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THE GREAT BIG FAT GREEK THREAD


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#16 wonderpup

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Posted 08 June 2011 - 08:23 PM

And, why are so many dubious liabilities being transferred to taxpayers from private creditors, who were paid an interest rate premium to take an informed risk?


Striking how seldom this point as regards risk premium is mentioned- it's as if the idea that an investor should ever lose money has become so heretical that no one dare point it out any more.

The simple truth is that the french and german banks made spectacularly bad investments- demanded an interest rate on their loans to reflect the risk they calculated they were taking- and yet now are looking for the entire greek poulation to take the hit on their bad investments- and they call this capitalism? :lol: :lol: :lol:

#17 interestrateripoff

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Posted 08 June 2011 - 08:27 PM

Striking how seldom this point as regards risk premium is mentioned- it's as if the idea that an investor should ever lose money has become so heretical that no one dare point it out any more.

The simple truth is that the french and german banks made spectacularly bad investments- demanded an interest rate on their loans to reflect the risk they calculated they were taking- and yet now are looking for the entire greek poulation to take the hit on their bad investments- and they call this capitalism? :lol: :lol: :lol:


The banks lent and lost, isn't part of the risk premium to cover you in event of default?
Proof that Brown had repeated IMF / OECD / BIS warnings over house prices and did nothing!!!
Looting: The Economic Underworld Of Bankruptcy For Profit
The exponential growth of debt and the unsustainability of debt
The logic of HPI @ 10% YoY means your £100k house would be worth £1.38bn in 100 years
Paying down my mortgage with money found on the street

It's time to sue the Bank of England / Federal Reserve for GROSS NEGLIGENCE
If DEBT is the problem REPAYMENT is the solution or you default

"Northern unemployment is an acceptable price to pay for curbing southern inflation" Eddie George former Governor of the Bank of England

New digest on the credit crisis and economy Part2 Part 3

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#18 RufflesTheGuineaPig

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Posted 08 June 2011 - 10:10 PM

Putting Germany at odds with the European Central Bank and the French government, Berlin has proposed extending the maturities on Greek bonds by seven years, insisting that private investors must share in the cost of any fresh financial aid to Greece.

The German finance minister, Wolfgang Schäuble, in a letter to his European counterparts as well as to the International Monetary Fund, the E.C.B. and the European Commission, who will meet June 20 to discuss aid, wrote: “Any additional financial support for Greece has to involve a fair burden sharing between taxpayers and private investors and has to help foster the Greek debt sustainability.”

Mr. Schäuble added that any deal to support Greece at the meeting would have to “lead to a quantified and substantial contribution of bondholders to the support effort” and would “best be reached through a bond swap leading to a prolongation of the outstanding Greek sovereign bonds by seven years.” The letter was dated Monday and released Wednesday.

Richard McGuire, a strategist at Rabobank in London, said the letter highlighted a division among the core members of the euro zone as well as with the central bank. As a result, he said, there is “the clear risk a Greek deal could well hit a snag.” That risk was underscored Wednesday by a report from the so-called troika — the I.M.F., the European Union and the E.C.B. — monitoring Greece’s progress at meeting its goals for receiving a €110 billion, or $160 billion, bailout.


Wouldn't any forced change in the debts T&Cs triggers all the CDSs? And basically destroy the universe.
It's time to pay the piper. There is no magician who will magic away the debt. Someone is going to have to pay it. Bend over and prepare to make payment.

In this glorious nation of ours, if you work hard and keep your head down for 25 years then you too can aspire to own one-eighth of a one bedroom flat in Manchester.


My mum and day always tell me how important it is to save to buy a house. They should know, it took them nearly 6 months to save for theirs. As teenagers, they bought a 3 bed semi.

#19 interestrateripoff

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Posted 09 June 2011 - 07:08 AM

Wouldn't any forced change in the debts T&Cs triggers all the CDSs? And basically destroy the universe.


AS CDSs are a zero risk bet, the universe is safe. Pity Noel isn't around to answer.
Proof that Brown had repeated IMF / OECD / BIS warnings over house prices and did nothing!!!
Looting: The Economic Underworld Of Bankruptcy For Profit
The exponential growth of debt and the unsustainability of debt
The logic of HPI @ 10% YoY means your £100k house would be worth £1.38bn in 100 years
Paying down my mortgage with money found on the street

It's time to sue the Bank of England / Federal Reserve for GROSS NEGLIGENCE
If DEBT is the problem REPAYMENT is the solution or you default

"Northern unemployment is an acceptable price to pay for curbing southern inflation" Eddie George former Governor of the Bank of England

New digest on the credit crisis and economy Part2 Part 3

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#20 interestrateripoff

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Posted 09 June 2011 - 07:38 PM

http://www.zerohedge...d-eurusd-higher

Wondering what lit a fire under the EURUSD? Wonder no more, courtesy of Reuters:

New bailout for Greece likely to total about EUR 120bln according to Eurozone sources
New bailout may comprise EUR 30bln from private sector, EUR 30bln from privatisations, up to EUR 60bln from EU/IMF
Remaining loans from initial Greek bailout would be disbursed alongside new bailout, according to Eurozone sources

And yes, as predicted the final amount will be far greater than previous expectations of under €100 billion.


We'll there is inflation, after all.
Proof that Brown had repeated IMF / OECD / BIS warnings over house prices and did nothing!!!
Looting: The Economic Underworld Of Bankruptcy For Profit
The exponential growth of debt and the unsustainability of debt
The logic of HPI @ 10% YoY means your £100k house would be worth £1.38bn in 100 years
Paying down my mortgage with money found on the street

It's time to sue the Bank of England / Federal Reserve for GROSS NEGLIGENCE
If DEBT is the problem REPAYMENT is the solution or you default

"Northern unemployment is an acceptable price to pay for curbing southern inflation" Eddie George former Governor of the Bank of England

New digest on the credit crisis and economy Part2 Part 3

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#21 The Masked Tulip

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Posted 16 June 2011 - 11:05 AM

BBC just reported this. Looks like we are approaching endgame.
The success or failure of your deeds does not add up to the sum of your life. Your spirit cannot be weighed. Judge yourself by the intention of your actions and by the strength you faced the challenges that have stood in your way.

The people closest to you have been trying to tell you that you have made a difference. That you did change things for the better. The Universe is vast and we are so small. There is really only one thing that we can ever truly control - whether we are good or evil.


The political triumph of the American Right has been to advance relentlessly the economic interests of the country's richest people, while emphasising a swath of moral, social and foreign policy issues that motivate and certainly distract middle-class and poor voters.

#22 Lepista

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Posted 16 June 2011 - 11:08 AM

BBC just reported this. Looks like we are approaching endgame.


You think you are going to be 'the one' with your black week prediction...?
---------------------------------------------------------------------------------------------------------------------

Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible behaviour drift into behaviour akin to that of Cinderella at the ball. They know that overstaying the festivities...will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is a helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There's a problem, though: They are dancing in a room in which the clocks have no hands."

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#23 The Masked Tulip

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Posted 16 June 2011 - 11:17 AM

You think you are going to be 'the one' with your black week prediction...?




The one?

Yes. Now, where is that narcissist smiley?
The success or failure of your deeds does not add up to the sum of your life. Your spirit cannot be weighed. Judge yourself by the intention of your actions and by the strength you faced the challenges that have stood in your way.

The people closest to you have been trying to tell you that you have made a difference. That you did change things for the better. The Universe is vast and we are so small. There is really only one thing that we can ever truly control - whether we are good or evil.


The political triumph of the American Right has been to advance relentlessly the economic interests of the country's richest people, while emphasising a swath of moral, social and foreign policy issues that motivate and certainly distract middle-class and poor voters.

#24 dolf

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Posted 16 June 2011 - 11:18 AM

You think you are going to be 'the one' with your black week prediction...?


London Metro had A 'Black Thursday' headline, but it was regarding the Public Sector Strikes.

#25 R K

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Posted 16 June 2011 - 11:40 AM

4 Black/Endgame/DOOM threads on the main forum in 3 days!

I'm going to have to double down if you carry on at this rate TMT :D


"The problem with capitalism is that eventually you end up with everyone else's money" RK
"We have now entered The Great Rebalancing 2007-20xx" - RK
"Gold will go to $1000, Silver to $18" - RK August 2011
QE £100bn and build 1m council homes - RK
Carney announces the launch of Empire 2.0 - Rise of the Banksters Oct '13


#26 The Masked Tulip

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Posted 16 June 2011 - 11:40 AM

London Metro had A 'Black Thursday' headline, but it was regarding the Public Sector Strikes.



Light-weights.
The success or failure of your deeds does not add up to the sum of your life. Your spirit cannot be weighed. Judge yourself by the intention of your actions and by the strength you faced the challenges that have stood in your way.

The people closest to you have been trying to tell you that you have made a difference. That you did change things for the better. The Universe is vast and we are so small. There is really only one thing that we can ever truly control - whether we are good or evil.


The political triumph of the American Right has been to advance relentlessly the economic interests of the country's richest people, while emphasising a swath of moral, social and foreign policy issues that motivate and certainly distract middle-class and poor voters.

#27 _w_

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Posted 16 June 2011 - 11:42 AM

Looks like we are approaching endgame.


GREEK TWO YEAR GOVT NOTE YIELD CLIMBS TO MORE THAN 30% (via Bloomberg).


Bond rates going hyperbolic now. Busy weekend ahead.




"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it."
–Frederic Bastiat



#28 interestrateripoff

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Posted 16 June 2011 - 11:46 AM

Bond rates going hyperbolic now. Busy weekend ahead.


Our central bankers will be very busy writing blank cheques in secret.

30%, pretty soon Greek lending will be at Wonga levels. We've already gone past Brighthouse levels.
Proof that Brown had repeated IMF / OECD / BIS warnings over house prices and did nothing!!!
Looting: The Economic Underworld Of Bankruptcy For Profit
The exponential growth of debt and the unsustainability of debt
The logic of HPI @ 10% YoY means your £100k house would be worth £1.38bn in 100 years
Paying down my mortgage with money found on the street

It's time to sue the Bank of England / Federal Reserve for GROSS NEGLIGENCE
If DEBT is the problem REPAYMENT is the solution or you default

"Northern unemployment is an acceptable price to pay for curbing southern inflation" Eddie George former Governor of the Bank of England

New digest on the credit crisis and economy Part2 Part 3

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#29 interestrateripoff

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Posted 16 June 2011 - 11:59 AM

Bond rates going hyperbolic now. Busy weekend ahead.


http://www.zerohedge...-greek-ruling-p

This morning Greek CDS is trading at a spread of 1,900 bps: a level that seals the fate of Greece, whose bonds are being sold into a bidless market. Two primary factors have totally shocked the market: one is that, as Reuters, reports, Germany now "wants the deadline for for a second Greek rescue package to be pushed back to September, reflecting the problems Europe is having hammering out the details, EU and banking sources said on Thursday." This means that Greece may well run out of cash in the interim, but it appears that Germany is now fine with that outcome. The other news comes from Athensnews.gr which reports that the exodus of MPs from ruling PASOK is now picking up: 'Ruling Pasok MP Yiorgos Floridis on Thursday tendered his resignation, the second ruling party MP to resign in the space of two days, followed by Ectoras Nasiokas, Larisa Pasok MP. George Lianis was the first Pasok MP to resign on Tuesday afternoon. In addition, veteran Pasok MP and former minister Vasso Papandreou asks for an extraordinary meeting of Pasok parliamentary group. Floridis resigned from his MP post, but did not declare himself an Independent, thus in effect "returning" the seat to Pasok." With the PASOK already slender majority in parliament in its current formation, these ongoing defections mean that, just as we warned, the mid-term fiscal proposal will likely fail in parliament and Greece will do what Ireland should have done, and what in fact Greece should have done a year ago, and voluntarily leave the eurozone. It also means that keep a close eye on the FRA-OIS and Libor-OIS spreads as today all liquidity hell can break loose now that a break up of the eurozone appears certain.


Seems the CDS spreads are going nuts as well.

Doesn't this mean to insure 10m Euro in Greek bonds it will cost 1.9m Euro?
Proof that Brown had repeated IMF / OECD / BIS warnings over house prices and did nothing!!!
Looting: The Economic Underworld Of Bankruptcy For Profit
The exponential growth of debt and the unsustainability of debt
The logic of HPI @ 10% YoY means your £100k house would be worth £1.38bn in 100 years
Paying down my mortgage with money found on the street

It's time to sue the Bank of England / Federal Reserve for GROSS NEGLIGENCE
If DEBT is the problem REPAYMENT is the solution or you default

"Northern unemployment is an acceptable price to pay for curbing southern inflation" Eddie George former Governor of the Bank of England

New digest on the credit crisis and economy Part2 Part 3

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#30 Pent Up

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Posted 16 June 2011 - 12:00 PM

the first sovereign default appears to be almost here.

Europe Faces ‘Lehman Moment’ as Greece Unravels: Euro Credit

June 16 (Bloomberg) -- The European Union’s failure to contain the Greek debt crisis is sending fresh shockwaves through currencies, money markets, equities and derivatives.
The euro lost more than 2 percent against the dollar in the past two days and the cost of protecting corporate bonds soared to the highest level since January, with credit-default swaps anticipating about a 78 percent chance that Greece won’t pay its debts. Equities declined around the world, while a measure of fear in fixed-income markets jumped the most since November.

Europe Faces ‘Lehman Moment’ as Greece Unravels

Market moves suggest heightened concern that authorities won’t be able to keep Greece’s debt troubles from spreading after Moody’s Investors Service said it may downgrade BNP Paribas SA and two other big French banks because of their investments in the southern European nation. The collapse of Lehman Brothers Holdings Inc. in September 2008 caused credit markets worldwide to freeze as investors fled all but the safest government debt.
“The probability of a eurozone Lehman moment is increasing,” said Neil Mackinnon, an economist at VTB Capital in London and a former U.K. Treasury official. “The markets have moved from simply pricing in a high probability of a Greek debt default to looking at a scenario of it becoming disorderly and of contagion spreading to other economies like Portugal, like Ireland, and maybe Spain, Italy and Belgium.”

Europe Faces ‘Lehman Moment’ as Greece Unravels

New Government
Lehman’s collapse contributed to $2 trillion in writedowns and losses at the world’s biggest financial institutions, data compiled by Bloomberg show, and central banks cut interest rates to record lows as economies slipped into recession.
Markets were roiled yesterday as Greek Prime Minister George Papandreou said he would name a new government and call a vote of confidence in Parliament as he seeks to pressure rebel lawmakers to back an austerity plan that would secure a new bailout. The MSCI World Index fell a further 1.1 percent today, while the Swiss franc rose to a record against the euro.
Papandreou needs to clinch a parliamentary vote on a 78 billion-euro ($110 billion) five-year package of budget cuts and asset sales by July to ensure the country receives a new EU aid package to avoid the euro-area’s first default.
“Our duty is to the nation, not to political parties,” Papandreou said in comments televised live on state-run NET TV. “I will form a new government and immediately afterwards seek a vote of confidence in Parliament. It is a time for responsibility.”

‘Armageddon Scenarios’

Papandreou’s options narrowed as his bid to garner support from the biggest opposition bloc failed, party allies turned against him and police deployed tear gas to break up anti- government protests in central Athens.
“This is by no means the end of the story, but based on current majority, such a motion should pass,” Charles Diebel, head of market strategy at Lloyds Bank Corporate Markets in London, wrote in a note to clients yesterday. “If not, then Armageddon scenarios come into play, which include default and potentially the whole contagion scenario plays out.”
Earlier this week, Standard & Poor’s slashed Greece to CCC from B, handing the nation the world’s lowest credit rating and noting it’s “increasingly likely” to face a debt restructuring.
Greece’s unemployment rate jumped to 15.9 percent in the first quarter from 14.2 percent in the last three months of 2010, the Hellenic Statistical Authority in Athens said today. The jobless rate, at a record 16.2 percent in March, has climbed faster than projected under last year’s 110 billion-euro bailout.
Sticking Point
The current sticking point is how to engage private investors in the next stage of rescuing Greece. European Central Bank authorities, including President Jean-Claude Trichet, have pushed back against German plans to lengthen the maturity of Greek bonds, leaving open only the option to persuade bondholders to voluntarily reinvest the proceeds of maturing debt into new securities.
“Keeping existing creditors engaged is far from trivial, as it involves a combination of incentives and penalties,” Francesco Garzarelli, a strategist at Goldman Sachs International in London, wrote in a report yesterday. “If the transactions are to be completed on a ‘voluntary’ basis in order not to trigger a default event, the ‘hold out’ problem is material” as persuading all lenders to move in lockstep is difficult, he wrote.
Moody’s placed the ratings of BNP Paribas, France’s biggest bank, and local rivals Societe Generale SA and Credit Agricole SA under reviews that will focus on their holdings of Greek public and private debt “and the potential for inconsistency between the impact of a possible Greek default or restructuring and current rating levels,” the firm said in a statement.
‘Ripple Effect’
“This is a ripple effect of the Greek crisis spilling into European banks,” said Sarah Hewin, a senior economist at Standard Chartered Bank in London. “Clearly, there would be an impact if there is an escalation” of the situation, she said.
German lenders were the biggest foreign owners of Greek government bonds with $22.7 billion in holdings last year, according to data compiled by the Bank for International Settlements in Basel, Switzerland.
French banks, which led the group of Greek creditors with overall claims amounting to $56.7 billion, trailed their German peers on sovereign debt with $15 billion, according to the June report from the BIS. The figure for French banks was inflated by $39.6 billion in lending to companies and households, mainly because of Credit Agricole’s Greek unit, Emporiki Bank SA. German lenders have no major units in the country.
At the end of 2010, Greek government bonds held by banks in countries reporting to the BIS totaled $54.2 billion, of which 96 percent was owned by European lenders.
Swap Spreads
U.S. interest-rate swap spreads, used to gauge investor perceptions of credit risk, widened the most since November after the announcement about banks by Moody’s.
The difference between the U.S. two-year swap rate and the comparable-maturity Treasury note yield, known as the swap spread, widened 5.06 basis points to 25.15 basis points. That was the largest increase since Nov. 30, when the gap widened by 6.5 basis points. The spread is based in part on expectations for the London interbank offered rate, or Libor.
“There is some worry that with what is going on in Greece there will be downgrades and this will cause a problem in funding and result in a rise in Libor,” said Ira Jersey, an interest-rate strategist in New York at Credit Suisse Group AG. “Swap spreads are widening as direct result.”
The yield on two-year Greek notes rose to a record 28.85 percent and 10-year bond rates gained 14 basis points today to 17.86 percent. The cost of protecting Greece against default climbed 74 basis points yesterday to an all-time high of 1,844 basis points in London, prices compiled by CMA show.
Government Bonds
The contracts, which typically rise as investor confidence worsens and fall as it improves, pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
Bonds across the euro region underperformed German debt, Europe’s benchmark government securities. The extra yield, or spread, investors demand to hold Greek 10-year securities instead of similar-maturity bunds climbed today to 1,493 basis points, or 14.93 percentage points, while Irish, Spanish and Italian spreads also widened.
The securities of so-called core members of the currency bloc also underperformed relative to German debt, with 10-year yield spreads between Austrian, French, Belgian and Dutch debt over bunds widening. The yield on the German bund dropped 3 basis points to a five-month low of 2.92 percent.
Euro, Swaps
The euro depreciated 0.5 percent today to $1.4109, the weakest in three weeks, while demand for options that protect against a drop in the euro versus the U.S. currency is at the highest level in a year as the EU struggles to contain the sovereign-debt crisis.
The premium for euro three-month put options granting the right to sell the currency against the greenback reached 2.54 percentage points yesterday over calls, which allow for purchases. That’s the most since June 2010 on an intraday basis.
In the corporate bond market, the Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 2.25 basis points to 114, the highest since Jan. 10, according to JPMorgan Chase Co. The gauge has risen from the low this year of 94.3 on April 8.
“Nervousness has intensified,” said Nick Stamenkovic, a fixed-income strategist at RIA Capital Markets Ltd. in Edinburgh. “The market is increasingly fretting that the components won’t be in place for a bailout package. You see signs of contagion spreading. Until we see a resolution with the situation in Greece, you’ll see a flight to quality.”
To contact the reporter on this story: Mark Gilbert at magilbert@bloomberg.net ; Liz Capo McCormick in New York at Emccormick7@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net .


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