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SocGen Answers: "Is Greece Unique?"
Greece is now yesterday's news. The only question is if, and when, Portugal will follow in the Greek footsteps. SocGen explains, answering key "client questions."
From Michala Marcussen:
Will Portugal follow Greece? Portuguese bond yields have increased on the back of downgrades and fears that Portugal will follow in the footsteps of Greece. Under the current EU/IMF program, Portugal is due to return to market funding in 2013. For this to become realistic, 10-year bond yields would have to decline substantially from the current level of 15.1%. In our opinion, the Portuguese government will bite the bullet and deliver deep reaching structural reform and austerity in 2012. The risk, however, is that even a successful program may not be enough to secure a sufficient decline in bond yields. That would leave only two options (1) a second official package or (2) PSI. A firm commitment from euro area policymakers that Portugal will not see PSI and, if necessary, funds would be made available would clearly be helpful and push bond yields lower (and thus reduce the risk that an official second package would be needed!). MARKET ISSUES: The ECB warned on the dangers of Greek PSI and have been proven correct. Until clear commitment is given by euro area policymakers on Portugal, market nerves are likely to remain on edge.
As a reminder, as both Zero Hedge, and subsequently Mistubishi UFJ warned, Portuguese bonds issued under UK law represent a far greater amount of the total notional outstanding than in the case of Greece, making a simple CAC stripping virtually impossible. And since the "UK bonds" have a negative pledge, option (1) the "official package" become next to impossible, as numerous bonds have a "negative pledge" covenant making priming loans (aka a Troika DIP) next to impossible. Good luck providing Portugal with incremental capital, if the collateral has to be allocated pro rata to the entire existing balance sheet. Alas, this most critical question was not answered by SocGen, which simply means that its "clients" have no idea what the right questions even are...
They'll find out soon enough.
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Most chilling thing I read this weekend was the quote by Donald Tsang - cheif executive of Hong Kong. "I've never been as scared as now about the world. We do not know how deep this hole will be when the whole thing implodes on us." A policy person speaking truth? Wow.
Christine Lagarde also said, "No one is immune. Not just EuroZone crisis. Could have collateral effects, spillover around the world". Yes, she's collecting money for the IMF, but it is likely that Strauss-Kahn wouldn't have said it outloud at Davos.
Lagarde is..........(fill in your expletive)
A dirty FUCKIN PANHANDLER!
Tax increases, and austerity will cause economic contraction leading to GDP shrinkage, increasing the Debt/GDP ratio. The debts will become harder to service, borrowing costs will rise.
...another status quo puppet working to kick the can far enough to the right to hand off the flaming bag of shit so that someone takes the fall.
Lagarde is..........
A seeping boil on the ass of a cancerous rodent!
We have a winner: http://www.armadamarkets.com/2012/01/weekly-market-update/
All these so called "financial assets" are about to start popping like kids party baloons.
Why Portugal before Italy?
Just the next pigeon in line, that's all.
"small pigeon"...therefore easier to manipulate. Oddly the euro-zone wanted to throw "dee leetle people" to wolves...since those are the most solveable. If you can't solve that problem...how can you possibly solve Italy or Spain? Anywho the EU is a trading bloc. Of what possible interest is that to the so called "global economy"? I say in world where nothing but price pressures are rampant....none. What was that line in Batman Begins? "I will now merge your department with that other department. As a consequence your services are no longer needed...
Central Planners always fail. They miss the nuances and adaptability of the human mind. It's like shadow boxing vs a real opponent. They never see the upper cut KO coming.
Yes, The Fatal Conceit!
Because that's what the bond market is saying - Portugal bonds are at 15% and rising and Italy has calmed down to a mere 6%.
Thank God those growth numbers are coming in...like a Green Day!
http://www.youtube.com/watch?feature=player_detailpage&v=VkmEZs_Kcms
Italy is "inside the firewall" (for now), and so is Spain. Not likely to last once economic contraction begins to accelerate. it will.
Is anyone arguing otherwise? NOT!
Spanish banks are by far the largest holders of Portuguese debt. If Portugal goes, Spain will either become very very expensive for Germany and France, or the game is over.
.
Cannibalism 101:
You eat the less critical parts first so that the game remains alive as long as possible for maximum yield (and pleasure).....
After Portugal, Spain, then Italy, followed by France, the UK, Japan (per Kyle Bass), then the US of A.
This chart comes in handy looking at who is exposed to who:
http://www.bbc.co.uk/news/business-15748696
Didn't they say the same fuckin' thing about Greece oh, so many months ago? And so many times it became actually stupid? Greece nor Portugal, nor Italy will "bite the bullet". The only "bullet" need be used is inserted in the heads of the fucking ignorant, incompetent Central Bankers and the EU (and American) Civil Servants that cannot apparently operate a fuckin' calculator nor read a fuckin' history book. People do not operate in these ways, at least no "successful" and "balanced" people.
I will purchase a shiny gun for any Central bankers that will use it on themselves and rid us of their stupidity and presence!
Fucking Idiots. SoGen and GS are just as bad because they spoon feed this shit to the MSM and the bureaucrats in the EU and the United States.
Your faux-rage brings a smile to my face. But judging by the 33 greens you got in the other article today, your message is resonating with some!
I'm terrible at picking stocks but my #1 play right now is STP. If I make you $ on this do you promise to curse less and be more genuine?
"I yam what I yam". The rage is not "faux", and if you can't see "genuine", well......
My message should be resonating with everyone. It is really that bad. If you can't see it it is that you "don't want to see".
Your message SHOULD be resonating with everyone, but trying to bring it to the attention of the masses of sheep will only result in them snuggling ever deeper into their MSM-spun cozy cocoons of denial.
As Spain's unemployment figure rose above 5 million last week, the new government of Mariano Rajoy called on Brussels to ease the country's deficit targets. Its 51.4% youth unemployment level means that for the first time in a modern European country the majority of young people are out of work. In Greece the figure is 46.6% and in Portugal it is 30.7%.
http://www.guardian.co.uk/business/2012/jan/28/youth-unemployment-crisis...
I posted this last night
The results of this World Governance Era remind me of central planning’s history of push and pull, lies and counter lies, screw ups and cover ups, and all the rest. And unemployment and starvation. It brings to mind Ayn Rand’s incredible description of central planning in another era, in Soviet Russia, with its counter lies, comings and goings, ups and downs, appeasers and oppressors, ultimate winners and losers--the façade of central planning—the bitter struggle of the individual against the central planners.
Wrote Rand in October 1958, just five years after Stalin’s death:
"To those who might wonder whether the conditions of existence in Soviet Russia have changed in any essential respect since 1925, I will make a suggestion: take a look through the files of the newspaper. If you do, you will observe the following patterns:
"First, you will read glowing reports about the happiness, the prosperity, the industrial development, the progress and the power of the Soviet Union, and that any statements to the contrary are the lies of prejudiced reactionaries; then, about five years later, you will read admissions that things were pretty miserable in the Soviet Union five years ago, just about as bad as the prejudiced reactionaries had claimed, but “now” the problems are solved and the Soviet Union is a land of happiness, prosperity, industrial development, progress and power; about five years later, you will read that Trotsky (or Zinoviev or Kamenev or Litvinov or the ‘kulaks’ or the foreign imperialists) had caused the miserable state of things five years ago, but “now’ Stalin has purged them all and the Soviet Union has surpassed the decadent West in happiness, prosperity, industrial development, etc.; five years later, you will read that Stalin was a monster who had crushed the progress of the Soviet Union, but “now” it is a land of happiness, prosperity, artistic freedom, educational perfection and scientific superiority over the whole world..
"How much of such five-year plans will you need before you begin to understand?" — We The Living, pp.vii-viii
And here's the Godfather:
http://en.wikipedia.org/wiki/Talk:Edward_Bernays
it's all "part of the plan" boyz and girlz. move along. Socrate's "shadows on the wall"...nothing more.
Don't you see? They were better off as "just simple farmers" than they are now after "modernization and gentrification". Once the music stops, the picture aint pretty.
NO SHIT! What exactly do the Greeks return to again? Rock farming? Earthquake watching? We'd call it a parody save for staggering increase in homelessness, panhandling, crime...etc, etc...obvioulsy nothing we don't already know about back in the USA.
"What exactly do the Greeks return to again? " Hopefully with some hard times they'll return to their feral nature. Fck, they may even grow some nuts again so they can't wear speedos. Stand back and see where we're all at right now.
Who is John Galt ?
Laggard could play Lillian !
JR, good morning. Always enjoy your perspective
The German economy is the strongest in Europe which is why the bankers are putting the pressure on the German people to save their invention – the euro.
First, the pressure is to give more support to the Euro Zone and lead the way in bailing out the weaker Euro Zone members, some of whom, with the help of Goldman Sachs, fabricated their budget reports and now can’t pay what the bankers claim would be their fair share.
Now, if Germany is reluctant to take the abuse of the banker-controlled financial press and declines to increase its taxes in order to save the euro, maybe their reparations payments and war debts will just have to be brought on again.
According to polls last June, the German public is 90 per cent against underwriting a second bailout of Greece.
This drive, if it continues to intensify, by the way, has one ending – the break-up of the Euro Zone and the eventual independence of Germany, with its own currency and its own economic growth. How can a proud, hard-working people eventually not follow this path? And the same goes for the Greeks.
All this new reparations talk, btw, comes from a London School of Economic “German” professor interviewed by Der Spiegel who obviously is more central banker than he is German.
Albrecht Ritschl, a professor at the London School of Economics, last June “slammed Germans for their hostile attitude to the struggling Mediterranean country (Greece), warning that if Germany isn't careful it could face claims from angry Greeks for unpaid World War II reparations,” as reported by theweek..
IOW, you’d better pay up or we will use the world’s media against you for your treatment of the Jews. That’s what reparations are; you practiced genocide and you’d better pay. That’s the unwritten definition of “reparations.”
Blackmail.
For those who doubt the effectiveness of this blackmail, they just need to review the comments on this website this weekend to show how easy it is for the international-banker-controlled media to drum up hatred for Germany. Translation: Money for the bankers and world governance for the people..
Never mind, of course, that Germany made its last reparations payment for World War I on Oct. 3, 2010, settling its outstanding debt from the 1919 Versailles Treaty, 92 years after its defeat.
Reports theweek: “Ritschl makes it plain he believes that Germany's economic success - it is vying with China to be the world's premier exporter of manufactured goods - has only been possible ‘through waiving extensive debt payments and stopping reparations to its World War II victims.'
“In Greece, he says, ‘no one has forgotten that Germany owes its economic prosperity to the grace of other nations.’
“Ritschl warns that if Germany keeps up its antagonistic attitude, Greece – and other European nations - may well feel like raising the issue of reparations again…
"’For Germany,’ he says, ‘this could be expensive, but we will have to pay either way.’" We? And this man is a German citizen; so is Paul M. L. Achleitner, the Goldman Sachs chairman of Deutsche Bank.
http://www.theweek.co.uk/people-news/4473/prof-reminds-germany-its-wwii-debts-greece#ixzz1ktpOiplJ
How about the Greeks that got killed? Don't they matter? Anywho...this is crapola anyways. Ask yourself this JR: when the euro was created was all existing debt then converted into the new currency...or only "to be issued debt...all under the auspices of the ECB"? The answer to this simple question give lie to everything you have said...all you yourself have propagandized here. So go ahead..."Bernay's out, bro"...put the Lip in "Lippman"... the whole thing's been a scam since day one...all designed (surprise, surprise!) to create "debt upon debt upon debt upon...
The Euro Zone downturn has been exacerbated by the common currency. I'm saying that in the end that common currency comes down to debt slavery to the international bankers--for all Euro Zone members.
I’m saying that it’s in the interest of these giant international bankers and international corporations to keep the Euro Zone together, but it’s not necessarily in the interest of the average German or Greek citizen. The German and Greek people just give up more and more of their standard of living to the bankers, as do Americans when forced to give billions in taxpayer funds to the likes of AIG’s counterparties -- Goldman Sachs Group Inc, Deutsche Bank AG, Merrill Lynch, Societe Generale, Calyon, Barclays Plc, Rabobank, Danske, HSBC, Royal Bank of Scotland, Banco Santander, Morgan Stanley, Wachovia, Bank of America, and Lloyds Banking Group…
And now look what they’re attempting to do to the Greek and German people; they’ll grind them into the dirt if they get their way. And this is just the beginning; the tyrants who come after them will make Mao look like some kind of Sunday school teacher. These people aren’t content with their commissions anymore; they want asset stripping and debt slavery.
As for Greece, here’s the current problem, outlined by The Economist in July: “Despite a relatively small primary deficit projected for this year, Greece is peculiarly vulnerable because of the scale of its indebtedness and the fact that so big a chunk of it is held abroad, a characteristic also shared by Ireland and Portugal, the two other bailed-out countries. As important, in joining the single currency, these economies lost the ability to reduce debt by inflation and to spur growth and competitiveness through devaluation. That makes investors fear that the only way to relieve oppressive debt burdens is through default…”
http://www.economist.com/blogs/dailychart/2011/09/government-debt?page=1
I disagree, however, with The Economist that devaluation spurs “growth and competitiveness.” In the long run, as we’re seeing it play out now, it spurs destruction.
Sound money and economic freedom are inseparable. Devaluation represents a default against the average citizen. As Prudent Investor asks, “If devaluation causes economic growth, then why has Zimbabwe’s massive devaluation (hyperinflation) not spurred her economy into the stratosphere?”
It is ABSOLUTELY in the German interest to keep that euro alive and kickin'. They've lent beyond belief to Greece, Spain, Italy, etc...etc. Shall we even dsicuss who owns the CDS's on all these countries? (German and Swiss Insurance giants? HELL YEAH!) There's no phuckin "International Cabal" here...just a tax evading German one. Why else bitch about Switzerland's tax evasion being "shut down by evil American Treasury Secretaries"? These clowns scream "sovereignty" while looting Greece down to the last artifact! Ridiculous. "You go in as one, you come out as one too." THAT'S THE DEAL WITH THE EURO. You might not know it...but Frau Merkel sure as hell does. Hear her bitchen about the US going after tax evasion via Switzerland? NOT!
“To ‘save’ the euro, the European Central Bank (ECB) chose what some economists were calling the ‘nuclear option’. That sounds dramatic, but for non-economists: what does it mean? Why was Germany so strongly opposed? As we will review herein, the ECB’s choice of the ‘nuclear option’ means: 1) the door has been opened for unlimited direct monetary creation by the ECB; 2) the money will be effectively used to pay for an outside-the-budget, unlimited bailout of major European and global banks; 3) the inflationary effects of creating all this new money will be contained by creating still more money out of the nothingness; and 4) as part of their Faustian bargain, global banks will hollow out still more of their balance sheets, growing ever economically weaker even while their regulatory capital creates an illusion of ever greater strength.
“The European Central Bank had a blueprint from which to work: the parallel interventions by the Federal Reserve in the United States…
“To understand the rescue, we need to understand who the beneficiaries are, and Greece is arguably not the main beneficiary. For the European Central Bank is not buying the securities directly from the governments or the private issuers -- it's buying them from the banks. The banks are in deep trouble, so the European Central Bank takes its power – which is the stewardship of the value of money for the citizens of Europe – and uses this power to buy the banks out at on an unlimited basis. The pricing is more attractive than what the market offers (which is the point of the intervention). So the banks either don’t lose money at all, or they take much lower losses than they would through selling to normal buyers. The ECB is making an unlimited amount of banking losses disappear. As others have commented, the euro zone rescue plan is not really a bailout of Greece, but rather, a bailout of Europe's (and America's) banks.
http://www.danielamerman.com/articles/Rescue.htm
"Albrecht Ritschl, a professor at the London School of Economics, last June “slammed Germans for their hostile attitude to the struggling Mediterranean country (Greece), warning that if Germany isn't careful it could face claims from angry Greeks for unpaid World War II reparations,” as reported by theweek.."
Angry Greeks? How exactly are they going to get their money? Invade Germany? Terrorism? Sorry, but this is what's going to happen:
1) Greece defaults
2) Gets booted out of the Euro
3) Goes back to the drachma
4) Drachma devalues rapidly
5) Widespread economic hardship in Greece
6) Germany swoops in and buys assets for pennies on the dollar
7) Greece goes back to 3rd World status and becomes
- solar generating farm for Germany
- cheap holiday destination
I agree that this is a very possible scenario, up to step 5.
Step 6 will read, Greece denounces EU constitution and start imposing import duties, blocking sale of assets to foreigners, imposing higher tax rates on foreign companies or tax breaks for local ones. Germany halts plans to buy assets.
Step 7 More countries fall in the above process. Hard EUR (or DM+) is appreciating by a scale of 2 to the rest of the world making the products less attractive, bringing economic crisis inside Germany.
The countries that break away from the EU (and there will be a lot of them) will immediately erect trade barriers with the remaining EU. This by itself will be sufficient to corner Germany. The appreciating Euro will be the least of Germany's problems. Germany will find it self in the middle of an increasingly hostile and unstable Europe, in which many people think that the Euro was designed only to benefit Germany. This by itself will be real hell for Germany in more levels than the financial one.
Ritschl and his obscure viewpoints are absolutely meaningless.
JR...its wrong to say the Euro is a German invention. Europe has a history with monetary unions that predate German participation. We should not forget the LMU (Latin Monetary Union) set up prior to WW1 which included France, Italy, Switzerland and Belgium, later to be joined by Greece and Spain.
Germany only seriously entertained a common currency in the early 90's as an exchange for support from France for its plans at German reunification.
So the Euro project is really more a French plan than a German one. I can see France desperate to save the Euro (and itself), but dont bet on Germany saving the likes of the Greeks despite the bad press it may incurr. This is a new world order we are moving to, and Germany has a new position in it (any doubt? Just ask yourself how central Germany has become compared to 5 yrs ago and how seemingly fragile the US has become).
I read a article about France wanting to 'check' german growth/interest/influence by binging everyone together with the currency. Perhaps this is the case, but its hard to deny that it was and is a political construct, wrapped in potential economic and political benefit and way to rival the dollar....or so they told the masses.
All firewall's are unique. At the end of the day, did they protect you from government theft and/or fraud? Nope. If fact, the very architects know your money will go poof! Saving the establishment comes first.
Number 13 Baby <<-- Lagarde
black tear falling on my lazy queengotta tattooed tit say number 13
I always enjoy watching incompetent fools try to save their own hides.
"the "UK bonds" have a negative pledge"
Amateur hour here: what's a 'negative pledge'?
http://www.investopedia.com/terms/n/negativepledgeclause.asp#axzz1kuBI2XPL
Read the link.
Basically, negative pledge = the issuer is not allowed to do anything in order to reduce the value of the bond (as it's happening with Greece).
Most of Greece's bonds are issued under Greek Law, only 10% under UK law. Whereas most of Portugal bonds are issued under UK law. Hence, they can't pull a Greece here since the UK law disallows it.
Seems ZH is making a big deal about Negative Pledge, but as i see it the Negative Pledges offer NO protection for sovereign bond holders (its a practice for commercial lending really). Portugal is ALREADY on its first bailout package. Those funds from EU and IMF clearly have seniority to existing bonds. So the Negative Pleadge really hasnt done anything to protect existing bond holders. Its all smoke and mirrors folks, bond holders will be subordinated as mandated by the new lenders.
ZH fails to point out explicitly how Negative Pledges work because they DONT WORK in the case of a Sovereign. All of Portugals bonds are unsecured, so a negative pledge only protects against Portugal issuing new bonds that are directly secured against the nations assets. Portugal can still issue new bonds that are unsecured.
So Mr Durden, care to explain specifically how a Negative Pledge prevents Portugal from a Greek situtation? You can't. cause it doesnt, and that why only you are talking about it while the bonds yields go higher.
Honestly , if that does not say it all that One country issues its own debt/finance problems under Another countries laws. pathetic.
Something Obama would say.
10-yr. futures now approaching all-time highs while "hard assets" sell off.
My prediction: If we see 1200 ES in February, 1.5% 10-yr. yield is a lock.
Muni-bonds are already going parabolic, they could reach escape velocity this week.
"10-yr. futures now approaching all-time highs while "hard assets" sell off."
lol...its a marathon not a sprint, you might want to pace yourself a bit.
That would be HUGE if it comes to past. Europe would be COMPLETELY in flames...with US/French and English troops parading through every capital imaginable. Forget the Cold War...you'd have a Showdown! with the Russians...not quite as good as this one of course:http://www.youtube.com/watch?v=PnFM9ymB76I&feature=player_detailpage
There's "something about 1.75%"...the point of no return kinda thing. We shall see...
That sneaky word "if" makes this not much of a prediction.
My prediction. If the Pats win the Super Bowl Brady will be one of the better QBs of all time.
that ten year came within .01 percentage points of that 1.75 just a few months back. and just as suddenly..."it changed." the key to all this crapola is not what the bullshit propaganda repeated by "crisp and clean Zero Hedge" that "there's a net short euro position." TOTAL BULLSHIT. The institutions are MASSIVELY net long. And so are the various Tylers peddling this completely retarded lie. Just look at the committment of traders report and you'll know what a lie this whole "net short" bullshit is. And THAT goes a long way towards explaining why treasuries soar in value while plunging in yield: these mega banks are up to their eyeballs in euro's and euro denominated SHIT PAPER. JUST LOOK AT GOLD TO START TO THE YEAR!!!! IF what robo says is true...and i call it probable and not merely possible...FINANCIAL ARMAGEDDON BITCHEZ! (and isn't that what ZH is suppose to be informing us about???...no? really? why is that? Cuz New York would be impacted just like they always said it would? Doesn't make any sense...
http://www.youtube.com/watch?feature=player_detailpage&v=JFfVaDFjeAM
First sensible thing I've seen RT say. Muni's have already hit escape velocity...
... only to be promptly sucked into the expanding black hole of unsustainable world governmental debt, while simultaneously finding themselves under attack from the collapsing US dollar Death Star.
http://www.bloomberg.com/news/2012-01-29/china-s-decision-to-maintain-bank-reserve-ratios-taken-as-sign-of-caution.html
So much for China printing money.
The price of pork is thru the roof, a whole chicken is 5 times as much as in Toronto. The current leadership that was a participator of Tien An Men bloody inflation protests in 1989 knows very well what food inflation does to a chinese man or woman spending 60% o salary on food. They are shitting Great Walls of China.
While wholesale beef in the US is at record highs and poised to go higher.
http://www.bloomberg.com/news/2012-01-27/u-s-cattle-herd-falls-to-smallest-since-1952-as-drought-destroys-pastures.html
No objection. But in US and CAN food is still not more than 25% of income. People of fat.
But shelter costs are much higher than those for most Chinese, all together we are riding on similar vehicle to shit house.
Yeah and while prices go through the roof the US wll be exporting record amounts of beef to other countries. Once again Americans take it so massive corporations can rake in overseas profit. Gasoline at $3.50 a gallon but the US becomes a net exporter of gasoline, check. Beef at record prices but the US exports record amount of beef, check! Go down the list and you will see Americans forced to endure record inflation to help the bottom line of big ag. How about some massive export tarrifs? That would solve the problem, but it would hurtall those speculators betting on higher contract prices.
"Alas, this most critical question was not answered by SocGen, which simply means that its "clients" have no idea what the right questions even are..."
Professional money management at its best!!!
Germany's just saying 'Nein!' to the EU bailout in a different way. Making demands that are absurd on their face.
They might as well ask each Greek (Portuguese, etc.) citizen to shave their heads and tattoo the German flag on their skulls (BTW, tattoos on bone REALLY hurt).
Going this route may be kinda random, but it has one upside: getting the Greeks etc. to be the ones to shout NO instead of the Germans.
Anyway, make with the defaults already. It's not getting any easier for waiting.
Follow Greece where? They haven't moved on anything, just conjecture. Move along.
I thought you'd like a list of the deck names of the Costa Concordia cruise ship that recently sank. The decks were named for members of the European Union.
Spagna DeckGermania Deck
Francia Deck
Portogallo Deck
Irlanda Deck
Gran Bretagna Deck
Italia Deck
Grecia Deck
Belgio Deck
Svezia Deck
Olanda Deck
you forgot the "Poop Deck." I here that stuff was smeared everywhere when "deal went down."
Ooops. I forgot the Davos deck filled the bilge.
nah, they take it up the ass!
"Portugal is due to return to market funding in 2013" Looks like a long alley to kick this can down, just saying..
First time we heard that was that Greece would return to the markets 2012. And that was before the big elephant (italy) appeared in the room :)
no one wants to be first, but everyone is going to want to be 2nd
LOL! NatGas gap up while everything else sells off.
Greece is devising an orderly exit strategy from the EU, wtih a return to the drachma (to be lowered in value 25% almost immediately), a strategy that was already being initiated when G-Pap planned to submit the Oct 2011 EU Summit decision to popular referendum. Greece's exit from the EU will be announced early March.
Someone lends, someone borrows and pays it back with interest, someone bundles up the bonds, someone sells them, someone else buys them. Lack of repayment is not a crisis. Refinance is not a crisis. Two credit cards maxed to pay for the first is not a crisis. Eventually, someone loses and experiences varying levels of discomfort along the food chain....the lender, the borrower, the packager, the seller, the ultimate owner. This is also Not A Crisis.
How much an investor invested, how much a bank is exposed, counter party CDS risk, tier one capital..................all personal problems. Yet here we are, the world hanging on to every phd and brokerage research dept to come up some complicated way to guage possible outcomes for this unique, act of God event that is upon us all. Pretty pathetic.