Greece Moving Closer to Eurozone Exit, Default

By: Tuesday May 8, 2012 10:29 am

Here’s the latest on the post-election tumult in Greece. After New Democracy (center-right) Party leader Antonis Samaras failed to form a government, the number-2 party, the Coalition of the Radical Left (known as Syriza), was given a chance. And they basically ruled out a coalition government. Greeceā€™s post-election political and economic chaos deepened on Tuesday, [...]

Some Eurozone Finance Ministers Call for Greek Exit From Monetary Union – Good Idea!

By: Wednesday February 15, 2012 7:34 am

New statistics out of Greece show that austerity shrunk the economy more than expected last year. GDP in Greece fell 6.8% in 2011, and a slightly faster 7% in the fourth quarter. The country is in a fifth straight year of recession, and the numbers are rapidly approaching a full-on depression. So of course, the [...]

Europe Has a Growth Problem

By: Wednesday January 25, 2012 10:21 am

With the Greek debt situation still in flux, it’s worth looking at the real problem in Europe, which of course has nothing to do with the special problem of Greek debt. It’s a growth problem. There is a palpable sense of hope at the annual Davos World Economic Forum that the euro zone is edging [...]

S&P: Greek Debt Restructuring Would Be a Default

By: Tuesday January 24, 2012 8:55 am

Standard and Poor’s has become the second rating agency to say that, regardless of the conclusion of the Greek debt restructuring, they would judge the country as in “selective default”. With two rating agencies – Fitch is the other – now on the record about default, it’s almost certain that the announcement of the deal, [...]

The Hedge Funds Threatening to Blow Up Greece

By: Wednesday January 18, 2012 7:22 am

We’ve told this story a couple times, but apparently what happened is that a lot of European banks and other investors held Greek debt, and they were able to quietly sell it to a group of hedge funds, who picked it up very cheaply. The hedge funds have no interest in taking a haircut on [...]

Fitch Regards Haircuts on Greek Debt as Default

By: Friday October 28, 2011 12:52 pm

The entire Eurozone crisis deal is predicated on the haircuts Greek creditors will take being voluntary. If the haircuts are seen as a default event, it would trigger certain credit default swaps, which since we actually don’t even know who holds what in that regard (!), would be wildly unpredictable and dangerous. So one of [...]

France, Germany Agree to Big Euro Bank Bailout

By: Monday October 10, 2011 6:17 am

In anticipation of an imminent Greek default, France and Germany have agreed to a big old-fashioned bank bailout! What are the details? That’s a secret. The leaders of France and Germany have announced that they are ready to recapitalise Europe’s troubled banks and have reached agreement on a “long-lasting, complete package” to counter the bloc’s [...]

Waiting on European Bailout Solutions, When European Policies Prevent Them

By: Monday September 26, 2011 6:20 am

The weekend ended without any dramatic announcement about a multi-trillion euro bailout for the banking sector. But the elements of the bailout are being prepped. European officials are working on bolstering their bailout fund, known as the European Financial Stability Fund (EFSF). After a weekend of being told by the United States, China and other [...]

Standard and Poor’s Has Less Leverage Than the Political Class Thinks

By: Thursday July 28, 2011 6:22 am

Standard and Poor’s rogue actions violate the Securities and Exchange Act, by giving the impression to the political class that they must reduce the deficit by $4 trillion in the next 90 days to avoid a credit downgrade (S&P, mindful of this violation, is now saying that they’ve been misquoted). But would that avoidance be [...]

S&P: Boehner Plan Not Enough to Avoid Debt Downgrade

By: Tuesday July 26, 2011 6:22 am

If the goal of last night’s Presidential address was to send a message to Congress to do their jobs, the fact that several Congressional websites allegedly crashed shows that the message was received at some level, and that President Obama should have been doing this kind of call to action all along, rather than merely [...]

S&P Is a Terrible Predictor of Sovereign Debt Defaults

By: Monday July 25, 2011 8:10 am

Asian and European markets fell very slightly today, as the collapse that would supposedly be associated with the failure to agree to a plan several days from default has not yet materialized. The US markets are down, but again, not radically so. Nevertheless, Wall Street is now making arrangements for a possible US debt downgrade: [...]

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