(POLL) Will Greece (Or really the EU or Any Ratings Agency) Ever Say "Default" ???

MsMorrisine

Haircuts have already been taken.

no default.

further haircuts are put forth.

no default.

With all the debt exposure and derivative exposure (like CDS) I don't think Greece CAN be said to default. Think of all those triggers on derivatives and debt instruments ... I think it'd spread through the financial industry and those non-financial institutions dealing with "investments" and derivatives wreaking havoc.


I think they can't use the word "default."


(there may be a future poll on the "lameness" factor of same)

mrearlygold

You mean more handouts were flushed down the toilet and a tiny bit cut from the budget

no formal default

More money was stolen from everyone including Americans as the fed printed some fresh money up to help em out over there yes? There's smoe handouts flushed down the toilet with just a little tiny bit allegedly cut from the buget ( I'm sorry I didn't finish college, the more educated use big words "austerity") and the pansies are rioting.

No formal default.


If all this was contained somewhere else I suppose it would be somewhat funny as we prospered because of our freedoms, strong defence, no entangling alliances, no helping to install and then propping up dicators, and are now sitting with a big fat checking and savings account with a powerfully strong dollar for investments around the world, a strong base of property and the property rights to go along with it but I think of madison and elsewhere and now the "occupiers" running thru the streets of NY and elsewhere






And judging by almost everything seen, with the exception of a small percentage, nothing's gonna change anytime soon except get worse for the amazing disintigrating middle class so enjoy the ride. I am

cladking

You can't fool mother nature.

You can't take more apples out of a basket than you put in it no matter how ingenious the
bankers become or how adept they get at taking other people's money. If you try then the
only possible outcome is to run out of money (politically unacceptable), run out of apples (im-
probable), or run the price of apples up to a couple million dollars (euros) each.

If we don't get our collective houses in order and start putting more apples in the basket
then the outcome will be one of the above (think hyperinflation).

derryb

A default is failure to fulfill a legal obligation or duty. Normally, a default by a borrower under a loan agreement (bonds in this case) permits a lender to take certain actions in response to the default. However, legal action cannot be taken against soverign governments which puts the bond holders (major German, French and American banks in this case) at the complete mercy of the Greek government to honor their debt. Current bailout efforts are to provide somebody else's money to save the banks and investment funds that hold the Greek bonds. Greece doesn't need bailing out, all it has to do is say "sorry don't have the money to pay you back." The only affect of doing this is a resulting bad credit rating on any of its future bond issues. Even with a bailout their credit rating on future bond issues will be terrible.

The reason you are seeing riots over bailouts is that those providing the bailout loans (IMF, etc.) are dictating strict terms of the bailout loans. This includes raising retirement age and higher taxes - basically taking it from the country's citizens. The rioting citizens are saying "no, we do not accept these terms" to the politicians, but as usual the politicians are serving their true masters, the banks that stand to lose.

Again, this is about saving the banks at the expense of the working and retired citizens as well as future generations. The end result will certainly be political suicide for the politicians that choose not to listen to the people.

This is what happens when governments are allowed to borrow money they do not have. They are borrowing against the future labor and output of their own citizens. The more they borrow, the more of that future they steal from each citizen. Because those doing the borrowing do not have to repay from their own pockets they will borrow and spend recklessly. Our own budget and spending are a prime example. The only thing that prevents us from defaulting is, that unlike European Union members, we can (and are currently doing so) print our way into worse trouble.

FYI, Illiniois is behind in hundreds of millions of its debt. Technically it is in default. Because it, and other failing states cannot print their own money it is just a matter of time before Washington will provide them with needed bailouts. Guess whose pocket that comes from.

The good news is that once there is nothing left to give the banks, the banks will finally go bust, but then again they will already have it all.

Iceland said "no" to bailouts, maybe the Greeks will

mrearlygold

Love the chinese proverb

57loaded

ìå óåâáóìü, ðïôÝ!

MsMorrisine

yeah, well the government debt doesn't have collateral and covenants.

but I'm more thinking of the non-governmental institutions.

certainly, someone out there with some Greek CDS that profit if greece defaults must be yelling "Default!" right now, no?

I don't hear them.

Let's call them X.

X has Greece CDS,

They also sold some CDS on Bank Q.

Bank Q has some PIIGS debt, and bought some Greece Does Default CDS from Bank Z.

Unfortunately, X thinks they are going to make money on this from Bank Q going down on the bad Greek Debt, but they bought their CDS on Greece from Bank Z. Bank Z has been incorrectly bullish on European debt, including Greece. While still solvent, if Greece defaults, they have to pay out. That'd take them from shaky to insolvent. They can not pay their part on the Greece CDS they wrote.

Bank Q now is no longer hedged on their PIIGS debt, they go from shaky to near insolvency, and X takes a write downs on their worthless CDS they paid for. Markets are tanking, both the stock market and the bond markets. Suddenly, X and Bank Q trigger debt covenants.... oops. More trouble... they could default....

and so the intertwined web of crap becomes crumpled into a tangled mess of "counterparty failure" and "after shocks"




So... where are the Greece CDS holders saying "we want our money??'


silenced.


Greece will never deault, even if it has already and will continue to do so.

MsMorrisine

and I could get (formal) help from the EU

(as if they aren't pressuring them already)

renman95

They can always take a page out of the Argentina playbook and nationalize private pension funds.

I know smoe in DC are eyeballing our $4.7T in 401k's and $4.9T in IRA's.

That $9.6T could come in handy.

Meltdown

Excellent summary Derryb.

PerryHall

<< <i>ìå óåâáóìü, ðïôÝ! >>



Translation?

derryb

"My new warnings are mostly focused on Europe. But as I’ll explain below, they’re bound to have a life-changing impact on nearly all investors in the U.S. and around the globe."

"Get all or most of your money out of danger immediately."

Respected Martin Weiss has published some serious warnings

ksammut

<< <i>"My new warnings are mostly focused on Europe. But as I’ll explain below, they’re bound to have a life-changing impact on nearly all investors in the U.S. and around the globe."

"Get all or most of your money out of danger immediately."

Respected Martin Weiss has published some serious warnings >>



What assets is Weiss suggesting to invest at this time?

derryb

<< <i>

<< <i>"My new warnings are mostly focused on Europe. But as I’ll explain below, they’re bound to have a life-changing impact on nearly all investors in the U.S. and around the globe."

"Get all or most of your money out of danger immediately."

Respected Martin Weiss has published some serious warnings >>



What assets is Weiss suggesting to invest at this time? >>


I'm not a paying customer so I'll have to figure that part out for myself. Key here is a reputable forecaster giving a pretty dire warning. One of my tools is 2009 results.

Coyn

First you say



<< <i>The reason you are seeing riots over bailouts is that those providing the bailout loans (IMF, etc.) are dictating strict terms of the bailout loans. This includes raising retirement age and higher taxes - basically taking it from the country's citizens. The rioting citizens are saying "no, we do not accept these terms" to the politicians, but as usual the politicians are serving their true masters, the banks that stand to lose >>



then you say



<< <i>This is what happens when governments are allowed to borrow money they do not have. They are borrowing against the future labor and output of their own citizens. The more they borrow, the more of that future they steal from each citizen. Because those doing the borrowing do not have to repay from their own pockets they will borrow and spend recklessly. Our own budget and spending are a prime example. The only thing that prevents us from defaulting is, that unlike European Union members, we can (and are currently doing so) print our way into worse trouble. >>



The money they so recklessly spent was for the pensions that were excessive. Now they don't have the money to pay for 35 years of retirement after 25 years of work and you say that they are "taking it " from the citizens. The cause of the changes in Greece is not the unreasonable demands of the bankers but the fact that the punchbowl is empty and and no one wants to keep filling it. There is no more free party.

We have the same thing here. Excessive retirements for millions which cannot be paid. Some time they will be told that the money is not there and will revolt like the Greeks. The truth being that the money in both cases was never there and the Unions etc bribed the politicians to provide benefits that are excessive and could never have been paid.

The banks (as evil as they are) are not asking the Greeks for thier money back, they are just telling them they wion't continue to fund the party.

derryb

<< <i>The money they so recklessly spent was for the pensions that were excessive. Now they don't have the money to pay for 35 years of retirement after 25 years of work and you say that they are "taking it " from the citizens. The cause of the changes in Greece is not the unreasonable demands of the bankers but the fact that the punchbowl is empty and and no one wants to keep filling it. There is no more free party.

We have the same thing here. Excessive retirements for millions which cannot be paid. Some time they will be told that the money is not there and will revolt like the Greeks. The truth being that the money in both cases was never there and the Unions etc bribed the politicians to provide benefits that are excessive and could never have been paid.

The banks (as evil as they are) are not asking the Greeks for thier money back, they are just telling them they wion't continue to fund the party. >>



Because they loaned to a soveriegn government, banks can't force Greece to repay. They can and are using political pressure to convince EU politicians to bailout Greece. Just as happened here, the banks are dependent on the politicians taking it from the citizens and giving it to the banks. The citizens are up in arms because they realize their political leaders are selling them out to the bond holding banks by supporting bailouts. As stated earlier, bailouts mean higher taxes, lower pensions, etc. for all of Greece's current and future citizens. It is no different than when US politicians caved to the bankers here with bailouts except that the US was able to "print" more money to cover the bailouts. Even in this case it will result in higher taxes to repay the loans made with the "new" money. The double whammy for US citizens is the added devaluation of the money they currently hold in the bank and in retirement accounts as a result in an increase in the money supply.

While public sector pensions (and we are talking federal employees only in this case) are a burden on federal spending, any part of it that can be considered "excessive" is small part of government waste. I agree that public sector pensions at the state and local level are bankrupting those governments and largely due to the selling of votes to public sector unions. However, at the federal level, excessive spending encompasses much, much more than retirement pensions.

GoldClause

<< <i>They can always take a page out of the Argentina playbook and nationalize private pension funds.

I know smoe in DC are eyeballing our $4.7T in 401k's and $4.9T in IRA's.

That $9.6T could come in handy. >>





This is exactly what's going to happen at some point in the not too distant future. It's possible that we could turn things around, but our parasite class is now about half the population, so it isn't likely.

derryb

Greek bond holders take a 50% haircut.

"Today, for the first time since World War II, a first-world country has outright defaulted on its general debt. Mainstream analysts had said that a day like this would never come. And yet, here we are." - Michael Finger