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The Greece Matrix: Summarizing The "What Ifs"
In response to several reader inquiries into the Bank Of America report behind the post highlighting the potential outcomes for the Greek nation, we present this simplified summary matrix from BofA that rates the probability of each possible scenario and the implications that would follow as a result. A useful cheat sheet for those sovereign default situations.
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Sometimes the professor has a question on
the test that your cheat sheet doesn't have
the answer for.
What if this is all bs and dummies are lapping it up?
"What if" you stay home Leo and play with your marbles or try to add something constructive.
Something constructive shouldn't be only what you want to read though should it?
didn't cramer essentially say the same thing with resepct to BSC, (you know pre march 16, 2008.) hence his go long call.
Greece's current financial situation is quantifiable fact and is thoroughly substantiated.
If you'd like to propose that "hey, maybe it's all BS and ur dummies lol," then I'd like to propose that "Hey, maybe you can check your facts, Leo, or actually present even one of them to back up what you're saying. If you don't do that, you kind of look like a retard when you post things like this."
Everyone and their grandmothers is BEARISH on Greece. This is big news? Wake up already!
Is that your best line of argument?
TD, keep zippin them articles out...and the Dow will be up 500 pts.
From my very modestly informed viewpoint, the Greece story only matters as part of a lead up to the next basketcase EU economy lifting its petticoat to show some nasty secrets. Still not big enough to cause panic, no way. In the history books this only matters as part of a trend if one forms. So who's next?
Or their banks. Who is exposed to what in the EU. Austrian banks are heavily exposed to Eastern Europe. Hungary has been in much dire straights than Greece, but no one talks about them. Or the danger of the exposure to them.
Ah, yes, but Hungary is not part of the Eurozone. Greece, on the other hand, is a member of the Eurozone.
In other words, Greece has the potential to be more damaging to the Euro than Hungary.
Also, Hungary's GDP is US$ 196.6 billion. Greece GDP is US$ 343 billion. That tells you everything you need to know about Eastern European countries, really.
There, fixed that for you.
The truth of the matter is, and I have said it time and time again, that Greece is totally irrelevant in the grand scheme of things. California, New York, Illinois: these are much larger economies, and they are in a lot more trouble than Greece ever was.
The United States need a stronger dollar to sell more U.S. Treasury bonds and the European Union need a weaker Euro to export more (and import less), Greece included. It's a match made in heaven, and the (mostly American) rating agencies are only too happy to oblige.
Now guess what happens is that you are being played, by very very big boys, and you are parrotting exactly what they want you to say and repeat.
One of these days, you will turn around and realize the disaster that the USA really are. Not that Europe is going to be much better, mind you, but a bit better.
Wake me up when Germany "lifts its petticoat", as you say.
"Fuc@ing Greeks! Have you seen my mother?"
Robert De Niro
Greece, and the Fiat world is collapsing and taking a different fork in the road,,as gold is up $23.50,,are we beginning to see gold being viewed as money?? If so, look out above..
DXY 79.30 Gold is indifferent.
It does seem to have two consistent themes:
1) these are not the droids you are looking for [dont worry, everything will work out]
2) Buy gold.
So how do you "muddle through" when your d/gdp is through the roof, and you have collapsing tax income and no reduction in spending. How is that a very likely outcome?
I ask the big brains in cyberspace to give light where all is dark.
Ladies and gentlemen: No democratic country can hope to implement the kind of austerity measures which are necessary to put the fiscal back on a sustainable path. You think Greece is going to cut its deficit from 13 to 3%? Please. Not gonna happen. Even modest measures are being met with fierce resistance from labour unions. 13 to 3 means all out social disorder and lots of molotov cocktails.
So the "most likely" muddle thru scenario above is pure bullshit. Can't happen without a bailout.
So the EU is going to borrow a page from the IMF's playbook, come in and offer aid in return for some sort of performance benchmarks (that's how they'll sell it to angry German voters). Disbursements will likely be contingent upon specific actions. But the EU, unlike the IMF, has no experience dealing with wayward countries. So Greece will fail to deliver and the programme will unravel at the first bend in the road.
Greecis a goner. Get used to it and think about who's next.
Any basic economist could have written this "fudge report"....
In other words...
"Put it on the line" ....or STFU
I love that "muddling through" is their most likely projected outcome. We all know that BoA has a GREAT track record as seeing system shifts coming from a long way away...
A comment from Kathimerini (note what I bolded):
World bet on the eurozone focuses on Greece; EU in difficult position Prime Minister Papandreou faces most crucial decisions in decades
AFP
Prime Minister George Papandreou (l) talks with Finance Minister Giorgos Papaconstantinou. The two will have to address the sharp increase in spending in recent years to improve Greece’s finances.
By Dimitris Kontogiannis - Kathimerini English Edition
Greece’s failure to respond to the demands by international markets for a tighter fiscal policy than envisaged in its three-year Stability and Growth Program and economic structural measures has made things worse, sowing the seeds of a credit crunch with immense economic and social implications. The ball is now in the premier’s court.
Greece invited worldwide attention by first allowing the 2009 budget deficit to jump to 12.7 percent of gross domestic product and by then moving hesitantly to tackle the huge budget deficit while admitting its statistical data had been falsified. In doing so, it was downgraded to the B category by Standard & Poor’s and Fitch Ratings and understandably breathed a sigh of relief when Moody’s downgraded it just one notch, keeping it in the A category, with a negative outlook.
It should be noted that had all three agencies lowered it to the B category, Greek government bonds would not be acceptable for European Central Bank repo funding when the ECB decides on the pre-crisis rules widely expected next December. It is therefore no surprise that the country’s stock and bond markets have been hit by heavy liquidation from both traditional institutional investors, who seek to limit the risk of their portfolios, and speculators since December 2009.
The number of hedge funds and others betting that Greek yield bond spreads will widen further against German Bunds has increased vastly, as earlier bets turned out to be profitable and the government disappointed the international markets when it unveiled its 2010-2012 Stability Program. Even worse, Greece became part of a world bet on the euro and eurozone itself.
By putting pressure on Greek spreads and, to a lesser extent, the bonds of other peripheral European Monetary Union countries with large budget deficits, the markets tested European Union authorities’ credibility and resolve. With Greece’s woes threatening to contaminate other weak eurozone countries, known as the PIGS (Portugal, Italy, Greece, Spain) of Europe, the markets know that the EU authorities, even unwillingly, will have to intervene to help Greece.
But EU authorities also know very well that any intervention will have to be preceded by a Greek package of additional restrictive fiscal and structural measures to ensure that the budget deficit targets set in the Stability Plan will be met if they are to safeguard their credibility.
If the Greek government does not reciprocate, the EU will find itself in the delicate position of picking between two choices: either leave a member state to protect its credibility on its own but risk a similar episode in another of the PIGS later or intervene and risk weakening the euro further and making the cost of borrowing more expensive even for core eurozone countries, such as Germany and France. It is more rational to assume that the first choice is more sensible from their point of view but it does not have to come to that and should not. The Greek government can move quickly to address the demands of the markets and avoid a credit crunch while providing the EU with a strong argument to step in and help.
According to different accounts, Prime Minister George Papandreou is now fully aware of the magnitude of the crisis. It is therefore up to him to give the green light to Finance Minister Giorgos Papaconstantinou to announce an additional set of measures to boost tax revenues and cut spending. Unfortunately, the indecisiveness of the Greek administration in the eyes of the markets calls for even tougher measures than perhaps would have been enough to satisfy them back in November or December. Therefore, it should make sure that the additional package includes some true spending cuts to entertain the idea that Greek measures are skewed heavily toward more taxes. Credit rating agencies and markets know very well that tax evasion may indeed be a big problem in Greece but can offer returns in the medium term if combated.
However, they also know that general government expenditure shot up to 50.1 percent of GDP in 2009 from 44.4 percent in 2007 and 42.9 percent in 2006, while revenues fell to 37.3 percent of GDP in 2009 from 40.4 percent in 2007 and 39.7 percent in 2006. In other words, the deficits widened because expenditures exploded in 2008 and 2009, while revenues simply deteriorated. The economic policy decision that has to be taken by Papandreou in the next few days, or couple of weeks at most, is the most crucial taken by any Greek prime minister in decades. For the sake of the country and future generations, he has to make the right one.
Greeks will have to adjust their standard of living to where it should have been. Dream is over!
The Greece angle is overplayed imo. The EU's well being is neither contingent nor jeapordized by the strengh of any of the Club Med basket case economies.
Their financial stability was always questionable as far as I remember. Personally, I've seen Italy devalue their currency Lira before.
Basel agreement gives these economies not the same cheap tricks they 've been using prior to the Euro. Now they're trapped within the very strict parameters of Basel 3.
Greece, Portugal, Italy and Spain will have to make drastic changes and cuts to their utopia public budgets.
In the big scheme of things, it's not a big deal. They can't afford the socialism they've created. They've got communist parties running some regions for fuck's sake.
LOL, as if the "capitalists" in the US and UK are doing a better job running their economies.
I'm not disagreeing with you.
The ponzies have all been overplayed. Everywhere.
Are the ECBs shorting Greece?
Sssshh, it's all part of a master plot by Germans to get out of the ECB. But don't tell anyone, ok?
dbl
Leo, Germans love Ouzo, olive oil and feta.
But it was cheaper when we could buy the products in Dracons.
HUngary has their budget deficit down to 4% of GDP. Greece is considering adopting the hungarian model. Hungary also has used its agricultural land as collateral
I say kill the doelarr and euro. let them bleed until the last drop. leo can have his stocks...worthless paper.