Sovereign debt bubble thread

[Admiral Yi]

Does anyone know how much Greece gets annually in EU transfers? 

I ask because it seems such a no-brainer for Greece to default on its official debt that I'm led to believe the only reason they don't is fear of getting kicked out of the EU.

[Iormlund]

They don't have a primary surplus yet, so they'd need help nevertheless.

[Iormlund]

Apparently there's an agreement for the next half-measure: resuming purchases of Italian and Spanish debt, using both EFSF (which by now should be almost depleted) and ESM (which doesn't event exist yet). Any bets on how short a life will this one have?

[Sheilbh]

Does anyone know how much Greece gets annually in EU transfers? 

I assume you mean the structural development funds?  That and the CAP are the major transfers in the EU.

Where I see a democratic deficit is how the lower chamber of the EU, the parliament, is elected as Maltese votes count much more than German votes. That's a good point for criticism in my opinion.

I don't think that's the major democratic deficit problem.  That exists in the UK Parliament too - a vote in the Western Isles constituency counts far more than one in the Isle of Wight.  But it's also arguably a problem in the US.  It's not necessarily problematic democratically.  Isn't there any real variation in population in German single-member constituencies?

[Neil]

Does anyone know how much Greece gets annually in EU transfers? 

I assume you mean the structural development funds?  That and the CAP are the major transfers in the EU.

I would imagine he means all the various transfers and subsidies, major and minor.  Still, it's not like those are especially important, since most of them are more or less direct transfers to assorted Greek criminals, due to the fact that the Greek government is corrupt.

Where I see a democratic deficit is how the lower chamber of the EU, the parliament, is elected as Maltese votes count much more than German votes. That's a good point for criticism in my opinion.

I don't think that's the major democratic deficit problem.  That exists in the UK Parliament too - a vote in the Western Isles constituency counts far more than one in the Isle of Wight.  But it's also arguably a problem in the US.  It's not necessarily problematic democratically.  Isn't there any real variation in population in German single-member constituencies?

Indeed, although that whine is common amongst inhabitants of heavily-populated regions in democracies.  It should be dismissed out of hand.

[Sheilbh]

I would imagine he means all the various transfers and subsidies, major and minor.  Still, it's not like those are especially important, since most of them are more or less direct transfers to assorted Greek criminals, due to the fact that the Greek government is corrupt.

CAP and the various regional development funds are the only real transfers and, together, for the entire EU they're under €100 billion.  I believe Greece is a big net recipient though, around €3 billion pa.  But the reason I ask about the development funds is it's not clear how much of those Greece are getting at the minute. 

For the infrastructure projects and the like the EU requires a 50-50 contribution from either the national or regional (lots of the funds are spread on a regional basis, so I believe Athens is a net contributor while some of the islands are among the biggest net recipients) governments.  The Greeks haven't been able to match that.  A while ago Barroso suggested cutting the requirement for Greece to 15% contribution, but I don't know if that got anywhere.

[Sheilbh]

Interesting IMF preliminary Eurozone findings:
http://www.imf.org/external/np/ms/2012/062112.htm

Bob Zoellick recently suggested there could be a big EZ-IMF bust up this summer because it's not clear that the EZ can deliver the things the IMF want for continued support and it's more open to renegotiating with the Greeks especially.  It looks like the IMF is at least getting more open about their policy preference - ECB easing, fiscal union (with some form of common debt issuance), banking union, single market in services and direct bank recapitalisation.

Hopefully the EZ can deliver something at this coming summit that comes somewhere close to the market expectations they've stoked.  According to the FT's tea-leaf reader the proposals Van Rompuy's making are still to be confirmed with member states (there's just a placeholder in the draft communique) and it looks like the single patent system could be moving forward which is good.  Apparently the only issue left is deciding where it'll be based - London, Paris or Munich - but no-one looks like giving in

[Tamas]

Word is, the ECB is easing up on it's ABS collateral requirements.

Now, I am not exactly sure what that means, so tell me: does that mean that it will accept ever crappier stuff as valid-value backings for the imaginary money it hands out to banks?

Which allows the banks to package utter shit into a package of value? And re-sell it as such?

what could POSSIBLY go wrong, I ask!

[Crazy_Ivan80]

Now, I am not exactly sure what that means, so tell me: does that mean that it will accept ever crappier stuff as valid-value backings for the imaginary money it hands out to banks?

yes.
Soon you'll get euros for verbal promises.

[Tamas]

Greek PM is in hospital due to "detached retina" and brand-new finance minister was taken to hospital as well due to fainting.

WHAT NEWS DID THEY HEAR? 

[Zanza]

[Richard Hakluyt]

Greek PM is in hospital due to "detached retina" and brand-new finance minister was taken to hospital as well due to fainting.

WHAT NEWS DID THEY HEAR? 

They must have seen the books 

[Sheilbh]

Word is, the ECB is easing up on it's ABS collateral requirements.

Yeah from A- rated mortgage backed securities to BBB- rated ones.  I think they're also accepting other types of securities.  But they're not accepted at face value, they get a variable haircut because of the extra risk.

Given the state many EZ banks are in this isn't a helpful move so much as it's a grudging and miserable acknowledgement of reality.

Edit:  Also this is laughable:
http://www.guardian.co.uk/business/2012/jun/22/eurozone-big-four-pledge-gdp

[MadImmortalMan]

Yeah from A- rated mortgage backed securities to BBB- rated ones.

No doubt to keep the bonds of the stressed euro nations inside the definition of valid collateral.

[Iormlund]

Probably. Spanish bonds are a sneeze away from junk and when that happens our banks will take a huge hit.