Will Greece Default on it's debt?

"... European officials are considering writedowns of as much as 50 percent on Greek bonds, a backstop for banks and continued central bank bond purchases as key planks in a revamped strategy to combat the debt crisis, people familiar with the discussions said.

The Greek bond losses may be accompanied by a pledge to rule out debt restructurings in other countries that received bailouts, such as Portugal, to persuade investors that Europe has mastered the crisis, said the people, who declined to be identified..."
From: http://www.bloomberg.com/news/2011-...ne-time-50-greek-writedown-bank-backstop.html

Billy T comment: That might work in sense, Greece may be able (with some additional delays) to pay back 50 cents on the dollar, which should look to creditors - better than nothing but years of court battles to see what assets they might get to claim.

 

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By edit the next day:
"Reuters’ sources dismissed a report in the Guardian newspaper that came out in late afternoon trading in the US on Tuesday that pushed stocks to the highs of the day."

So following (except for my comment) is probably false, but no retraction form the Guardian, AFAIK.

"... The Guardian is reporting that France and Germany have agreed to leverage the EFSF to a €2 trillion entity.

No, they are not talking about adding new funds to the EFSF. Instead the EFSF will be given additional flexibility enabling it to offer “first loss guarantees” for new bond buyers. The paper says this approach will provide a fivefold increase in the funds’ firepower – up to €2 trillion.

Germany and France have also reportedly agreed to a bank recapitalization plan that includes a 9% tier one capital level. The first step will be new stress tests to determine which of the 60-70 “systemic banks” will need new capital. The banks will then have more than a year to acquire the new capital.

Finally, the third prong of the comprehensive plan is to redo the Greece deal. The Guardian reports that Berlin and Paris are said to be working on increasing the private sector involvement in the second bailout. This means that the originally agreed to “haircut” of 21% will likely be increased upwards towards 50% or higher. ..."

Billy T comment:If confirmed, that should give a lift to stock prices.

 

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"... Greek Finance Minister Evangelos Venizelos told banks and insurers that under the plan, they would receive 15 euros in cash and 35 euros in 30-year, 6% coupon bonds for every 100 euros of debt they own. ... {But} Germany, Finland and Netherlands* were still pressing for a haircut of 60%, a source said that there will ultimately be an agreement at the 50% level. Unlike the restructuring plan agreed to in July, the new bonds issued would not have a guarantee from the EFSF. ..."

From: http://www.stateofthemarkets.com/re.../1/0/6a4d743d91ac36a8dfa5c5331ad036296c4e7b1e

Billy T comment: In some ways 15% cash on the Greek Euro debt now with 35% on the Euro "paid" in 30 year ; 6% bonds is a very easy deal for Greece. I think they pay at least 16% to borrow for less than 30 years now from the financial Markets. The banks will get to carry these bonds at face value on their books so it is only a 50% hair cut.

* Not France - The French banks are on the hook for more Greek debt than the others so would need help from the government to not go under - that help would very likely make France lose its AAA rating, and add to France's interest costs. France wants the bank hair cut to be 40% or less.

 

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Yes on 29/12/11:

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Unless Santa gives big bag of gold 4 days earlier.

 

Wait Greece doesnt pay france, so france gets downgraded? seriously?

 

Yes, that is about it. I don't think it possible to significantly down grade Greece further prior to bankrupt grade.

Rating agencies work like most police: If you failed to prevent the crime, at least put someone in jail after it happens (guilty or not).

 

Ok awesome, then they can nail the American banks that taught Greece how to hide debt and leverage their airports and infrastructure?

 

I don't know, but guess the Greeks have more than 2500 years of practice doing that sort of thing* - may just have used the US banks this time, who no doubt took a nice "cut of the action" for their services. Look what the Greek's "gift" did to the Trojans!
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*Tricking, stealing, especially gold (even as "fleece") and beautiful women, (like Helen), etc. Not to mention sleeping with your mother, murdering kings, stealing fire from the gods, etc.

 

Oh they will get a cut of the action, when they can't pay JP Morgan and Goldman Sachs...those guys will take over their roads and airports ETC and jack up the fees.

http://articles.businessinsider.com...0065714_1_greece-goldman-sachs-currency-trade

 

Would it be possible for a new populist Greek government to exit the EU and declare those agreements null and void? (How likely is this to happen?)

 

Very possible. The country would probably get shit on almost as much as North Korea though.

 

Aren't most European banks Insured by US Insurance companies?


BofA alone has 75 TRILLION riding high on derivative bets. That shit isn't going to ever be paid no matter how many roads are tolled, airports sold, gold dug up, etc... the only solution is to liquidate the debt and the poor wittle wealthy new york snobs have to take a hair cut and sell the family home.

 

Greeks await name of new coalition government PM

Hey Hey, lQQky what we got going on over here in Greece

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On a complete side track:

Social Structure in Medieval Japan:


First: The Emperor. The Emperor technically was the topmost position in Japanese society, but usually the Emperor was not actually in control of the country; rather it was the person who was Shogun who basically ran everything. The Emperor was kept under constant surveillance with their movements kept quite limited.

Second: The Shogun technically was the second most powerful person in the country but actually was the one to hold the real power.

Third: Daimyo: There were 250 han, or clan domains, into which the country was divided. The fudai composed the "inner" group which had proclaimed their allegiance to the Tokugawa shogunate before the battle of Sekigahara, and the tozama or "outer" group which proclaimed their allegiance after that battle.

Fourth: Samurai. The samurai were in the employ of the daimyo. They were fairly limited to the amount of money they could have, helping to keep them under the daimyo's thumbs. They were also expected to serve their lords faithfully and even sacrifice their lives if necessary.

The samurai were also allowed to kill anyone they considered inferior to them. Thus, if a peasant happened to hurls verbal insults at a samurai, the samurai could turn around and behead the peasant without any fear of reprisal from the authorities.

Fifth: Farmers. Farmers made up about 80% of the population of the country but were forbidden to have weapons. They were totally dependent upon their harvest; a year of bad harvest could result in starvation and the killing of female infants, called mabiki or "weeding out the rice seedlings."

Sixth: Craftsmen. People who lived in the towns that developed did not grow their own food, thus placing them below farmers in the social status. Swordsmiths were considered at the top of this group of people.

Seventh: Merchants. Considered by most a parasite, as they earned a living from the labor of others, they were almost at the bottom of the social order they managed to control much of the financial power. (sound like anyone we know??? *Cough* Banksters *Cough* ..

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)

Eight: Outcasts of Japanese society. Beggars were in this group.

All things must come to an end.... I know a LOT of obese Americans who spend their time staring at their TVs. Hell, some can't even stand to be in their homes without the TV on. Waiting for the end and to pass on to the next world I suppose :shrug: I sure wish they'd get off their fat arses and move their moneys from Citi, BofA and Chase over to local credit union

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LQQKS like the Itanlians are following right behind. How long before Spain and Ireland come crashing down? Then France, England, Germany and finally the USA.

Will Americans let the Federal Reserve print the TRILLIONS needed to bail-out (so called) Small Enough to Fail Banks and Insurers?

 

I'm afraid so. But they will also help bail out Italy, and then Spain too. I'm guessing that the IMF comes in and the US is the major funder of the IMF. However, they will want Germany and France to print some of the money; they will have to. I say we have a fun five years ahead, lol.

 

"... Reuters reports that French President Sarkozy took a step towards Merkel this week by agreeing to amend the European Union's treaty to permit intrusive powers to change national budgets in euro area countries that go off the rails. ..." from: http://www.stateofthemarkets.com/re.../1/0/60e7fdb49d0ca178372a0fa741dbf2711d21951d

billy T comment: Sounds like a badly needed first step towards the USE, United States of Europe.

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Why would any sane person give up their sovereignty to a USE? I know I wouldn't. I'm already thinking the USA was good while it lasted, but we want out. Michigan could probably do better setting out on Her own. Starting with a new currency, maybe we'll call them Michigander Wolf-Backs or MI Apple-Blossoms??
We don't like New York. We aren't interested in paying mother f*cking New York ass-wipe douche bags hundreds of millions of dollars a year to totally decimate our economy. Notice how the GoldenSux douche bag ran MF Global into the ground and didn't even get a slap on the hand. That's because GoldmanSux's OWNS Obama and most of CONgress. Obama's a GoldenBitchBoy and did you see what the GOP puked up? Other than Ron Paul they're a bunch of f*cking looney rightwingnuts.

Less Government not more.


Anyway, you think the Chinese Yuan is cheap, just wait till you see the Michigander

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Same reason you chose to live under laws that limit what you can do. - I.e. there is a net benefit to you.

Even with all it is and will cost Germany, the Euro is a net benefit to the Germans. Go here to see why:
http://www.sciforums.com/showpost.php?p=2863290&postcount=82

Once there were 13 dis-joint states. Each with banks printing their own money - that made inter state commerce difficult - For example, If a man rode his horse from Florida to DC, he had to carry gold coin to pay for his overnight stays in hotels - good target for robbers, so tried to avoid that.
I.e. Florida tried to be a closed economy. It is easy to prove that trade benefit all.

If you don't like proofs, just take it to the extreme - Let a city build a wall around its self - not be part of a greater economy, and see how fast it descends into economic hell. Basically it is a question of scale - Cheaper to produce some items on large scale and trade what you don't need for items others making those items on a larger scale than they need. Again see this in the extreme - let Michigan build its own airplanes - to hell with Boeing.

A common currency facilitates trade - removes the foreign exchange risk - a cost.

 

The Eurozone will eventually print money. Lots of it. The Eurozone will then make Bonds. Individual country's debts must be absorbed by the group as a whole.
Germany must do what it has been dragged, screaming and kicking like a child resisting its first day at school, to do.
Sit quietly in class, and prepare to be educated.

The result will be a short term leap in inflation, and a devaluing of the Euro.
It's going to happen Germany.
Just accept it.


Billy. If my prediction is true, what would be the best thing to invest in?

 

Yes but they need controls as presidents of France & Germany admitted yesterday.* I.e. give up some sovern independence.

As far a Printing money / euro losing value is concerned yes that will happen. Like the US does** the ECB will do - buy its own debt. Not doing enough of than now as this shows:

"... Italy, which is the Eurozone’s third largest economy, struggled to raise cash in the bond market Friday. Yields for 6-month T-Bills nearly doubled over last month’s rate and hit an all-time high. - Italy sold €10B of 6-month T-Bills at an average yield 6.504%. This was nearly double last month’s auction rate 3.535%. ...

According to Reuters, yields on two-year Italian BTP bonds soared to more than 8 percent in response, also a euro lifetime high, despite the ECB reportedly making purchases in the market in an attempt to keep yields down.

By comparison, Spain, which is also struggling to raise money in the bond market paid 5.2% to sell 6-month treasuries at an auction earlier this week. This after elections handed power to a new conservative government in a landslide. ..." From: http://www.stateofthemarkets.com/re.../1/0/5b22040a8c64625bfa8671faed51c77213ac7ebd

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* Read the modifications being suggested here:
http://www.stateofthemarkets.com/re...-Germany-To-Propose-Modificatons-to-EU-Treaty

** Hell the FED has driven interests rate down even on 10 year bonds below 2%, but at the cost of a flood of new dollars, which fortunately the banks don't let out into the economy, but send back to the treasury by also buying it "safe" bonds. And short term rates driven down to essentially zero. ECB will do much more of this too before Euro is "saved" with lower value, like dollar is dropping on longer term.