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Greece Forced To Pay Sky-High Rates To Borrow

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http://www.telegraph.co.uk/finance/economics/gilts/8461745/Greece-forced-to-pay-sky-high-rates-to-borrow.html

The bailed-out nation sold €1.625bn (£1.43bn) of 13-week government bonds on Tuesday, but investors demanded a yield, or return, of 4.1pc to hold the debt - a quarter of a percentage point more than in a similar sale in February.

That means Greece pays a higher rate to borrow for three months than Germany pays for three decades, at 3.8pc.

The costs of servicing Greece's debt keep rising as markets ignore politicians' protestations that the country will not have to restructure the burden - effectively default, by changing its repayment terms.

A local report on Tuesday quoted a European Commission official as saying Greece "has realised that there is no other way and has accepted a mild debt restructuring".

Denials from the Commission, which argued that discussions were "not even" taking place between Brussels and the Greek government, could not convince investors.

How long before Greece defaults, it's clear it cannot pay the money back. Default is it's only option.

How many more denials will we have before the inevitable happens? When it does happen will the Irish and the rest follow?

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No no, the orange woman from the French finance ministry said today that a restructuring was unimaginable. So the Greeks will have to find a way to pay 20% on their 10 year debt, it's as simple as that!

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If the Greeks are able to issue bonds at a yield of 4% then they should be kissing the feet of the EU. This ridiculous spin of the OP is clear. I find it amazing that the liars in Greek finance got away so lightly. If Greece had been kicked out of the EU or had left voluntarily then they would have been paying more than 4%.

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But this is only 3 month bonds, isn't it?

Correct. 17% annual if my maths is correct this early in the morning. Soon Greece will be better of getting a Barclaycard, they may even get an interest free teaser rate to get them into more trouble.

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Correct. 17% annual if my maths is correct this early in the morning. Soon Greece will be better of getting a Barclaycard, they may even get an interest free teaser rate to get them into more trouble.

Nope. 4.1% annual. Bonds are always quoted in annual rate, regardless of length.

What this means is that investors are still willing to lend for 3 months, because they think the risk of default in that time frame is small. By contrast, the 2 year bond is near worthless, because the Market thinks that default is a near certainty within that time frame.

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http://www.telegraph.co.uk/finance/economics/gilts/8461745/Greece-forced-to-pay-sky-high-rates-to-borrow.html

How long before Greece defaults, it's clear it cannot pay the money back. Default is it's only option.

How many more denials will we have before the inevitable happens? When it does happen will the Irish and the rest follow?

Good question, despite this being obvious the ECB and Markets seem oblivious. They are meant to return to the markets next year for €33bn. There is a report being released in June by the IMF on debt sustainability. I would go for late summer, before 2012 some kind of soft restructuring at least.

Even with a 70% haircut the debt would keep building up. They need to default restructure and grow simultaneously. With the ECB raising rates and a 10%~ 2010 deficit that looks impossible.

I don’t think there is any good outcome here. Best solution for the Greeks would probably be 70% hair cut and figure out a way to leave the € and start again.

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Guest eight

Correct. 17% annual if my maths is correct this early in the morning. Soon Greece will be better of getting a Barclaycard, they may even get an interest free teaser rate to get them into more trouble.

I get an ad for Payday Express when reading this page.

eight

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Nope. 4.1% annual. Bonds are always quoted in annual rate, regardless of length.

What this means is that investors are still willing to lend for 3 months, because they think the risk of default in that time frame is small. By contrast, the 2 year bond is near worthless, because the Market thinks that default is a near certainty within that time frame.

It's for 3 month bonds, so 4x4.1 annual or somat.

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It's for 3 month bonds, so 4x4.1 annual or somat.

No. 4.1% annual.

Now 5.5% annual on bloomberg. Looks like things are deteriorating.

Edited by ChumpusRex

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No. 4.1% annual.

Now 5.5% annual on bloomberg. Looks like things are deteriorating.

The bailed-out nation sold €1.625bn (£1.43bn) of 13-week government bonds on Tuesday, but investors demanded a yield, or return, of 4.1pc to hold the debt - a quarter of a percentage point more than in a similar sale in February.

That means Greece pays a higher rate to borrow for three months than Germany pays for three decades, at 3.8pc.

The costs of servicing Greece's debt keep rising as markets ignore politicians' protestations that the country will not have to restructure the burden - effectively default, by changing its repayment terms.

A local report on Tuesday quoted a European Commission official as saying Greece "has realised that there is no other way and has accepted a mild debt restructuring".

Denials from the Commission, which argued that discussions were "not even" taking place between Brussels and the Greek government, could not convince investors.

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Greek government 10-year debt is trading with a yield around 14pc, surpassing the peaks seen during the country's €110bn bail-out last year. The nation's weak economy, hobbled by a severe austerity programme, means it is seen as an impossibility that Greece will manage strong enough growth to support a debt equivalent to 144pc of output.

Gold futures for June - contracts arranging to sell at a promised price - hit a record $1,500 an ounce as investors looked for a safe haven from Europe's debt crisis, as well as the problems in the US which saw its credit outlook downgraded by credit rating agency Standard & Poor's. Nonetheless, the euro held steady as data for the wider eurozone showed growth - and prices - had picked up.

April's purchasing managers' index (PMI), a survey tracking private sector activity across the region, ticked up to 57.8 from March's 57.6, where anything over the 50-level signals activity rose.

Prices climbed at a near-record rate, raising expectations the European Central Bank will tighten monetary policy further. The bank raised interest rates earlier this month for the first time since mid-2008, despite concerns over the effect it could have on struggling countries.

The euro climbed to 87.72p against the pound, up from 87.69p.

http://www.telegraph.co.uk/finance/economics/gilts/8461745/Greece-forced-to-pay-sky-high-rates-to-borrow.html

EDIT: Sorry maybe you're right if the yield is always presented in annual figures. Flergh.

Edited by Snafu

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If only they could be forced to pay their taxes.

...dead on....if they don't collect their revenue....the don't have anything to spend ...simples...when will the fools get it.... :rolleyes:

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If only they could be forced to pay their taxes.

Not a lot of incentive right now. If they didn't pay taxes when it was for their own services and welfare, why should they feel the need to pay them when it's just money for foreign banks?

TBH I'm on their side.

Edit - wrong quote...

Edited by tomandlu

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Not a lot of incentive right now. If they didn't pay taxes when it was for their own services and welfare, why should they feel the need to pay them when it's just money for foreign banks?

Because in the past they were able to borrow money to make up for the gap between tax revenue and spending.

Now they need to show that they are collecting all their tax revenues if they want to be able to borrow anything to fund their public spending.

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Because in the past they were able to borrow money to make up for the gap between tax revenue and spending.

Now they need to show that they are collecting all their tax revenues if they want to be able to borrow anything to fund their public spending.

Or they could just cancel all the previous debts and do something more, you know...sane.

We are talking about numbers on a PC screen here.

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Or they could just cancel all the previous debts and do something more, you know...sane.

We are talking about numbers on a PC screen here.

They could do that if they could reduce their deficit to zero (and it would then be helpful to issue their own currency).

But as long as they want to live in the style to which they have become accustomed, they'll be needing to borrow large amounts of Euros to facilitate it.

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They could do that if they could reduce their deficit to zero (and it would then be helpful to issue their own currency).

But as long as they want to live in the style to which they have become accustomed, they'll be needing to borrow large amounts of Euros to facilitate it.

Really?

Why?

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You can't consume more than you produce unless you are able to borrow the difference.

You are talking like euros are hard to manufacture for governments.

How come?

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Because in the past they were able to borrow money to make up for the gap between tax revenue and spending.

Now they need to show that they are collecting all their tax revenues if they want to be able to borrow anything to fund their public spending.

You say 'they' as though the collectors (the gov.) and the payers (the citizens) were the same thing.

Any citizen with half a brain is going to say, "screw that, let's just default and then live within our means" (since the alternative is - what - somehow pay and somehow keep borrowing to infinity?)

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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