the acropolis as it has, apparently, the highest density of rats in the nation.




Don't worry,

I think his maximum bid can only go to  $5 as his government is broke from unnecessary handouts, home vendor boosts and paying labourers $6000 per week to install insulation.  He also is going to have to pay electricians $200 per hour to fix the problems the labourers caused.


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## Soft Dough

Julia said:


> And to retire to once he has retired from the position he currently seeks at the United Nations.
> 
> Better still, perhaps all Australians could contribute for a bid at the auction for Santorini in order to send Mr Rudd off there for an early retirement.  He could still have his Parliamentary Pension from Australia:  it would be a small price to pay for his departure.    Therese could keep working for a while to bolster the family income.




I've got a fiver if you are collecting.


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## Uncle Festivus

Timmy said:


> WTF? Do we redefine words to suit preconceptions now?




WTF?? Which word are you referring to? What pre-conceptions are you referring to?

_



March 11 (Bloomberg) ”” Mohamed A. El-Erian, whose company runs the world’s biggest mutual fund, said deteriorating public finances around the world may affect the global economy more than is currently realized.
“The importance of the shock to public finances in advanced economies is not yet sufficiently appreciated and understood,” El-Erian, co-chief investment officer at Pacific Investment Management Co., wrote in an article on the Financial Times Web site. The potential damage from increased government borrowings is “at present being viewed primarily ”” and excessively ”” through the narrow prism of Greece,” he wrote.

Governments may have to raise taxes and slash spending to cope with swelling deficits after nations including the U.S. borrowed unprecedented amounts to stave off the global financial crisis, said El-Erian, 51, who shares his job title with Bill Gross. A failure to carry out fiscal measures in time would raise the possibility of governments seeking to eliminate excessive debt through inflation *or default*, he said.

Click to expand...


_


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## Timmy

Uncle Festivus said:


> WTF?? Which word are you referring to? What pre-conceptions are you referring to?




Your redefinition of "default" and your bearish preconceptions/bias.


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## McCoy Pauley

Anyone seen this article in the NY Times about Greek pensions?

http://www.nytimes.com/2010/03/12/business/global/12pension.html?hp

Sounds like the current Greek sovereign debt crisis could only be the tip of the iceberg.


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## cite3726

Uncle Festivus said:


> It will default in that it will find it hard to service it's debts due to, um, it's high debts......faced with increasing taxes and cutting back services (a familiar theme globally now) the 'new normal' is austerity......esp when they don't actually produce much these days. The devaluing currency, pound, tells the sad story.




I know forming an opinion and then seeking information to support it is a common habit of the retail punter (and some particulary dullard mutual funds), but changing the meaning of words to suit opinion is a new one to me.  Keep it up, tres entertaining.  Keeps the hedgies in good business too.

Greece is in deep trouble.  Best solution is leaving the Eurozone, reintroduce the drachma, default on the debt (the real meaning of the word default - to refuse to pay it) and start over.  Argentina is a success story (for those who know of such things).  Such things are my dream.  But the real story will be an EU muddle-though.    

The UK will never default on its debts (view good for 20 years, after that I will be on an island somewhere and don't care).


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## Macquack

Timmy said:


> Your redefinition of "default" and your bearish preconceptions/bias.




Go easy on the Guru (Uncle Festivus), after all he was the ASF member who predicted the GFC.

Greece's problem is nothing that a good dose of "fiat" currency (printed or just "plain" keystroke entered) can't fix. Only down side for Greece is inflation.


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## doctorj

Uncle Festivus said:


> Economists warn Britain is on course to borrow the equivalent of 12.8 percent of gross domestic product in 2009/10 ”” exceeding the 12.7 percent forecast in crisis-hit Greece and far above the average 6 percent for Europe.
> Britan's debt to GDP ratio is forecast to reach 82 percent this year, almost double the level two years ago ”” albeit well shy of the 123 percent in Greece.



Numbers are all well and good, but what does it mean?  All you've shown is that UK debt levels are actually less than Greece, who, by the way, haven't defaulted and based on CDS spreads seem unlikely to default.


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## Bill M

Reuters

LONDON

The euro zone has agreed a multi-billion euro bailout for heavily indebted Greece as part of a package to support the euro, the Guardian newspaper reported on Saturday.

Full Story Here


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## Timmy

Thanks Bill, appreciate the info and the link.


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## PrudentInvestor

phantomcamel said:


> There are jitters about the impact Greece's debt has on the markets. Portugal, Spain, Italy & Portugal don't look much healthier.
> Is Greece heading into the abyss or is it saveable?




This is what you get when you try to build a new country, or a "union", from well-established, proud old-world nations with very distinct national identities.

Helping Greece would be a huge credibility issue for the entire EU ("scrap the budged deficit, we'll rescue you anyway"). On the other hand, as far as I'm concerned, not helping them is also very bad for efficient decision making in the EU in the future: One more reason to argue.

Goldman Sachs to the rescue!


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## MRC & Co

IMO, fiscal and monetary policy HAVE to be inter-twined to be effective.  I once did a study on this and it is the conclusion I came up with.

Trying to build a new 'union' with only mutual monetary policy, is exposed by disaster scenarios such as this......

Perhaps an IMF bailout after this.  The latest talk is this and the bailout by the EU has stalled once more, hence the absolute pounding the EZ currencies are taking and dragging down the rest of the world with them!


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## newbie trader

They are corrupt and they dont pay income tax etc...its disgusting!

N.T


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## Julia

newbie trader said:


> They are corrupt and they dont pay income tax etc...its disgusting!
> 
> N.T



Huh?  Who doesn't pay income tax?  Greece?
You need to provide a link to an allegation like that, including that 'they are corrupt'.

Meantime, here is a guide to taxation in Greece:

http://www.capitaltaxconsulting.com/international-tax/greece/greek-income-tax/


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## doctorj

Julia said:


> Huh?  Who doesn't pay income tax?  Greece?
> You need to provide a link to an allegation like that, including that 'they are corrupt'.



The situation in Greece is pretty well documented - 


> The Greek shadow economy, which is made up of unreported income, was  25.1% of gross domestic product in 2007, according to Friedrich  Schneider, a professor at Johannes Kepler University in Linz, Austria.



http://online.wsj.com/article/SB10001424052748704182004575055473233674214.html

There was a very entertaining rant written by a guy from Goldman (?) that did the rounds a few weeks ago...


> On the official statistics alone, we are comfortably in the world's top  40 for per capita GDP. But that's peanuts. Lest we forget, that's our  declared income. Don't quote me on this apocryphal statistic, but I'm reliably informed that exactly six Greeks declared more than a  million EUR in income last time anybody counted. And exactly 85 declared  more than half a million. So we're probably a bit better than top 40. 	    Either that, or this trading floor alone has more rich people  than Greece. Hell, our new recruits for this season alone could probably  do it.



Most likely not entirely true, but the point is fair.


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## newbie trader

Julia said:


> Huh?  Who doesn't pay income tax?  Greece?
> You need to provide a link to an allegation like that, including that 'they are corrupt'.
> 
> Meantime, here is a guide to taxation in Greece:
> 
> http://www.capitaltaxconsulting.com/international-tax/greece/greek-income-tax/




I dont have a link but we know a lot of Greeks who live in Australia and their family back home own shops etc (one guy for instance owns a souvineer shop in delphi). They have openly admitted to the fact that they never pay taxes and when the tax inspector comes around they pay off the tax inspector. I'm not making it up, you can choose to believe me or not (considering you only have my word on the matter). Theres a range of things that go on in Greece which are not reported in the papers.

NT


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## theasxgorilla

cite3726 said:


> Greece is in deep trouble.  Best solution is leaving the Eurozone, reintroduce the drachma, default on the debt (the real meaning of the word default - to refuse to pay it) and start over.  Argentina is a success story (for those who know of such things).  Such things are my dream.  But the real story will be an EU muddle-though.




I have a good friend living in Argentina... he tells me no-one there trusts the banks (or perhaps more to the point the government) so no-one puts their money there, and that you can't borrow money to buy property so you have to save up and buy the whole thing cash.  I'm not sure I'd call what he describes a "success story".


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## Uncle Festivus

There goes $60B down the drain. How are they going to pay it back?



> April 24 (Bloomberg) -- Greece’s request for a $60 billion bailout led by the European Union may fail to ease investor concerns about the nation’s ability to end its fiscal crisis.
> 
> A rebound in Greek bonds after the government’s request for a rescue yesterday, fizzled out as investors kept their focus on a budget deficit that will still be around 10 percent of gross domestic product this year *even after* austerity measures. The yield on the Greek two-year note rose to 10.23 percent, after falling to 9.63 percent.
> 
> “We are not buying Greek debt while so many problems remain unsolved,” said Ralf Ahrens,  who holds Greek bonds as part of the about $20 billion he manages as head of fixed-income at Frankfurt Trust. “Asking for the package will not calm down the market.”
> 
> European policy makers have only spelled out the aid that Greece would receive over the next year, sparking concerns about how the country will finance itself beyond 2011. While Greece has pledged to lower its budget deficit below the EU’s 3 percent limit by 2012, Goldman Sachs Group Inc. says the country’s challenge is so great the nation may cut or delay payments to bond investors.



Maybe they can start making barge poles and sell them to bond buyers - about the only way they are going to make any foreign income?

Greece is stuffed, who's next?


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## explod

Uncle Festivus said:


> There goes $60B down the drain. How are they going to pay it back?
> 
> Maybe they can start making barge poles and sell them to bond buyers - about the only way they are going to make any foreign income?
> 
> Greece is stuffed, who's next?




Well the great thing Uncle is that the general investment community is learning to understand that countries in this day and age can go broke.   It will make for astute observers when a few more start to go broke and they may even begin to look for other ways in which to safeguard their hard won dosh.

However on a Saturdy after a few schooners I find it hard to say more less I get into bother again.  Does anyone out there have a clue?


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## Calliope

explod said:


> However on a Saturdy after a few schooners I find it hard to say more less I get into bother again.  Does anyone out there have a clue?




I think you mean Saturday and lest. That's what a few schooners will do. I hope you didn't drive home.


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## TheBigSponge

And pigs fly   Greece is the last on the agenda. Go the Euro!!


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## Macquack

I did not realise Greece had scrapped the "drachma" in 2002. 

*Big, big mistake *relinquishing control of their currency to the "money masters" in the European Central Bank headquartered in Frankfurt, Germany.


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## explod

Calliope said:


> I think you mean Saturday and lest. That's what a few schooners will do. I hope you didn't drive home.




Not at all ole pal, off topic but if ya not good at spellin you dish out with the sounds.   Of course in the 1950's the accent was very much Saturdy or Saterdy, and it was Pub day for the returned diggers, Dad always at the front to hide the back (the past)


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## basilio

It's a big question isn't it? Perhaps the real question is 

*"What would be the consequences for large bank solvency, investor confidence and international financial transactions if Greece fell over*? "

And of course the follow up question

*"How much capacity do other countries have to bankroll  a restoration of confidence?"*

in 2010 we are not talking about a single or small country taking a dive in a largely robust international world. There is no country that is not in substantial if not dangerous debt. And the financial links that tie countries, banks and economies together suggest that if one country goes "down" it will be a real challenge to keep the rest above water. 

The inevitable conclusion of this metaphor is almost all countries will be pulled into the water with their debt millstones locked securely around their throats. 

Bit like the collapse of the Austrian  banks in 1931 which turned the stock market collapse of 1929 into a true depression.

http://www.globaleconomiccrisis.com/blog/archives/199

Cheers....


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## TheBigSponge

Look on the bright side guys! Its dirt cheap to holiday in Europe now!!


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## basilio

It's not getting any prettier in Greece and Europe is it? 

And it's also clear that the potential loss of multi-billions in bonds could "destabilize" some of the biggest institutions in Europe. From our perspective what investments do we hold and what do we  exit from?

 Or do we see this as another fantastic buying opportunity within a couple of weeks?
*
One thing for absolute certainty. Goldman Sux and co will be milking the roiling markets senseless in the next couple of weeks. That means we are going to well and truly shorn if not slaughtered.*


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## Calliope

Of course it is not salvageable.  They say God helps those who help themselves but I don't think he meant helping yourself to stuff you can't afford. They are not prepared to put in the hard yards to dig themselves out of their hole.

The EU  made the big mistake of taking all these basket cases on board in the first place.

The EU is a failure. By the way, how's Rudd's Asian Union going?


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## Absolutely

I don't get what the consequences are of not being able to pay back debt.

I mean what does it mean for the average Greek?

What would Greece be saved _from_ actually, if it were "saveable"?


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## Temjin

It doesn't matter if an agreement was made in 3 weeks time or not. Greece will have to face a complete or partial default sooner or later. It's not a matter of if, but when. 

In fact, the amount of hurdles that the EU has to go through to get a "bailout" package is simply impossible to go pass given how "political" this has become. 

I remember the RBA gave a public comment suggesting the "problem" with EU/Greece is "behind us now". HAH, am I not surprised to know they didn't see this coming? (and while other blogs, ZeroHedge, etc, are jumping up and down about it is getting worse and worse by the day, until today, which was not a surprise at all) 

This article is a very good read.

http://www.investorsinsight.com/blo...2010/04/26/the-making-of-a-greek-tragedy.aspx

*John Mauldin's on "The Making of a Greek Tragedy".*


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## MRC & Co

Germany just won't move before the 9th May elections.  

EZ will be punished by then and contagion is spreading right now.


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## GumbyLearner

Greek bonds 2 year-yield over 20% corn:

http://www.marketwatch.com/story/greek-bonds-in-free-fall-two-year-yield-over-20-2010-04-28


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## maffu

GumbyLearner said:


> Greek bonds 2 year-yield over 20% corn:
> 
> http://www.marketwatch.com/story/greek-bonds-in-free-fall-two-year-yield-over-20-2010-04-28




Most junkies and homeless people can access a credit card at rates cheaper than that...

I am too young to remember the Russian default, and am really interested in how this will all play out, as I have not see a nation of prominence go bankrupt since I have studied Finance.

What I find strange is that the Greek public are protesting so hard against changes to cut government spending...


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## kwallace

It's all very, sadly, interesting I agree. 

What I would like to know is how they are going to get investors to come (back?) to Greece?

There is almost nothing at all a company would want to be there for, small internal market, they cannot devalue their currency to make exports attractive, they cannot offer bonus tax terms due to agreements within the EU and a generally high wage system with immense social payments to boot (Also not to mention stupidly high real estate values, though that may change soon)

Can anyone tell me if I'm wrong about this?


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## Calliope

maffu said:


> What I find strange is that the Greek public are protesting so hard against changes to cut government spending...




Greece has 10 million people. One fifth of the workforce is in the Public Sector, they have jobs for life, they have an early retirement age, and they get a pension of 80% of their income. The Public Sector is also riddled with corruption.

Any realistic cutback in Government spending would involve cutting wages, raising the retirement age and reducing pensions. They are protesting, often violently, over loss of privilege.



> ATHENS (Dow Jones)--Greece's public sector umbrella union, ADEDY, said it would extend a planned 24-hour strike to a second day to protest the government's austerity measures.
> 
> In a statement issued late Sunday, ADEDY called on public workers to walk off the job from Tuesday for 48 hours. The union had previously announced a strike, along with its private sector counterpart, GSEE, for Wednesday.
> 
> "The executive committee of ADEDY calls on the workers to strongly react against the unprecedentedly harsh and savage measures taken by the government," the union said in a statement.
> 
> *The statement followed an announcement Sunday that the Greek government has signed off on a EUR110 billion, three year joint European Union-International Monetary Fund aid program.
> 
> The program, which will help Greece cover its financing needs for the next two years, requires Greece to implement tough spending cuts and raise taxes, including steep cuts in civil service pay and pensions and higher sales and sin taxes.*
> 
> On Monday, local government workers also staged a 24-hour strike, both to protest plans to radically pare back the number of local governments, and over the recent austerity measures.




http://online.wsj.com/article/BT-CO-20100503-701264.html?mod=rss_Bonds


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## Calliope

It becomes more and more unlikely. The civil servants are reluctant to give up there their privileges to help Greece out of bankruptcy.

*Three dead as Athens burns*



> ATHENS: Three people were killed last night when an Athens bank went up in flames as tens of thousands of Greeks took to the streets to protest against harsh spending cuts aimed at saving the country from bankruptcy



.

http://www.theaustralian.com.au/news/world/three-dead-as-athens-burns/story-e6frg6so-1225862813392


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## Temjin

Here are some interesting facts that almost everyone is unaware of and has not been reported in the media.

http://online.wsj.com/article/SB10001424052748704866204575224421086866944.html



> U.S. participation in the €110 billion ($145 billion) loan to Greece is relatively modest. The 15 nation euro-zone governments are ponying up $106 billion, divided according to their stake in the European Central Bank. Germany, for example kicks in $29 billion, with France good for $22 billion.
> 
> Of the $39 billion the IMF is participating in, the US is likely to kick in somewhere in the neighborhood of $3 billion dollars. Considering the US role in the global collapse, that is a relative bargain.
> 
> Each member has a "quota"—that is, a financial stake in the IMF, expressed as a percentage—and contributes accordingly. The U.S. quota is 17.09%, followed by Japan at 6.12%, Germany at 5.98% and France and Britain at 4.94% each.




Australia's share of IMF = 1.49%, $3236.4 of SDR quota.









> Does that mean that the U.S. is responsible for 17% of the IMF's portion of the Greek package? Not exactly.
> 
> First, though all countries are theoretically responsible for investing in the IMF's lending pool, not all of them have currencies that potential borrowers can use. (Think of Zimbabwean dollars or Venezuelan pesos.)
> 
> The IMF doesn't say that outright. Instead, it uses the concept of "usable resources," meaning it uses money from countries that are considered financially sound. About 21% of the quota contributions to the IMF were "non-usable," according to the IMF, as of January 2010.
> 
> Because the U.S., Japan and big European countries are in the "usable" camp, they finance a larger percentage of IMF funding than their quota would suggest.
> 
> It isn't possible now to pinpoint those percentages, for several reasons.




We can assume Australia's money is considered "financially sound" and is a "usable resources".

It is of course, impossible to know for sure how much of Australia's money is involved in this bailout. But let's assume it is equally share among all shareholders of IMF. 

$3 billion from US of $39 billion = 7.7% share. 

Australia has a quota share of 8.77% equivalent to the US's quota.

Therefore, it MAY be possible that *we are funding approximately $263,100,000*  for the total bailout in Greece. 

That's *$11.78* for every man, woman and children in Australia to satisfy the greedy unionsed citizen of Greek and their incompetence. 

Yes, this does not sound a lot. But $263 million dollar is still a lot of money and could have been better spent elsewhere.

And you can be sure that once the precedent has been set for bailing out Greece, Spain and Portugal will start asking for help as well. The bill will only get more expensive.

So why is Australians have to pay for this ridiculous bailout for someone who is several thousand kilometers away?


----------



## Ageo

Temjin said:


> So why is Australians have to pay for this ridiculous bailout for someone who is several thousand kilometers away?




Hehe i agree totally, protectionism i reckon!


----------



## Calliope

The German people, who have a strong work ethic, are not happy at having to bail out the irresponsible Greeks. But they have made their bed and now have to lie in it.



> BERLIN: Chancellor Angela Merkel is urging German legislators makers to approve aid for Greece worth E22.4 billion ($32bn) over three years, warning that "the future of Germany in Europe" is at stake.
> 
> Ms Merkel's cabinet this week agreed on the German contribution to a three-year E110bn EU and International Monetary Fund bailout for Greece.
> 
> It was introduced to parliament yesterday and the Chancellor said she wanted it fast-tracked for passage by both houses by tomorrow. It is not expected to meet significant resistance.
> 
> Ms Merkel said the bailout needed to be passed for "the future of Europe, and with that, the future of Germany in Europe"



.

http://www.theaustralian.com.au/new...for-greek-action/story-e6frg6so-1225862743485


----------



## ASFASF

Perhaps some perspective on why the Eurozone even exists may shed more light on what is happening.

Europe was wracked by wars for centuries.  All realized that there were no winners from this.  The League of Nations was initially formed and following WWII moves were made to tie all the nations of Europe financially together so that an attack by one nation on another would probabilistically hurt the attacker more than they had to gain.  Welcome to the EEC an later EU.

Naturally a nation at the center of the past trouble and also suffering was a key player -Germany.

Now.  How important is the threat of a Eurozone nation's default on the peace and stability of the region?

In my opinion Germany and France see Greece as a stone's throw from Turkey and the Middle East.  Greece is a buffer zone.  Greece always knew this and have played their cards (even if internally corruptly) accordingly. They will be protected.

Portugal and Spain may buffer a lesser threatening North Africa.  They may get some help but not much.

Ireland?  Start planting more potatoes; no help is on the way.

As a side note whenever the IMF joins these efforts be sure that Ben Bernanke has just turned the printing press speed upwards so it weakens US currency as well.


----------



## Calliope

The German finger in the Greek dyke, especially when the Greeks are undermining on the other side, won't stop the contagion spreading to the other Mediterranean countries then Ireland and eventually, who knows?:shake:


----------



## pixel

Calliope said:


> The German people, who have a strong work ethic, are not happy at having to bail out the irresponsible Greeks. But they have made their bed and now have to lie in it.




Of course they aren't happy; but the problem is not so much Greece, but the romantic notion of a United Europe.
Here is my contribution to a friend's blog spot, who asked my opinion on the above question._

The Northern countries have a habit of working up a sweat - well, they have to if they want to stay warm. Whereas the Mediterranean "culture" centers around siesta and lying in the shade to stay cool. The entire idea of Euroland was a failure.
I'm just not sure whether the Poms did well to stay out. It was probably born out of the hubris, dreaming that Britannia can still waive the rules - which she can't and hasn't been able to for 100 years. They still haven't noticed - maybe if they'd joined Euroland, they might have persuaded their new "friends" to bail them out too.

I think the mistake was made when the continental countries tried to emulate the United States. Yanks, for all their differences, are "culturally" in agreement about two tenets:
Every American citizen is as good as the next one and better than most.
It's everybody's right to do what seems necessary to make as many $$$'s as possible.

Europeans differ among themselves to an enormous extent. Some may feel entitled, like the Americans, to any amount of money they wish - but they feel it's their birthright to demand it be given to them. Others know you only get what you work for. Some live to work. Others work just enough to make a living. And each little tribe has the firm conviction that its members are superior to everybody else - especially the immediate neighbours ...
So, in come the pollies and decree "Let there be one union and one currency." Forgetting that it's essential for a stable currency to be backed by a stable and united approach to economic and foreign policy. And what happens? Every pipsqueak country retains the right to promise its citizens stability without concern. Greeks can retire - on full pay of course - at 52. Germans have to work till 65 and even that is under review to be increased. Can you blame the Germans for getting miffed at Angela, if she signs her own citizens' pensions over to the Greeks?
Foreign policy is just as crazy: France and Germany knew in advance, where the invasion of Iraq would be heading. Not only for moral reasons - but the entire sordid affair was doomed to fail. Yet Spain (not to mention the Great Brits) joined in the fun and wasted Billions to tickle GWB's vanity and help him search for something that wasn't there. Is it a wonder that Spain could be the next country to choke on its debt?
If only our political leadership had been smart enough to stay out of that quagmire. We'd be Billions of Dollars better off - not to mention a few of our soldiers' lives. No politician's ego and desire to be mentioned in one sentence with "World Leaders" is worth the immeasurable physical and emotional damage that our military personnel and their loved ones was put through without any real and present danger to Australia or her allies being attacked.

Let's just hope and pray that the new "Europeans", formerly "Warsaw Pact Allies", don't discover the gravy train and demand to be spoon-fed as well - or else .

'nuff said. I'm sure you get my drift._

Now compare Oliver Marc Hartwich: "The fantasy of European integration is over" in today's Business Spectator:


> The Greek crisis should have dealt a blow to those who still cling on to this harmonious ideal of European integration. If Greece has demonstrated one thing it is the fact that ‘ever closer union’ cannot effectively conceal economic discrepancies and national interests.
> 
> Many European leaders would, however, draw the very opposite conclusion. Instead of recognising the failures of the European project, they call for even more of the same. For example, French President Nicholas Sarkozy has repeatedly advocated a joint economic policy for the whole continent – blissfully ignoring that the EU is an institution in which even an agreement on the definition of chocolate can take 15 years


----------



## condog

ITs a rediculous situation

Lending Greece money will not fix the problem it will delay the inveitable. 

Having highly productive and efficient econmies and rediculous mismanaged un productive economies under the same currency is rediculous. The exchange mechanism is what stops low production companies going broke. Thie currency devalues, makes them more competitive, they sell more goods, import less and the problem gets better.

But now they cant just go kick them out unless the other EU countries take on most the debt. If they did kick them out with no remedy, the greek currency would devalue so far, so quick they would have no chance of repayment, as the debts in euros would become comparitavily massive.

So theres imo a very valuable lesson for the EU. If the remain 100% under the euro, they will have no choice for the productive countries to continue to subsidise the unproductive. 

The only long term solution i see is to stop lending to the greeks. Take over thier debts and restructure the debts. Then either kick them out with a very manable debt under thier own currency, or heaqvily police thier spending and others to ensure no one goes over an agreed deficit.

But the solution is take over part of the debt, not lend money. It may be politically unpalatable, but its the only acceptable solution that will appease global markets.

It seems however that politically they are to scared to acknowledge this, or economically they are too inept to do so.


----------



## explod

condog said:


> ITs a rediculous situation
> 
> Lending Greece money will not fix the problem it will delay the inveitable.
> 
> Having highly productive and efficient econmies and rediculous mismanaged un productive economies under the same currency is rediculous. The exchange mechanism is what stops low production companies going broke. Thie currency devalues, makes them more competitive, they sell more goods, import less and the problem gets better.
> 
> But now they cant just go kick them out unless the other EU countries take on most the debt. If they did kick them out with no remedy, the greek currency would devalue so far, so quick they would have no chance of repayment, as the debts in euros would become comparitavily massive.
> 
> So theres imo a very valuable lesson for the EU. If the remain 100% under the euro, they will have no choice for the productive countries to continue to subsidise the unproductive.
> 
> The only long term solution i see is to stop lending to the greeks. Take over thier debts and restructure the debts. Then either kick them out with a very manable debt under thier own currency, or heaqvily police thier spending and others to ensure no one goes over an agreed deficit.
> 
> But the solution is take over part of the debt, not lend money. It may be politically unpalatable, but its the only acceptable solution that will appease global markets.
> 
> It seems however that politically they are to scared to acknowledge this, or economically they are too inept to do so.




You try and tell a spoilt child it cannot have any more ice cream.   Guvmints want to be nice, everyone is nice, lend more print more and nice nice nice.

Too many older people, toooo many people full stop.  No one with the b lls to do anything about it.   Lets just go back to sleep and party if you can get the credit.   Got gold, no worries.


----------



## Aussiejeff

Oh so close to GFC#1 market bottom for Greece stock market. Next stop??


----------



## Aussiejeff

Aussiejeff said:


> *Oh so close to GFC#1 market bottom* for Greece stock market. Next stop??




Almost at breakthrough at the last stop on the slippery slope to hell....

Plummeted over *-5%* in last night's US / Eurozone stock carnage.

Down to 1484.90


----------



## basilio

Start turning the lawns into gardens and the spare rooms into lodgings


----------



## billv

Aussiejeff said:


> Oh so close to GFC#1 market bottom for Greece stock market. Next stop??




Does anyone know of any companies worth buying there?
Surely this would be the time to buy


----------



## Aussiejeff

billv said:


> Does anyone know of any companies worth buying there?
> *Surely this would be the time to buy*




Haha!

You sure have a wicked sense of humour billv.


----------



## billv

Aussiejeff said:


> Haha!
> You sure have a wicked sense of humour billv.




haha 
I'm trying to think outside the square.

Do you believe that the floor is the limit? 
You could be right but I'm thinking there would be some companies of value.
Ofcourse I'm not talking about their banking sector


----------



## Aussiejeff

billv said:


> haha
> I'm trying to think outside the square.
> 
> Do you believe that the floor is the limit?
> You could be right but I'm thinking there would be some companies of value.
> Ofcourse I'm not talking about their banking sector




From Wiki then...



> Greece's main industries are *tourism, shipping, industrial products, food and tobacco processing, textiles, chemicals, metal products, mining and petroleum*. Greece's GDP growth has also, as an average, since the early 1990s been higher than the EU average. *However, the Greek economy also faces significant problems, including rising unemployment levels, inefficient bureaucracy, tax evasion and corruption*.
> 
> In 2009, Greece had the EU's second lowest Index of Economic Freedom (after Poland), ranking 81st in the world. *The country suffers from high levels of political and economic corruption and low global competitiveness relative to its EU partners.*




So, if you don't mind holding stock which fortune is at the whim of one of the most corrupt
governments in the world, feel free! You might dive in looking for scraps on their charred trading floor, only to find their market plunges further and they slap a punitive withholding tax on equities overnight (or halt trading for some unspecified period - honestly anything is possible over there now, mate) in an attempt to bolster their coffers. They might suddenly admit to being deeper in do-doos than they have let on to date.

Of course, it's all up to you. 

Good luck,

aj


----------



## Uncle Festivus

Greece is 're-profiled', again?  Just don't mention the 'D' word?



> Extending the maturity of outstanding debt -- re-profiling -- would relieve some of the pressure surrounding the 40 billion euro repayment of maturing Greek debt and coupons in 2012, buying time for Athens to stabilize its finances, but without reducing the eventual burden.
> 
> "Re-profiling private sector obligations, i.e. Greek government bonds, buys them time but doesn't obviate the fact that *they are fundamentally insolvent*," said Rabobank strategist Richard McGuire.







> NEW YORK, May 13, 2011 (BUSINESS WIRE) -- International investors view a sovereign default by a euro-area nation as more likely than not with more than four-fifths (85%) betting Greece will eventually fail to pay off its debt.
> 
> Eighty-five percent of those surveyed this week said Greece probably will default, with majorities predicting the same fate for Portugal and Ireland, which followed Greece in seeking European Union-led bailouts, a new Bloomberg Global Poll shows. The outlook for all three countries deteriorated since January.


----------



## tothemax6

Its really up to Greece.
If they want to save themselves they NEED to leave the EU. Not just for economic reasons.

Seriously, you guys should watch some EU parliament videos on youtube. It is _fcked up_. They don't even _pretend _to be in favour of democracy and national sovereignty. They are hell-bent on taking over Europe and turning it into a single, totalitarian socialist state. Sounds crazy and outlandish yes - until you actually hear these people talk and hear about what they get up to. MP's can't even introduce bills - bills are introduced by an unelected commission. They even put out national referendums on treaties, and when the countries vote no, they pretty much say 'wrong answer' and do it anyway.

If countries don't start dropping out of the EU soon it is going to make the USSR look like it wasn't even trying.


----------



## ceasar73

*Greece.Here we go again!!*

Can someone please explain WTF is going on over there???

IM over it


----------



## basilio

Greece owes $110b to banks which it can't repay. The banks want the government to basically slash and burn the the economy and sell off the remainder at bargain prices to get their money. The people and the country can go hang.

The Greek people don't want to be slashed burned and sold off in the fire sale. They simply want to write off the debts and live happliy ever after... If they do that the effect on the European bank system and then the world economy would be  at least as bad as GFC 1  and probably  much worse. Given that almost all governments are up to their ears in debt (particularly after rescuing the banks after GFC 1)  it's hard to see how our financial system could continue in it's current form.

For the longer explanations check out The Guardian article referenced and the other stories that come up on the page.

http://www.guardian.co.uk/world/2011/jun/15/greece-prime-minister-george-papandreou?intcmp=239
http://www.guardian.co.uk/business/2011/jun/16/greek-debt-crisis-key-questions-answered?intcmp=239


----------



## Aussiejeff

basilio said:


> Greece owes $110b to banks which it can't repay. *The banks want the government to basically slash and burn the the economy and sell off the remainder at bargain prices to get their money. The people and the country can go hang.*
> 
> The Greek people don't want to be slashed burned and sold off in the fire sale. They simply want to write off the debts and live happliy ever after... If they do that the effect on the European bank system and then the world economy would be  at least as bad as GFC 1  and probably  much worse. Given that almost all governments are up to their ears in debt (particularly after rescuing the banks after GFC 1)  it's hard to see how our financial system could continue in it's current form.
> 
> For the longer explanations check out The Guardian article referenced and the other stories that come up on the page.
> 
> http://www.guardian.co.uk/world/2011/jun/15/greece-prime-minister-george-papandreou?intcmp=239
> http://www.guardian.co.uk/business/2011/jun/16/greek-debt-crisis-key-questions-answered?intcmp=239




The cuurrent shambolic gummint & any succeeding mish-mash of gummint WILL (with Euro buddies support) save their too-big-too-fail Greek bank buddies at any cost. The pesky hoipoloi are, after all, expendable.


----------



## alexc2005

The real question in my mind is how will this all affect the australian share market?

Is it time to bail on all shares and let things settle down?

I've been through the GFC and am still holding some wounded stocks, i don't wish to go through a similar thing and be nursing my wounds for years to come...


----------



## noirua

alexc2005 said:


> The real question in my mind is how will this all affect the australian share market?
> 
> Is it time to bail on all shares and let things settle down?
> 
> I've been through the GFC and am still holding some wounded stocks, i don't wish to go through a similar thing and be nursing my wounds for years to come...




It puzzles me why strikes in minnow country Greece should be seen as that important. Germany is enormous compared to Greece and its manufacturing side is powering along. Why Australia bothers so much about this baffles me.

It also baffles me why Gillard and Co want to crash the smaller mining sector and mining as a whole; they'll probably say they don't but that is a matter of debate. Sure the mining giants came to a twist their arms up their backs agreement, though again they'll say, "not so", and once again debate may see it differently.

Australia, when you consider land mass and the resource sector, are giants with America and Canada, and yes, many of these stocks are quoted on the UK's AIM market. The Australian Government should take care in this respect as their moves damage resource markets worldwide.

Just as in 2008 and 1987 the falls are overdone but when the downdraft will end is uncertain.


----------



## explod

noirua said:


> It puzzles me why strikes in minnow country Greece should be seen as that important. Germany is enormous compared to Greece and its manufacturing side is powering along. Why Australia bothers so much about this baffles me.
> 
> .




Its all about noise noiura (and no pun intended either)

Whenever (if you go back and check) the US market is about to fall off a cliff or a tranche of treasury bills are coming up for Auction you can bet that S & P will come up with a rating of someone else.

And of course the debt level in the US is greater per capita than Greece but the former can print their way out and also tell tales that some people continue to swallow.

So when things are looking crook just look at the news on Bloomberg and ask yourself *why?*

For the last week the Dow has been on the cusp of last support in an uptrend that goes back to the lowest level during the last GFC.   The downgrade of Greeze ought to stop that till they can dream up some other excreter to roll the ponzie a bit further down the track.


----------



## davede

Update:

20th June 2011 No Agreement on Greek Bailout

Looks like Greece will have to wait until next month to find out whether it will get the funding it clearly needs to keep from defaulting.

While Greenspan and other 'respected' economists have stated a Greek default inevitable I can't help but feel the other euro nations aren't going to want to admit defeat on their monetary experiment.

Why should oz care?
true Greece is a small part of the Euro and of the global economy. The problem really for the rest of the world is contagion. Fear. Someone out there has to be holding the existing greek bonds (French banks, German Banks) these banks are already drastically undercapitalised following the GFC. A big balance sheet hit like losing big bond holdings could tip the small players over the edge. Coupled with speculators moving to a fresh target like one of the other PIGS spells real trouble.

However I did find some humour in Michael Pascoe's comparison of Greece to the single US state of Florida this week.

I'll be watching developments very closely waiting for euro short to show some viability. As for buying Greek companies forget about it.


----------



## Aussiejeff

No wuckers.

Given that Mr Market immediately recovers with a blast of uber-positive media hype every time they "delay" a decision on Greece's debt, all the Europollies have to do is keep delaying indefinitely!

Their hot air costs nothing.

Party on, Europhiles.....


----------



## Uncle Festivus

Well at least 'the game' is getting easier to play? It used to be BTFD, but now it's STFR?

(BuyThe*Dip)(ShortThe*Rally)

<Contagion>


----------



## davede

Too risky for me to short any rallies at the moment.

p.s. vote of confidence takes place today for Greek parliament (EU time) - this will provide some indication of whether Papandreou can deliver on his required austerity measures.


----------



## doctorj

davede said:


> Why should oz care?
> true Greece is a small part of the Euro and of the global economy. The problem really for the rest of the world is contagion. Fear. Someone out there has to be holding the existing greek bonds (French banks, German Banks) these banks are already drastically undercapitalised following the GFC. A big balance sheet hit like losing big bond holdings could tip the small players over the edge. Coupled with speculators moving to a fresh target like one of the other PIGS spells real trouble.




Unfortunately, the default of Greece would have a material impact on the global financial system for the same reason that Lehman did - the world's financial systems are heavily interconnected. In Greece, any sort of haircut on Greek debt would mean the Greek banking system would need to be recapitalised as they've all been forced to hold significant amounts of Greek sovereign debt on their balance sheets (which is fairly unfortunately given that they're otherwise quite healthy). This would have a severe flow on effect to the banking systems of the Western Balkans - there may not be a bank run in these countries, but at the very least the local subsidiaries of Greek banks (which hold significant market share) would be in severe distress and probably also need new capital.

Then you have the exposures of foreign banks - particularly the German and French banks but also the US banks that own several billion of Greek sovereign and corporate debt (not including the exposure they also probably have to the Western Balkan countries). Whilst it's no where near enough to take them down, the fear is that contagion will spread to other PIGS and drive up funding costs further - Greek CDS is 1938bps, Portugal is at 761bps and Spain is only 277bps - and if it did, sooner or later, unless it's stopped, there's a good chance other countries may find themselves in a similar situation and much of Europe's banking system would need to be recapitalised.

So what for Australia? Well, Australian banks rely on wholesale funding and would be competing for capital internationally, so funding costs would go up (along with it interest rates, which would affect growth etc). Also, Australia's economy is fairly captive to China, who would suffer should one of their major export markets experience such distress. Finally, whilst Australia and its banks survived the Global Financial Crisis largely unscathed and Australian sovereign CDS is virtually flat lining, its banks are heavily over exposed to retail mortgages and would suffer should house prices decline.


----------



## Sdajii

So, in the event that Greece does default, the flow on effects get nasty etc, presumably commodities will fall drastically due to lack of demand... what's good to be holding? Gold, tobacco stocks and suicide kits? What else?

Or if all the PIIGS fall and drag down Uncle Sam... tins of food, radiation suit, a couple of trusty boom sticks and a lot of ammo.


----------



## davede

doctorj said:


> So what for Australia? Well, Australian banks rely on wholesale funding and would be competing for capital internationally, so funding costs would go up (along with it interest rates, which would affect growth etc). Also, Australia's economy is fairly captive to China, who would suffer should one of their major export markets experience such distress. Finally, whilst Australia and its banks survived the Global Financial Crisis largely unscathed and Australian sovereign CDS is virtually flat lining, its banks are heavily over exposed to retail mortgages and would suffer should house prices decline.





Thanks for elaborating on that Doctorj.

Well said.

As for 'what's good to hold?' that is another question entirely!


----------



## Aussiejeff

Sdajii said:


> So, in the event that Greece does default, the flow on effects get nasty etc, presumably commodities will fall drastically due to lack of demand... what's good to be holding? Gold, tobacco stocks and suicide kits? What else?
> 
> Or if all the PIIGS fall and drag down Uncle Sam... tins of food, radiation suit, a couple of trusty boom sticks and a lot of ammo.




Greece sharemarket UP a whopping +3.74% overnight on pollies' promises. 

See? No cause for concern at all, at all....


----------



## doctorj

davede said:


> As for 'what's good to hold?' that is another question entirely!



 Who knows?  The play book went out the window a long time ago.  Sitting in the UK, everything is relative, so I'd be happy enough being long AUD (from a considerably lower entry...), despite what I said about Australia's issues.  I don't think gold is the right asset, as I think QE, which won't continue forever, has driven it up.  Maybe soft commodities? Another commodity currency with a bigger domestic market like Rubles?  Or a currency that has already been to the wall like Hyrvina?

Having said that, if its time to sell when cab drivers start giving stock tips, what do you do when the same cab drivers start saying that the world is ending???


----------



## davede

doctorj said:


> Who knows?  The play book went out the window a long time ago.  Sitting in the UK, everything is relative, so I'd be happy enough being long AUD (from a considerably lower entry...), despite what I said about Australia's issues.  I don't think gold is the right asset, as I think QE, which won't continue forever, has driven it up.  Maybe soft commodities? Another commodity currency with a bigger domestic market like Rubles?  Or a currency that has already been to the wall like Hyrvina?
> 
> Having said that, if its time to sell when cab drivers start giving stock tips, what do you do when the same cab drivers start saying that the world is ending???




Very true. I was considering a EUR short, but also wanting to get out of AUD as the upward trend has now starting to reverse. Also don't want to go near the USD with Bernanke's talks of debt ceiling raising. A good currency that has taken a bit of a battering lately but i think is due for a rebound is the Norwegian Kroner.

I'm all talk at the moment though. Will wait at least till the end of the week before placing my bets.


----------



## davede

update:

More on the risk of contagion:

ECB President Says Risk Signals Are Flashing Red as Debt Crisis Threatens Banks



> The top U.S. prime money-market funds have about half their assets in securities issued by European banks, Fitch Ratings said in a report on June 21. The Bank for International Settlements estimated European lenders held $136.2 billion in loans to Greece at the end of 2010 and almost $2 trillion in Portugal, Ireland, Spain and Italy. Greece, Ireland and Portugal all received external support.
> 
> BNP Paribas (BNP) SA, France’s biggest bank, and rivals Societe Generale (GLE) SA and Credit Agricole SA (ACA) may have their credit ratings cut by Moody’s Investors Service because of their Greek investments, the ratings company said on June 15. German banks could also be at risk from contagion, Fitch said last month.
> 
> “The most serious threat to financial stability in the EU stems from the interplay between the vulnerabilities of public finances in certain EU member states and the banking system,” Trichet said. There are “potential contagion effects across the union and beyond.”




source: http://www.bloomberg.com/news/2011-...gnals-red-as-debt-crisis-threatens-banks.html


----------



## doctorj

Fitch also put out quite an extensive note on the exposure of European banks to the Greek situation.  They also conclude that Greek itself is not enough to cause a serious problem, but second order risks could.



> *
> Contagion Fears and Extreme Market Risk Aversion Represent Main Risks
> to European Banks From Greek Default​*For most major European banks, the direct solvency impact of a Greek sovereign
> debt restructuring or rollover would generally be limited. The secondary risks,
> however, could create the most risk.​*Contagion​*​​​​: A Greek restructuring or rollover has the potential to create immediate
> incremental pressure on Irish and Portuguese sovereign and bank risks, exacerbating
> already high investor risk aversion to these counterparties.
> While European bank exposures to these risks are not material enough to represent
> a significant direct source of credit loss risk, the contagion effect would be likely to
> trigger broader risk aversion and cause liquidity to contract sharply in the critical
> money and capital markets. After Ireland and Portugal, countries like Spain and
> Italy would see most pressure. This would be of particular concern for the mediumsized
> and smaller Spanish banks that have been weakened by the domestic realestate
> crisis and that are struggling to de‐risk, deleverage and refinance. Fitch
> believes that the recent increase in utilisation of ECB funding by Spanish banking
> sector (up to EUR57bn at end‐May 2011 from a EUR42bn low in March, albeit still
> well down on the EUR139bn peak reported in July 2010) is largely due to higher​
> utilisation by medium‐sized Spanish banks.


----------



## Julia

Thanks for the Fitch info, doctorj.  You're over in that part of the world.  What's the overall sentiment about Greece et al?  Is there any expectation that they will ever actually pay back the debt or is it intended to be 'restructured' indefinitely?


----------



## davede

update:



> European Union leaders vowed to stave off a Greek default as long as Prime Minister George Papandreou pushes through a package of budget cuts next week, pledging to do whatever it takes to stabilize the euro economy.
> 
> “We have agreed that there will be a new program for Greece,” German Chancellor Angela Merkel told reporters before the final session of an EU summit in Brussels today. “This is an important decision that says once again we will do everything to stabilize the euro overall.




Glad they have at least reached an agreement although the details and implementation is very sketchy. What I especially do not like is the 'bailout' hinges on 'voluntary' commitments from the private sector. Without some serious incentives what kind of financial institutions are just going to just roll over their bonds - effectively re-investing in an asset that is very risky? 



> ‘Informal and Voluntary’
> 
> Leaders of the euro area’s six AAA rated countries have said the key ingredient of a second package must be a pledge by banks, insurance companies and asset managers to maintain their holdings of Greek bonds.
> 
> An EU statement spoke of the need for “informal and voluntary rollovers of existing Greek debt at maturity,” avoiding a coercive exchange that would lead credit-rating companies to declare Greece in default.




source: http://www.bloomberg.com/news/2011-06-23/eu-vows-to-rescue-greece-in-exchange-for-cuts.html

As for the sentiment. I'm currently in Norway (which while is not part of the Euro, is very dependent on the area obviously). Greece is dominating the economic news and there is certainly a lot of fear about default. While I can't find anything explicitly stating the debt is to be repaid one must assume that for Greece to be a functioning member of the euro it must plan to repay it's loans. After all the Maastrict criteria (criteria for allowing countries to be a part of the euro) states that member countries must have debt to gdp less than 60%.

Britain is not taking part in the rescue:



> Britain is to be spared from taking part in the rescue after leaders accepted David Cameron's argument that the bailout should be borne by the eurozone. Without the final tranche of last year's rescue – â‚¬12bn from the eurozone and the IMF – Greece would be broke by mid-July.




source: http://www.guardian.co.uk/business/2011/jun/24/world-stock-markets-greece-bailout


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## Aussiejeff

Athens Stock Exchange up a whopping +2.7% overnight as the peasantry riot at the prospect of having to bear the brunt of continuing massive debt interest payments for at least the next 30 years under the "revised" no-default plan.

See? It's all goooooood......

Pop the champers!


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## doctorj

Julia said:


> Thanks for the Fitch info, doctorj.  You're over in that part of the world.  What's the overall sentiment about Greece et al?  Is there any expectation that they will ever actually pay back the debt or is it intended to be 'restructured' indefinitely?



 Last week, in a survey of bankers based in London, something like 75% of those surveyed expected Greece to default in the next 2 years.  In reality, what will probably happen is debt holders will receive some incentives to 'voluntarily' restructure debt and the Germans will keep throwing cash at Greece (they seem to view the money paid to hold the EU together as pennants for past wrongs).  

The only question is whether or not that will be enough.  Greece has very little industry and even less worth exporting.  They're really being hurt by the lack of flexibility in the currency, which is a lot higher than the drachma would be.  EU and IMF support is contingent on the government passing key economic reforms, but the incumbent government has a slim majority and people on the street are really suffering - high unemployment, wage cuts and cost of fuel up 60%+.  They're protesting at the moment, but with 3-4 years until the next election and the government making life harder, there's a chance it could get worse.


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## davede

doctorj said:


> The only question is whether or not that will be enough.  Greece has very little industry and even less worth exporting.  They're really being hurt by the lack of flexibility in the currency, which is a lot higher than the drachma would be.




Seems a lot of analysts are saying that it is more a question of when than if. While the reforms were passed today Greece still has to meet every bond payment hurdle for as long as the bonds exist in the market. Yes the Greek economy certainly suffers from a high currency value as its largest industry is tourism I believe.

Read an interesting piece on the risk for ozzie banks and the oz economy today here:
http://www.bloomberg.com/news/2011-...at-2011-highs-on-greece-australia-credit.html


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## choofer

I guess Adolf gets his Third Reich afterall.


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## Uncle Festivus

You can only kick a can down the road for so long......I give it 6 weeks at most till they are finally consigned to an 'orderly' default?

The real problem is oil - they simply won't have funds to buy fuel, and nobody will extend them any more credit to buy any. The country will literally come to a physical stop as well as a financial freeze. Classic negative contagion.......Italy is next........so the market is saying....?


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## nulla nulla

Look the solution is really easy. Greece has been throught this before. After the second world war half of the greek population emigrated to Victoria Australia. There they opened up market gardens and "fish and chip" shops. They sent money home to Greece and bailed Greece out of the post 2nd world war depression.

Now it is time for Greece to send out the pampered unemployed youth to places like India and South Africa (or Western Australia) where they can get employment and send their money back to Greece just like the earlier generations did. Problem solved QED.


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## LifeChoices

I've been reading the news and watching the locals riots on the streets.

Europe and the rest of the world look like they are all doing their best to help Greece dig themselves out of the massive hole they dug for themselves.

Two words: dumb wogs.


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## ceasar73

WORK.......ya lazy pri.cks


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## IFocus

Uncle Festivus said:


> You can only kick a can down the road for so long......I give it 6 weeks at most till they are finally consigned to an 'orderly' default?
> 
> The real problem is oil - they simply won't have funds to buy fuel, and nobody will extend them any more credit to buy any. The country will literally come to a physical stop as well as a financial freeze. Classic negative contagion.......Italy is next........so the market is saying....?




Banks that are on the hook must be screaming for time to try and recapitalize so that they can take the hit when it comes hence the kicking the can down the road so long, 

Lending another $100 bil plus to some one who can never repay also moves the problem onto the next election cycle for some one else to face the music.

Longer it goes the more it looks nasty IMHO.


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## skc

The Greeks should have played hardball, causing the financial markets to fall while they secretly buy up the most highly leveraged derivative products on their own debt.

They then announce that the austerity plans are accepted by parliment, causing the market to stage a relief rally.

They then announce that, thanks to the relief rally, half of their debt problems have been solved by the profits they've made on those instruments.

The market hears that news and rally harder, and Greek has enough profits to pay back all the debt.

The market rally harder yet, and Greek decides to paint their streets gold, buy a few German banks and construct one man-made island for each Greek citizen... with new debt.


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## nulla nulla

skc said:


> The Greeks should have played hardball, causing the financial markets to fall while they secretly buy up the most highly leveraged derivative products on their own debt.
> 
> They then announce that the austerity plans are accepted by parliment, causing the market to stage a relief rally.
> 
> They then announce that, thanks to the relief rally, half of their debt problems have been solved by the profits they've made on those instruments.
> 
> The market hears that news and rally harder, and Greek has enough profits to pay back all the debt.
> 
> The market rally harder yet, and Greek decides to paint their streets gold, buy a few German banks and construct one man-made island for each Greek citizen... with new debt.




Isn't that what the U.S.A just did, or is still doing?


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## Aussiejeff

IFocus said:


> Banks that are on the hook must be screaming for time to try and recapitalize so that they can take the hit when it comes hence the kicking the can down the road so long,
> 
> *Lending another $100 bil plus to some one who can never repay* also moves the problem onto the next election cycle for some one else to face the music.
> 
> Longer it goes the more it looks nasty IMHO.




If one of our banks _knowingly_ lent $1Million in cash to a tramp off the street who could never repay the debt, that bank would be committing an indictable offence.

Funny how the Greece bailout is seen in a totally different light by Europollies.....See? They are not criminals, they are generous souls!  

LOL


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## Garpal Gumnut

I'm 100% in cash, so I hope the silly buggers go **** up.

The Germans like to work, so they can pay for the Greeks pensions.

The Greeks don't work as hard as the Germans, and can then enjoy their retirements, while the Germans work, which they seem to enjoy doing. Thus everyone is happy.

Assets get sold cheaply, the AUD goes up, goods and stocks thus become cheaper for me.

I hope it is not saveable.

gg


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## Boggo

If this article is correct then Greece should be allowed wallow in their own mess.

Link..
The Greek gravy train, or, we are lazy, come and save us !


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## Bigukraine

Guardian.co.uk

"% Greece set to default on massive debt burden,european leaders concede %"

Don't know how to link but looks like game over for them and now the stone has been thrown into the lake the ripples are starting to head around the world !


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## Aussiejeff

Greece is "saved" by pro-austerity parties? Lollipops sans sunshine?

Leading to perhaps worse street riots and yet another "early election" after a few more months of failed "fiscal austerity" with spiralling debt??

Oh well. Saved for now..... let the market Boom commence...


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## explod

Aussiejeff said:


> Greece is "saved" by pro-austerity parties? Lollipops sans sunshine?
> 
> Leading to perhaps worse street riots and yet another "early election" after a few more months of failed "fiscal austerity" with spiralling debt??
> 
> Oh well. Saved for now..... let the market Boom commence...




Have another wine on the bankcard


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## Calliope

Greece and the Euro will be saved because Merkel is now taking advice from the PM of the country with the World's Greatest Treasurer.


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## Joules MM1

*Greek pro-bailout parties secure ruling majority*


By Renee Maltezou and Harry Papachristou

ATHENS | Sun Jun 17, 2012 7:38pm EDT


http://www.reuters.com/article/2012/06/17/us-greece-election-idUSBRE85F05320120617


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## caribean

Some of you people are so ignorant of what really is going on, not only with the Greek financial crisis, but also i suspect with other matters affecting the rest of the world.
Name calling of other cultures seems to be a popular sport for some of you, it must be the race superiority you enjoy, after all it is only natural it is happening to such an inferior country and its peoples, hey?
The lazy Greeks and the hard working Germans.....


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## ironzy12

I would like to see that poll open again to see if the forum has a similar view! The chances of a 'greek exit' are much higher now, I couldn't see it being less than a 90% chance of an exit.

Greek productivity levels and the structural issues that remain in the country make continually throwing more cash at it whilst it remains a member of the EU, diverts focus from the countries that would cause the EU bigger issues (i.e. Spain, whose economy is around 5x the size of Greece).

Why wouldn't a Greek version of Argentina be a better idea both for Greece and the EU?? Untested for the EU, yes, but it would give Greece the ability to control currency and would give a clear signal to EU members and the wider world that the EU won't support less than successful economies at the cost of the union.


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## DB008

*Europe's Record Youth Unemployment: The Scariest Graph in the World Just Got Scarier*




> Europe's job market is a historic disaster.
> 
> The EU unemployment rate set a new all-time high of 12.2 percent, according to today's estimates. But it's the youth unemployment crisis that's truly terrifying. In Spain, unemployment surged past 56 percent, and Greece now leads the rich world with an astonishing 62.5 percent of its youth workforce out of a job (graph via James Plunket).





http://www.theatlantic.com/business/archive/2013/05/europes-record-youth-unemployment-the-scariest-graph-in-the-world-just-got-scarier/276423/


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