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 Post subject: Re: Greece Financial Bailout
PostPosted: Mon Mar 15, 2010 8:13 pm 
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simple schoolboy wrote:
tyler wrote:
Electromatic wrote:
Unless you are retiring to go do further work retireing from working at less than 75 is a freaking waste. WHat are you going to do watch your stories and price is right? Knit?
Are you insane? I plan on travelling the world for at least 3 months every year. Surf, hike or bike daily. Play guitar, hang with grand kids, have good scotch with lunch. You know, do all the stuff I can't do now because I'm working. If you've planned and saved properly, why would you want to keep working? I like my job but let's be serious.


Does "planned and saved properly" equate to getting a government job with sweet pension provisions?
Nope. My retirement plans are being sufficiently funded by myself. Government and union pension plans have a very strong track record of being underfunded, where the retiree is at the mercy of others.

I'm basing my retirement age and plans based on what I can afford. Government workers basically bribed the government into promising what the government could not afford and the citizens (including government workers) were not willing to pay for.


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 Post subject: Re: Greece Financial Bailout
PostPosted: Fri Mar 19, 2010 3:33 pm 
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germany hinting they may prefer the imf step in than doing it themselves

http://www.nytimes.com/2010/03/19/busin ... achma.html

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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Mar 25, 2010 7:06 pm 
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http://www.economist.com/business-finan ... extfeature

Quote:
Greece's bail-out maths

Safety not
Greece is likely to need far more financial aid than seems to be on offer
Mar 25th 2010 | From The Economist print edition

IN FEBRUARY European Union leaders vowed to take “determined and co-ordinated action” to protect Greece against a sovereign-debt default and to stop its troubles infecting the rest of the euro area. Weeks later the same politicians are still discussing how precisely to meet that pledge (see article).

The need for clarity is now more urgent. Greece has to refinance some €20 billion ($27 billion) of debts that mature in April and May. The yields on ten-year Greek government bonds rose to 6.3% this week, a spread of some three percentage points over German Bunds. The euro fell to its lowest level against the dollar for ten months after Portugal, another troubled euro-zone country, suffered a downgrade.

A standby fund for Greece of €25 billion is rumoured, and euro-zone ministers now seem less frosty at the thought of help from the IMF. That may be enough to calm markets and enable Greece to roll over its debts. But it will be only a temporary fix. It will take years to repair Greece’s public finances, which means a much larger rescue fund will be needed if it is to avoid default.

The Greek government has somehow to keep its economy on an even keel while pushing through a huge fiscal tightening. Countries that seek IMF help generally have to endure brutal cuts in public spending, which deepen recessions. To counter that effect, the IMF typically counsels a weaker currency. Sadly, this is not an option for Greece. Stuck in the euro, its exchange rate with its main trading partners is fixed. Greece cannot devalue, so it needs more time to adjust than the three years it has agreed with its EU partners—and a bigger safety net while it does.

Just how big? Analysis by The Economist suggests a figure of €75 billion rather than €25 billion. Greece is likely to need five years to get its deficit down below 3% of GDP (see table). On our projections interest payments will rise from 5% of GDP to 8.4% in that time, to reflect the higher cost of issuing new debts and of refinancing old ones. Other budgetary cuts will be needed to offset this. By our reckoning the Greek government will have to increase the “primary” budget balance (ie, excluding interest payments) by 13.5 percentage points of GDP to cap its debt burden. That is bound to have an effect on growth. Our projections assume that nominal GDP will be 5% lower by 2014.

This is necessarily a stylised analysis, which requires some brave assumptions (some of which may even be too kind). The estimate of how big a bail-out Greece may need hinges on a particularly heroic one: that private investors have had their fill of Greek bonds but would still roll over existing debts if a bail-out fund covered the country’s new borrowing. Our projections imply that Greece will run-up an extra €75 billion of debt by 2014, by which time its debt will stabilise at 153% of GDP. This figure is a rough guide to how much financial aid Greece may require.

That may be too much even for the newly flush IMF. For its share of Latvia’s rescue, says Laurence Boone of Barclays Capital, the fund stretched to 12 times the country’s “quota”, the amount a member country contributes to the fund’s coffers. A €75 billion package would require the IMF to provide around 40 times Greece’s quota if the costs were split with the EU.

Optimists say that demand for Greek bonds will revive as its budget deficit falls and confidence returns. There is no theory that says investors will tolerate debts of 113% of GDP (Greece’s ratio in 2009) but balk at anything higher. Japan’s gross public debt is almost 200% of its GDP with as yet few signs of revulsion. But Japan is the only sovereign issuer of yen bonds, while Greece is the least creditworthy of the many countries offering euro bonds. Japan is a creditor nation that can rely on domestic savers. Greece is a deficit country that depends on “footloose” investors, says Thomas Mayer of Deutsche Bank.

Greek bonds are attractive because of their generous yields. If the interest-rate spread stays close to 3%, a buyer of a ten-year German bond who holds it until it matures would make only three-quarters of the return he could make on a similar Greek bond. For bold investors, such a gap is ample insurance against the risk that Greece may not able to pay back all it has promised. Others think the reward may not be worth the gamble. A debt restructuring, where bondholders are forced to swallow losses, is a “substantial risk” if recession in Greece drags on, says Marco Annunziata of UniCredit. Its would-be rescuers may conclude that throwing money at a weak, if profligate, country is still the cheapest way to stop trouble spreading. But the likely bill for Greece’s bail-out looks larger than many are assuming.


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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Mar 25, 2010 7:17 pm 
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Ouch!

Well at least many in the country can still retire @ 50 8)


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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Mar 25, 2010 7:58 pm 
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homersheineken wrote:
Ouch!

Well at least many in the country can still retire @ 50 8)

Hah, yep.

Funny how you don't hear raised retirement age as being on the table.

It should be. They should face serious sanctions if they don't raise it, imo.

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 Post subject: Re: Greece Financial Bailout
PostPosted: Wed Apr 07, 2010 4:07 pm 
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Ruh-roh. First this...

Zero Hedge wrote:
The curve below (the white line) indicates that bond investors now believe that Greece will likely default in under 6 months, or at least the EMU will realize that Greece is a lost cause and cut it off, despite all rhetoric to the opposite. Actually, with the 3 month trading at a mindblowing 4%+, which we are fairly confident is a record for any country, let alone a EU and EMU member, one can claim that the country will not see July in its current political form. The 3M-6M spread of nearly 300 bps is an all time record for a developed country. Past the 6M point, you can see all the way to the Pacific. Note the curve shift from April 2009, when the 3M was trading at just over 1%. At this point the only question is whether the 3 Month will join the other points on the curve in the 7% ballpark.


Image

That's bad. But then there's this...

Zero Hedge wrote:
And so the Greek funding crisis shifts to a liquidity crisis yet again. Bankingnews.gr reports that Commerzbank, among many others, is now pulling its repos with Greek banks, essentially killing liquidity in the entire financial system. Cue Lehman Brothers and Sunday CDS trading...

Repos are the instruments used to provide short-term liquidity to large institutional investment houses and banks, and when one is pulled, the effect is to constrain the trading and operating abilities of the trading institution(s) by clawing back the cash necessary to conduct business. These large banks and investment houses rarely have cash on hand, and rely on pledging assets - among which is sovereign debt (Greek bonds) - to secure short-term financing. If firms are now pulling back and refusing to engage in repo transactions, the whole system could grind to a screeching halt.

Should be interesting.

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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Apr 08, 2010 12:47 am 
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That's quite the widening for just six days. *grabs popcorn*

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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Apr 08, 2010 12:51 am 
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When's the last time (if ever?) a sovereign nation has defaulted?


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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Apr 08, 2010 1:47 am 
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Green Habit wrote:
When's the last time (if ever?) a sovereign nation has defaulted?


Looks like Equador.
http://en.wikipedia.org/wiki/National_b ... bankruptcy


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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Apr 08, 2010 1:54 am 
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Green Habit wrote:
When's the last time (if ever?) a sovereign nation has defaulted?

If you're at all interested in the history of sovereign defaults, this is a must read.

Image

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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Apr 08, 2010 2:04 am 
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So what happens when the US defaults?

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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Apr 08, 2010 2:08 am 
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world economy collapses

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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Apr 08, 2010 2:29 am 
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thodoks wrote:
Green Habit wrote:
When's the last time (if ever?) a sovereign nation has defaulted?

If you're at all interested in the history of sovereign defaults, this is a must read.

Image


:thumbsup: I concur.


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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Apr 08, 2010 4:52 am 
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homersheineken wrote:
thodoks wrote:
Green Habit wrote:
When's the last time (if ever?) a sovereign nation has defaulted?

If you're at all interested in the history of sovereign defaults, this is a must read.

Image


:thumbsup: I concur.

It's sitting on my bookshelf, unread... :o

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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Apr 08, 2010 4:57 am 
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i'm glad you posted that again. i'm putting it on my to read list. which means i might get to it in a year.

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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Apr 08, 2010 6:19 pm 
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Buffalohed wrote:
So what happens when the US defaults?

That's the $64,000 question.

It will likely be something like what happened in the past - renegotiated interest rates, government revenue grabs, high tax rates, principle writedowns, etc. It will certainly share some of the characteristics of past defaults.

But what's unique about this episode is that the entirety of the world's developed economies operate on some semblance of a fiat model. That is, there is nothing constraining government spending, and nothing tangible that backs the any currency. That's what so potentially ruinous. We're reaching the endgame of a completely unique monetary experiment where the world's reserve currency - instead of something tangible - is based on the credibility of the American economy and the strength of its currency. There's really no way to know exactly what will happen, or when it will happen.

In short, it won't be Armagaedon. The sun will come up tomorrow. But the economic and political landscape will undergo significant changes, and it's likely that the world will be a very, very different place in ten years.

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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Apr 08, 2010 6:29 pm 
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thodoks wrote:
Buffalohed wrote:
So what happens when the US defaults?

That's the $64,000 question.

It will likely be something like what happened in the past - renegotiated interest rates, government revenue grabs, high tax rates, principle writedowns, etc. It will certainly share some of the characteristics of past defaults.

But what's unique about this episode is that the entirety of the world's developed economies operate on some semblance of a fiat model. That is, there is nothing constraining government spending, and nothing tangible that backs the any currency. That's what so potentially ruinous. We're reaching the endgame of a completely unique monetary experiment where the world's reserve currency - instead of something tangible - is based on the credibility of the American economy and the strength of its currency. There's really no way to know exactly what will happen, or when it will happen.

In short, it won't be Armagaedon. The sun will come up tomorrow. But the economic and political landscape will undergo significant changes, and it's likely that the world will be a very, very different place in ten years.

This is good.

So, is it possible, or even likely, that a revaluation would occur, after a global economic collapse, based on the natural distribution of resources other than money? Essentially a regression to the barter system, where physical goods are the only thing of value? I just don't see how, if there is a collapse, any form of physical or especially digital currency can remain viable.

Would gold emerge again? Or would it be something more mundane like possibly copper and silicon (whose rarity determine the value of basically all electronic technology)?

This sort of raises the question of the American strategy, where we have been procuring far more than our natural amount of resources by using money backed by nothing but our trustworthiness. It's almost like we have pulled off a colossal, global scam, and the final act in that scam is the collapse of the currency economy.

Very interesting stuff.

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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Apr 08, 2010 6:36 pm 
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Buffalohed wrote:
thodoks wrote:
Buffalohed wrote:
So what happens when the US defaults?

That's the $64,000 question.

It will likely be something like what happened in the past - renegotiated interest rates, government revenue grabs, high tax rates, principle writedowns, etc. It will certainly share some of the characteristics of past defaults.

But what's unique about this episode is that the entirety of the world's developed economies operate on some semblance of a fiat model. That is, there is nothing constraining government spending, and nothing tangible that backs the any currency. That's what so potentially ruinous. We're reaching the endgame of a completely unique monetary experiment where the world's reserve currency - instead of something tangible - is based on the credibility of the American economy and the strength of its currency. There's really no way to know exactly what will happen, or when it will happen.

In short, it won't be Armagaedon. The sun will come up tomorrow. But the economic and political landscape will undergo significant changes, and it's likely that the world will be a very, very different place in ten years.

This is good.

So, is it possible, or even likely, that a revaluation would occur, after a global economic collapse, based on the natural distribution of resources other than money? Essentially a regression to the barter system, where physical goods are the only thing of value? I just don't see how, if there is a collapse, any form of physical or especially digital currency can remain viable.

Would gold emerge again? Or would it be something more mundane like possibly copper and silicon (whose rarity determine the value of basically all electronic technology)? Very interesting stuff.

Also consider that for all intents and purposes the government defaulted in 1934 when they devalued the dollar. While not technically a default, the gov't couldn't pay its bills and, instead of outright default, debased the currency to make principle/interest payments more tenable. That also seems to me to be a distinct possibility.

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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Apr 08, 2010 6:44 pm 
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Buffalohed wrote:
So, is it possible, or even likely, that a revaluation would occur, after a global economic collapse, based on the natural distribution of resources other than money? Essentially a regression to the barter system, where physical goods are the only thing of value? I just don't see how, if there is a collapse, any form of physical or especially digital currency can remain viable.

Yes. But again, we wouldn't be sent hurtling into the Dark Ages. There would likely be some sort of temporary "bottleneck" where people, frankly, don't know what to do. Recall what happened when FDR declared banking holidays and people had no access to whatever capital they'd accumulated.

Mind you, this scenario is not highly likely. But it's becoming more and more likely as we refuse to address the systemic issues with our economy.

Buffalohed wrote:
Would gold emerge again? Or would it be something more mundane like possibly copper and silicon (whose rarity determine the value of basically all electronic technology)?

Anything of tangible value would emerge. Generators, food, liquor, etc.

To these eyes, the only certain is uncertainty. That is, there's just no way to know what would happen. That's why I'm capital diverse: food, cash (to buy goods from distressed sellers in the event of a deflationary collapse), silver, gold, and marketable/tradeable skills (read: lawyer, teacher, repairman, etc).

Buffalohed wrote:
This sort of raises the question of the American strategy, where we have been procuring far more than our natural amount of resources by using money backed by nothing but our trustworthiness. It's almost like we have pulled off a colossal, global scam, and the final act in that scam is the collapse of the currency economy.

Very interesting stuff.

You've just identified the essence of the Ponzi-conomy.

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Last edited by thodoks on Thu Apr 08, 2010 6:50 pm, edited 1 time in total.

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 Post subject: Re: Greece Financial Bailout
PostPosted: Thu Apr 08, 2010 6:46 pm 
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according to some headline i read on nyt, someone's not willing to let greece default

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