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European Union leaders announced a write down of Greek bonds by 50%

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Re: European Union leaders announced a write down of Greek bonds by 50%

#31

Post by johnyzee »

sasvari wrote: post #28
nknight wrote: post #16

Earlier quoted context omitted.

There's also, as I understand it, the matter of how Greece was permitted to join the Eurozone with, shall we say, overly optimistic economic reports that were blindly accepted under a set of rules that would warm a sub-prime lender's heart. Greece made quite the mess on its own, of course, but the number of ways in which the EU has further screwed the pooch are mind-blowing.

[..] the matter of how Greece was permitted to join the Eurozone with, shall we say, overly optimistic economic reports that were blindly accepted [..] I think this is one of the fundamental things about this whole crisis (concerning Greece). everybody knew that the Greece government s were very creative with their way of presenting their financial situations back to the seventies (or even longer), and everybody knew…

Since this is so obvious to everyone, the logical conclusion seems to be that things worked out exactly as planned for somebody. I know, "never attribute to malice" etc., but the pattern of banks encouraging non-creditworthy entities to pig out on debt, leading to their devastating and unceremonious bankruptcy a few miles down the road seems very common by now.

I am not well versed enough in finance to speculate on who gains and how in these scenarios, but it seems like too much of a lock-in to be 'accident'. I know that in the past, nations and the IMF used loans and defaults to influence policies of other countries, could it be something like that going on here? Default as a way to force spending cuts and other political changes?

Re: European Union leaders announced a write down of Greek bonds by 50%

#32

Post by cheez »

johnyzee wrote: post #31
sasvari wrote: post #28

Earlier quoted context omitted.

[..] the matter of how Greece was permitted to join the Eurozone with, shall we say, overly optimistic economic reports that were blindly accepted [..] I think this is one of the fundamental things about this whole crisis (concerning Greece). everybody knew that the Greece government s were very creative with their way of presenting their financial situations back to the seventies (or even longer), and everybody knew…

Since this is so obvious to everyone, the logical conclusion seems to be that things worked out exactly as planned for somebody. I know, "never attribute to malice" etc., but the pattern of banks encouraging non-creditworthy entities to pig out on debt, leading to their devastating and unceremonious bankruptcy a few miles down the road seems very common by now. I am not well versed enough in finance to speculate on w…

If there are 147 entities controlling 40% of the global financial market, this is not that far-fetched.

Re: European Union leaders announced a write down of Greek bonds by 50%

#33

Post by Loic »

nknight wrote: post #18
antimarketing wrote: post #4

Earlier quoted context omitted.

Basically everyone is waiting for Spain, Italy, Greece, Portugal, Ireland and Iceland to crash. None of them have, despite all the screaming and all of them will have to implode in their own sad ways, eventually. Thus, despite all the media talk about fear, drama and emotion people in the investment community are actually very unemotional and pragmatic and unfearful (I can not say they are courageuous now can I?) The…

Are you sure this applies to Iceland? My understanding is they've had their crash and are cleaning up from it.

Iceland crashed but they also declared default for all the foreign debt at the same time. As Iceland is very small, the effects were negligible for the foreigners. The effect was also a devaluation of the ISK because of the lost of trust in the country/currency:

http://www.xe.com/currencycharts/?from=ISK&to=EUR&vi...

Re: European Union leaders announced a write down of Greek bonds by 50%

#34

Post by arethuza »

sasvari wrote: post #28
nknight wrote: post #16

Earlier quoted context omitted.

There's also, as I understand it, the matter of how Greece was permitted to join the Eurozone with, shall we say, overly optimistic economic reports that were blindly accepted under a set of rules that would warm a sub-prime lender's heart. Greece made quite the mess on its own, of course, but the number of ways in which the EU has further screwed the pooch are mind-blowing.

[..] the matter of how Greece was permitted to join the Eurozone with, shall we say, overly optimistic economic reports that were blindly accepted [..] I think this is one of the fundamental things about this whole crisis (concerning Greece). everybody knew that the Greece government s were very creative with their way of presenting their financial situations back to the seventies (or even longer), and everybody knew…

Isn't that rather similar to the subprime mortgage fiasco - everyone "knew" that there were stacks of mortgages that were worthless, but everyone continued regardless.

Re: European Union leaders announced a write down of Greek bonds by 50%

#35

Post by ajo11 »

mc32 wrote: post #11

Great, so German's pay for the fiscal and political indiscretion of the Greeks. I guess they had little alternative as Greece was too big to fail -or, had they been allowed to default, The German people, via German bank investments in Greece,would have lost even more --seems they didn't learn much from our Wall Street banks and saddling die Volkes with the bag. Or do I have this wrong? I've been trying to follow this…

"pay for the fiscal and political indiscretion of the Greeks"

- what about -

"pay for the massacres back in the 40's"

?

[http://en.wikipedia.org/wiki/List_of_massacres_in_Greece]

And it's more like loaning so that the Greeks may afford to buy their high quality products.

Re: European Union leaders announced a write down of Greek bonds by 50%

#36

Post by flipbrad »

ajo11 wrote: post #35
mc32 wrote: post #11

Great, so German's pay for the fiscal and political indiscretion of the Greeks. I guess they had little alternative as Greece was too big to fail -or, had they been allowed to default, The German people, via German bank investments in Greece,would have lost even more --seems they didn't learn much from our Wall Street banks and saddling die Volkes with the bag. Or do I have this wrong? I've been trying to follow this…

"pay for the fiscal and political indiscretion of the Greeks" - what about - "pay for the massacres back in the 40's" ? [ http://en.wikipedia.org/wiki/List_of_massacres_in_Greece ] And it's more like loaning so that the Greeks may afford to buy their high quality products.

Totally, totally irrelevant - not only did greece benefit from a free handout because this happened (the Marshall Plan), or that it received 4.4 billion euros in reparations for the war from Germany, or that the number of relevant deaths listed on your source is equivalent to only about 6 years' worth of Greek road fatalities - but that is an entirely different generation's mistake

Re: European Union leaders announced a write down of Greek bonds by 50%

#37

Post by ajo11 »

flipbrad wrote: post #36
ajo11 wrote: post #35

Earlier quoted context omitted.

"pay for the fiscal and political indiscretion of the Greeks" - what about - "pay for the massacres back in the 40's" ? [ http://en.wikipedia.org/wiki/List_of_massacres_in_Greece ] And it's more like loaning so that the Greeks may afford to buy their high quality products.

Totally, totally irrelevant - not only did greece benefit from a free handout because this happened (the Marshall Plan), or that it received 4.4 billion euros in reparations for the war from Germany, or that the number of relevant deaths listed on your source is equivalent to only about 6 years' worth of Greek road fatalities - but that is an entirely different generation's mistake

when it comes down to money/business nothing is irrelevant :D

edit: bah! The truth always hurts :C

Re: European Union leaders announced a write down of Greek bonds by 50%

#38

Post by Jabbles »

sliverstorm wrote: post #7
anigbrowl wrote: post #6

Earlier quoted context omitted.

Both. Pension funds and the like often invest in government bonds; traditionally they're a safe investment used to hedge against riskier ones like stocks. With the latter you know there's no guarantee of performance, but you expect a risk premium in the firm of a dividend or accelerated growth. 'Bond' is another word for 'promise' so you should be able to rely on it. Saying that 'people knew the risks' of investing i…

'Bond' is another word for 'promise' so you should be able to rely on it... they're supposed to be risk-free Agreed. I'd be livid right about now if I held Greek bonds. Although I suppose anyone looking for shelter in the form of government bonds could have taken the next step and diversified across nations, further reducing their exposure.

Is this comparable to an organised default? If the Greek government had instead defaulted on its bonds and the price naturally fallen to 50% of the original, would the effects have been similar?

Re: European Union leaders announced a write down of Greek bonds by 50%

#39

Post by peteretep »

iwwr wrote: post #25
yxhuvud wrote: post #15

Incorrect title. This deal only cut down the debt hold by nongovernmental entities. The debt will be cut from 180% to 120%, roughly speaking. This restriction makes this deal a nothingburger.

Exactly, the IMF, the EC or other governmental bodies will still be paid in full. In effect, the bailout loans increased the private sector haircut by both delaying and also adding extra super-senior debt on top of the existing one.

I have this theory, see, about the delays.

The longer the delays have gone on, the more the Greek government has had to actually implement austerity measures - the more political capital those who want to see austerity and proper financial liberalization have had to force those through...

So by the time some breathing room has been introduced, Greek society has undergone the necessary but painful changes towards a better long-term solution.

Re: European Union leaders announced a write down of Greek bonds by 50%

#40

Post by iwwr »

peteretep wrote: post #39
iwwr wrote: post #25

Earlier quoted context omitted.

Exactly, the IMF, the EC or other governmental bodies will still be paid in full. In effect, the bailout loans increased the private sector haircut by both delaying and also adding extra super-senior debt on top of the existing one.

I have this theory, see, about the delays. The longer the delays have gone on, the more the Greek government has had to actually implement austerity measures - the more political capital those who want to see austerity and proper financial liberalization have had to force those through... So by the time some breathing room has been introduced, Greek society has undergone the necessary but painful changes towards a be…

If the bailout loans didn't come then, then Greece would have had to negotiate a debt restructuring then rather than now, gaining 1-2 years at least.

As for austerity, there is the healthy streamlining and downsizing of public expenses and there is the hobbling of the private sector with new and higher taxes. The latter solution merely sinks the Greeks further.

Public debt is not strictly meant to be paid off ever, but it should grow no faster than the overall economy for this indefinite deferral to work. It also means the productive aspect of society, namely the private sector, not be hindered by too high taxes or regulations.

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