Is the end nigh for the Euro? [vol. 2]
Discussion
Globs said:
Steffan said:
1point7bar said:
Gary11 said:
I am interested in the mechanics of the CDS insurance and cannot work out the goldman sachs connection
JP Morgan, Morgan Stanley, Goldman Sachs, Bank of America, and Citigroup sold & underwrite credit default insurance for many European banks, who in turn hold Greek 'gilts'. Do you know whether the Greek haircut constitutes a default?
If it does these insurance companies are going to be toast shortly. I wonder if the state will be the rescuer again.
These are no insurance companies, these guys own the FED, the US and go golfing with their mates at the BIS, ECB, BoE etc..
It's all starting to make sense as to why Greece is not allowed to default.
In fact with this new information, I'd like to say that Greece will NEVER be allowed to officially default.
Not with these guys running the game, No Chance.
IMO there is no possibility that Greece can remain in the Euro unless Germany agrees to pay for them.
Which, given the Germans determination to remove subsidy, seems unlikely.
Which I think means Greece will default. Interesting times.
Interesting Quote from the ISDA or International Saps And Derivatives Association: see below taken from their website at: http://www2.isda.org/greece-sovereign-debt-faq/
" UPDATE JANUARY 16, 2012:
The possibility of retrospectively applying Collective Action Clauses (CACs) to existing Greek debt has been discussed of late. Would the inclusion or activation of a CAC trigger a Credit Event?
The determination of whether any action constitutes a credit event under CDS documentation will be made by ISDA’s EMEA Determinations Committee on the basis of the specific facts and if a market participant requests a decision from the DC. Generally, however, the inclusion of a CAC would not, in and of itself, be expected to trigger a Credit Event. On the other hand, the use of such a clause to effect a reduction in coupon or principal or one of the other events set out in the definition of the Restructuring Credit Event could trigger if the other requirements of the Restructuring Credit Event were met (for example decline in creditworthiness), as its effect would be to bind all holders of the relevant debt."
Curioser and Curioser indeed.
There are several pages on the Greek Default. It takes a while to read them.
Mu understanding is the UK legislation was used on many of the Greek Bonds but not all. Some were based on Greek law, I understand. Under UK law the haircut would constitute a default IMO.
When financial transactions become so complex and intertwined as to make the instruments unintelligible, to ordinary mortals,as they did with the Packaged Mortgage Swaps that bust the Banks some four years ago, everyone distrusts them. Frankly I think this Greek Haircut is heading the same way.
I think the Greeks will default. Shortly.
" UPDATE JANUARY 16, 2012:
The possibility of retrospectively applying Collective Action Clauses (CACs) to existing Greek debt has been discussed of late. Would the inclusion or activation of a CAC trigger a Credit Event?
The determination of whether any action constitutes a credit event under CDS documentation will be made by ISDA’s EMEA Determinations Committee on the basis of the specific facts and if a market participant requests a decision from the DC. Generally, however, the inclusion of a CAC would not, in and of itself, be expected to trigger a Credit Event. On the other hand, the use of such a clause to effect a reduction in coupon or principal or one of the other events set out in the definition of the Restructuring Credit Event could trigger if the other requirements of the Restructuring Credit Event were met (for example decline in creditworthiness), as its effect would be to bind all holders of the relevant debt."
Curioser and Curioser indeed.
There are several pages on the Greek Default. It takes a while to read them.
Mu understanding is the UK legislation was used on many of the Greek Bonds but not all. Some were based on Greek law, I understand. Under UK law the haircut would constitute a default IMO.
When financial transactions become so complex and intertwined as to make the instruments unintelligible, to ordinary mortals,as they did with the Packaged Mortgage Swaps that bust the Banks some four years ago, everyone distrusts them. Frankly I think this Greek Haircut is heading the same way.
I think the Greeks will default. Shortly.
That is why I am interested in the actual jurisdiction of the law relating to the issue of Greek bonds.
I think the jurisdiction on many of these is the UK.
If that is the case then the UK Insolvency laws will determine the proportion of agreement required for a scheme of arrangement to be binding on the creditors of Greek bonds.
The Hedge funds are generally pretty sharp. They will have sussed this out in detail. It may well be that the terms of the Greek Bonds are couched under UK jurisdiction. In which case a majority of more than 50% would be required to be binding on the other Bondholders. It could be 75%.
In a way this is a sideshow. But I find it a very interesting sideshow.
IMO the Greeks will default whatever terms are agreed with the EU.
This is because the Greeks cannot possibly achieve the cuts required and still have a country left to run. It is impossible and utterly wrong.
The EU being the madmen they are, the pretense will go on for a while.
But default is the only way Greece can devalue its currency and start too rebuild. Once the subsidy is gone, the Greeks will default. Late March IMO.
I think the jurisdiction on many of these is the UK.
If that is the case then the UK Insolvency laws will determine the proportion of agreement required for a scheme of arrangement to be binding on the creditors of Greek bonds.
The Hedge funds are generally pretty sharp. They will have sussed this out in detail. It may well be that the terms of the Greek Bonds are couched under UK jurisdiction. In which case a majority of more than 50% would be required to be binding on the other Bondholders. It could be 75%.
In a way this is a sideshow. But I find it a very interesting sideshow.
IMO the Greeks will default whatever terms are agreed with the EU.
This is because the Greeks cannot possibly achieve the cuts required and still have a country left to run. It is impossible and utterly wrong.
The EU being the madmen they are, the pretense will go on for a while.
But default is the only way Greece can devalue its currency and start too rebuild. Once the subsidy is gone, the Greeks will default. Late March IMO.
1point7bar said:
Greek's four largest banks are the government's biggest creditors. If they side with BNP Paribas, Deutsche Bank, Commerzbank AG, Intesa Sanpaolo SpA, ING Groep NV, Allianz SE and Axa any smaller creditors wishing to object (like a hedge fund) will get a very short back & sides.
I agree. What it will not do is keep Greece in the Euro.Greece will default.
Presumably then all the haircuts will be off and the CDS insurance will be liable to repay the full value of the default. I am unconvinced that the insurance companies (if indeed these are insurance companies) will be able to meet the debt.
I am utterly unable to understand why the EU have not attempted to actually manage the problem to keep the Greeks in the Euro and prevent the possibility of collateral damage to the other insolvent countries and pressure on all the defaulters through faltering confidence worldwide.
Presumably the EU simply does not have the impetus or will to resolve the issues. It is much easier to print money and flood the system with Billions of Euros.
But ultimately this EU philosophy was always bound to fail. Spin and hype are no substitute of effective action in a crisis. There has been no effective action from the EU.
Instead the EU have created a series of reforms to be made to the Greek economy which will render the country ungovernable if it is actually introduced in Greece.
Greek default is inevitable.
Firstly, because Greece simply cannot afford the costs of living in the Euro. Greece needs a currency devaluation. It is complete nonsense to believe Greece can recover and remain in the Euro. It will not happen.
Secondly, because the EU have totally failed to recognise the reality of the Greek crisis and effectively manage the default of Greece or manage the subsidy required for Greece to remain.
The EU have tried to play poker with the Greek default with Grandstanding and Funny Money as the prime cards. Much easier than facing the facts and admitting the mistakes made by the EU. Greece too has made mistakes.
Unfortunately because of this the game has gone awry.
Mmmmmm, all Greeks are lazy and the Germans are at work 24 hours a day, not according to this lot.
http://www.bbc.co.uk/news/magazine-17155304
http://www.bbc.co.uk/news/magazine-17155304
Norfolkit said:
Mmmmmm, all Greeks are lazy and the Germans are at work 24 hours a day, not according to this lot.
http://www.bbc.co.uk/news/magazine-17155304
Yet, like many things before it, the BBC's issue with this, is a lack of understanding that working hard does not on its own make something successful and that there is a difference between the public and private sectors . . . .in the case of Greece, the workers could be the most productive and hard working on the planet, but if they don’t pay tax and what little they do pay, is frittered away on a bloated, corrupt and inefficient public sector, then the public sector debt will destroy the whole country.http://www.bbc.co.uk/news/magazine-17155304
Hmmm TBH I was wondering if the biggest "holder" of bonds had to take a hair cut then would the lesser holders have to accept the same deal? A bit like a 1p in the pound insolvency scenario.
If this were so I feel thats an arrangement rather than a default IMO then it wont get paid as a default,these insurance type scenarios are well ringfenced the devil as usual always in the detail.
If this were so I feel thats an arrangement rather than a default IMO then it wont get paid as a default,these insurance type scenarios are well ringfenced the devil as usual always in the detail.
AndrewW-G said:
Norfolkit said:
Mmmmmm, all Greeks are lazy and the Germans are at work 24 hours a day, not according to this lot.
http://www.bbc.co.uk/news/magazine-17155304
Yet, like many things before it, the BBC's issue with this, is a lack of understanding that working hard does not on its own make something successful and that there is a difference between the public and private sectors . . . .in the case of Greece, the workers could be the most productive and hard working on the planet, but if they don’t pay tax and what little they do pay, is frittered away on a bloated, corrupt and inefficient public sector, then the public sector debt will destroy the whole country.http://www.bbc.co.uk/news/magazine-17155304
It's the Euro and the ECB/EU that makes all this suddenly everyone elses problem.
It's like having a friend who is always broke, and then deciding to have a joint account and complaining when he spends too much.
Globs said:
AndrewW-G said:
Norfolkit said:
Mmmmmm, all Greeks are lazy and the Germans are at work 24 hours a day, not according to this lot.
http://www.bbc.co.uk/news/magazine-17155304
Yet, like many things before it, the BBC's issue with this, is a lack of understanding that working hard does not on its own make something successful and that there is a difference between the public and private sectors . . . .in the case of Greece, the workers could be the most productive and hard working on the planet, but if they don’t pay tax and what little they do pay, is frittered away on a bloated, corrupt and inefficient public sector, then the public sector debt will destroy the whole country.http://www.bbc.co.uk/news/magazine-17155304
It's the Euro and the ECB/EU that makes all this suddenly everyone elses problem.
It's like having a friend who is always broke, and then deciding to have a joint account and complaining when he spends too much.
It is the classic problem many couples have when one discovers that the other is a financial dipstick. Not good, frequently fatal.
The Greek financial disaster is only a problem for the rest of the Eurozone because the EU have allowed it to become so. It will be a bigger problem when the Greek default occurs.
The loss of confidence and collateral doubts about the ability of the EU to hold the Portuguese and Spanish economies in the Euro will ramp up very quickly once the Greek default occurs and could cause a real crisis in itself. Funny money printing will only lubricate the economies it cannot in itself solve the fundamental issues. Effective action is what we need.
The triple whammy could cause all sorts of problems.
Downside risk of a membership club with a fixed currency rate and total lack of control of the fiscal attitudes and policies of the member states. The EU are apparently going to change that. Too little too late. Famous last words perhaps?
I doubt the EU will get this legislation through without widespread disapproval by unhappy net contributor states and I believe that the EU could founder over this in itself.
Greece will default. Then there will be a period of major upheaval within the Eurozone and the EU. Then Portugal and Spain will default. Then there will be real trouble in the markets.
What happens after that depends entirely on whether the EU can hold onto Italy. God knows and he has not informed me yet.
I would like to think we could be sitting on the side watching the drama unfold. And it will be a drama.
But in reality if the EU goes boobs up, or there is seriously widespread economic damage, which is really inevitable, we will be hurt in the roll on of the consequences. I just hope Cameroon and Co are up to the challenge.
I wish to God Merkozy were up to this crisis.
Sadly, as we can see, they ain't.
Steffan said:
the Greeks will default. Late March IMO.
Steffan, seriously? With the best will in the world, why do you continue with predictions like that? You're certainly well, well past the point where you can say "I told you so" and that's if anything happens at all. How long can you go on predicting the end of something before you have to give it up?
At what point, if there is no change, will you admit that you were wrong? Can you at least tell us that?
How about June 2012, the one year anniversary.
Here's a (very distilled!) history:
Friday 17th June 2011
"Certainly within 6 months and very possibly much less the other PIGS Ireland Portugal and Spain will need another bail out and reality will set in."
Saturday 18th June 2011
"Seems my timeframe of August for the Greek collapse is still looking reasonable."
Sunday 19th June 2011
"I anticipate the refunding of Greece short term: by August the Greek economy will collapse and fall out of the Euro. "
Then on Monday 20th June 2011
"August is my date for Greek Collapse but I could out by some months."
The on Friday 1st July 2011 we’re back to:
"Greece is going bust big time. I think August anyone disagree?"
Monday 4th July 2011
"Looks like the end is nigh for Greece. August crunch looks right to me"
Monday 18th July 2011
"About four more weeks I think or there abouts."
Monday 18th July 2011
"The Euro will be very weak shortly."
Tuesday 19th July 2011
"Therefore the PIIGS are doomed"
Wednesday 20th July 2011
"Or they could simply refuse further aid in which case Greek will default next week."
Friday 22nd July 2011
" the Greeks will be out of the Euro in a nonth and chaos will follow"
Friday 29th July 2011
"Within three months and possibly considerably less this will be back to face Europe"
Monday 1st August 2011
"I still believe this Greek crisis will reappear before the end of August."
Wednesday 3rd August 2011
"My view still is that the PIGS or possibly PIIIGS will collapse in Domino order before the end of the month."
"As others on this forum are saying this cannot go on. FOUR WEEKS!!"
Thursday 4th August 2011
"The PIIGS are going bust very shortly. "
Friday 5th August 2011
"As I said a while ago August 2011 will be the crunch time."
Saturday 13th August 2011
"How long do you think? Days? Weeks? Surely not months?"
Tuesday 16th August 2011
"I think the PIIGS are going down very shortly."
"The run on the PIIGS happening NOW."
Then the end of August arrives:
Thursday 25th August 2011 and it's back to:
" I still think this Autumn."
"PIIGS collapse here we come."
Sunday 28th August 2011
"Weeks? Yes I think so. Days? Very possibly"
Monday 29th August 2011
"I think the end is nigh for the PIIGS."
"There will be a run of the PIIGS probably starting with Greece. Now. "
August comes and goes
Monday 5th September 2011
"I think the crunch is almost upon us. "
Wednesday 7th September 2011
"This will be end shorty I think. "
Sunday 11th September 2011
"Greece will collapse shortly. "
Monday 12th September 2011
"Default is coming."
Tuesday 13th September 2011
"PIIGS are bust."
Tuesday 13th September 2011
"The end IS nigh"
Wednesday 14th September 2011
"Well its all coming thick and fast this morning The PIIGS are going. "
Thursday 15th September 2011
"Too little too late. The disaster is upon them. THE PIIGS ARE GOING."
Thursday 15th September 2011
"The PIIGS are gone"
Sunday 18th September 2011
"I am sorry to say the end is nigh."
Monday 19th September 2011
"Over the next month the inevitability of a Greek default will become apparent"
Tuesday 20th September 2011
"the PIIGS will begin unwinding shortly. "
Wednesday 21st September 2011
"I think the fall of the PIIGS is actually upon us."
"Greece will naturally fail to deliver the proposed savings and fold in October or November"
Friday 23rd September 2011
"Greece and Ireland are both Dead Ducks. Not long I think."
Friday 23rd September 2011
"The next tranche of Euro funds (charity?) to Greece is due in early October I believe. If this is paid Greece could last another month. If it is not paid I doubt if Greece could function for more than a few days"
Saturday 1st October 2011
"This month?"
Monday 3rd October 2011
"the crunch now cometh and October seems a long month for the PIIGS to me. "
Thursday 6th October 2011
"In my view Greece will go first followed by the rest: the crunch is coming."
Thursday 20th October 2011
"Not long now before the effluent hits the fan."
Friday 21st October 2011
"Greece will lead the PIIGS out of Europe very shortly."
Saturday 22nd October 2011
"NOT LONG NOW."
The end of October comes and goes. I couldn't be bothered to go through the 300 odd pages of Nov and Dec but presumably it went something like "Greece is toast, the PIGS are bust-tomorrow!" several times per page
Monday 16th January
"It will be pissing down shortly. Then a flood of Biblical proportions."
Thursday 19th January
"the point of collapse is rapidly approaching"
Monday 13th February
"Not Long."
Tuesday 14th February
"Default is rapidly approaching."
Yesterday (21:20)
"I think the Greeks will default. Shortly."
Yesterday (22:30)
"the Greeks will default. Late March IMO"
Edited by Driller on Sunday 26th February 21:53
Driller said:
Steffan said:
the Greeks will default. Late March IMO.
Steffan, seriously? With the best will in the world, why do you continue with predictions like that? You're certainly well, well past the point where you can say "I told you so" and that's if anything happens at all. How long can you go on predicting the end of something before you have to give it up?
At what point, if there is no change, will you admit that you were wrong? Can you at least tell us that?
Globs said:
Driller said:
Steffan said:
the Greeks will default. Late March IMO.
Steffan, seriously? With the best will in the world, why do you continue with predictions like that? You're certainly well, well past the point where you can say "I told you so" and that's if anything happens at all. How long can you go on predicting the end of something before you have to give it up?
At what point, if there is no change, will you admit that you were wrong? Can you at least tell us that?
Sadly for driller, Steffan only has to be right once...
IMO it really comes down to whether I am going to be right in the end.
I set the original Topic title out with double question marks`at the end of the line because I was unsure of the timing. I still am.
Difficult to predict when the entire EU is trying to prevent the collapse.The EU have huge resources and can spin this out. But they cannot actually prevent the defaults of hugely insolvent Sovereign states. As I think has become apparent to most observers.
I appreciate the effort Driller made in deducing the number of comments he listed. It saves me a job when I come to review the topic after the Greeks default and the whole morass moves on to round two which will be the default of the rest of the insolvent Sovereign states.
If Driller wants to start a topic on why I am wrong and to explain how the insolvent Sovereign states will continue within the Euro good luck to him. IMO he will need to rewrite the economics textbooks but that is up to Driller. I would happily contribute, obviously arguing Driller would be wrong.
For my part I will continue to bang the drum on what will be by far the largest economic collapse in world history and will repeat itself several times over the next few months. The consequences of this mess will resound around the entire world economies for years to come. Such events are not easy to predict and the timing is extremely difficult to foresee.
I think I will be right in the end.
I think a lot of PH'ers and others also think the defaults are inevitable.
I just hope the tragedy of the suffering and penury that will be wrought upon the citizens of the countries concerned is not too great.
Because, at the risk of repeating myself, the defaults are inevitable. The timing is open to question.
I set the original Topic title out with double question marks`at the end of the line because I was unsure of the timing. I still am.
Difficult to predict when the entire EU is trying to prevent the collapse.The EU have huge resources and can spin this out. But they cannot actually prevent the defaults of hugely insolvent Sovereign states. As I think has become apparent to most observers.
I appreciate the effort Driller made in deducing the number of comments he listed. It saves me a job when I come to review the topic after the Greeks default and the whole morass moves on to round two which will be the default of the rest of the insolvent Sovereign states.
If Driller wants to start a topic on why I am wrong and to explain how the insolvent Sovereign states will continue within the Euro good luck to him. IMO he will need to rewrite the economics textbooks but that is up to Driller. I would happily contribute, obviously arguing Driller would be wrong.
For my part I will continue to bang the drum on what will be by far the largest economic collapse in world history and will repeat itself several times over the next few months. The consequences of this mess will resound around the entire world economies for years to come. Such events are not easy to predict and the timing is extremely difficult to foresee.
I think I will be right in the end.
I think a lot of PH'ers and others also think the defaults are inevitable.
I just hope the tragedy of the suffering and penury that will be wrought upon the citizens of the countries concerned is not too great.
Because, at the risk of repeating myself, the defaults are inevitable. The timing is open to question.
AndrewW-G said:
Yet, like many things before it, the BBC's issue with this, is a lack of understanding that working hard does not on its own make something successful and that there is a difference between the public and private sectors . . . .in the case of Greece, the workers could be the most productive and hard working on the planet, but if they don’t pay tax and what little they do pay, is frittered away on a bloated, corrupt and inefficient public sector, then the public sector debt will destroy the whole country.
Actually that's an excellent point. If you look at OECD data tables most countries with the highest GDP per hour and total hours per year most developed European countries have broadly the same value in the latter and the former makes a much bigger difference to total GDP.Disagree on the latter however, Greece's public sector is now better trimmed than most other European countries.
Guam said:
Tbh given the history of currency Unions and the Greeks part in their demise, this has all been done before. There was an excellent progr on Radio 4 yesterday morning itemising the failure of EVERY attempt at currency Union.
Steffans only error has been attempting to put a date on it, the reality is, that history shows that it WILL fail and there would be a nearly 100% certainty on its subsequent collapse.
Cheers
Not if you can make the 'merger', er, permanent in a political sense. (But then you may need to determine the boundaries of the meaning of 'permanent').Steffans only error has been attempting to put a date on it, the reality is, that history shows that it WILL fail and there would be a nearly 100% certainty on its subsequent collapse.
Cheers
tertius said:
Driller said:
The question is when do we get to let fly with the classic "this thread isn't going the way the OP intended"? 
It would be funny if it wasn't for the fact that Greece staying in the Euro is bad news for the rest of us.
The trouble with this thread though is that there are too many naysayers and not enough yays. It's just tedious.
It goes like this:
"Morning, blimey the Euro's in s
t isn't it? So and so country's going to default soon, have a look at this link"
"Well said, and that link of yours is bang on"
"I concur, Europe is in the st, have a pat on the back for such a well thought out argument".
"We are rather good aren't we? We've got it all worked out and everyone else is on cloud cookoo land, they will all default and it will happen soon. This afternoon in fact"
Afternoon comes.
"Well they've managed to wing it again but it will all come crashing down soon, tomorrow probably"
"Same time tomorrow then?"
"Yep, see you then"
etc etc
I agree actually.It would be funny if it wasn't for the fact that Greece staying in the Euro is bad news for the rest of us.
The trouble with this thread though is that there are too many naysayers and not enough yays. It's just tedious.
It goes like this:
"Morning, blimey the Euro's in s
t isn't it? So and so country's going to default soon, have a look at this link""Well said, and that link of yours is bang on"
"I concur, Europe is in the s
t, have a pat on the back for such a well thought out argument"."We are rather good aren't we? We've got it all worked out and everyone else is on cloud cookoo land, they will all default and it will happen soon. This afternoon in fact"
Afternoon comes.
"Well they've managed to wing it again but it will all come crashing down soon, tomorrow probably"
"Same time tomorrow then?"
"Yep, see you then"
etc etc
I almost posted something similar a day or two ago, but decided it would get pretty well the response that, well, your post got.
And to be clear its not that I think posters are wrong with regard to the outcome necessarily just that it is all so repetitive.
I think use of the word "soon" should be banned from this thread - if you are going to predict something, put a timetable on it.
I recently read "Too big to fail" which was a very interesting account of the start of the financial crash. There the remaining life of the various investment banks was measured in days, or less towards the end, without intervention, as they were dependant on short term funding.
Countries are a very different proposition, particularly where they share a currency and therefore don't suffer a foreign exchange crises. The issue then becomes whether it can meet debt repayments as they become due and whether ongoing government expenditure can be financed.
This could drag on for years, but without a fundamental change in growth and competitiveness within the Eurozone the outcome remains inevitable for many.
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