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Guest_chris c-t_*

Greek 1Yr Bond Yield 98%

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You ask a pertinent question at this time, I think.

Bondholders have typically relied on the IMF and ECB to protect their interests. (No Euromoney unless bondholders get dosh in full.)

There was a good example of this in Bailout 1. Some dodgy Athens mayor borrowed a few hundred million from an Austrian bank based in Cyprus.

It was for a shopping mall in a place with no planning permission. The local council subsequently disputed the arrangement - it was everything from criminal fraud to predatory liar loan - but the IMF supported the Austrian offshore. Pay them or no money to Greece at all.

With no central agreement on 'bailout', however, bondholders don't know what to do. Settle with Greece for a haircut? Make side-deals like Finland? Wait and See if the banks' host country will bail them instead? To answer your post, I think everyone is now in different rooms fighting their own corner.

Popcorn time, absolutely.

are all their bonds renewing on monday?

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are all their bonds renewing on monday?

No, but there was supposedly a cut-off / make-your-mind-up deadline for rollovers/bond swaps on Friday.

The reporting on this has gone very vague, as have official answers on how successful this integral part of the supposed 'bailout' programme actually is, or was.

If you Google news on the progress, you will find Greek sources saying it's all positive, the OECD saying it's a disaster.

Make of that what you will :lol:

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haircut implied?, haircut in policy terms?

the "haircut" will be decided by the debtor and the amount he cant pay.

Very true.

We still exist in a fantasy land where the policy makers think that they can influence the outcome rather than acceptng the opinion of the market.

The policy makers will ultimately be dissapointed but none of us know when their moment of dissapointment will occur : it could be on Monday or in December 2021.

My bet is closer to the former but I wouldn't be surprised if their insider dealing / manipulations result in an outcome closer to the latter.

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A bond with a 5% coupon (typical) and pricing in that level of default would have a 20% yield.

The nonsense in the title of this thread would imply that the market is pricing in a default of well over 90%, compared to Argentina's 75%.

(fwiw, a quick check reveals that yields on greek government bonds have indeed shot up, and stand at all of 18.28%).

Bloomberg says:

Credit-default swaps insuring Greek sovereign bonds jumped 212 basis points to a record 3,238, according to CMA. The five- year contracts signal there’s a 92 percent probability the country won’t meet its debt commitments.

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Very true.

We still exist in a fantasy land where the policy makers think that they can influence the outcome rather than acceptng the opinion of the market.

The policy makers will ultimately be dissapointed but none of us know when their moment of dissapointment will occur : it could be on Monday or in December 2021.

My bet is closer to the former but I wouldn't be surprised if their insider dealing / manipulations result in an outcome closer to the latter.

Apologies for lowering the intellectual tone of this thread, but does this mean *something* is going to happen on Monday? Does Greece have to default now - what does that actually mean - for them, the Eurozone, us?

I get the idea from this thread that you experts are in disagreement, but I am not quite sure what about?

Patient explanations welcomed...

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Apologies for lowering the intellectual tone of this thread, but does this mean *something* is going to happen on Monday? Does Greece have to default now - what does that actually mean - for them, the Eurozone, us?

I get the idea from this thread that you experts are in disagreement, but I am not quite sure what about?

Patient explanations welcomed...

In my opinion, Greece falls in the range of 1 < Lehaman < i^n where i and n are limited by the imagination of the observer.

The country presents huge problems which will manifest themselves at some point between Monday and 2021. The timing is uncertain but the outcome is definite.

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I guess it works if you play games with redemption yields.

As in, if you pay 99p today for a bond with face value £1 and zero interest but the redemption date is tomorrow, then you've bagged a yield of (100/99) ^ 365 = 3900%. That's the same kind of smoke-and-mirrors trick that gives us this thread title and some of the outrageous 'loan shark' meeja stories.

You sure about that?

I'm not.

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I don't think anyone in Athens today was discussing the finer points of bond yields.

Oh dear.

It was in 1985 I had a half-greek colleague, who advised me to go and see Athens real soon while there was still something left to see :o

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Courtesy of the Telegraph this week a couple of melodies.....

Paired to the tune of Bohemian Rhapsody by Queen.....

Is this our real debt?

Is this just fantasy?

Won in a landslide

Now I’m facing austerity

I opened the books

And said “are you kidding me?”

Did what we did to get into the Eurozone

So there was never a need to grow

Euro's high, rates stayed low

Anything to enter, didn’t really matter to Greece, to Greece Papa, just told the truth

No one’s paying any tax

And my colleagues here are hacks

Papa, Greece had everything

But the bankers came and took it all away

Papa, ooh ooh ooh ooh

Goldman told us it would work

and now I sit here like a jerk

They were wrong, they were wrong, that swap illusion’s shattered

And I will Survive by Gloria Gaynor.....

At first we took the aid

We were petrified

Kept thinking we could only live

with Germans by our side

But then we spent so many nights

Thinking how you did us wrong

And we grew strong

And learned to string you all along

and so we're back

Just watch this space

What are the yields doing up here

you've got a sad look on your face

We should have made people pay tax

And begun austerity

But were busy on the beach

And you bail us out for free

Go on now go walk out the door

Things turned around now

And the Dax is on the floor

Merkel the one who tried to hurt me with goodbye

Watch the Euro tumble

EuroStox become the S M I

Oh no, not I

I will survive

oh as long as Trichet buys our bonds

I know I'll stay alive

We have our cushy lives to live

And in return nothing to give

and I'll survive

I will survive (hey hey)

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I'm wondering is 100% the ceiling - or could the bond drop to 25% of par for a yield of 300%? Has this ever happened?

No, infinity is the ceiling, when the bonds fall down to €0.00 each. Yes, I'm pretty sure there are corporate bonds where the yield has gone above 100%. I don't know about sovereign debt, but I'm sure there is an example somewhere.

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The 2 year greek yield is ~56%

Why do longer bonds have lower interest rates? Shouldn't it be the other way around?

Because if they default and pay only half the amount due, you will get 50% back whether it is a 1 year bond or a 10 year bond; but for a 10 year bond it is spread over a greater number of years, hence the lower interest rate.

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I do hope the can does not get kicked down the road again. I have bought popcorn.

Time is nearly up.

The new gold?

WGBoxMT.jpg

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They have been thinking of a way people cannot escape taxes. It's a property tax via electric bills.

Greece will announce a new tax on real estate to make up for fiscal slippage and meet this year's deficit target, a government official told Reuters on Sunday.

"There will be a levy on property which will be collected through electricity bills," the official said on condition of anonymity after a informal cabinet meeting held in the northern Greek city of Thessaloniki.

Athens is scrambling to meet fiscal targets under a bailout plan agreed with its international lenders to secure continued funding amid renewed talk in European capitals that its will to comply with the plan and stay in the euro bloc may be wavering.

http://uk.finance.yahoo.com/news/Greece-slap-new-tax-property-reuters_molt-1821419119.html

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<Edit to add: it's interesting to note that the attempt is to hurt people living in houses rather than the house owners themselves. Landlords and hoarders of empty property won't be touched. Wasn't the Greek government supposed to be socialist? Where's the difference between right and left today?>

Presenting an electricity tax as a property tax is quite similar to Cameron's 'environmental' subsidy to landlords to be paid by tenants via their electricity bills. I wonder if Cameron gave Papandreou the idea.

Edited by _w_

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I predict a new growth industry in Greece........

Electricians wiring local houses up to the nearest lampost!!

Seriously suppose there is a mass refusal to pay the bills and therefore the tax, clearly they will cut them off and they will all again take to the streets.....

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All contained:

http://www.ft.com/cms/s/0/d075c800-dc91-11e0-8654-00144feabdc0.html?ftcamp=rss#axzz1XgNzehY9

Greece takes action on debt stand-off

The Greek government announced on Sunday that it would impose a two-year property tax to raise €2bn ($2.7bn) this year, closing a €1.7bn budget gap that the European Union and International Monetary Fund said must be resolved or they would stop making bail-out payments.

What a pity . . . all the tax collectors are on strike after their 30% pay cut.

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Because if they default and pay only half the amount due, you will get 50% back whether it is a 1 year bond or a 10 year bond; but for a 10 year bond it is spread over a greater number of years, hence the lower interest rate.

My mind spins. How can they pay anything back ever if they have a perpetual deficit, unless they pay it back by borrowing from someone else whom they dont pay back?

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