Here we go, Germans deciding on Greece population and it’s future.
The newspaper said in an advance excerpt released ahead of publication on Sunday that the plan calls for investors who hold Greek bonds due to mature in 2012 to 2014 to voluntarily exchange those for new sovereign debt instruments with an extended maturity of seven years.
The Finance Ministry did not comment on the report.
Welt am Sonntag quoted from an unofficial paper from the Finance Ministry saying it is in principle possible to structure a conversion of debt in such a way to avoid default.
According to the plan, creditors could be motivated to join in a voluntary exchange with the help of a so-called “collective action clause” that would be introduced into existing bond contracts in the event not enough investors were prepared to take part.
At the same time, the ministry’s plan says that investors who swap their old bonds into new bonds would get preferential treatment in the future if another rescheduling is needed.
There are concerns in financial markets that Greece will eventually be forced into a coercive restructuring of its debt, which stood at nearly 330 billion euros ($476.1 billion) — or close to 150 percent of GDP — at the end of last year.
A harsh restructuring that would force losses on private creditors has been ruled out for now, butGermany and allies like Finland and the Netherlands are insisting on some sort of symbolic participation from the private sector.
Sources have told Reuters for the past two weeks that investors who hold Greek bonds due to mature in 2012 and 2013 could be encouraged to roll over that debt under a scheme similar to the “Vienna Initiative” used in early 2009 to safeguard banking systems in central and eastern Europe.
It has until now been unclear what incentives governments could offer to convince investors to buy new Greek bonds, but in similar cases in the past, they have been promised higher coupons, preferred creditor status or collateral as inducements. (Kathimerini)
We have been arguing for Greece to restructure, exit the Euro, and fix the Economy. Yes, very hard short term, but at least you are free, and end up with a sound Economy, if you do the restructure process well. Greece is now in the hand of the Bail outers, the Troika, dictating what Greece and it’s people should do. Yes, the banks have “saved” the many billions in exposure by the bail out. The poeple of Greece have been hit with Austerity, lower wages, higher taxes etc. The banks together with the Troika are now in full control of Greece. They dictate every detail of the coming bail out, and the ones that will follow. When you get a bail out, like Greece, the country lost its freedom. The Class War is now run by the Financial Oligarchs. Look out for more protests. Below insight from Hudson;
“But if a country is still not delivering, I think all would agree that the second stage has to be different. Would it go too far if we envisaged, at this second stage, giving euro area authorities a much deeper and authoritative say in the formation of the country’s economic policies if these go harmfully astray? A direct influence, well over and above the reinforced surveillance that is presently envisaged? Jean-Claude Trichet, President of the ECB on receiving the Charlemagne prize for European unity (Aachen, 2 June 2011)
Soon after the Socialist Party won Greece’s national elections in autumn 2009, it became apparent that the government’s finances were in a shambles. In May 2010, French President Nicolas Sarkozy took the lead in rounding up €120bn ($180 billion) from European governments to subsidize Greece’s unprogressive tax system that had led its government into debt – which Wall Street banks had helped conceal with Enron-style accounting.
The tax system operated as a siphon collecting revenue to pay the German and French banks that were buying government bonds (at rising interest risk premiums). The bankers are now moving to make this role formal, an official condition for rolling over Greek bonds as they come due, and extend maturities on the short-term financial string that Greece is now operating under. Existing bondholders are to reap a windfall if this plan succeeds. Moody’s lowered Greece’s credit rating to junk status on June 1 (to Caa1, down from B1, which was already pretty low), estimating a 50/50 likelihood of default. The downgrade serves to tighten the screws yet further on the Greek government. Regardless of what European officials do, Moody’s noted, “The increased likelihood that Greece’s supporters (the IMF, ECB and the EU Commission, together known as the “Troika”) will, at some point in the future, require the participation of private creditors in a debt restructuring as a precondition for funding support.”
The conditionality for the new “reformed” loan package is that Greece must initiate a class war by raising its taxes, lowering its social spending – and even private-sector pensions – and sell off public land, tourist sites, islands, ports, water and sewer facilities. This will raise the cost of living and doing business, eroding the nation’s already limited export competitiveness. The bankers sanctimoniously depict this as a “rescue” of Greek finances.
What really were rescued a year ago, in May 2010, were the French banks that held €31 billion of Greek bonds, German banks with €23 billion, and other foreign investors. The problem was how to get the Greeks to go along. Newly elected Prime Minister George Papandreou’s Socialists seemed able to deliver their constituency along similar lines to what neoliberal Social Democrat and Labor parties throughout Europe had followed – privatizing basic infrastructure and pledging future revenue to pay the bankers.
Watch Mr Bull’s argument about Dow 20k imminent. As our readers know, we are slightly bearish, but we present you the Dow 20k theory. One of the arguments, companies will buy back stock. That’s great, if all the companies in the world just bought back stock, we could reach Dow 100k soon. We recommend buying all calls on Dow, if target is 20k in a year. Then all options definitely are totally mispriced.
In the edwards campaign when he enough of the doom and gloom already, our next guest is boldly predicting that the dowwill go to 20,000. he says it could happen in the next 12 do 18 months. that is james altersure, managing director and author.brains behind the recent article next stop, dow 20,000. we read it and called him. he decided to come on the program. 20,000 on the dow, make your case. it’s kind of david letterman style, top ten list. exactly. i want to take a little break from all the doom and gloom pessimism. people act like every economic report should crash the market or boom the market qe2 has not even begun to have an effect on the economy. just because the printing press is printing, doesn’t mean it’s affecting the economy one second later. it typically takes 6 to 18 months for the economy to have any effect from the stimulus. next, we’re still — obama’s basically done nothing to the economy. he’s extended bush’s tax cuts, we’ll see what happens with health care, he’s backed off on wall street. the actual stimulus isn’t just 600 billion, but when you use those stimulus dollars to buy adoughnut and then the doughnut guy buys a newspaper and thenewspaper guy buys some furnituring there’s a multiplier effect.600 billion could be up to $3 trillion in stimulus on the economy.that’s a significant – except a few hundred billion of that went to transfer payments. okay, i’ll deal with that. again, 3 trillion is an enormous effect on gdp. finally, companies are sitting on 2 trillion in cash, the greatest amount of cash in history. this is is the only recession where companies quarter over quarter increase their cash every single quarter of this recession. they never went down a quarter. what are they doing with this cash?they’re spending it. stock buy backs are the highest levels in history. they’re announcing — the stock market is supply and zee manned. if you remove the supply of shares from the market, what happens, in any market in the world, price goes up. that’s what’s going to happen here much we have some more, butlet’s. no, keep going quickly. temp workers are being hired, that means full time workers are coming next. corporate profits are at their highest point ever, people say it’s going to come down. the reality is, right now, they’re at the highest ever. major stocks all trading around 10 to 13 times forward earnings. let’s not forget innovation. we all have ipads, every year there’s new biotech drugs, everything. google has cars driving around on the highways without drivers. it’s an innovative economy, and it’s going to stay that way. that’s what i’m going to bet on. i agree with all ten except for numbers 1, 3, 4, 9 and 10. let’s do cnbc fight club right now. you’re taller than me, i’ll take you on. scott is with us phil orlando is with us. phil, i want to start with you. he makes very good points. i don’t agree with all of them. could the dow hit 20,000 in a year and a half? i directionally agree withjames, he’s made some excellent arguments there. i would focus on two of his points monetary policy works with a lag, it takes about six to nine months for one half of the effect of monetary policy to begin working. about 12 to 18 months for thefull effect to be felt. if the feds started injecting liquidity, it will be the third and fourth quarters of this year where we’ll start to see that stimulus. and the full boom in 2012. i’m worried for bubbleproportions at the end of 2012. i don’t think we need qe 2. i know equityies are not necessarily your primary focus, that’s bonds. if they’re right, what would that mean for the bond mark ed. if you don’t think they’re right, tell me why. let me support james’argument for a minute. if you look at the fed model which takes where 10-year treasuries are trading and it correlates to price earnings ratios. the price earnings ratio should be about 22 times, we have lots of room for of room for multiple expansion of current earnings, i could see supporting james’ argument thatwe could have a massive rally in treasuries in stocks. as for the fixed income markets, brian, the history of the fed is that after the end of recessions, they have not raised short-term rates until about three years after the end of the downturn. so we are still a good 12 to 14 months away from seeing is any serious moves on the part of the fed. and given that overnight rates are locked in here around zero percent, the normal relationship between the ten-year note and fed funds ranges between 2.5 percentage points and 4 percentage points. which i think we – when the market tends to go up, when interest rates start to rise, raising interest rates aren’t a bad thing for the stock market. it means the economy is growing, and the fed is starting to get worried about potential bubbles. right, but my point here is not that you’re not correct. you’re 100% correct, it’s gist that we are a long way off from seeing a material rise in interest rates, which is just going to continue to support corporate earnings and support the multiple, and i thinkstocks will go higher just because the multiple will expand. we talked this week whetherthere’s too much hyperbollistic behavior in this market. we’re either doomed or we’re going to boom. there’s no middle ground. is the worst behind us? is it only going to get better day by day for the next few years? please say yes. the longer term answer to that is yes. the near term answer is that undeniably we’re in an economic soft batch, but we think the catalyst for the soft patch are very much trans tory. the earthquake in japan, theweather issues, the spike in commodity prices, we think thatthose issues are going to fade over the course of the thirdquarter and we’re going to enjoy a strong rally through the endof this year and into calendar 2012 for many of the reasons that james identified. phil, scott and james, i love the discussion, it was nothing but positive. very good stuff, guys, we appreciate your time tonight. thank you. have a great weekend. coming up, john edwards, stunning fall continues.
Greece moves closer to a second bail out. That has to be great, or? Everybody knows, Greece doesn’t have cash in a months time. Deal, no deal, doesn’t really matter. Trying to solve the economic problems of Greece should be the no 1 priority. Greece receiving 12 billion Euros (most likely) will only contrribute to the 17 billion interest rates the country needs to pay annually. The question is, what will Greece do next year and next year? They can’t get bailed out every year, nor do they have the luxury of printing money. Greece must restructure/reprofile it’s debt, the sooner the better. Kathimerini reports;
Following talks in Luxembourg with visiting Prime Minister George Papandreou, Juncker said the two men had been “in total agreement” as regards Greece’s fiscal targets, structural reforms and an ambitious privatization drive aimed at raising 50 billion euros by 2015.
But he made it clear that further financial support would be dependant on the Greek private sector sharing some of the burden of economic recovery. “I expect the Eurogroup to agree to additional finance being provided to Greece under strict conditionality,” Juncker told reporters. “This conditionality will include private sector involvement on a voluntary basis.”
Juncker also noted “with satisfaction” that the Greek government had agreed to the creation of an independent agency to oversee the privatization drive.
Calling Juncker “a friend of Greece,” Papandreou said, “Greece will continue to work hard, and Greece is committed to fully honor its obligations.”
Earlier in the day, officials of the European Union, European Central Bank and International Monetary Fund – who have been reviewing the progress of the government’s economic reforms – issued a statement saying that the review had been successful and that the fifth tranche of emergency loans, valued at 12 billion euros, would “most likely” be released in early July.
It added that envoys had agreed with government officials on “a set of economic and financial policies” and called for their “strict implementation,” referring also to the government’s midterm fiscal program, which aims to raise some 6.4 billion euros through tax increases and cuts to the public sector.