I wonder how long it will take the Greeks to burn through that money and be back in the same situation?
EDIT: UPDATE
http://www.businessweek.com/news/2010-04-11/greece-wins-eu45-billion-pledge-to-blunt-crisis-shore-up-euro.html
Quote
Greece Wins EU45 Billion Aid Pledge to Blunt Crisis (Update1)
April 11, 2010, 6:50 PM EDT
More From Businessweek
(Updates currency in fifth paragraph. For more on the Greek crisis, see {EXT3 <GO>}.)
By James G. Neuger and Jonathan Stearns
April 12 (Bloomberg) -- European governments offered debt- plagued Greece a rescue package worth as much as 45 billion euros ($61 billion) at below-market interest rates in a bid to stem its fiscal crisis and restore confidence in the euro.
Forced into action by a surge in Greek borrowing costs to an 11-year high, euro-region finance ministers said yesterday they would offer as much as 30 billion euros in three-year loans in 2010 at around 5 percent. That's less than the current three- year Greek bond yield of 6.98 percent. Another 15 billion euros would come from the International Monetary Fund.
"This is a huge amount," said Stephen Jen, managing director at BlueGold Capital Management LLP in London and a former IMF economist. "This is more than a bazooka. They have gone nuclear on the issue of Greece. In the short run the market is short Greek assets so we'll get a rally in those."
With the euro facing the stiffest test since its debut in 1999, the 16-nation bloc maneuvered around rules barring the bailout of debt-stricken countries, aiming to prevent Greece's financial plight from spreading and to mute concerns about the currency's viability. Germany also abandoned an earlier demand that Greece pay market rates.
No Aid Request
The euro has dropped 5.7 percent against the dollar this year as the discord within Europe over the response to the Greek crisis sapped faith in Europe's economic management. The single currency rose 0.9 percent to $1.3617 as of 7:06 a.m. in Tokyo after jumping 1 percent on April 9.
Bond investors' response will determine whether Greece needs to tap the aid, a Greek Finance Ministry official said in Athens yesterday. Finance Minister George Papaconstantinou said the government plans to go ahead with debt sales, including a dollar-denominated bond, without taking up the offer for aid.
The package "sends a clear message that nobody can play with our common currency and our common fate," Greek Prime Minister George Papandreou told reporters in Larnaca, Cyprus.
Yesterday's teleconference of euro-region officials, which included European Central Bank President Jean-Claude Trichet, left open just how much Greece might need in 2011 and 2012, the final years covered by the package.
"It shows there is money behind this," Luxembourg Prime Minister Jean-Claude Juncker told reporters in Brussels yesterday after chairing the conference call. "The initiative for activating the mechanism rests with the Greek government."
IMF Loan
Europe's contribution would represent about two thirds of any aid, with the IMF chipping in the rest, European Union Economic and Monetary Commissioner Olli Rehn said.
"We cannot speak on behalf of the IMF, but we know that they are ready to cooperate and contribute with a substantial amount," Rehn said. Greek, EU and IMF officials will meet today to start working on details.
The IMF was "ready to join the effort," Managing Director Dominique Strauss-Kahn said an in e-mailed statement, without giving more details on the IMF contribution.
European rhetorical support in February and March failed to prevent Greek 10-year bond yields from soaring to 7.51 percent on April 8, according to Bloomberg generic prices, amid concern that Papandreou's government will be swamped by its bills.
The jump in Greek yields to the highest since December 1998 helped overcome resistance to an aid package in Germany, which as Europe's biggest economy would contribute almost a third of the loans, the largest single share.
Germany Backs Down
Germany "has lost the competition," said Carsten Brzeski, an economist at ING Group in Brussels who used to work at the European Commission. "All that fuss and talk about not putting taxpayer money at risk has been made obsolete."
The premium investors demand to buy Greek 10-year bonds instead of German bunds jumped to 442 basis points April 8, easing to 398 basis points the next day as speculation over a rescue gained steam.
In the compromise hammered out yesterday, the European loans would be tied to Euribor and priced above rates charged by the IMF, a nod to German opposition to subsidizing a country that lived beyond its means. The EU will offer a mix of fixed- rate and floating rate loans.
The IMF would charge less than the EU. Both types of funding would be offered at the same time, Rehn said. Transfers to Greece would be made by the ECB.
Greece last week raised its estimate of the 2009 deficit from 12.7 percent of gross domestic product to 12.9 percent, the highest in the euro's history and more than four times the EU's 3 percent limit.
Deficit Limits
While rules dictated by Germany in the 1990s foresee fines for countries that go over the limit, no penalty has ever been imposed. Germany also led the charge to loosen the rules in 2005 after three years of excessive deficits.
While all euro-region governments vowed to contribute, some would need parliamentary approval. Ireland, itself reeling from the financial crisis, would require "national legislation," Finance Minister Brian Lenihan said in an e-mailed statement.
The Greek government has yet to request a European lifeline, confident that this year's planned budget cut of 4 percentage points will stem speculation that it is heading for the euro region's first-ever default. Fitch Ratings highlighted that risk by shaving Greece's debt rating to BBB-, one level above junk, on April 9.
A combination of higher taxes, lower spending and salary cuts for public workers have prompted strikes and protests against Papandreou, a socialist elected in October on promises of raising wages.
Maturing Debt
The EU showed no sign of demanding further Greek austerity measures. Rehn hailed the Greek government for implementing "a very bold and ambitious program."
Greece needs to raise 11.6 billion euros by the end of May to cover maturing bonds, and another 20 billion euros by the end of the year to pay debt coupons and finance this year's deficit.
The debt agency plans to offer 1.2 billion euros of six- month and one-year notes tomorrow, in a test of investor confidence.
Greece is likely to need money by the end of April, said Erik Nielsen, London-based chief European economist at Goldman Sachs Group Inc. Noting that the budget cuts threaten to cripple the economy, he said in a research note that "this thing is unlikely to go to bed anytime soon."
--With assistance from Meera Louis and John Martens in Brussels, Maria Petrakis in Athens, Simon Kennedy in Paris, Stelios Orphanides in Nicosia, and Alan Crawford and Brian Parkin in Berlin. Editors: Andrew Davis, Ben Livesey
To contact the reporters on this story: James G. Neuger in Brussels at [email protected]; Jonathan Stearns in Brussels at [email protected];
To contact the editor responsible for this story: James Hertling at [email protected]
:nelson:
Europe
QuoteThe EU showed no sign of demanding further Greek austerity measures. Rehn hailed the Greek government for implementing "a very bold and ambitious program."
No point. They probably won't be able to implement the measures they have already announced.
QuoteGreece needs to raise 11.6 billion euros by the end of May to cover maturing bonds, and another 20 billion euros by the end of the year to pay debt coupons and finance this year's deficit.
So - basically Europe and the IMF will be financing Greece's deficit for around a year, roughly, if, as seems likely, this package is needed. What then?
What other choice did Germany have? We all know that all that 'tough love' talk was a bunch of horseshit. Until the EU breaks up, the well-organized, wealthy states will continue to bankroll the countries that never made it out of the 70s.
Quote from: Agelastus on April 11, 2010, 07:59:25 PM
QuoteThe EU showed no sign of demanding further Greek austerity measures. Rehn hailed the Greek government for implementing "a very bold and ambitious program."
No point. They probably won't be able to implement the measures they have already announced.
QuoteGreece needs to raise 11.6 billion euros by the end of May to cover maturing bonds, and another 20 billion euros by the end of the year to pay debt coupons and finance this year's deficit.
So - basically Europe and the IMF will be financing Greece's deficit for around a year, roughly, if, as seems likely, this package is needed. What then?
Greek army marches on Istanbul.
The money will be delivered to Athens in a hollow wooden horse. :)
Maybe we can convince the Europeans to bailout California.
Quote from: jimmy olsen on April 11, 2010, 08:02:14 PM
Quote from: Agelastus on April 11, 2010, 07:59:25 PM
QuoteThe EU showed no sign of demanding further Greek austerity measures. Rehn hailed the Greek government for implementing "a very bold and ambitious program."
No point. They probably won't be able to implement the measures they have already announced.
QuoteGreece needs to raise 11.6 billion euros by the end of May to cover maturing bonds, and another 20 billion euros by the end of the year to pay debt coupons and finance this year's deficit.
So - basically Europe and the IMF will be financing Greece's deficit for around a year, roughly, if, as seems likely, this package is needed. What then?
Greek army marches on Istanbul.
Better to have the Turkish army march on Athens. It'd solve all those problems Greece is at the heart of - their debt crisis, Cyprus, Macedonia.
I don't think our continental brethren are that stupid.
edit: this is a response to Raz, of course...bloody speed posters...
That's an absurdly over-the-top and inaccurate title Tim. Greece hasn't been bailed out and nowhere in the article does it say they have.
I mean they may need bailing out at some point very soon but it's not actually happened.
They get a credit line at an interest rate that is still considerably higher than what any other country has to pay at the markets right now. Not a particularly generous bailout.
Seems like a good compromise though. It gives the Greeks time to fix the situation, but it does give the other countries a risk premium - not as high as the market, but still.
Quote from: Neil on April 11, 2010, 08:02:01 PM
What other choice did Germany have?
Let Greece default.
Quote from: Admiral Yi on April 12, 2010, 06:15:18 AMLet Greece default.
That would probably have required very expensive bank bailouts, so it would not have been cheaper. When Lehman was allowed to go bankrupt that was in hindsight not such a brilliant idea.
And the damage it would do to the idea of European integration and solidarity not to help the Greeks in some way would be immeasurable.
Quote from: Zanza on April 12, 2010, 06:21:57 AM
That would probably have required very expensive bank bailouts, so it would not have been cheaper. When Lehman was allowed to go bankrupt that was in hindsight not such a brilliant idea.
And the damage it would do to the idea of European integration and solidarity not to help the Greeks in some way would be immeasurable.
Do you know that some (European) banks have heavy exposure to Greek debt--enough to sink them--or is that speculation?
This is the first I've heard of the concept of European solidarity.
Quote from: Zanza on April 12, 2010, 06:21:57 AM
And the damage it would do to the idea of European integration and solidarity not to help the Greeks in some way would be immeasurable.
This. The EU is a pretty popular idea with a lot of the citizens of those wealthy countries.
Quote from: Admiral Yi on April 12, 2010, 06:49:37 AM
Quote from: Zanza on April 12, 2010, 06:21:57 AM
That would probably have required very expensive bank bailouts, so it would not have been cheaper. When Lehman was allowed to go bankrupt that was in hindsight not such a brilliant idea.
And the damage it would do to the idea of European integration and solidarity not to help the Greeks in some way would be immeasurable.
Do you know that some (European) banks have heavy exposure to Greek debt--enough to sink them--or is that speculation?
This is the first I've heard of the concept of European solidarity.
It is known and many of those banks are German. European solidarity is something that has always been present in some way or the other. Development funds, for instance.
Well, the Greek PM himself accuses banks of taking advantage of Greece's situation (lame excuse of course, reminds me of my buddy who used to play FPS LAN games shouting "don't shoot, don't shoot" at anyone who dared targetin him"
so I would not worry that much about banks going busto.
Besides, at some point, we will have to stop caring for big banks going bust because until they know they will be protected, why they should not take insane risks? Hell, even Greece is in deep shit because the politicans thought that on the longterm something will be done to save their asses, and what do you know...
Quote from: Admiral Yi on April 12, 2010, 06:49:37 AMDo you know that some (European) banks have heavy exposure to Greek debt--enough to sink them--or is that speculation?
Some of the government owned banks in Germany have heavy exposure, most of all the Hypo Real Estate that was bailed out with 90 billion Euro (or so) last year. So the alternatives for the German government are apparently to either give the Greeks 8-10 billion at a rather high interest rate that will give Germany a nice profit in case Greece is able to pay it back. Or to give money to the black hole that are our government controlled banks.
QuoteThis is the first I've heard of the concept of European solidarity.
It was always about solidarity. It says so in the preamble of the treaties too. The current preamble has this:
QuoteDESIRING to deepen the solidarity between their peoples while respecting their history, their culture and their traditions,
It was different before, but it was always there. To give an example: the Structural Funds and Cohesion Funds, which together are the second biggest EU budget item after agricultural subsidies, is all about solidarity.
Quote from: Tamas on April 12, 2010, 08:14:14 AMBesides, at some point, we will have to stop caring for big banks going bust because until they know they will be protected, why they should not take insane risks? Hell, even Greece is in deep shit because the politicans thought that on the longterm something will be done to save their asses, and what do you know...
Do you think that in hindsight it was right not to bail out Lehman Brothers?
Quote from: Zanza on April 12, 2010, 08:27:34 AM
Quote from: Tamas on April 12, 2010, 08:14:14 AMBesides, at some point, we will have to stop caring for big banks going bust because until they know they will be protected, why they should not take insane risks? Hell, even Greece is in deep shit because the politicans thought that on the longterm something will be done to save their asses, and what do you know...
Do you think that in hindsight it was right not to bail out Lehman Brothers?
I dislike state bailout of private companies on general principle.
Quote from: Tamas on April 12, 2010, 08:43:51 AMI dislike state bailout of private companies on general principle.
Me too. But politics is not about principles, but about reality. Do you think that despite violating a good principle a bailout of Lehman would have been beneficial in hindsight?
Quote from: Zanza on April 12, 2010, 08:51:54 AM
Quote from: Tamas on April 12, 2010, 08:43:51 AMI dislike state bailout of private companies on general principle.
Me too. But politics is not about principles, but about reality. Do you think that despite violating a good principle a bailout of Lehman would have been beneficial in hindsight?
I don't know, honestly.
However, this is one of those principles with which they should stick. I am telling you right now that we will have our next US bubble (as a matter of fact one may very well be forming on the stockmarket as we speak) sooner or later, and Spain will be the next asking for lenient loans to sponsor a failed model.
Financial leaders must see there are irreversible huge risks with financial trickery. But for that, there have to be irreversible huge risks with financial trickery.
Quote from: Tamas on April 12, 2010, 08:43:51 AM
However, this is one of those principles with which they should stick. I am telling you right now that we will have our next US bubble (as a matter of fact one may very well be forming on the stockmarket as we speak) sooner or later, and Spain will be the next asking for lenient loans to sponsor a failed model.
Financial leaders must see there are irreversible huge risks with financial trickery. But for that, there have to be irreversible huge risks with financial trickery.
If only the US could get on that gravy train :(
Quote from: Tamas on April 12, 2010, 09:09:52 AMFinancial leaders must see there are irreversible huge risks with financial trickery. But for that, there have to be irreversible huge risks with financial trickery.
It would be nice if that actually works. As it is, even if shareholders are wiped out in a stock company bust, they are not the ones that actually make the risky decision in the first place. And the very concept of limited liability in a corporation obviously limits the maximum pain they will have to bear to their stake in the corporation. And the real decision makers, the employees of the company, can at worst lose their job as they are usually not liable at all (unless they are stock holders too). So unless you change the law so that banks can no longer operate as limited liability companies, I don't see how this could work.
Hmm, perhaps I could sign up to full liability. I guess that would discourage investment though and might on the whole not be beneficial for a society.
45 Billion? Heck you could hardly bail out one failed Wall Street firm for that. Europe is small time.
Quote from: Valmy on April 12, 2010, 10:22:27 AM
45 Billion? Heck you could hardly bail out one failed Wall Street firm for that. Europe is small time.
Unlike a Wall Street bailout, we don't get any Greek stock though. And Greece does not have any assets it could sell off to pay back the loans really. And as it is a sovereign nation, it can always do this: :moon:
Quote from: Zanza on April 12, 2010, 11:05:50 AM
Quote from: Valmy on April 12, 2010, 10:22:27 AM
45 Billion? Heck you could hardly bail out one failed Wall Street firm for that. Europe is small time.
Unlike a Wall Street bailout, we don't get any Greek stock though. And Greece does not have any assets it could sell off to pay back the loans really. And as it is a sovereign nation, it can always do this: :moon:
Oh and they will. I guess all they need is one party starting to shout "the jews did it, to the hell with all our foreign loans!" it will win the election for them
By the way, the IMF has currently given loans the following European states Hungary, Ukraine, Iceland, Latvia, Belarus, Romania, Serbia, Bosnia-Herzegovina, Moldavia, Georgia. That's like half of Eastern Europe.
I kinda liked the island-selling idea.
Quote from: MadImmortalMan on April 12, 2010, 09:25:04 PM
I kinda liked the island-selling idea.
Use a quit-claim deed and you could do it over and over again. ;)
Quote from: Zanza on April 12, 2010, 11:27:34 AM
By the way, the IMF has currently given loans the following European states Hungary, Ukraine, Iceland, Latvia, Belarus, Romania, Serbia, Bosnia-Herzegovina, Moldavia, Georgia. That's like half of Eastern Europe.
I approve of classifying Iceland as Eastern European.
This is the kind of financing that only politicians and diplomats could dream up. Strauss-Kahn must be out of his mind to agree to this. Both the IMF and the EU are committing funds as part of an overall package, but there are separate loans with separate terms and conditions. Hard to think of a better recipe for chaos. Who is in charge in the event something goes wrong? Within the EU part, what EU institution is going to service and monitor the loan?
QuoteWhile all euro-region governments vowed to contribute, some would need parliamentary approval. Ireland, itself reeling from the financial crisis, would require "national legislation," Finance Minister Brian Lenihan said in an e-mailed statement.
This must be a joke.
Quote from: The Minsky Moment on April 13, 2010, 10:40:01 AM
This is the kind of financing that only politicians and diplomats could dream up. Strauss-Kahn must be out of his mind to agree to this. Both the IMF and the EU are committing funds as part of an overall package, but there are separate loans with separate terms and conditions. Hard to think of a better recipe for chaos. Who is in charge in the event something goes wrong? Within the EU part, what EU institution is going to service and monitor the loan?
I haven't read anything about it, but there is the European Investment Bank. As far as I can tell it's exactly the kind of institution to handle stuff like this.
Quote from: The Minsky Moment on April 13, 2010, 10:42:30 AM
QuoteWhile all euro-region governments vowed to contribute, some would need parliamentary approval. Ireland, itself reeling from the financial crisis, would require "national legislation," Finance Minister Brian Lenihan said in an e-mailed statement.
This must be a joke.
Yes, that doesn't make any sense. Does Greece pay its share as well?
So there will have to be a national vote in Ireland before the greeks can get their loans? :lol:
Stockmarkets will crumble the moment this becomes official.
Quote from: Zanza on April 13, 2010, 11:18:48 AM
I haven't read anything about it, but there is the European Investment Bank. As far as I can tell it's exactly the kind of institution to handle stuff like this.
Will the individual states make their loans and then simply walk away and let the EIB handle all the details, come what may? Does not seem likely.
The problem is that the EU has an institutional vacuum for this sort of program. No EU level institution has either the funding or the authority and the Council (as the body bringing together the individual states who do have the funding and authority) does not have the bureaucracy or expertise to manage it.
Thus, the logical thing would be a plain vanilla IMF program, but that would have the side effect of exposing the lacunae in the EU's incomplete financial infrastructure, forcing uncomfortable questions to be asked.
Quote from: Tamas on April 13, 2010, 11:30:16 AM
So there will have to be a national vote in Ireland before the greeks can get their loans? :lol:
Stockmarkets will crumble the moment this becomes official.
I think the national legislation just means that the legislation needs to be passed through the Irish parliament. I'm fairly sure a referendum wouldn't be needed.
Quote from: The Minsky Moment on April 13, 2010, 11:47:44 AMWill the individual states make their loans and then simply walk away and let the EIB handle all the details, come what may? Does not seem likely.
The problem is that the EU has an institutional vacuum for this sort of program. No EU level institution has either the funding or the authority and the Council (as the body bringing together the individual states who do have the funding and authority) does not have the bureaucracy or expertise to manage it.
They'll just make it up as they go along. That's how the EU works. :P
Quote from: The Minsky Moment on April 13, 2010, 10:40:01 AM
This is the kind of financing that only politicians and diplomats could dream up. Strauss-Kahn must be out of his mind to agree to this.
Election year 2012 in France? ;)
Is Greece too big to fail?
QuoteGreece requests financial bailout
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fenglish.aljazeera.net%2Fmritems%2FImages%2F%2F2010%2F4%2F23%2F2010423113921373734_5.jpg&hash=43e957df14c0cf36569f9a565bcf9322fb5cf74a)
On Thursday, tens of thousands of Greek civil servants staged a strike to protest over debt [AFP]
George Papandreou, the Greek prime minister, has asked for the activation of financial aid package, designed to help pull the euro zone member out of its debt crisis.
The request on Friday followed negotiations with European Union and International Monetary Fund officials over the details of the $60bn emergency rescue package.
Financial data published the previous day showed a worse-than-expected budget deficit of 13.6 per cent of gross domestic product (GDP).
"The moment has come," Papandreou said.
"It is a national and pressing necessity for us to formally ask our partners for the activation of the support mechanism, which we jointly created in the European Union."
Papandreou said the markets had not responded positively to Greece's austerity measures that were designed to pull the country's disastrous finances into line.
George Papaconstantinou, the Greek finance minister, said that the country expects to receive the first tranche of the $60.49bn (45bn euro) EU/IMF aid package before May 19.
"The request for aid removes uncertainty in the markets that Greece will not have funding," he said.
This is probably the largest multilateral rescue of a country ever attempted and comes after months of markets pushing Greek borrowing costs ever higher, undermining the country's efforts to cut its 300bn euro debt load.
Meanwhile, Angela Merkel, the German Chancellor, has said that there will be no aid for Greece until talks with the IMF are finished.
"The European Commission, the European Central Bank and the IMF would have to determine whether there is a situation whereby the stability of the euro as a whole makes it necessary to provide an aid programme for Greece," Merkel said.
Greece has covered its funding needs for this month, albeit at a high cost and needs to borrow less than 10 billion euros to cover next month when an 8.5 billion euro government bond comes due.
"Greece will go out to borrow from markets when conditions are appropriate," said Papaconstantinou, who will meet with IMF chief Dominique Strauss-Kahn in Washington this weekend.
Germany is furious that Greece has been able to borrow for years at rates close to German rates by virtue of being in the eurozone, but on misstated data which EU authorities let pass.
Germany remains central to the rescue, since it is reluctant to allow Greece steeply concessionary rates, of around 5.0 percent.
Axel Weber, Germany's central banker, warned that the risks of contagion from the Greek debt crisis had increased in recent weeks with many countries running "excessive budget deficits."
"The risk of contagion has increased over the last weeks and many countries are running excessive budget deficits," Weber said.
"Today, the situation in the markets threatens to deconstruct, not only the sacrifices of the Greek people, but also the smooth course of the economy," he said.
The rescue plan aims to cover Greece's immediate borrowing needs so it can continue servicing its debt and avoid default.
Papandreou was visiting the Aegean island of Kastellorizo on Friday before travelling to the United States for a meeting with IMF officials.
He is expected to meet Jean-Claude Trichet, the European central bank president, who is also attending the event in Washington.
The bailout would have to be reviewed by the European Union executive and the European central bank, and needs approval by all 15 of the other governments that use the euro.
'Painful process'
Al Jazeera's Barnaby Phillips, reporting from Athens, said it seems as if Greece has no other option.
"This has been a long, slow, painful process that has dragged on for four to five months but in the last two weeks the endgame has looked sadly inevitable.
"It is a humiliating moment for Greece, it's a traumatic moment for a country in the euro zone, it has to take the cheaper emergency money which is on offer whether it likes it or not," he said.
On Thursday, borrowing costs spiralled to alarming and unsustainable levels, pushing interest rates for Greek 10-year bonds to nearly nine per cent.
The spike came after after Moody's credit agency downgraded the country's sovereign rating and the European Union's statistics agency Eurostat revised Greece's budget deficit in 2009 to 13.6 per cent of GDP from 12.9 per cent, and said it could be further revised by up to 0.5 percentage points.
The level is more than four times the EU limit set for the 16 countries that use the euro, which has been badly hit by the Greek financial crisis.
Athens insisted its target of reducing its deficit by at least four percentage points in 2010 remained unchanged.
I can only assume that the caption is a mistake; even the Greeks wouldn't strike in order to be fired, right? :unsure:
QuoteOn Thursday, tens of thousands of Greek civil servants staged a strike to protest over debt
Wow. Civil servants demanding the government slash expenses and pay its debts. What noble patriots those Greeks are :cry:
Quote from: Valmy on April 23, 2010, 10:38:30 AM
QuoteOn Thursday, tens of thousands of Greek civil servants staged a strike to protest over debt
Wow. Civil servants demanding the government slash expenses and pay its debts. What noble patriots those Greeks are :cry:
:lol:
I am pretty sure they want Teh Evöl Banks to pay the whole and not Teh People
All this does is ensure that Greece doesn't default on it's debts this year. There's always next year, though...
The richer countries in the EU will of course suffer from the wealth distribution of the EU, and they will likely be doomed to this fate so long as failure-prone economies (like the PIIGS economies) are allowed to be members of the EU. The outrage in Germany over this is understandable.
Still though, there has been some good to this: the pro-Euro crowd have finally been proven wrong here! :lol:
Quote from: Admiral Yi on April 12, 2010, 06:49:37 AM
Quote from: Zanza on April 12, 2010, 06:21:57 AM
That would probably have required very expensive bank bailouts, so it would not have been cheaper. When Lehman was allowed to go bankrupt that was in hindsight not such a brilliant idea.
And the damage it would do to the idea of European integration and solidarity not to help the Greeks in some way would be immeasurable.
Do you know that some (European) banks have heavy exposure to Greek debt--enough to sink them--or is that speculation?
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In addition Swiss banks are very vulnerable to a Greek default.
So France is really the one with the big Greek exposure. :hmm:
That number for Ireland can't possibly be 100% sovereign debt, can it?
Quote from: Admiral Yi on April 23, 2010, 05:57:14 PM
So France is really the one with the big Greek exposure. :hmm:
That number for Ireland can't possibly be 100% sovereign debt, can it?
I think a lot of it's from one of the nationalised banks and Central Bank/FSA spending during the crisis. I believe Irish external debt as a whole is worth over 800% of GDP.
I also heard that their budgets in 2009 cut spending and raised taxes by a sum around about 5% of GDP, despite this the deficit increased because the economy shrank quicker than the deficit.
I'm also rather stunned by that Irish debt figure :huh:
It would be like the UK having a debt of $9tn.........and we are worried by one of "merely" a trillion or so :hmm:
Given only half of Greek's national debt is listed, and Ireland's debt is listed as being approximately five times its actual level of national debt, I am at a loss as to what this chart actually shows. :hmm:
If Ireland collapses, they can always go back to terror.
Quote from: Agelastus on April 23, 2010, 07:08:50 PM
Given only half of Greek's national debt is listed, and Ireland's debt is listed as being approximately five times its actual level of national debt, I am at a loss as to what this chart actually shows. :hmm:
I think government debt plus debt they're effectively guaranteeing in nationalised banks. The Irish nationalised Anglo-Irish and effectively Allied Irish and the Bank of Ireland didn't they?
Quote from: jamesww on April 23, 2010, 07:22:54 PM
I think the graph might have originated from some recent BIS guestimate where they included "contingent liabilities and pension debts", so yes largely made up figures.
So is the solid colour real debt and then the sort of shaded colour the guesswork?
As it stands the figure is simply insane; Greece is a veritable Mono compared to the profligacy of Ireland :lol:
However, some of the debts might be more theoretical than real. The UK government recently went into profit on it's bailout of RBS. Presumably those Irish banks do actually have some assets :huh: ?
Quote from: jamesww on April 23, 2010, 07:25:26 PM
Quote from: Neil on April 23, 2010, 07:09:37 PM
1. If Ireland collapses,
3. they can always go back to terror.
You missed out a stage:
2. - go work in construction in the USA.
I'm content with more Irish men coming to America.
Quote from: jamesww on April 23, 2010, 07:36:08 PM
Quote from: Sheilbh on April 23, 2010, 07:28:37 PM
Quote from: jamesww on April 23, 2010, 07:22:54 PM
I think the graph might have originated from some recent BIS guestimate where they included "contingent liabilities and pension debts", so yes largely made up figures.
So is the solid colour real debt and then the sort of shaded colour the guesswork?
No idea, because whoever posted it didn't include a link, your guess as good as...
Though well spotted on the different shadings, could be anything, why is all of the Irish debt the UK hold lightly shaded and germany holds only solid green ? :hmm:
The chart is from the Wall Street Journal (right click over the image for properties, and then copy and paste the URL.) However, I have not yet been able to locate the article it is attached to. I have the feeling I am missing something obvious. :Embarrass:
Quote from: Agelastus on April 23, 2010, 07:53:16 PM
Quote from: jamesww on April 23, 2010, 07:36:08 PM
Quote from: Sheilbh on April 23, 2010, 07:28:37 PM
Quote from: jamesww on April 23, 2010, 07:22:54 PM
I think the graph might have originated from some recent BIS guestimate where they included "contingent liabilities and pension debts", so yes largely made up figures.
So is the solid colour real debt and then the sort of shaded colour the guesswork?
No idea, because whoever posted it didn't include a link, your guess as good as...
Though well spotted on the different shadings, could be anything, why is all of the Irish debt the UK hold lightly shaded and germany holds only solid green ? :hmm:
The chart is from the Wall Street Journal (right click over the image for properties, and then copy and paste the URL.) However, I have not yet been able to locate the article it is attached to. I have the feeling I am missing something obvious. :Embarrass:
;)
http://online.wsj.com/article/SB10001424052748703798904575069712153415820.html (http://online.wsj.com/article/SB10001424052748703798904575069712153415820.html)
Quote from: citizen k on April 23, 2010, 11:55:55 PM
;)
http://online.wsj.com/article/SB10001424052748703798904575069712153415820.html (http://online.wsj.com/article/SB10001424052748703798904575069712153415820.html)
Thanks.
As I suspected, the chart includes private as well as public debt, which would explain the massive British exposure to Ireland.
QuoteThe data include government bonds, corporate debt and loans to individuals.
Quote from: jamesww on April 23, 2010, 07:22:54 PM
I think the graph might have originated from some recent BIS guestimate where they included "contingent liabilities and pension debts", so yes largely made up figures.
Can you explain why in a way someone who only took Economics 101 (in another language!) can understand? :unsure:
Quote from: jamesww on April 23, 2010, 07:22:54 PM
I think the graph might have originated from some recent BIS guestimate where they included "contingent liabilities and pension debts", so yes largely made up figures.
That can't be right--the aggregate exposure for individual countries (France, Germany, etc.) equals the aggregate debt listed for the PIIGS.
Quote from: Iormlund on April 24, 2010, 07:04:34 AM
Quote from: jamesww on April 23, 2010, 07:22:54 PM
I think the graph might have originated from some recent BIS guestimate where they included "contingent liabilities and pension debts", so yes largely made up figures.
Can you explain why in a way someone who only took Economics 101 (in another language!) can understand? :unsure:
I don't think it applies to this chart, but governments typically account for pensions differently than private companies (there are different accounting rules), and so sometimes people will apply the private company rules (or some other standard they prefer) to government bodies which greatly increases their debt.
Contingent liabilities are liabilities that depend on future uncertain events. For example, if I am being sued for $1 million and my lawyer thinks it is 50/50 I will win, I'll recognize a contingent liability of $500k.
Quote from: Agelastus on April 24, 2010, 07:03:26 AM
As I suspected, the chart includes private as well as public debt, which would explain the massive British exposure to Ireland.
QuoteThe data include government bonds, corporate debt and loans to individuals.
That makes more sense.
So then the question arises whether Irish homeowners are borrowing from British households, or whether British banks are operating in Ireland a la Icesave and intermediating Irish savings.