Current Topics
Normalizing Cu ban Relations
by logtroll
Today at 01:49 PM
Defense of the GOP
by logtroll
Today at 12:33 PM
Round Table For The Month Of December, 2014
by Phil Hoskins
Today at 12:00 PM
Current case study: Oil and the Free Market
by NW Ponderer
Yesterday at 04:03 PM
Just a random thought that keeps circulating in my brain:
by NW Ponderer
12/17/14 10:42 AM
Graphic report on CIA interrogations, torture released by Senate panel
by Phil Hoskins
12/16/14 09:30 PM
Philip K. Dick would have been 86 today: Some thoughts on hi
by pondering_it_all
12/16/14 08:17 PM
Five GOP immigration myths
by pondering_it_all
12/15/14 03:12 PM
'Annie': Film Review
by pdx rick
12/15/14 12:19 AM
10 most dangerous jobs
by logtroll
12/14/14 02:36 PM
Miscellaneous humor thread
by Golem
12/14/14 01:23 PM
police shootings, killings
by jgw
12/13/14 03:20 PM
Cromnibus? Cronybus? Crimnibus?
by logtroll
12/12/14 09:49 AM
I think I might be Catholic...
by logtroll
12/12/14 03:03 AM
Brainwashing
by Ken Condon
12/10/14 11:01 PM
Forum Stats
6003 Members
55 Forums
14500 Topics
248999 Posts

Max Online: 282 @ 05/29/08 01:08 AM
Google Adsense
Page 1 of 11 1 2 3 ... 10 11 >
Topic Options
#184828 - 06/18/11 12:44 PM Greece - The Domino Effect
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
France and Germany have agreed to a last ditch stand against the default of the Greek debt crisis. It's a short term delay of the inevitable.
As we discuss our own debt, and the future of China's influence on the world economy, it is becoming increasingly evident that Greece will probably be the trigger for a world-wide domino effect to destabilize the monetary system.

Rather than trying to recap the tumbledown effect, the following link provides an outline of what we might expect.

Article

FWIW, I believe that the the author has developed a well connected and logical scenario that brings together the weaknesses that are likely to cause a worldwide breakdown that will affect all countries, and could cause continued instability for the foreseeable future. The commentary to the right of the slide show is worth thoughtful review.
_________________________
Life is Good!

Top
#184833 - 06/18/11 12:58 PM Re: Greece - The Domino Effect [Re: itstarted]
pdx rick Offline
Member
Carpal Tunnel

Registered: 05/09/05
Posts: 36332
Loc: Portland, Oregon
Quote:
...it is becoming increasingly evident that Greece will probably be the trigger for a world-wide domino effect to destabilize the monetary system.

Article

***Heavy sigh***

I saw an analysis graph from This Week with Christine Amanpour, last week, which showed how long previous recessions took to "bounce-back" - relatively short times.

It's estimated that the US won't "bounce-back" 'til 2016.
_________________________
Contrarian, extraordinaire



Top
#184912 - 06/18/11 08:47 PM Re: Greece - The Domino Effect [Re: pdx rick]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Part of the Domino Effect - How the market looks at it:
Excerpt
Trader view
Quote:
The volume increases are less exciting than they may first appear, as deal sizes are not growing, and responding to rapid changes in market conditions is not a cost-free exercise. Also the boom has led to a sharpening of competitive conditions, so all market participants have to fight to preserve market share, and there is of course resulting pressure on commission rates. Persistent low interest rates are yet another negative factor, restricting the returns on funds held in clients’ margin accounts.

There are also concerns on the part of derivatives market users about global market structure and costs. With the proposed Deutsche Börse-NYSE Euronext merger expected to be scrutinized closely by competition authorities, leading industry figures have been calling attention to some long-recognized issues: derivatives market concentration, restrictive intellectual property practices that preclude contract fungibility, and the prevalent vertical-silo model inhibiting competition at the clearing level.

Meanwhile, trading clients and buy-side investors are not becoming any less demanding. Their strategies are more broad-based and complex, often ranging across multiple markets and asset classes. Direct market access (DMA) trading demand continues to grow steadily, and parallel growth in the use of execution algorithms has driven the requirement for brokers to distribute these algos also to their clients. And as the high frequency trading (HFT) phenomenon becomes established in derivatives markets, it brings another new set of requirements – ultra-low latency, sponsored access, exchange co-location and so on. There is no shortage of areas in which a derivatives brokerage is forced to invest, if it wishes to capture the best of the new revenue opportunities.


This is a reflection of the derivative concern itemized in the initial subject thread. With 98% leverage, it's clear to see that the time element will be crucial. At present, longest expected delay will be until September. smile

Top
#185029 - 06/19/11 02:19 PM Re: Greece - The Domino Effect [Re: itstarted]
Jeffery J. Haas Offline
veteran

Registered: 08/03/04
Posts: 10550
Loc: Downey, California
One thing's for sure, lenders aren't going to take a write down of any size or scale whatsoever. Watching the entire world go down the crapper is a good thing for them. They get to vacuum everything up all over again at fire sale prices.

I find myself wondering if it isn't better to just have the actual fire instead. Just a fleeting thought that runs through my head once in a while.
_________________________
"Our options for change range from basically what we have plus a little more Hayek,
to what we have plus a little more Keynes. Why?"

---Benjamin Bratton

Top
#186740 - 07/04/11 08:08 AM Re: Greece - The Domino Effect [Re: Jeffery J. Haas]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
There are several areas of new attempts to resolve the crisis.
The intricacies are incredibly complex. The Rating agencies are in disagreement, and the suggestions for resolution by the debtor nations, notably France appear to be short sighted.
Quote:
Analysts warned that the S&P's position could wreak havoc on Europe's attempts to deal with the Greek debt crisis, especially if rivals Moody's and Fitch come to the same conclusion. A so-called "selective default" could trigger massive insurance claims on Greek bonds, likely triggering another bout of turmoil in the financial markets.
S&P view

Quote:
PARIS- BNP Paribas SA and Credit Agricole SA face one-notch downgrades and Societe Generale SA could see a two-notch decline through their holdings of Greek government bonds or through their local banking subsidiaries, Moody's said.
The move followed Moody's decision earlier this month to cut Greece's own rating by three notches from a B1 rating to Caa1 with a negative outlook, citing increased risk that the financially stricken country will be unable to handle its debt problems without an eventual restructuring — paying creditors less than the full amount, or later than originally planned.
Societe Generale CEO Frederic Oudea has said a possible Greek debt restructuring "would be unpleasant but manageable" for the bank. A spokeswoman for the bank declined to comment further Wednesday. Spokespeople for BNP Paribas and Credit Agricole didn't immediately return calls for comment. A government spokesman sought to downplay the importance of the looming downgrade.


...More


Boiling the problem down to the dry dregs, it looks to me that the bottom line risk in all of the rescue plans, is that no matter what kind of structured settlement is reached, there is no way of avoiding the utter meltdown in the Credit Default Swaps. One can make a syllogistic comparison to the Lehman Brothers and the AIG situations, which in the case of the US, effectively kicked the can down the road. The actions of the government and the full support from the financial sector avoided the US catastrophe. It was in the interests of all, (at least at that time)... to paper over the holes in the counter party risk.

In the case of Greece, with nearly 100 Billion in eventual settlements at stake, the EU is looking to it's own shaky underpinnings, and trying to distance itself from the depths of the PIIGS web of debt.

I am inclined to agree with S&P and Moodys, that there are no good options, and that default is inevitable. The only question is how soon, and whether the world can shake off the fall of Greece.

I think not. Ten years of shooting craps in a dark room results in no winners.


Top
#186788 - 07/04/11 07:58 PM Re: Greece - The Domino Effect [Re: itstarted]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'
Mired in a Colossal Muddle -- US Economy Remains Stuck in Long-Term Slump

Quote:
"Imagine that in the worst year of our recent recession, the United States government decided to reduce its federal budget deficit by more than $800 billion dollars -- cutting spending and raising taxes to meet this goal. Imagine that, as a result of these measures, the economy worsened and unemployment soared to more than 16 percent, and then the president pledged another $400 billion in spending cuts and tax increases this year. What do you think would be the public reaction?

"It would probably be similar to what we are seeing in Greece today, including mass demonstrations and riots, because that is what the Greek government has done....

Because of the massive opposition to further economic self-destruction -- the latest polls show that 80 percent of Greeks are opposed to making any more concessions to the European authorities....

While the Papandreou government has clinched enough votes in parliament to pass another phase of the EU's austerity plan, this merely puts off the day of reckoning. Greece will not escape default. Eventually, the bondholders will be forced to take a hit on their investments and that will push the EU banking system (particularly English, French and German banks) into crisis. The meltdown may not be as big as Lehman, but it will certainly be enough to push the eurozone back into recession.


Edited by numan (07/06/11 12:19 AM)
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#194618 - 09/18/11 07:26 PM Re: Greece - The Domino Effect [Re: numan]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Update 9/18/2011

Default imminent

Watch to see how close they come... The domino effect spelled out in the link from the first post in this thread is happening. Geithner's apparent sense of criticality could be very real. The only thing that the current article didn't address is the one that seems to be the most serious to me. It's the effect of trying to unwind the credit default swaps. Despite assurances from the derivatives markets, I still don't see any way to arbitrate the huge positions that will be involved.
There is no question that the US will be involved. Even though the US government states it won't get involved... the danger is so great, that I'll bet a nickel that either the US banks will pony up, or the Fed or Treasury will find some kind of "deal" to kick the can further down the road.
It's the ultimate game of "Chicken".

Edit: to add this new link Is September 20th Greece Default Day?


Edited by itstarted (09/18/11 08:25 PM)
Edit Reason: to add 2nd link

Top
#198789 - 11/01/11 10:09 AM Re: Greece - The Domino Effect [Re: itstarted]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Surprise!!!

Wasn't the EU, but Greece that came up with a new way to kick the can down the road.
Greece will have a referendum in January to approve the government's austerity program.

Watch the Market... crazy, and likely to remain so.

No one predicted this referendum, and everybody's mad as hell.

... but maybe push the inevitable until after the new year???

Markets slide after surprise

as I write, the DJIA is down over 500 since yesterday's highs.
............................

Another point... The bankruptcy of MF Global looks as if there was some really bad hanky panky, and that they may have used customer accounts to hedge the Greek, Portugal and Italian bonds, and make a fortune. Looks like there may be a $1 Billion loss. An incredible figure to the hedge fund markets which are now in a panic, since there are no government guarantees anywhere on this stuff.

When we look back at the LTCM debacle, which almost brought down the market, and see that the underlying loss was $2Billion, you can see why there is some nervousness.

It's all tied in... the dominoes may be tipping a little.
Stay tuned.
........................................
One more thing... some breaking news stuff.
It looks as if China may not be getting into the "salvage the EU" deal... That has been a big part of the hope to get thru this meltdown.

Just a heads up:

Here

Top
#198800 - 11/01/11 12:25 PM Re: Greece - The Domino Effect [Re: itstarted]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?


Greece announces a euro referendum – hark what discord follows

Quote:
I wish I could convey the sheer writhing horror that George Papanderou's referendum proposal has provoked in Brussels. Eurocrats instinctively dislike referendums. They feel that their work is too important and complicated to be vulnerable to the prejudices of hoi polloi....

A referendum at any time would be regarded by European leaders as irresponsible. But a referendum when the euro is teetering on the brink is seen as the height of ingratitude, selfishness and recklessness. Eurocrats believe they understand Papandreou's game: by putting the terms of the bailout o the electorate, he hopes to wring better terms from them. But they know, too, that people have a tendency to ignore their leaders' advice and vote against Brussels.
What would a 'No' vote mean? It would mean a rejection of the bailout, obviously, which would imply an immediate default on Greece's remaining debt. This, in turn, would mean leaving the euro: with no more Brussels cash, Athens would need to devalue and print drachmas simply to meet payroll.

French President Sarkozy and German Chancellor Merkel are beside themselves, denouncing a decision of the people in a vote to be "irresponsible"!! · · · LOL

Thus we see what modern "developed democracies" are like. What a farce the modern world is !

And, by the way, global stock markets are in free fall.
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#198826 - 11/01/11 03:00 PM Re: Greece - The Domino Effect [Re: itstarted]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'
Greek Turmoil Sends US and World Markets Lower

Quote:
The stocks of major banks, including Citigroup and JPMorgan Chase, were hit hard....
Intense selling roiled markets in Europe. Italy's main stock index dropped 6.8 percent. France's fell 5.4 percent and Germany's fell 5 percent....
"The Greek referendum puts the connections between European countries at risk, from free-trade agreements to the common currency," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott....
In the United States, the market sank Monday before the surprise Greek announcement. MF Global Holdings, a securities firm led by former New Jersey Gov. Jon Corzine, was driven into bankruptcy in part because it held European debt....
The selling accelerated after the Greek announcement, and the U.S. market opened Tuesday with a drop of almost 300 points.

And just think! The uncertainty and panic will last at least until January!

Oh, Papandreou! You clever, clever socialist!
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#198859 - 11/01/11 11:22 PM Re: Greece - The Domino Effect [Re: numan]
pdx rick Offline
Member
Carpal Tunnel

Registered: 05/09/05
Posts: 36332
Loc: Portland, Oregon

Yup, who saw that coming? Hmm

Really? Let the folks who are causing the problem vote on a solution to their actions? Why, that's so democratic! coffee

Guess Merkel was drawing-upon her inner right-wing when she and Sarkozy foisted this austerity plan onto the Greek people.

Then again, when you allow people into your li'l private club, you really ought to vet them better - just sayin'. Hmm

Everyone knows that southern Europeans aren't so thrifty with their money - life is one big party! Pass the ouzo. Let's take a nap!

...and, besides, regularly buying replacement plates can be very expensive. coffee

_________________________
Contrarian, extraordinaire



Top
#198874 - 11/02/11 08:29 AM Re: Greece - The Domino Effect [Re: itstarted]
Ted Remington Offline
old hand

Registered: 07/09/08
Posts: 4890
Rick:

I don't get that last sentence. dinner ware plates, license plates, tectonic plates, dental plates? What did I miss?
_________________________
Take the nacilbupeR pledge: I solemnly swear that I will help back out all Republicans at the next election.

Top
#198875 - 11/02/11 09:03 AM Re: Greece - The Domino Effect [Re: Ted Remington]
Joe Keegan Offline
veteran

Registered: 12/25/05
Posts: 8707

Top
#198877 - 11/02/11 09:15 AM Re: Greece - The Domino Effect [Re: Ted Remington]
Joe Keegan Offline
veteran

Registered: 12/25/05
Posts: 8707
Originally Posted By: churlpat lives
What did I miss?
The movie?

Top
#198881 - 11/02/11 11:00 AM Re: Greece - The Domino Effect [Re: Joe Keegan]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Just read a statement that makes any kind of rescue of the EU impossible.

"Sovereign debt cannot be collateralized."

I believe that.

Top
#198893 - 11/02/11 04:01 PM Re: Greece - The Domino Effect [Re: pdx rick]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'
Originally Posted By: california rick

Everyone knows that southern Europeans aren't so thrifty with their money....

Yes, why don't they follow the policy of the United States and "invest" in the War Machine! Manufacturing things in order to destroy them, and devastating whole countries and murdering, maiming and torturing their people is such sound economic policy!

By the way, Rick, the people of Greece did not create the problems there---the political and economic "leaders" did that !
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#198901 - 11/02/11 06:05 PM Re: Greece - The Domino Effect [Re: numan]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
LUCY Papandreou and the World


Top
#198903 - 11/02/11 06:50 PM Re: Greece - The Domino Effect [Re: itstarted]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'

I always did like Lucy better than wishy-washy Charlie Brown. · · ·
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#198904 - 11/02/11 06:54 PM Re: Greece - The Domino Effect [Re: numan]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Article

Quote:
Guarantees provided by U.S. lenders on government, bank and corporate debt in those countries rose by $80.7 billion to $518 billion, according to the Bank for International Settlements. Almost all of those are credit-default swaps, said two people familiar with the numbers, accounting for two-thirds of the total related to the five nations, BIS data show.
The CDS holdings of U.S. banks are almost three times as much as their $181 billion in direct lending to the five countries at the end of June, according to the most recent data available from BIS. Adding CDS raises the total risk to $767 billion, a 20 percent increase over six months, the data show.

and
Quote:
“Risk isn’t going to evaporate through these trades,” Cannon said. “The big problem with all these gross exposures is counterparty risk. When the CDS is triggered due to default, will those counterparties be standing? If everybody is buying from each other, who’s ultimately going to pay for the losses?”
Reread the bolded text enough times until you have enough information to debunk the next time clueless advocates of Morgan Stanley and other banks scramble to say that the banks are hedged, hedged, hedged. No. THEY ARE NOT. And as the AIG debacle demonstrated, once the chain of bilateral netting breaks, whether due to the default of one AIG, one Dexia, one French or Italian bank, or whoever, absent an immediately government bailout and nationalization, which has one purpose and one purpose alone: to onboard the protection written to the nationalizing government, then GROSS BECOMES NET! This also means that should things in Europe take a turn for the worst, Morgan Stanley's $39 billion in gross exposure really is.. $39 billion in gross exposure, as we have been claiming since September 22.


That ain't hay.

Top
#199121 - 11/04/11 06:55 PM Re: Greece - The Domino Effect [Re: itstarted]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'
A Conversation About Greece

Quote:
Greek debt is largely held by German banks that made the loans. If Greece has been irresponsible, so were the German banks that happily loaned out the money. So if Greece defaults, the banks go kablooey. But they're too big to fail, which means the German government would be forced to bail them out. And guess where the bailout money comes from? Tax dollars.
This means that German taxpayers have a bleak choice. They can shovel lots of money to Greece to keep them from defaulting, or they can refuse, and then shovel lots of money into German banks to keep them from collapsing. Either way, German taxpayers are going to foot the bill. They just haven't quite accepted this in their gut yet, and it's hard to blame them. They're pretty badly screwed no matter what....
So why not just let that happen?
It's just too catastrophic to consider. German banks, of course, would collapse and have to be bailed out. Ditto for banks in other countries that have lots of exposure to Greek debt. But that's not the worst of it. If Greece exits the euro, it will become terrifyingly obvious that other weak countries might exit too. Portugal, Spain, and Italy are the obvious candidates. Investors, spooked at the thought of their money being stuck in a country that might exit the euro and devalue all its bank deposits, would start huge runs on banks in those countries. The ECB would have to intervene and provide liquidity without limit. It would be a disaster....
Everyone knows that somebody's going to lose a huge pile of money over this. What's really happening right now is a very high-stakes negotiation to figure out just how the losses are going to be parceled out. Stay tuned.
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#199257 - 11/05/11 06:25 PM Re: Greece - The Domino Effect [Re: numan]
Phil Hoskins Offline
Administrator
Carpal Tunnel

Registered: 06/07/04
Posts: 20687
Loc: West Hollywood, CA
Is this where the Republicans get their inspiration?
Quote:
Jin, who has served as China's deputy minister of finance and vice president of the Asian Development Bank, manages $400bn worth of the nations money through the sovereign wealth fund. He says unless Europe changes its labour laws and adjusts its welfare system, he does not consider it to be a profitable investment.

"If you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of the worn out welfare society. I think the labour laws are outdated. The labour laws induce sloth, indolence, rather than hardworking. The incentive system, is totally out of whack."

"Why should for instance, within eurozone, why should some members people have to work to 65, even longer, whereas in some other countries they are happily retiring at 55, languisihing on the beach! This is unfair! The welfare system is good for any society to reduce the gap, to help those who happen to have disadvantages, to enjoy a good life, but a welfare society should not induce people not to work hard."

Jin Liqun, supervising chairman of China's sovereign wealth fund
Link
_________________________
Life is a banquet -- and most poor suckers are starving to death -- Auntie Mame
You are born naked and everything else is drag - RuPaul

Top
#199262 - 11/05/11 06:46 PM Re: Greece - The Domino Effect [Re: itstarted]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'
Does anyone remember 40 and 50 years ago, when the "wise thinkers" were predicting that, in 40 or 50 years, productivity increases would produce such abundance that the chief problem of most people would be how to enjoy their wealth and how to deal with all their leisure time?

Well, the vast increases in productivity duly arrived, but what happened to all that increased wealth and leisure time?

· · · wink
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#199265 - 11/05/11 07:15 PM Re: Greece - The Domino Effect [Re: itstarted]
Irked Offline
enthusiast

Registered: 12/14/05
Posts: 3320
Loc: Somewhere out in left field
Leisure should only be available to the deserving - the job creators. Others need to be working or sleeping so they can get moving and get to working to insure that they can continue to afford 99.8% of the life they could afford yesterday. Incentivizing the naturally indolent to waste time pursuing leisure when they could be working is the acme of inanity and reveals the core problem with European Socialism. Every hour a worker is not producing for her employer is an hour of productivity stolen.
_________________________
How eager they are to be slaves - Tiberus Caesar

Coulda tripped out easy, but I've changed my ways - Donovan

I consider myself to be a laid back type and quite tolerant on most issues - AB Breivik

Top
#199269 - 11/05/11 09:04 PM Re: Greece - The Domino Effect [Re: numan]
Greger Offline
veteran

Registered: 11/24/06
Posts: 11848
Loc: Florida
Quote:
the vast increases in productivity duly arrived, but what happened to all that increased wealth and leisure time?

I love it when someone asks a truly simple question to answer!
The increased wealth went to the top 1% of earners.
The increased leisure time came in the form of unemployment.
_________________________
"Be yourself; everyone else is already taken."— Oscar Wilde

Top
#199327 - 11/06/11 12:41 PM Re: Greece - The Domino Effect [Re: itstarted]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'
The obvious does explain so much, doesn't it?

Too bad more people can't see it.
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#199369 - 11/06/11 07:17 PM Re: Greece - The Domino Effect [Re: numan]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
And talking about explanations...
Try this:
Explaining Greece and the EU in plain English

Quote:
Are the Greeks crazy?

No, they're just at the end of their tether. Europe is asking them to adopt more austerity than they're willing to bear.

Okay, but they're spending too much money. Surely they know they have to cut back?

Sure, but the deals on offer are pretty unattractive. Europe wants to forgive half of Greece's debt and put them on a brutal austerity plan. The problem is that this is unrealistic. Greece would be broke even if all its debt were forgiven, and if their economy tanks they'll be even broker.

But that's the prospect they're being offered: a little bit of debt forgiveness and a lot of austerity.

Well, them's the breaks.

But it puts Greece into a death spiral. They can't pay their debts, so they cut back, which hurts their economy, which makes them even broker, so they cut back some more, rinse and repeat. There's virtually no hope that they'll recover anytime in the near future. It's just endless pain. What they need is total debt forgiveness and lots of aid going forward.


The rest of the article explains what's going to happen. Worth reading.

Top
#199443 - 11/07/11 03:19 PM Re: Greece - The Domino Effect [Re: itstarted]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Gotta post this somewhere...

Remember BlackRock? Currently $3.6+ Trillion in assets

Link

CIO (chief investment officer) Italian debt a good investment.

aaaarrghhh.

BlackRock... deja vu in spades

Top
#199451 - 11/07/11 06:18 PM Re: Greece - The Domino Effect [Re: itstarted]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Things are moving fast on the entire EU situation.
While it's very confusing for everyone, there are increasing pressure points that predict a bad outcome.
The latest is the interest rates on Italian bonds. Today, the rate of the short term bond rose above that of the ten year long term.
See the previous post re BlackRock and note the implication.

Hedge funds must be working hard to adjust their positions. This should be showing up soon.

Top
#199544 - 11/08/11 05:12 PM Re: Greece - The Domino Effect [Re: itstarted]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
The TBTF banks are at it again...
Instead of backing off after getting the bailout when AIG collapsed, they're back at it... worse than ever.

Article from Problem Bank List
This is really a must read... Gives some idea of how the dollars in the EU debt problem have been exponentially leveraged. I watch the cable financial shows... Bloomberg, CNBC, and Fox Business news, and am convinced the talking heads don't have a clue.

...............................................
aside... in the article is this explanation of Buffet's commentary on the derivatives from General RE, that I've been unable to find until now.
Quote:
Do the “Too Big To Fail Banks” really have a full understanding of the risks involved on their trillions of dollars of risky derivative contracts? In 1998 Warren Buffett purchased insurer General Re which held 23,000 derivative contracts. After unwinding the derivatives and losing $400 million in the process, Buffett concluded that “I could have hired 15 of the smartest people, you know, math majors, Ph.D.’s. I could have given them carte blanche to devise any reporting system that would enable me to get my mind around what exposure that I had, and it wouldn’t have worked. Can you imagine 23,000 contracts with 900 institutions all over the world with probably 200 of them names I can’t pronounce?"
Does anyone really believe that the Casino Banks are acting in the public’s best interest? Does anyone doubt that the Casino Banks will again be bailed out when their derivative portfolios blow up?


Parting shot
Quote:
The Bank of America zombies currently have the FDIC held hostage for nearly $75 trillion, with the approval Ben Bernanke’s Federal Reserve. The supposed assets were moved from Bank of America’s investment holding company, Merrill Lynch, into the consumer lending side of the business. This distinction is important, because the investment bank’s assets are not guaranteed by the FDIC, while your own deposits in their other division are. Of course, for the Federal Reserve to allow Bank of America to classify risky derivatives as FDIC-insured deposits is almost certainly illegal.


Top
#199591 - 11/09/11 07:11 AM Re: Greece - The Domino Effect [Re: itstarted]
Jeffery J. Haas Offline
veteran

Registered: 08/03/04
Posts: 10550
Loc: Downey, California
Seventy-five trillion?
Oh come on, why piddle around, they should just say

"A gajillion bazillion frillion dollars."

_________________________
"Our options for change range from basically what we have plus a little more Hayek,
to what we have plus a little more Keynes. Why?"

---Benjamin Bratton

Top
#199657 - 11/09/11 03:55 PM Re: Greece - The Domino Effect [Re: itstarted]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'
European debt crisis: Seven basics you need to know

Quote:

1. Greece has already defaulted, in effect

2. This problem goes beyond "PIIGS"

3. Hurdles to a solution are political, not just financial

4. Three scenarios for a fix

5. Debt crises are old hat

6. It's got the whole world in its hands

7. The US needn't be smug

_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#199660 - 11/09/11 04:52 PM Re: Greece - The Domino Effect [Re: numan]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
The "muddle through" part of the "solution" (#3) probably will happen.

I don't think it will work. The Jeffries situation is likely extant in hundreds of funds.

Everything depends on maintaining liquidity, and it's just not possible, given the size of the problem. Like trying to repair a balloon that has burst.


Top
#199698 - 11/10/11 01:35 AM Re: Greece - The Domino Effect [Re: numan]
Ken Condon Offline
enthusiast

Registered: 06/13/07
Posts: 2999
Loc: Eugene, OR
Quote:
It's got the whole world in its hands


_________________________
The past is always tense, the future perfect.

Top
#201667 - 11/25/11 06:55 PM Re: Greece - The Domino Effect [Re: itstarted]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Italian Bonds rose to 8%+ interest rates today.

This is an impossible situation that cannot continue. It is so strange that the financial world chooses to ignore this.

8%+

Top
#201672 - 11/25/11 07:08 PM Re: Greece - The Domino Effect [Re: itstarted]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'

An enormous House of Cards takes some time to fall down.
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#201713 - 11/26/11 01:37 AM Re: Greece - The Domino Effect [Re: numan]
Joe Keegan Offline
veteran

Registered: 12/25/05
Posts: 8707

Top
#201733 - 11/26/11 11:45 AM Re: Greece - The Domino Effect [Re: itstarted]
Ted Remington Offline
old hand

Registered: 07/09/08
Posts: 4890
Originally Posted By: itstarted
Italian Bonds rose to 8%+ interest rates today.

This is an impossible situation that cannot continue. It is so strange that the financial world chooses to ignore this.

8%+


Since their interest rates are headed for the stratosphere I suspect very strongly that the financial world is not ignoring "this", whatever this is, at all. Rather, they are making risky investments, and charging more interest because of the risk.
_________________________
Take the nacilbupeR pledge: I solemnly swear that I will help back out all Republicans at the next election.

Top
#203088 - 12/06/11 04:34 PM Re: Greece - The Domino Effect [Re: Ted Remington]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Greeks emptying bank assounts
The article and the heading is carefully worded.

We might call it a "run on the banks"...
_________________________
Life is Good!

Top
#203102 - 12/06/11 06:42 PM Re: Greece - The Domino Effect [Re: itstarted]
Ted Remington Offline
old hand

Registered: 07/09/08
Posts: 4890
its:

Do you know if the Greeks have the equivalent of an FDIC?
_________________________
Take the nacilbupeR pledge: I solemnly swear that I will help back out all Republicans at the next election.

Top
#203108 - 12/06/11 07:23 PM Re: Greece - The Domino Effect [Re: Ted Remington]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
From an April 2010 article:
Quote:
Banks in Greece are experiencing runs in the billions of euros. Remember, depositors can remove their money and redeposit in another country in another bank and still do business in the euro. There are sixteen countries in the euro zone. The banking options for euro zone citizens are varied and abundant.

The bank deposit scheme in the euro zone leaves deposit guarantees in the hands of the national governments. In this case Greece is the guarantor. And since the country is in trouble because if its fiscal deficit issues, its banking system is also in trouble. That is because the strength of the national banks deposit guarantees are dependent on the strength of the government’s finances.


link
_________________________
Life is Good!

Top
#203112 - 12/06/11 08:13 PM Re: Greece - The Domino Effect [Re: itstarted]
pdx rick Offline
Member
Carpal Tunnel

Registered: 05/09/05
Posts: 36332
Loc: Portland, Oregon
Great post Bob! smile It does make sense for the people of Greece to put their money in another country's bank. Hmm
_________________________
Contrarian, extraordinaire



Top
#203114 - 12/06/11 08:23 PM Re: Greece - The Domino Effect [Re: itstarted]
AustinRanter Offline
enthusiast

Registered: 10/29/06
Posts: 3643
Loc: Austin, Texas
Just read an interesting article in "Economist" regarding issues related to the domino effect.

Story title: "The Horsemen Approach" (not a long article)
LINK

The EU situation is genuinely a very serious and far reaching disaster waiting to happen.
_________________________
Turn on ANY brand of political machine - and it automatically goes to the "SPIN and LIE CYCLE" wink

Yours Truly - Gregg



Top
#203118 - 12/06/11 08:55 PM Re: Greece - The Domino Effect [Re: AustinRanter]
pdx rick Offline
Member
Carpal Tunnel

Registered: 05/09/05
Posts: 36332
Loc: Portland, Oregon
Originally Posted By: AustinRanter
The EU situation is genuinely a very serious and far reaching disaster waiting to happen.

Yup, Bob and I have started many threads, linked many articles and still we get: What's the relationship to the U.S.

-or -
how does this affect the U.S.? dunce


One can lead a horse to only so much water... coffee
_________________________
Contrarian, extraordinaire



Top
#203126 - 12/06/11 09:21 PM Re: Greece - The Domino Effect [Re: pdx rick]
Irked Offline
enthusiast

Registered: 12/14/05
Posts: 3320
Loc: Somewhere out in left field
Originally Posted By: california rick
Great post Bob! smile It does make sense for the people of Greece to put their money in another country's bank. Hmm


I assume all your money and credit are in banks incorporated in California. That's quite commendable to shut yourself off from lower prices or better services in order to subsidize local business - it's so pre-Riegle-Neal.
_________________________
How eager they are to be slaves - Tiberus Caesar

Coulda tripped out easy, but I've changed my ways - Donovan

I consider myself to be a laid back type and quite tolerant on most issues - AB Breivik

Top
#203135 - 12/06/11 10:20 PM Re: Greece - The Domino Effect [Re: AustinRanter]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Originally Posted By: AustinRanter
Just read an interesting article in "Economist" regarding issues related to the domino effect.

Story title: "The Horsemen Approach" (not a long article)
LINK

The EU situation is genuinely a very serious and far reaching disaster waiting to happen.

Interesting article, in that it sees some solutions. The part I wonder about, is the months of uncertainty as the pieces come together, and what would happen in the interim... Just as in the US, continuing the debt financing, even for a few months, has a multiplying effect on the total debt, as the brokers and bankers continue to leverage... Instead of drawing back, since the regulations are so permissive... the players double down on their bets.

I was wrong in thinking the problems would have come to a head sooner... Naivity in underestimating the deviousness of the finance community.
_________________________
Life is Good!

Top
#203151 - 12/07/11 07:53 AM Re: Greece - The Domino Effect [Re: itstarted]
keysersoze Offline
journeyman

Registered: 12/01/11
Posts: 881
I also thought this would resurface quickly but the house of cards is now clued to the table.

The weekly adventures of the Wall Street sheep buying and selling our future depending upon a fart taking place in Greece or Italy or Spain.
_________________________
Only racists oppose my dictatorship.

Top
#203153 - 12/07/11 08:28 AM Re: Greece - The Domino Effect [Re: pdx rick]
AustinRanter Offline
enthusiast

Registered: 10/29/06
Posts: 3643
Loc: Austin, Texas
Originally Posted By: california rick
Originally Posted By: AustinRanter
The EU situation is genuinely a very serious and far reaching disaster waiting to happen.

Yup, Bob and I have started many threads, linked many articles and still we get: What's the relationship to the U.S.

-or -
how does this affect the U.S.? dunce

One can lead a horse to only so much water... coffee



Rick, the following comments are as close as I can get to understanding the potential problems to be for the U.S.

And Rick, please know that I'm not claiming that the following is or ever will be the reality connected to your question reading how Europe's financial failures will affect the U.S.

As Bob has stated over and over in his related posts, this issue is incredibly complex. The reason it is so complex is that our laws don't force disclosures by our financial and market institutions that would reveal our countries full involvement in Europe.

That said...

When Lehman Brothers went bankrupt in the fall of 2008, it initiated a global financial panic greater than almost anyone predicted, largely because of uncertainty. Nobody knew who owed what to whom. The global financial system froze, with disastrous consequences.

Europe banks are currently holding an extraordinary amount of European debt. And while U.S. banks have been reporting more details about their exposure to European banks, there still is a tremendous sense of uncertainty about who is on the hook, and for what, exactly. If Europe’s biggest banks go down, it could very well cause another Lehman-like crisis in the U.S. It’s still an “if.”

Our country doesn't work very well on "IF's", which is where we now seem to live on a daily basis, but adding Europe's "IF's" to our "IF's" and their "IF's" unravel...who knows what the hell will happen, Rick?

Personally, I think that the "supposed" $708 TRILLION in global swaps will domino should Europe not be able to overcome the "EURO" debacle.

Some say the solution might be for Europe to switch to a dual currency system. For eons, China has been using dollars externally and their currency internally. They are pretty much experts at it. Obviously their are problems with using a dual currency lies with constant drop in value of the dollar. But Europe Union is made of countries that don't share the same language, the same economies...or anything else other than currency.

Maybe some will fall into deep austerity and the remaining countries will struggle for awhile, but survive and begin nurse their own economies back to health within a reasonable time frame. Can U.S. companies who are financially enmeshed endure the struggle along with those countries that have the ability to rise above their financial and economic woes - while dealing with their own?

Of those who fall into a deep austerity - how much does U.S. companies have invested in those countries - and what would be the ultimate consequence of absorbing the losses???

I don't think anybody knows the right questions much less the right answers.



_________________________
Turn on ANY brand of political machine - and it automatically goes to the "SPIN and LIE CYCLE" wink

Yours Truly - Gregg



Top
#203154 - 12/07/11 08:36 AM Re: Greece - The Domino Effect [Re: itstarted]
Greger Offline
veteran

Registered: 11/24/06
Posts: 11848
Loc: Florida
Quote:
Naivity in underestimating the deviousness of the finance community.

Naivety? I think no one distrusts the finance community and their actions more than you, Bob, but perhaps you see it through the eyes of a sensible man who sees what their actions should logically lead to. You must bear in mind, however, that as long as a profit can be made, even from a dead horse, they will continue to flog it until every last drop of blood has been squeezed from its flayed corpse. They are not finished extracting interest and late fees and administration fees. There are still bets to be placed and won before they simply forclose. Greece as we have known it will be gone. Living under a bridge and drinking cheap ouzo from plastic bottles, no longer able to verbalize even a quiet "Opa".
The financial community will not be satisfied until these people who embrace life in all its ups and downs have been driven to the ground and their enthusiasm extinguished.
They are vampyres who take more than your gold. They take your very lifeblood and leave you a dried and empty husk.

Default, Oh Greece, and begin the ball rolling, begin to drive the stake into their greedy hearts.
_________________________
"Be yourself; everyone else is already taken."— Oscar Wilde

Top
#203156 - 12/07/11 09:42 AM Re: Greece - The Domino Effect [Re: itstarted]
keysersoze Offline
journeyman

Registered: 12/01/11
Posts: 881
I have not seen reliable figures on just what the exposure is? They vary depending upon the messenger. I recently had a potential problem with the transmission on my car. They could not tell be the extent of the damage or if damage existed until they installed new lines, loaded in some fluid and drove it around. Now there was no damage but IMO it takes time to tell. Drive it around a bit.

This may be a piss poor analogy but I see it as similar to world financial markets. Greece is up and down and a few weeks ago pronounced "stable" thanks to interventions by other nations and their financial resources. But is it? Like that transmission there may be hidden problems and those would be Italy, Spain, Portugal and just about anyone with a Euro. And even further internal exposure not yet "discovered."

With all the economic experts weighing in it reminds be of the Truman quote about getting a one armed economist.
_________________________
Only racists oppose my dictatorship.

Top
#203159 - 12/07/11 10:06 AM Re: Greece - The Domino Effect [Re: Joe Keegan]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Originally Posted By: Joe Keegan

Joe... thanks for this additional background.
As we all get deeper into the morass, adding the IMF, and bringing Goldman Sachs and the whole leveraged financial community into the mix to add to the simplistic media approach, could make this a full time job. smile

I live in a very small circle of people, so I suppose it's not fair to say what I think... but anyway...
Here's what I think:
"There are too few people that understand, or are interested enough in knowing what their government is doing, to make much of a difference in the future."

RR is a refuge from this. While we don't always agree, it's comforting to know that there are others who are willing to venture into the deep end of the pool.

... so when do we get into the IMF? smile


_________________________
Life is Good!

Top
#203164 - 12/07/11 10:43 AM Re: Greece - The Domino Effect [Re: itstarted]
pdx rick Offline
Member
Carpal Tunnel

Registered: 05/09/05
Posts: 36332
Loc: Portland, Oregon
Quote:
Eleventh-hour negotiations have begun to create a much bigger finanical "bazooka" to present at this week’s European Union summit that could include running two separate rescue funds and winning increased support for the International Monetary Fund.

This three-pronged rescue system would form part of a carefully crafted package EU leaders hope will win over financial markets, just two months after a similar summit failed to convince bond investors Europe could contain its spiralling debt crisis. The rescue system would be introduced alongside proposals to rewrite EU treaties with far tougher budget rules for the eurozone.

This is the make or break week for the €.
_________________________
Contrarian, extraordinaire



Top
#203167 - 12/07/11 10:48 AM Re: Greece - The Domino Effect [Re: Greger]
Ardy Offline
veteran

Registered: 12/22/05
Posts: 11734
Loc: San Jose, Ca USA
Originally Posted By: Greger

Default, Oh Greece, and begin the ball rolling, begin to drive the stake into their greedy hearts.


Nice rant Greger
But IMO there is a very significant part of this whole morass that just get's brushes under the carpet.

It starts with the illusion that the vultures of our financial system will get their comeuppance through something like a rolling wave of defaults. This might be true if it was their own money that they loaned Greece... or if they owned a significant part of the banks that may teeter upon failure. But that is not really the case.

These people make their money through bonuses tied to the transactions. They already got their money from making the loans in the first place. And it was not their money they loaned... so they do not much care whether there is a default or not.


Also, these guys are sophisticated enough to find ways to protect their own financial future from any stumbles of the people they loan money to, or the organizations that they manage. IN short.... these guys will be sitting pretty on a pile of gold in a big ass ol' mansion no matter what happens to the world economy. If any of us thinks otherwise, THAT is naive.

We may resent the big banks and their ilk... but the reality is what we REALLY hate is the managers who got us all into this mess through their blind self interest. Even if you fire the lot of them, we are still sitting in the same pile o' s***. And if we try to punish them by letting their organizations crumble to bankruptcy... it just makes the pile o' s*** that much bigger.... cause mostly these organizations are managing other people's money and those people and organizations are the ones that will get screwed.... which is the whole reason that we got into this "too big to fail" mess.
_________________________

"Not everything that counts can be counted, and not everything that can be counted counts."

Top
#203196 - 12/07/11 02:51 PM Re: Greece - The Domino Effect [Re: itstarted]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'
How very nice---and amazingly providential---that the world-wide economic crises will wind up increasing totalitarian control over nations and societies!

Funny how these things work out, isn't it?
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#203200 - 12/07/11 03:19 PM Re: Greece - The Domino Effect [Re: Greger]
Ozymanithrax Offline
member

Registered: 04/11/11
Posts: 1343
Loc: California
Originally Posted By: gregor
Default, Oh Greece, and begin the ball rolling, begin to drive the stake into their greedy hearts.

If you look back at the Great Depression, you will see that thought banks, corporations, and the wealthy were hurt a little, those who paid the price for that "Bankageddon" were the middle class and, especially, the poor.

If all the dominos fall, the banks will swollow their losses, and hold tight until things improve as they will. That is the nature of the world.

The people who will have a stake driven through their hearts are the middleclass and poor, millions of whom will lose their livlihood, their homes, and everything the worked for in their lives.

Naivity is thinking that those who profited by the grotewque mony orgy that led to this problem will be the ones who pay.

In a few places, wise elected representatives will do what they did in Iceland (Ex-Glitnir Chief Larus Welding Said to Be Arrested in Iceland). Such acts are very much the exception rather than the rule. Bankers will go on and misery starts with those on the bottom 99% of the heap. Misery will increase exponentially with each percentage point nearer the bottom.
_________________________
“If you think you've got an inside track to absolute truth, you become doctrinaire, humorless and intellectually constipated." Saul Alinskey

Top
#203265 - 12/07/11 07:13 PM Re: Greece - The Domino Effect [Re: Ozymanithrax]
Greger Offline
veteran

Registered: 11/24/06
Posts: 11848
Loc: Florida
Quote:
Naivity is thinking that those who profited by the grotewque mony orgy that led to this problem will be the ones who pay
I agree that those on the bottom will suffer the most. But they are already suffering. I don't see an end to that until something changes. In fact, I see it getting worse and worse unless something changes.
Yes, of course, the wealthy will remain wealthy, it is the banks I speak of. It is past time to drive the money changers from the temple.
_________________________
"Be yourself; everyone else is already taken."— Oscar Wilde

Top
#203275 - 12/07/11 08:11 PM Re: Greece - The Domino Effect [Re: Greger]
logtroll Online   happy
old hand

Registered: 04/25/10
Posts: 6455
Loc: New Mexico (not old Mexico)
Originally Posted By: Greger
Quote:
Naivity is thinking that those who profited by the grotewque mony orgy that led to this problem will be the ones who pay
I agree that those on the bottom will suffer the most. But they are already suffering. I don't see an end to that until something changes. In fact, I see it getting worse and worse unless something changes.
Yes, of course, the wealthy will remain wealthy, it is the banks I speak of. It is past time to drive the money changers from the temple.

I agree, the domino effect is so yesterday. What we are facing is the Yahtzee effect, which is little understood but will only materialize if folks remove their wealth from the control of the money changers. Get your money out of the sordid system if you can and invest it in your community.
_________________________
"You can't fix a problem until you know what the problem is." Logtroll

Top
#208539 - 01/13/12 12:24 PM Re: Greece - The Domino Effect [Re: logtroll]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Much of the "TALK" is over.
Today... with some EU downgrades (France), and a probable refusal by Greece to take that 50% to 75% "haircut"... it's beginning to look like we may be into another very serious international financial problem.

The "chartists" have been predicting something like this.

At this point, not much on the positive side to suggest that things are going to get better in the short term.

The thing to watch... between now and the near time days, is what happens to derivatives. The biggest worry for everyone in the industry is a sudden default on the part of any counterparty. Problem is, no one knows who.

We'll have to see if there's anything else that Geithner or Bernancke can do, or if there is a sudden change of heart on the part of the European Central Bank, the World Bank, or the IMF...

Everyone knows that the foundation of the entire world economy is extremely shaky, being held together mostly by words, rather than deeds.

The finger is on the trigger.... March is the next critical date... for bigtime debt rollover.

Edit to ad an aside: Maybe some major changes in the works at Goldman Sachs (off topic, but maybe not)


Edited by itstarted (01/13/12 01:14 PM)

Top
#208548 - 01/13/12 02:36 PM Re: Greece - The Domino Effect [Re: itstarted]
Joe Keegan Offline
veteran

Registered: 12/25/05
Posts: 8707
Five European Nations to Be Downgraded by S&P: Report
Quote:
Standard & Poor's will cut the credit ratings of Italy, Spain and Portugal by two notches and downgrade France and Austria by one notch, a French newspaper said Friday, without citing its sources.

The newspaper, Les Echos, said that S&P would spare Germany, the Netherlands, Finland and Luxembourg in its long-awaited adjustment of euro zone sovereign ratings.

Top
#208565 - 01/13/12 04:11 PM Re: Greece - The Domino Effect [Re: itstarted]
Ozymanithrax Offline
member

Registered: 04/11/11
Posts: 1343
Loc: California
So,Cousin It, you are saying "Beware the Ides of March" to the modern version of Ceaser in the guise of the European Union.

Oh, dear.
_________________________
“If you think you've got an inside track to absolute truth, you become doctrinaire, humorless and intellectually constipated." Saul Alinskey

Top
#208573 - 01/13/12 05:04 PM Re: Greece - The Domino Effect [Re: Ozymanithrax]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Here's the problem, and the worry.

Just as the US borrows to fund our budget deficit, so do all countries. Since the US is considered to have a more stable economy (rightly or wrongly) we borrow at interst rates that are relatively low... as under 3%.

Countries that borrow in the same manner, but which are considered to be poorer credit risks, face higher rates... 5% and even over 20%.

There is short term debt and long term debt. When the debt comes due, it is usually "rolled over". If the perception is that the Borrower is in a worse position at the time of "rollover" then the new rates of interest are higher.

There are several Billion dollars of Greek debt that comes due for rollover in March. If the debt is so risky that no one will buy, even at 30% or more interest... then the country may default.

That means that all of the banks and brokers who own the debt, will lose their equity, and since the debt has changed hands through Credit Default Swaps... perhaps many times, it means that the counterparties (the trading banks and brokers) will have to settle who owes how much to whom.

This is a virtual impossibility because the swaps were made in the proverbial "dark room" with no regulators keeping track. That could lead to financial armageddon.

Here is a link to the European debt interest rates , measured by the European Central Bank. You can evaluate the relative risk estimate of each country by the interest rate shown. High equals worse.

European Central Bank Interest Rates

This is long term debt. The March worry is over the short term debt roll over, which I think is just a few billion.

An oversimplification but generally correct I think.

When you look at the interest rates in the other EU countries, you can see the reason for the worry about their rollovers. Thus the Domino effect.

crazy
_________________________
Life is Good!

Top
#208576 - 01/13/12 05:16 PM Re: Greece - The Domino Effect [Re: itstarted]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'

Anyone who imagines that there will be an economic recovery this year (or this decade) has gone far over the border into the Land of Lunacy.
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#208598 - 01/13/12 06:13 PM Re: Greece - The Domino Effect [Re: itstarted]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Originally Posted By: itstarted
Here's the problem, and the worry.

Just as the US borrows to fund our budget deficit, so do all countries. Since the US is considered to have a more stable economy (rightly or wrongly) we borrow at interst rates that are relatively low... as under 3%.

Countries that borrow in the same manner, but which are considered to be poorer credit risks, face higher rates... 5% and even over 20%.

There is short term debt and long term debt. When the debt comes due, it is usually "rolled over". If the perception is that the Borrower is in a worse position at the time of "rollover" then the new rates of interest are higher.

There are several Billion dollars of Greek debt that comes due for rollover in March. If the debt is so risky that no one will buy, even at 30% or more interest... then the country may default.

That means that all of the banks and brokers who own the debt, will lose their equity, and since the debt has changed hands through Credit Default Swaps... perhaps many times, it means that the counterparties (the trading banks and brokers) will have to settle who owes how much to whom.

This is a virtual impossibility because the swaps were made in the proverbial "dark room" with no regulators keeping track. That could lead to financial armageddon.

Here is a link to the European debt interest rates , measured by the European Central Bank. You can evaluate the relative risk estimate of each country by the interest rate shown. High equals worse.

European Central Bank Interest Rates

This is long term debt. The March worry is over the short term debt roll over, which I think is just a few billion.

An oversimplification but generally correct I think.

When you look at the interest rates in the other EU countries, you can see the reason for the worry about their rollovers. Thus the Domino effect.

crazy



UPDATE with S&P Downgrades

BTW... the Greek rollover in March amounts to 14+B.

Quote:
Standard & Poor's Ratings Services slashed the credit ratings of nine eurozone countries on Friday, marking a deterioration in confidence in the troubled eurozone.

S&P stripped France and Austria of their gold-plated AAA ratings, downgrading them to AA+, and downgraded Italy and Spain two notches to BBB+ and A, respectively. It also downgraded Portugal and Cyprus to junk, or non-investment grade, ratings: BB and BB+ respectively. Slovenia was downgraded to A+ from AA-, Slovakia was downgraded to A from A+ and Malta was downgraded to A- from A.

"The policy initiatives that have been taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone," S&P said in a statement on Friday.



Top
#208599 - 01/13/12 06:13 PM Re: Greece - The Domino Effect [Re: numan]
Ozymanithrax Offline
member

Registered: 04/11/11
Posts: 1343
Loc: California
My neighborhood saw a good economic recovery since 2008, as measured by the amount of trash collected after Chrismas. We needed 50% more trash trucks to carry away the boxes and wrapping paper than were used in 2008.

Their biggest concern is that things will fall apart because people in power refuse to solve the problems.


Edited by Ozymanithrax (01/13/12 06:14 PM)
_________________________
“If you think you've got an inside track to absolute truth, you become doctrinaire, humorless and intellectually constipated." Saul Alinskey

Top
#208619 - 01/13/12 07:02 PM Re: Greece - The Domino Effect [Re: Ozymanithrax]
logtroll Online   happy
old hand

Registered: 04/25/10
Posts: 6455
Loc: New Mexico (not old Mexico)
Originally Posted By: Ozymanithrax
...
Their biggest concern is that things will fall apart because people in power refuse to solve the problems.


The economy turns to garbage because of a refuse issue?
_________________________
"You can't fix a problem until you know what the problem is." Logtroll

Top
#208676 - 01/14/12 01:52 AM Re: Greece - The Domino Effect [Re: itstarted]
Joe Keegan Offline
veteran

Registered: 12/25/05
Posts: 8707
S&P Cuts Credit Ratings for Nine Euro Zone Nations
Quote:
Standard & Poor's downgraded the credit ratings of nine euro zone countries, stripping France and Austria of their coveted triple-A status but not EU paymaster Germany, in a Black Friday 13th for the troubled single currency area.

Top
#208730 - 01/14/12 01:03 PM Re: Greece - The Domino Effect [Re: Joe Keegan]
Joe Keegan Offline
veteran

Registered: 12/25/05
Posts: 8707
Obama Starts Clock for Congress to Vote on Raising Federal Debt Ceiling
Quote:
President Barack Obama asked Congress for another $1.2 trillion in government borrowing authority, the third and final request under an August deal with lawmakers that averted a U.S. default.

Uh-uh

Top
#208764 - 01/14/12 02:34 PM Re: Greece - The Domino Effect [Re: Joe Keegan]
Ted Remington Offline
old hand

Registered: 07/09/08
Posts: 4890
Originally Posted By: Joe Keegan
Obama Starts Clock for Congress to Vote on Raising Federal Debt Ceiling
Quote:
President Barack Obama asked Congress for another $1.2 trillion in government borrowing authority, the third and final request under an August deal with lawmakers that averted a U.S. default.

Uh-uh


Do you mean by that that you are against it? Why?
_________________________
Take the nacilbupeR pledge: I solemnly swear that I will help back out all Republicans at the next election.

Top
#208777 - 01/14/12 02:46 PM Re: Greece - The Domino Effect [Re: Ted Remington]
Joe Keegan Offline
veteran

Registered: 12/25/05
Posts: 8707
Why are you for it? Explain one of your inane posts for once.


Edited by Joe Keegan (01/14/12 03:03 PM)
Edit Reason: before they made me edit it

Top
#208783 - 01/14/12 03:03 PM Re: Greece - The Domino Effect [Re: itstarted]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'

Uh-oh!! NWP is gonna getcha, Joe! · · · wink
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#208797 - 01/14/12 03:55 PM Re: Greece - The Domino Effect [Re: numan]
Joe Keegan Offline
veteran

Registered: 12/25/05
Posts: 8707

Top
#208811 - 01/14/12 04:43 PM Re: Greece - The Domino Effect [Re: Joe Keegan]
Ted Remington Offline
old hand

Registered: 07/09/08
Posts: 4890
Originally Posted By: Joe Keegan
Why are you for it? Explain one of your inane posts for once.


Joe,

I looked quite carefully at what I posted. I did not say I was for it or against it. I wanted to know what uh-uh meant, and if it meant no I was curious as to why.

Please lighten up a bit, guy.

I just asked a simple question or two.
_________________________
Take the nacilbupeR pledge: I solemnly swear that I will help back out all Republicans at the next election.

Top
#208822 - 01/14/12 05:04 PM Re: Greece - The Domino Effect [Re: Ted Remington]
Joe Keegan Offline
veteran

Registered: 12/25/05
Posts: 8707

Top
#208846 - 01/14/12 06:07 PM Re: Greece - The Domino Effect [Re: itstarted]
Irked Offline
enthusiast

Registered: 12/14/05
Posts: 3320
Loc: Somewhere out in left field
We can only hope the United States will not raise the debt ceiling and actually default on the debt instead of just almost defaulting. That way US instruments of debt will get the Junk rating they deserve precipitating the collapse of and end of fiat currency in this country. Everyone with any foresight will pull all their money out of banks, stocks and bonds and convert it into something real: gold, silver, platinum, molybdenum, titanium, etc.
_________________________
How eager they are to be slaves - Tiberus Caesar

Coulda tripped out easy, but I've changed my ways - Donovan

I consider myself to be a laid back type and quite tolerant on most issues - AB Breivik

Top
#208858 - 01/14/12 07:48 PM Re: Greece - The Domino Effect [Re: Joe Keegan]
Ted Remington Offline
old hand

Registered: 07/09/08
Posts: 4890
Originally Posted By: Joe Keegan

Joe, that ain't what you said, guy. And I don't have any fluency in grunt.

If you meant uh-huh, yes, does that mean that you are telling us you are in favor of raising the debt ceiling by another ten percent or so?
_________________________
Take the nacilbupeR pledge: I solemnly swear that I will help back out all Republicans at the next election.

Top
#208882 - 01/14/12 10:32 PM Re: Greece - The Domino Effect [Re: Ted Remington]
Ozymanithrax Offline
member

Registered: 04/11/11
Posts: 1343
Loc: California
Ardy, I though he was propositioning you.

If he wasn't, then he should clarify.
_________________________
“If you think you've got an inside track to absolute truth, you become doctrinaire, humorless and intellectually constipated." Saul Alinskey

Top
#210114 - 01/22/12 07:28 PM Re: Greece - The Domino Effect [Re: Ozymanithrax]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
This article is the most cogent, most researched, and IMHO the most likely predicate for the Greece centered world economy meltdown.

As the media, the governments and the people ignore the reality of the first worldwide financial disaster, the facts, when understood in the light of law, forecast a no way out scenario.

zerohedge

Anyone who has been following the ongoing negotiations and deadline evasions, will understand the the gloomy prediction.
Understanding subordinated debt, is necessary to gain perspective.

It may not be an overstatement to say that the results of the debt problems could be more devastating than war.

Top
#211091 - 01/29/12 09:49 AM Re: Greece - The Domino Effect [Re: itstarted]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
At World Economic Forum, Fear of Global Contagion Dominates

Article

Lost in the enthusiasm for Republican Politics and a "feel good" sense about the Stock market, are the hard facts.

No one likes to hear depressing news, and so there was no coverage of Davos.
_________________________
Life is Good!

Top
#211094 - 01/29/12 10:08 AM Re: Greece - The Domino Effect [Re: itstarted]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'
Originally Posted By: itstarted

No one likes to hear depressing news....

Speak for yourself ....
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#211097 - 01/29/12 10:16 AM Re: Greece - The Domino Effect [Re: itstarted]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'
Quote:
They came, they feasted on smoked sturgeon and black truffle risotto, drank liquor paid for by global banks....They talked about the perilous state of the global economy and the future of capitalism. Then, they headed back to their home countries -- many in chauffeured limousines, some by private jet.....
Nouriel Roubini, the economist who -- not for nothing -- is known as "Doctor Doom," noted that"On all these issues that require international coordination, there is no agreement," he said during a Saturday morning panel. "It's a world of chaos...."

Chaos reigns -- the outlook is excellent!
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#211104 - 01/29/12 12:47 PM Re: Greece - The Domino Effect [Re: itstarted]
Ardy Offline
veteran

Registered: 12/22/05
Posts: 11734
Loc: San Jose, Ca USA
Originally Posted By: itstarted

No one likes to hear depressing news, and so there was no coverage of Davos.


There seems no end of people predicting the end of the world. That has gone on through out the historical record.... going back to the old testament prophets.

On the other hand, I supposed that the passengers on the Titanic at some point became indifferent to constant announcements that the ship is sinking.

Cousin IT....
I cannot remember a time when you were not a prophet of imminent doom. So far, my view of the reality has not corresponded to the alarm you have raised.

Perhaps in the future, there is some great disaster lurking which will fulfill the worst of your predictions.... it is something we can all look forward to.

In the mean time, I will finish my coffee.
_________________________

"Not everything that counts can be counted, and not everything that can be counted counts."

Top
#211105 - 01/29/12 12:59 PM Re: Greece - The Domino Effect [Re: itstarted]
Ardy Offline
veteran

Registered: 12/22/05
Posts: 11734
Loc: San Jose, Ca USA
By the way, let me offer a general comment.

I think it is certainly true that unforeseen shocks to the system are quite dangerous. IE the SHearson failure, or the worldwide collapse of the housing bubble.


On the other hand, when the problems are mostly seen, then even relatively sever problems can often be managed better than would have been expected.


At the end of the day, I suspect that Greece and the other problems in the EU will be managed. It will be clumsy, messy, unsatisfying. But at the end of the day, most leaders will be willing to put up with some otherwise unacceptable kludges in order to avoid what everyone knows to be a fantastically horrible worst case scenario.


There are a lot of downsides to the fact that some very powerful people manipulate the world economies. The somewhat comforting upside to this reality is that these people have many options to prevent a worst case collapse.
_________________________

"Not everything that counts can be counted, and not everything that can be counted counts."

Top
#211106 - 01/29/12 01:16 PM Re: Greece - The Domino Effect [Re: Ardy]
issodhos Offline
Pooh-Bah

Registered: 09/29/05
Posts: 12581
Originally Posted By: Ardy
There are a lot of downsides to the fact that some very powerful people manipulate the world economies. The somewhat comforting upside to this reality is that these people have many options to prevent a worst case collapse.

I can't help but suspect that in times of trouble slaves would reassure each other, saying, "Massah will do right". I can't help but think also that some of them were not convinced. coffee
_________________________
"When all has been said that can be said, and all has been done that can be done, there will be poetry";-) -- Issodhos

Top
#211115 - 01/29/12 02:09 PM Re: Greece - The Domino Effect [Re: issodhos]
Ardy Offline
veteran

Registered: 12/22/05
Posts: 11734
Loc: San Jose, Ca USA
Originally Posted By: issodhos
Originally Posted By: Ardy
There are a lot of downsides to the fact that some very powerful people manipulate the world economies. The somewhat comforting upside to this reality is that these people have many options to prevent a worst case collapse.

I can't help but suspect that in times of trouble slaves would reassure each other, saying, "Massah will do right". I can't help but think also that some of them were not convinced. coffee


Likely you are correct... as usually seems to be the case despite your humility in that respect.

I would note that sometimes "Massah" is in fact a better option.
The french revolution, the russion revolution, cambodia, somalia, the partition of India from Pakistan, the chinese revolution, and almost all of the de-colonialized african states.


IMO it is not true that the situation is univerally improved by giving the inmates the keys to the insane asylum

Likely it is true that the best possible outcome comes from removing all controls and letting natural market process settle the details.... no doubt that view is true in the long run. But in the short time I have left to live on this earth... I prefer to avoid a catastrophic economic collapse on the road to a non utopian, yet much better free market libertarian world of the future. Selfish of me, I know....
_________________________

"Not everything that counts can be counted, and not everything that can be counted counts."

Top
#211126 - 01/29/12 03:16 PM Re: Greece - The Domino Effect [Re: Ardy]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Quote:
Cousin IT....
I cannot remember a time when you were not a prophet of imminent doom. So far, my view of the reality has not corresponded to the alarm you have raised.

Perhaps in the future, there is some great disaster lurking which will fulfill the worst of your predictions.... it is something we can all look forward to.

smile
Ardy... we're both in the same boat. I no more want a financial disaster than anyone else in their right mind.... and on your second point about "things" working themselves through, yes... I agree with that too...

But... kicking the can down the road, as has happened here since the bailouts, and now, with the bandaids on Greek and EU debt, comes at a cost. Watchful waiting is the term I'd prefer, rather than Dr. Doom...

As to the future and solutions, I am concerned, and see the interim as a continued period of system and legal abuse, which has already added trillions of dollars to the US Debt. Very little of this surfaces in the MSM and the General Financial News, most of which is directed by vested interests.

Perhaps you are right about people not wanting to hear the details or the downsides. Might be better to keep these concerns for financial websites. Hmm
_________________________
Life is Good!

Top
#211131 - 01/29/12 03:32 PM Re: Greece - The Domino Effect [Re: Ardy]
numan Offline
veteran

Registered: 08/06/08
Posts: 10853
Loc: What! Me Worry?
'
Originally Posted By: Ardy

Cousin IT....
I cannot remember a time when you were not a prophet of imminent doom. So far, my view of the reality has not corresponded to the alarm you have raised.

Oh dear, oh dear, Ardy!! I don't think there is much hope for you if you can live in the midst of collapse and disaster and still cannot see it !!

It is like someone in the World Trade Towers at the beginning of the collapse thinking that things aren't so bad yet, and they might still get better !! · · · wink
_________________________
The ultimate result of shielding men from the effects of folly is to fill the world with fools -- Herbert Spencer

Top
#211146 - 01/29/12 05:20 PM Re: Greece - The Domino Effect [Re: Ardy]
issodhos Offline
Pooh-Bah

Registered: 09/29/05
Posts: 12581
Originally Posted By: Ardy
I prefer to avoid a catastrophic economic collapse on the road to a non utopian, yet much better free market libertarian world of the future. Selfish of me, I know....

Ardy! you wrote "non" utopia! I am going to chalk that up as a small victory. Dang. I think I got a little somethin' in mah eye.
_________________________
"When all has been said that can be said, and all has been done that can be done, there will be poetry";-) -- Issodhos

Top
#211363 - 02/01/12 01:26 PM Re: Greece - The Domino Effect [Re: issodhos]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Avoiding default:
agreement near

gotta be hard negotiations...
Quote:
The bond swap, known as the Private Sector Involvement, or PSI, will see private creditors swap the bonds they hold with new ones worth half their original face value, longer repayment times and lower interest rates. They will also get a €30 billion cash sweetener — to be taken from the €130 billion bailout — for accepting the deal. Once secured, the PSI will cut €100 billion off Greece’s national debt.

Overall, the investors participating in the deal will face a loss on their bondholdings of more than 70 percent, Finance Minister Evangelos Venizelos said in a Parliament committee meeting Tuesday night. The official offering of the new bonds will come by Feb. 13, Venizelos said.
more....

Top
#212611 - 02/11/12 02:18 PM Re: Greece - The Domino Effect [Re: itstarted]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Keeping this alive...
51 Page memo of understanding by the Troika
If you ever wondered why the Greek problem is rattling the international markets, when all Greece has to do is comply with some austerity requirements to get the needed loans... then you might want to look at page 2 to see a few of the basic economies they will be required to initiate.

If the requirements were placed on the US?

Just page 2 of 51 pages... imagine.

And this from Reuters Saturday 2/11
Quote:
(Reuters) - Prime Minister Lucas Papademos told Greeks they face a collapse in living standards and shortages of fuel and medicine if lawmakers on Sunday reject a multi-billion euro bailout deal and the country defaults on its debt.

Papademos spoke on Saturday in a televised address to the nation before parliament votes on a deeply unpopular austerity bill to clinch a 130-billion-euro bailout from the European Union and International Monetary Fund.

"This agreement will decide the country's future," he said. "We are just a breath away from ground zero."

"A disorderly default would set the country on a disastrous adventure," Papademos said. "Living standards would collapse and it would lead sooner or later to an exit from the euro."

Failing to adopt the bill, he said, "would disrupt imports of fuel, medicine and machinery."

Strange... how few seem interested in what may decide the future of the US, for years to come... Almost nothing in the MSM news, and even the financial cable channels treat the subject as lightly as a passing storm.

The Bill comes due in March...

Top
#213217 - 02/17/12 05:51 PM Re: Greece - The Domino Effect [Re: itstarted]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
I realize there are other posts on Greece... and that is fine. I'll continue to post here as I feel this thread contains a many points that will become important after whatever the Greek settlement occurs, and will explain much of what doesn't seem important in the interim, such as hypothecation...
Here's the latest Charles Hugh Smith take on whether the default will be orderly, or perhaps a panic.

Article

I can't see a regulated default, but I hope I'm wrong.

excerpt:
Quote:
It may be a good time to unearth a famous statement about known knowns and unknown unknowns:

Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns -- the ones we don't know we don't know. (Donald Rumsfeld)

Top
#214395 - 02/28/12 07:26 PM Re: Greece - The Domino Effect [Re: itstarted]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois

Top
#214424 - 02/28/12 09:21 PM Re: Greece - The Domino Effect [Re: itstarted]
Irked Offline
enthusiast

Registered: 12/14/05
Posts: 3320
Loc: Somewhere out in left field
Cslifornia has an economy that is nearly 4 times as large as Greece, is In dire straits and does not have the option of pulling out of the dollar and devaluing themselves out of debt. Yet we don't see the end of the world because of California. General Motors alone is comparable in economic magnitude to Greece not to mention Bank of America, yet many who most fear the default of Greece, cheered for the bankruptcy of both and continue to to this day to lament such a lost opportunity, I'm obviously missing something.
_________________________
How eager they are to be slaves - Tiberus Caesar

Coulda tripped out easy, but I've changed my ways - Donovan

I consider myself to be a laid back type and quite tolerant on most issues - AB Breivik

Top
#214429 - 02/28/12 10:01 PM Re: Greece - The Domino Effect [Re: Irked]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
Quote:
Cslifornia has an economy that is nearly 4 times as large as Greece, is In dire straits and does not have the option of pulling out of the dollar and devaluing themselves out of debt. Yet we don't see the end of the world because of California. General Motors alone is comparable in economic magnitude to Greece not to mention Bank of America, yet many who most fear the default of Greece, cheered for the bankruptcy of both and continue to to this day to lament such a lost opportunity, I'm obviously missing something.


Perhaps because the US has laws to handle bankruptcy, and the ability to nationalize.

Greece- The trigger for a domino effect for the world economy.

The worry is not the dollar debt, but the effect on the leveraged and opaque derivative transactions.

But you are correct... The same danger exists over the longer term. Greece is more immediate.
_________________________
Life is Good!

Top
#214434 - 02/28/12 10:42 PM Re: Greece - The Domino Effect [Re: itstarted]
Irked Offline
enthusiast

Registered: 12/14/05
Posts: 3320
Loc: Somewhere out in left field
Nothing as trivial as what might happen to Greek debt will bring down the world economy unless the destruction of the world economy is seen as being in the best interest of those possessing the world's wealth.
_________________________
How eager they are to be slaves - Tiberus Caesar

Coulda tripped out easy, but I've changed my ways - Donovan

I consider myself to be a laid back type and quite tolerant on most issues - AB Breivik

Top
#215203 - 03/05/12 12:22 AM Re: Greece - The Domino Effect [Re: Irked]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
On March 2nd, the ISDA... The International Derivative Swaps Association, made the decision to NOT declare Greece in Default. despite Moody's newest rating that puts Greece in the lowest category of trust.

This is an extremely important event for the international banking system.

As we have discussed many times, the 700 trillion dollar derivatives market is basically a house of cards, where investors use derivatives as an insurance against their investment... in this case, Greek Bonds. The insurance called Credit Default Swaps. When a Bond is declared "In Default", this should trigger a payment on that insurance.

The ISDA determines when a bond is in "Default". In fact, the Greek debt is, by every measurement, impossible to be sustained under any scenario. The decision to call a default would essentially put a "call" on all of the Swaps... Most experts believe this would be the beginning of the domino effect.

No one wants the default to happen.

Another debt rollover is scheduled for mid March. The world will be watching to see if it is successful. Those who have already suffered a 70% write down, want a default judgement.

One more moment of truth, coming up.
more
_________________________
Life is Good!

Top
#215388 - 03/06/12 10:33 AM Re: Greece - The Domino Effect [Re: itstarted]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
The previous few posts outlined the default swaps, and the fact that the governing body had decided to NOT call Greece a default, despite the Credit downgrades.

Greece is trying (next three days) to sell bonds to avoid default
It could possibly override the formal decision, and cause calls on Credit Default Swaps.

This probably won't happen this time, but no one is ruling it out for the near future.

Now... new info coming out on Portugal, Italy... and new today, Brazil.

Market is nervous... down nearly 200 points as I write...

If you've been following the derivative markets and understand the incredible reinsurance swaps, you can guess what could happen.

Keeping the thread alive, 'cuz I think it may be the most important prediction of the world economy in the near term.
_________________________
Life is Good!

Top
#215425 - 03/06/12 02:38 PM Re: Greece - The Domino Effect [Re: itstarted]
Joe Keegan Offline
veteran

Registered: 12/25/05
Posts: 8707
Greece is in already in default.

Top
#215508 - 03/06/12 11:05 PM Re: Greece - The Domino Effect [Re: Joe Keegan]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
ROTFMOL
Quote:
Greece is in already in default.


It's possible you might have a different feeling, if you were on the backside of a $100 Million CDS.

LOL
_________________________
Life is Good!

Top
#215525 - 03/07/12 07:36 AM Re: Greece - The Domino Effect [Re: itstarted]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
_________________________
Life is Good!

Top
#215530 - 03/07/12 09:22 AM Re: Greece - The Domino Effect [Re: itstarted]
Joe Keegan Offline
veteran

Registered: 12/25/05
Posts: 8707
I wonder if this means anything? 28 February 2012 - Eligibility of Gr... operations
Quote:
The Governing Council of the European Central Bank (ECB) has decided to temporarily suspend the eligibility of marketable debt instruments issued or fully guaranteed by the Hellenic Republic for use as collateral in Eurosystem monetary policy operations. This decision takes into account the rating of the Hellenic Republic as a result of the launch of the private sector involvement offer.

Top
#215835 - 03/10/12 08:26 AM Re: Greece - The Domino Effect [Re: Joe Keegan]
Joe Keegan Offline
veteran

Registered: 12/25/05
Posts: 8707

Top
#215859 - 03/10/12 12:42 PM Re: Greece - The Domino Effect [Re: Joe Keegan]
itstarted Offline
old hand

Registered: 01/27/03
Posts: 6368
Loc: Florida/Illinois
The ISDA is the key to stonewalling a worldwide meltdown.

This latest Mar 10 decision is the latest attempt to retain some sense of investor confidence. If you understand the details of the swaps settlement auction coming up, give yourself a gold star!... You are entering the realm of the sophisticated financial investor.

Suffice it to say, that if they (the ISDA) can pull this one off, it may be the magic trick of the century.

This is a VERY big deal
_________________________
Life is Good!

Top
#215922 - 03/11/12 09:27 AM Re: Greece - The Domino Effect [Re: itstarted]
Joe Keegan Offline
veteran

Registered: 12/25/05
Posts: 8707
That's one big rabbit that they'd have to pull out of the hat. They may be running out of bunnies this time. Maybe.

Top
Page 1 of 11 1 2 3 ... 10 11 >

Who's Online
0 registered (), 20 Guests and 4 Spiders online.
Key: Admin, Global Mod, Mod
Newest Members
xiawei, Marzman, kyleyoung8, Retread, solafeian
6003 Registered Users
A2