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HenryTo
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 Posted: Wed Feb 24, 2010 10:39 am Post subject: |
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Greece paralyzed yet again:
http://www.nytimes.com/2010/02/25/world/europe/25greece.html
| Quote: | Flights at Greek airports were canceled, public transportation was halted, and schools closed Wednesday as public-sector employees and private-sector workers walked off their jobs in the second 24-hour strike in two weeks against austerity measures.
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Another engineer milling in the crowd before Wednesday’s march said he believed many more protests would follow. “If people see the minority living a good life and their wages plummeting, they’re going to take to the streets,” said Haralambos Dramantis, a 60-year-old employee with the state power board. “We haven’t seen the big uprising yet but it will come.”
He added that the strike, by farmers, tax collectors, customs officials and others in recent weeks was “just the beginning.” |
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nodoodahs
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rffrydr
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Joined: 30 Oct 2005
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Location: Sunny California
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| Posted: Fri Feb 19, 2010 10:21 am Post subject: |
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There's a new man on the job--a man with a "goldman arm":
| Quote: | “49 Years Old
Petros Christodoulou, born 1960, is the General Manager of Treasury, Global Markets and Private Banking. Before joining the Bank in 1998, he worked in various positions in Global Markets for Credit Suisse First Boston and for Goldman Sachs. Additionally, at JPMorgan he led the derivatives desk, followed by the short-term interest-rate trading and emerging markets division in London as Managing Director. He is a member of the Investment Committee of EH and the Foundation for Economic and Industrial Research. He holds a BSc from the Athens School of Commerce and Economics and an MBA in International Financial Markets from Columbia University.” |
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rffrydr
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HenryTo
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HenryTo
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Posts: 11735
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| Posted: Thu Feb 11, 2010 11:39 am Post subject: |
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Diesel,
The biggest calamity after the initial crash occured in late 1931:
http://www.marketthoughts.com/z20081207.html
| Quote: | | At the end of August 1931 (two years after the beginning of the 1929 crash), the Dow Jones Industrial Average sat at 139.41, down by more than 60% from its peak on September 3, 1929, but still more than 200% above its cataclysmic low trough of 41.22 at the close on July 8, 1932. As documented by Henry Villard of the University of Minnesota in a 1937 Journal of Political Economy article (and others since, including Milton Friedman and Ben Bernanke), the month of September 1931 marked a watershed event in the US and global economy, as the British devaluation and departure from the gold standard reversed gold inflows into the US – thus shrinking the domestic money supply. The Federal Reserve – in an effort to stem the outflow of gold – raised the discount rate from 1.5% to 3.5% in early October. This confluence of events set off a severe banking crisis and a decline in the Dow Industrials. While bank failures across the country averaged 100 a month during 1930, it rose to a monthly average of 320 from September 1931 to February 1932. The Dow Industrials, meanwhile, declined 30% during September 1931 – its worst monthly decline in history as the country crashed into the Great Depression. While the US and global economy is infinitely more complex than it was in the 1930s, the Federal Reserve and the US government also have their disposals a much greater set of tools available to stem further decline in the US banking system and economy. Neither the US or global economy is constrained by the gold standard any longer. Finally (and most encouragingly), unlike the 1930s, the major economies of the world (with the glaring exception of Germany) are now much more willing to work with the US to combat this financial crisis. |
Also note that the collapse of the Thai Baht and the subsequent collapse of the Asian Tiger Countries in 1997, along with Brazil and Russia in 1998, ultimately triggered a U.S. consumer boom as commodity prices and international wages fell across the board, and as the Federal Reserve lowered rates.
The one to watch this time will be the Asian consumer, given their undervalued currencies and underleveraged balance sheets. |
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diesel
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| Posted: Thu Feb 11, 2010 2:37 am Post subject: |
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Just remember that in the Great Depression after stocks fell greatly, they began to crawl back bit by bit and as everyone became hopeful a major sovereign bank collapsed. In 1932, this was the Anhalt Bank in Vienna. The failure of one sovereign bank suddenly is ‘contagious’ and all the rest can follow in quick order.
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HenryTo
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| Posted: Wed Feb 10, 2010 11:56 pm Post subject: |
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| I don't think Greece poses a systemic risk - and Portugal, Spain, and Ireland should be fine as debt-to-GDP levels are still relatively tame. In the long-run, however, standards of living will have to come down for all four countries. |
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rffrydr
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| Posted: Wed Feb 10, 2010 10:25 pm Post subject: |
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rffrydr
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| Posted: Tue Feb 09, 2010 11:54 am Post subject: |
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Marc Chandler
| Quote: | EU Aid for Greece Unlikely Despite Reuters Headlines
2/9/2010 12:44 PM EST
A reuters headline indicating the EMU in principle is ready to help Greece according to a German government source provides no details of what that help may include. THat has been followed by Belgian EC Commissioner of the Economy Rehn indicating "we are talking about support in the broad sense of the word" adding Greece has to take the necessary measures first. This is in line with our view that it is too soon in the process for the EU to provide support to Greece. Greece and the EU have only just agreed to a strategy to address the deficit. They have also worked out a review schedule as the program is implemented. Additionally EU aid to Greece carries with it moral hazard and opens the door for aid to other countries, notably Spain and Portugal. |
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rffrydr
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| Posted: Tue Feb 09, 2010 11:16 am Post subject: |
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Watch copper not Greece. Banks and RE not taking the bait. "Year of the Bull" is fast behind us.
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HenryTo
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rffrydr
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| Posted: Fri Feb 05, 2010 10:28 pm Post subject: |
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The Domino Theory didn't work in 'Nam....and it won't work now.
Debt focused on citizens in local currency is the big brake--think Italy. Add to that the fact that crises in Italy is stasis and you have a buy shaping up.
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rffrydr
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| Posted: Fri Feb 05, 2010 3:08 pm Post subject: |
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“The markets are expecting a positive announcement out of the European Union this weekend as it relates to Greece and their debt,” said John Brady, Chicago-based senior vice president with the interest rates product group at MF Global Ltd. “Although it’s unclear whether Greece will be bailed out, some in the market think the EU has no choice.”
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HenryTo
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| Posted: Thu Feb 04, 2010 12:16 pm Post subject: |
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CDS spreads continue to widen - with CDS spreads on Greek five-year government bonds now at an unprecedented 426 bps:
| Quote: | LONDON—The cost of insuring the debt of euro-zone members with large budget deficits against default rose Thursday, dashing hopes that the European Commission's qualified endorsement of Greece's budget plan would calm investor fears.
Greece, Portugal and Spain were in focus, with their five-year sovereign credit default spreads moving sharply wider.
Greece's five-year sovereign credit default swap spreads were recently at 4.23 percentage points, compared with Wednesday's closing level of 3.97 percentage points, according to to CMA DataVision. That means the annual cost of insuring €10 million of Greek government debt against default for five years had risen €26,000 to €423,000.
Portugal's five-year sovereign CDS spreads were at 2.26 percentage points—their widest level ever—after closing Wednesday at 1.96 percentage points. Spain's sovereign CDS spreads widened to 0.16 percentage point to 1.68 percentage points.
The moves followed news Wednesday that the European Commission had put Greece under more pressure to cut its deficit; that the Portuguese government sold only €300 million of treasury bills at an auction, compared with an indicative offer of €500 millon; and that the Spanish government had raised its budget deficit forecasts for 2010 through 2012.
Spreads on a credit default swap index of developed European sovereign borrowers rose above 1.00 percentage point for the first time Thursday, driven by further weakness in Spain and Portugal.
The SovX Western Europe index, which lets investors buy or sell default insurance on a basket of 15 sovereigns, widened beyond 1.00 percentage point Thursday morning, compared with .925 percentage point late Wednesday.
Gavan Nolan, vice president of credit research at index-owner Markit, said there was "panic buying" in the sovereign CDS market. The 10-year yield spread between Portuguese government bonds, or OTs, and German bunds widened briefly to 1.75 percentage point early Thursday, up from 1.43 percentage point at Wednesday's close, before retreating to 1.55 percentage point. The 1.75 percentage-point level is close to the highest closing level of 1.78 percentage point registered in March 2009. Portuguese spreads have more than doubled this year from .68 percentage point at the end of 2009.
Greek 10-year spreads over German bunds were relatively quiet Thursday at 3.55 percentage point versus 3.51 percentage point at Wednesday's close, but below the all-time high of 4.05 percentage point reached last week. Spanish 10-year spreads over bunds were at 0.94 percentage point versus 0.87 point at Wednesday's close.
Spanish and Portuguese stock markets fell sharply for the second consecutive day, with banks leading decliners on sovereign debt worries. At 0920 GMT, Spain's IBEX-35 index was down 2% at 10659.5, while Portugal's PSI-20 was down 3.2% at 7575.8.
Meanwhile, stocks in Athens were down 2%. In the foreign exchange market, the euro hit a seven-month low against the dollar, dropping to $1.3831.
CDS are tradable, over-the-counter derivatives that function like a default insurance contract for debt. If a borrower defaults, the protection buyer is paid compensation by the protection seller. |
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