Thursday, October 27, 2011

Sir Mervyn King: Deal ‘will only give year or two of breathing space’

One TRILLION euro deal hammered out (with a 50% Greek debt 'haircut' for banks

They also approved a complex mechanism for 'leveraging' the existing bailout fund (the European Financial Stability Facility) to one trillion euros to boost its fire-power.

Posted by mark @ 11:11 AM (1985 views)
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15 thoughts on “Sir Mervyn King: Deal ‘will only give year or two of breathing space’

  • general congreve says:

    A year or two? Yeah right, the deal is only theoretical at the moment and even if it is signed off it is only a sticking plaster, that will come off within six months I expect when the next ‘event’ takes place.

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  • general congreve says:

    Liked this analysis from another articile on the 50% haircut part of the deal, especially the part on Greek Pensions:

    Just the math, something Europe is unable to do:

    * Greece has €350 billion in total debt including about €70 billion in Troika “post-petition” loans; these are untouched.
    * Of the €280 billion, roughly €75 billion is held by the ECB: this, like the Troika loans, will be untouched.
    * This leaves just ~€200 billion in actual debt to undergo a haircut.
    * Apply a 50% haircut to this debt (ignoring the fact that of this about €35 billion is held by Greek pension funds, and once the
    realization that Greek pensions have been cut in half dawns upon the population, the result will be the biggest riots ever seen in
    Athens yet).
    * Total debt to be cut: just about €100 billion.
    * Hence, of the total €350 billion, just €100 billion is eliminated, most of it used to backstop and service Greek pension and retirement
    obligations
    * €250, or the residual, of €350, the original, means 72%, or a 28% haircut.
    * Greek GDP was €230 billion on December 31, 2010 and declining fast.
    * And that is how a 50% haircut is “cut” almost in half

    We also have to remember that the other Euro states that are deep in debt are not going to see it as fair that they commit to austerity while Greece just throws its toys out the pram and gets free money. We also have a downgrade of France on the horizon which will throw a spanner in the viability of the whole EFSF funding, which in reality need to be 3 times bigger anyway to cover the bad debts.

    God damn dog and pony show, just die!

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  • mail today suggested france was basically bankrupt

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  • just found this on the web

    Investors have fretted about Italy’s chronically sluggish growth and the sustainability of its 1.9 trillion euro debt, which at 120 percent of GDP is second only to Greece’s in the euro zone.

    how much!!! Glad I dont have that credit card lol

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  • why does no-one ever ask where all this money has gone?….imo corruption has been rife and no prosecutions must mean they have all been at it.

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  • most of it is sitting in secret bank accounts of tony and gordon lol

    was the money ever real?

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  • its real when you launder it through contracts

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  • Wonder if they’ll get a new version of Monopoly out in time for Christmas. Instead of buying/selling property you buy debt, CDS’s, CDO’s etc. and instead of money you just have blank post-it notes and write IOU’s for whatever amount you feel like.

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  • general congreve says:

    @8 – They’d also have to change the Chance card to ‘Bailout card’ and the Community Chest to ‘Taxpayers/Deficit Money’.

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  • what would a get out of jail card be

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  • Banking license

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  • wow…some quality untamed wit on this blog today

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  • i assume the water works would be the sobbing public

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  • greenshootsandleaves says:

    taffee @3: ‘mail today suggested france was basically bankrupt’

    Did that come after the revelation (doubtless based on some in-depth dm research) that Sarkozy is not very tall and is married to someone who is a bit of a looker? I’m afraid I stopped reading after that.

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  • yeah….must admit i’ve always thought size was irrelevant,however,I’ve struggled to get a girlfriend in the past AND I live in wales

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