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Greek Debt Email-- merged threads

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Greece getting pretty desperate. Pretty obvious to everyone (other than the EU & ECB) that Greece will only be able to pay a tiny fraction of its debt if any at all.

The austerity program has been a disaster and the domestic economy is detonating so fast the cuts are having virtually no effect. Wait for the deficit revision for 2010 ( to 10.6%+) coming up next week. The number out of work had risen 25% since Jan 10 and retails sales down 16% y/y in Jan.

It would have been better not to have had austerity at all. The more the Greek economy is destroyed the less future capacity they will have to pay off debt. The damage will be permanent as a large amount of the workforce emigrates to find work elsewhere.



A straight default would almost certainly lead to default in Portugal, Ireland then probably Spain and maybe Italy as well and is not an option. That only leaves Payment of Greece’s debt by Germany / France etc or it being monetised by the ECB.

I can’t see Germany / France picking up the bill and there domestic political situation could become dangerous if they tried. That only leaves an eventual announcement that the euro project has failed Germany maybe others will end up running dual currencies the austerity programs will be reversed and the ECB will fire up the printing press.

The clock is ticking as Greece erupting in to anarchy, government overthrow and default being forced cannot be ruled out.

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I agree that this is a clear case of trying to shoot the messenger and ignore the message! The truth is the situation is getting worse and not better and is illustrated well in this blog post.

As we approach Easter 2011 I thought it was time to look for some perspective and so I looked at the situation on Easter 2010. The Greek two-year goverment bond yield was 5.79% and the ten-year was 6.53% in what was already something of a crisis. Last night they closed at 22.07% and 14.87% respectively and the changes are rather eloquent about what has happened over the past year. When you consider the capital employed by the Euro zone then the inversion of short yield which now way exceed longer ones is analagous to a football goalkeeper catching a shot but then in an attempt to start his own teams attack somehow throwing the ball into his own net.


Put like that the rescue looks an utter failure doesnt it?

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I see this as a classic flow and stock problem.

For many countries, the stock problem is so large that there is no executable flow solution that can overcome it.

For countries like Greece, Ireland and Portugal, there is no point in reducing deficits without restructuring their debts.

For the UK, I believe that there is still time (just) to manage flows (deficits) before the stock (debt) attains critical mass and becomes uncontrollable.

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Defaults are murky, full of unexpected consequences.


It looks like Greece will have to default on ~50% of the debt.

Ignoring what happens to the creditor banks, that will sink the Greek banks and destroy pension payments.

In the main, Greeks are not rioting because they are objecting to some harsh capitalistic system intruding on their rural, barter economy.

They are rioting because they have been caught out.

I've not any sympathy for Greeks. The entire Economy is a joke.

Greeks paid hefty bribes to get public sector jobs - with the pay + pension then get enough cash in hand job and never really turn up for the public sector job.

If you think the UK public sector is bad then you really have not seen anything like Greece's.

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I've not any sympathy for Greeks. The entire Economy is a joke.

some Greeks paid hefty bribes to get public sector jobs - with the pay + pension then get enough cash in hand job and never really turn up for the public sector job.

If you think the UK public sector is bad then you really have not seen anything like Greece's.

i've corrected that for you. Have you no sympathy for the significant percentage that not only did not get a post in the public sector but also had to live at the mercy of its 'services' all these years?

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Exactly what offence has this guy committed? He seems only to have expressed an opinion. I'd like to know, as any or all of us could be expressing a similar opinion on Greece, Portugal or even good 'ole Blighty. Financial terrorists for stating the bleedin' obvious?

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A nice note on the subject on ZH. And the last point re. pensions about to take the hit is important IMO. It could be a big shock.


Greece "Velvet Restructuring" Imminent, Blames Upcoming Second Bankruptcy On Citigroup Trader

from zero hedge - on a long enough timeline, the survival rate for everyone drops to zero by Tyler Durden

It appears rumors that Greece is set to restructure its debt are about to come true. According to Greek daily Ta Nea, reported by the Guardian, "the government was mulling "a velvet restructuring" that would include extending outstanding debt and a voluntary agreement with lenders to modify repayment terms." More: "Greece is considering ways to restructure its debt – such as by extending the life of its loans – two national newspapers claimed on Friday, joining a flurry of recent reports on the prospect that Athens might be forced to default." Not surprising, this comes hot on the heels of continued lies about the stability and viability of the eurozone and the euro, which recently surged to nosebleed levels only to allow it to drop from the highest possible position when the realization that the dominoes are falling finally sets in. But never one to be bound by the confines of reality, where one is accountable and responsible for their actions1 (1: except all millionaires and billionaires bailed out by the Bernanke Put), Greece is now calling in Interpol to put the blame for its latest and greatest bankruptcy on a Citigroup trader: "A London trader working for US bank Citigroup is to be questioned by investigators over an email at the centre of an investigation by the Greek authorities into rumours that Athens could be forced to restructure its national debt as early as this weekend." So, it is a trader fault for pointing out the market's reaction to what is so glaringly obvious even a caveman finance minister from Athens will realize it, and not the fact that one needs to apply a new Excel #Ref! patch in order to express Greek debt to GDP. The lunacy. The lunacy.

And here is the text of the trader email, which was basically a bond run, for those who want to spew blood from their ears:

MKT NOISE Over the last 20min, there seems to be some increased noise over Gr debt restructuring as early as this Easter weekend. Spreads are moving wider now with 2y spread +100 from +35 at midday, while Gr banks are at -4%, -6% vs +2% in the morning.
The last few days the talks over Gr restructuring/rescheduling have intensified, despite the ongoing denials by Gr and foreign officials.
If a credit event takes place it is crucial to see what the terms would be as a haircut would have a much different outcome vs an extension of maturities.

Well in that case Zero Hedge is about to be raided by the FBI and the KGB because we had the temerity to not only point out that the country will default back in April 2010 (proven right once already, about to be proven right for the second time) by showing the plummeting bond prices, but because yesterday we showed that according to the market the haircut on Greek bonds is to be 50% of par.


Of course, for Interpol to have any standing, someone in Greece would need to prove that cause and effect are actually inverted, but with all the soon to be unemployed philosophers to be rambling around Athens, we are positive this won't be a problem.

More on this unprecedented attempt to blame one person for decade's of one nation's horrendous fiscal (we would also add monetary, but of course Greece has no monetary policy being a slave to the euro) policy. From the Guardian.

The trader, who has been identified in Greece as Paul Moss, is expected to be interviewed in London by Interpol, working with Greece's cyber crime division.
"We have located the computer terminal at a company in London from which this very damaging email was sent," police spokesman Thanassis Kokkalakis said. "It contained very confusing misinformation that is now the focus of an urgent investigation. This man will be questioned and the findings sent to a prosecutor involved in the case."
Citigroup is insisting it has done nothing wrong . "We are co-operating with the authorities and do not consider there to have been any wrongdoing by Citi or its employees," the bank said.
With Athens poised to launch a €50bn (£44bn) privatisation drive, the Greek finance ministry said the email was now at the centre of "a possible criminal investigation".
Fears abound that the country's reputation may have sustained irreparable damage at a time when it is desperate to attract foreign investment. Greek bank shares fell by 4.6% on Wednesday, with traders citing the email as the cause for the sell-off – but market experts pointed out that the fall in shares had begun before the email was sent.

Anyway back to reality, where Greece apparently has about 48 hours before it sets off a domino effect whereby bank asset writedowns are about to escalate and result in the same shadow banking system "Ice-Nine" effect that nearly destroyed capitalism back in September 2008.

According to another report on Friday in Greek newspaper Isotimia, the government might seek to extend the maturities of its outstanding debt by an average of five years. This would happen after an agreement with its lenders, the newspaper said, citing government sources it did not name.
No final decision to propose such a solution had been taken and discussions were still at an informal level, Isotimia said.
Greece has been shut out of financial markets in the wake of its debt crisis last year. Papaconstantinou said on Wednesday he considered Greece's debt – expected to hit about 160% of GDP in 2012 – "totally sustainable" and that restructuring was not an option.
But given the sheer size of the country's debt set against a continuing economic slump, markets are increasingly factoring in a restructuring.

And while banks may have built up a sufficient buffer against total collapse immediately, one entity which certainly has not is the Greek social security fund which holds about €28 billion in Greek debt. In other words, pension haircut of up to 50% are coming. Let's see how the socialism-tolerant population processes that particular piece of new. Oh yes, those same Greek households about to say goodbye to their pensions are also on the hook for €6 billion of Greek debt. But we are positive their Tier 1 ratios are wonderfully overcapitalized as well, and with immediate access to the Fed's discount window when so needed.

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