Greece gets closer to brink of bankruptcy

bripat9643

Diamond Member
Apr 1, 2011
169,921
47,175
2,180
Greece gets closer to brink of bankruptcy - Telegraph

Fears are mounting that Greece could be the first European country to default on its debt in 60 years, as the country gears up to salvage collapsed talks over bond repayments on Wednesday.

Three months of negotiations ground to a halt on Friday night, amid a wave of downgrades by ratings agency Standard & Poor’s aimed at a clutch of European countries, including France.

The unexpected breakdown in talks between Greece and its private-sector creditors has taken the country a step closer to bankruptcy after a failure to sign up lenders to a voluntary and “orderly” 50pc haircut to their holdings.

Greece’s finance minister Evangelos Venizelos said talks would resume on Wednesday to “bridge differences” but insiders remained sceptical that a deal could be stitched at such a late stage.

The clock is ticking for Greece, as a deal must be reached before March 20, when the country is due to receive a further €130bn (£107bn) bail-out tranche from the International Monetary Fund and must make a key €14.5bn bond payment.

The problem centres on the difference between lenders agreeing to a “voluntary” and orderly default – which would mean swapping into bonds with a lower value – and lenders refusing terms, which would cause a default.

This type of “credit event” would trigger billions of insurance claims through credit default swaps (CDS), insurance policies taken out to protect investors in the event of a default.

The problem is that, of the €315bn of Greek debt outstanding, only €7.8bn is covered by Greek CDS. The vast majority of Greek debt is held by European banks, which have little insurance on their exposure. Most Greek CDS are held by hedge fund managers – accused by Germany and France of financially benefiting from sovereign woes.
 
I am not sure why the United States is helping prop up the Euro. I mean lets be honest here people. The Euro was set to take the Dollar on as the Worlds Dominate Currency. When, and it is when not if, the Euro Zone Experiment fails and the Euro with it. The World will turn to the Dollar in mass numbers as a place to run to and it will be a very good thing for the US economy over all.
 
Yeah?

Then what happens?

Do Greece's creditors get ownership of the Parthenon?
 
Watch out for the Greecian spring...
:confused:
Greece lurches closer to collapse
January 17, 2012 - Greece could finally default in March when massive bond payments are due.
Greece, where the eurozone debt crisis started in 2009, seems to be closer to financial collapse than ever. While Italy and Spain, both struggling with huge debts themselves, have been able to reassure most investors that they can weather the storm, it is looking more likely that Athens could finally default in March when massive bond payments are due. Some observers think Greece is already beyond redemption. “In my opinion, Greece has already defaulted,” says Clemens Fuest, an economist at Oxford University and adviser to the German government. He and other economists argue that Greece is unlikely to be admitted back to the financial markets anytime soon and is being kept afloat by bailout money in order to avoid damage to the eurozone.

His Greek colleague Nikos Vettas from the Athens University of Economics disagrees. “It is still possible to escape this vicious circle if we see decisive action within the next weeks and months,” he says. "Private creditors have to agree swiftly on the haircut procedures, the EU partners to deliver the support needed, the citizens to actively support a reform agenda and the politicians to reach the minimum consensus required for such reforms." Everything hinges on the second bailout package for Greece, worth €130 billion ($169.5 billion), that was agreed to at a European Union summit in October. Inspectors of the so-called troika – the International Monetary Fund (IMF), the European Central Bank (ECB), and the European Union – arrived in Athens today to monitor Greece's progress cutting public spending and bringing down the budget deficit, two preconditions for receiving additional bailout money.

The country is already receiving loans of €110 billion ($139.5 billion) from a first bailout set up in May 2010. Earlier in January, Greek Prime Minister Lucas Papademos warned that “without an agreement with the troika and further funding, Greece in March faces an immediate risk of an uncontrolled default.” March 20 is the deadline for €14.5 billion ($18.4 billion) of bonds to be repaid. But the IMF has doubts about Athens’ ability to meet the troika's requirements. Last week German newspapers quoted an internal IMF memorandum that said that Greece was lagging behind badly with necessary reforms and that the current framework of the bailout would have to be adjusted to the country’s worsening economic situation.

Greece’s economy shrank by 5.5 percent in 2011, and a further contraction is expected for the current year. Unemployment rose to 17.7 percent, and that number will rise with government plans to cut another 150,000 public sector jobs by 2015. Athens is also struggling to persuade private creditors to forgive half of the €205 billion ($260 billion) they hold in Greek debt – a vital part of the bailout package known as a haircut. Some banks and a number of hedge funds oppose the deal, apparently speculating they could either recover the whole amount or cash Credit Default Swaps (CDS) in the case of a bankruptcy.

Talks between the Greek finance ministry and the Institute of International Finance (IIF), which represents Greece’s private creditors, collapsed last week, but are expected to resume within days. Charles Dallara, head of the IIF, told the Financial Times that an agreement was needed by the end of this week in order to avoid a Greek default. For Hans-Werner Sinn, president of the Munich-based Ifo Institute for Economic Research, the risk of a Greek bankruptcy is the lesser evil compared with a further spreading of the debt crisis within the eurozone. He thinks Greece should leave the euro. “We can only chose between a short-term risk and a long-term one,” he says. “The long-term risk is beyond imagination.”

Source
 
I am not sure why the United States is helping prop up the Euro.

Because if the Euro collapses, we will be right back in the global credit crisis of four years ago, and this time there is no Wall Street bailout money, and no tolerance for one. It's all the same players, same financial instruments, same root causes.

Welcome back to the abyss.

If you don't learn your lessons from the last crisis, you always get a chance to learn again.
 
Last edited:
I am not sure why the United States is helping prop up the Euro. I mean lets be honest here people. The Euro was set to take the Dollar on as the Worlds Dominate Currency. When, and it is when not if, the Euro Zone Experiment fails and the Euro with it. The World will turn to the Dollar in mass numbers as a place to run to and it will be a very good thing for the US economy over all.

They are propping it up because of systemic risk. Basically we are all so interconnected, that if one goes down it starts a domino effect destroying all of us. See, we arent in nearly the good position our government is pretending to be in.

We need to spit ourselves out of system.
 
Ron Paul spills the beans on Greek bailout...
:eusa_eh:
Paul: Bernanke Is Planning to Bail out Greece with U.S. Dollars
February 13, 2012 – GOP presidential candidate Ron Paul, speaking on the heels of a defeat in the Maine GOP primary, said Federal Reserve Chairman Ben Bernanke is planning to bail out Greece.
“Just look at Europe, the mess they have. They’re rioting over in Greece because they say they have to cut a little bit. So what is the plan? Bernanke’s over there planning to bail them out with our dollars. The debt when it gets this big shouldn’t be liquidated. It shouldn’t be dumped on the people, and that is what we have been doing for these last three or four years. It needs to stop,” Paul said.

The Texas congressman said the U.S. is bankrupt, and Americans need to admit the truth about the economy.

“The country is bankrupt, and the most important thing the American people do right now is admit the truth. We cannot deny the truth, and the truth is that we can’t continue this way,” Paul said.

“We have to either go in a desperately wrong direction as we had been or we have to stop the nonsense, look to our traditions and not go backwards and act as we did 200 years ago, but pick up on that, because freedom was never perfect,” he added.

MORE

See also:

Obama to unveil budget with higher taxes, more deficits
Friday, February 10, 2012 President Obama will release an election-year federal budget Monday that is loaded with deficit spending and tax increases on the wealthy but avoids tough choices on the soaring costs of entitlements, independent analysts and Republican lawmakers say.
The president’s budget request to Congress forecasts a deficit of $1.33 trillion in the current fiscal year — even higher than expected — and calls for at least $1.5 trillion in tax hikes over the next decade. By including $350 billion in short-term stimulus spending, Mr. Obama is submitting a plan that is ready-made for his re-election campaign but has no chance of passing a divided Congress. “Honestly, my expectations couldn’t be lower,” said Douglas Holtz-Eakin, former director of the nonpartisan Congressional Budget Office. “He has put out budgets that lead to a death spiral. His budgets have never added up, and he has a propensity to use it as a very powerful campaign tool.”

Mr. Obama is scheduled to unveil his proposal at 11 a.m. Monday at Northern Virginia Community College in Annandale. Senior administration officials said the fiscal 2013 budget will feature a “balanced approach” to deficit reduction, in part by ending the Bush-era tax cuts for families earning $250,000 or more. The budget also will ask Congress to impose the president’s “Buffett rule,” named for billionaire Warren Buffett, that would require tax rates of at least 30 percent on income over $1 million. “What we have to do is focus on the long term and the short term at the same time,” White House Chief of Staff Jack Lew said Sunday on ABC’s “This Week.” “In the short term, we need to keep the economy growing. In the long term, we need to get the deficit under control in a way that builds the economy that can last for the future.”

Sen. Jeff Sessions, Alabama Republican and ranking member of the Budget Committee, said Mr. Obama’s previous budgets have been “exceedingly irresponsible” and demonstrate the president’s aversion to reducing the nation’s $15.3 trillion debt. “Our systemic debt problem requires the nation to make serious choices,” Mr. Sessions said. “A good leader should tell the American people what the options are. I remain baffled that the president seems unwilling to do that.” Administration officials said the budget envisions $4 trillion in deficit reductions over the next decade through a mix of tax increases, spending caps that were enacted last year, savings from ending the wars in Iraq and Afghanistan, and curbing the growth of Medicare and Medicaid. Critics point out that Mr. Obama promised in February 2009 that he would cut a deficit of $1.4 trillion in half by the end of his first term. The deficit for the fiscal year that ends Oct. 1 — just a month before the election — will be nearly as high as when Mr. Obama took office.

Mr. Lew said on “Fox News Sunday” that administration officials didn’t know how bad the recession was when Mr. Obama made that promise. “The economy was softer than anyone knew at the time, and we had less revenue coming in, and it means there was a deeper hole to dig out of than anyone could envision” at the time, Mr. Lew said. Mr. Sessions said Republicans remain wary of the president’s math and accuse the administration of employing various budgetary “gimmicks” that forecast savings on paper but don’t materialize. For example, he said, the administration is banking on about $1 trillion in war savings over the next decade, a figure he said is inflated. “This is not healthy; the president should submit an honest budget,” Mr. Sessions said.

MORE
 
You can't compare Greece and US because Greece could not borrow in its own currency. Japan is much more relevant example -- it borrows in its own currency, like US, and so it has no trouble servicing far bigger debt level than US has now (or Greece, for that matter).
 
Not much confidence Greece's austerity program will work...
:eusa_eh:
Doubts Grow Over Austerity for Greece
February 15, 2012 - With the European Union demanding more spending cuts from Greece in return for billions of dollars in bailout funds, doubts are growing over whether more austerity is the right solution for Athens. Some analysts and politicians suggest that a once worst-case scenario, Greece leaving the eurozone, may not be so bad.
Even as he promised that Greece would meet European Union requirements for another installment of rescue funds, Greek Finance Minister Evangelos Venizelos said Wednesday that his country was on a "knife's edge." He said Some EU members want Greece to leave the eurozone, which he called "playing with fire." The EU has set tough conditions for Greece to get a $173 billion bailout. It needs the money by March 20, otherwise it risks defaulting on its massive debt. Despite angry public protests and riots last weekend, the Greek parliament voted in favor of more austerity measures. The move drew praise from EU officials like European Economic and Monetary Commissioner Olli Rehn. "I'm confident that the other conditions, including for instance, the identification of the concrete measures over 325 million euros [more than $424 million in spending cuts] will be completed by the next meeting of the eurogroup," said Reihn.

But Greece did not meet the other conditions by Wednesday, when EU finance ministers were expected to decide on the bailout money. So instead, the meeting was downgraded to a conference call. Philip Whyte, senior research fellow at the London-based Center for European Reform, describes the standoff between Greece and its creditors - which also includes the International Monetary Fund and the European Central Bank - as a bluffing game. "The social strains in Greece are increasing by the day," he said. "At the same time, there's a complete loss of trust amongst the troika [EU, IMF and ECB] in Greece's willingness and ability to push through the sort of reforms that everyone expects the Greeks to push through."

Europe's two largest economies, France and Germany, have led the push for further Greek cuts. In a radio interview, French Foreign Minister Alain Juppe was optimistic that Athens would meet Europe's terms. Juppe said a deal must reached. If Greece defaults on its debts and leaves the eurozone, the chaos would be even more terrible for the Greek population than it is today, and bad news for the eurozone.

Whyte also believes Greece will meet the conditions. But critics say that with the Greek economy shrinking, making it even tougher to repay its debts, further austerity measures aren't the answer. "There is a growing view among certain countries in northern Europe that this game can't go on," said Whyte. "And that letting Greece go [i.e. leave the eurozone] may actually, in the end, be a better option." This view - that both Greece and Europe would be better off if Athens left the eurozone - was echoed Wednesday by the European Parliament's conservative leader Martin Callahan. Callahan told fellow lawmakers that a so-called "orderly" Greek withdrawal from the monetary union, along with a devaluation of its currency, would save a generation of Greeks from a miserable economic inheritance.

Source
 
Good, someone should give them a kick off that cliff.

That what they get with their bloated government.
 
they should be left to their own devices. If they want to inflate the Drachma to argentine levels, let them. But making the taxpayers in the more responsible parts of europe pay for Greek fecklessness is no longer sustainable.
 
if Greece defaults....the piigs will follow....we may see the biggest bank run in history.....

prepare for another recession...
 
Yeah?

Then what happens?

Do Greece's creditors get ownership of the Parthenon?

No. They have to eat their losses. And chances are good that your 401k owns some of their bonds.
 
Yeah?

Then what happens?

Do Greece's creditors get ownership of the Parthenon?


It means that when government employees attempt to cash their paychecks they bounce.

That will be fun to watch, eh?

And we will be next if we don't change our political machine in WA., in `12.


------"And the press buys it. The Washington Post has been writing about "draconian cuts."

"The politicians know this game," Mitchell said. "The special interests know this game. Everyone gets a bigger budget every year. ... And we wind up, sooner or later, being Greece."

We are definitely on the road to bankruptcy.

"We have maybe 10, 15 years' advanced notice. And what's frustrating is that we're not taking advantage of that, even as we see these other countries collapsing into social chaos and disarray."

much more, in detail: A commentary by John Stossel

Never Trust Government Numbers - Rasmussen Reports™
 
Last edited:

Forum List

Back
Top