Saturday 10 March 2012

GREECE HAS DEFAULTED ~ WHICH COUNTRY IN EUROPE IS NEXT?

 
March 9, 2012

Well, it is official.  The restructuring deal between Greece and private investors has been pushed through and the International Swaps and Derivatives Association has ruled that this is a credit event which will trigger credit-default swap contracts. 

The ISDA is saying that there are approximately $3.2 billion in credit-default swap contracts on Greek debt outstanding, and most analysts expect that the global financial system will be able to absorb these losses. 

But still, 3.2 billion dollars is nothing to scoff at, and some of these financial institutions that wrote a lot of these contracts on Greek debt are going to be hurting.  

This deal with private investors may have "rescued" Greece for the moment, but the consequences of this deal are going to be felt for years to come.  

For example, now that Greece has gotten a sweet "haircut" from private investors, politicians in Portugal, Italy, Spain and other European nations are going to wonder why they shouldn't get some "debt forgiveness" too.  

Also, private investors are almost certainly going to be less likely to want to loan money to European nations from now on.  If they will be required to take a massive haircuts at some point, then why in the world would they want to lend huge amounts of money to European governments at super low interest rates?  

It simply does not make sense.  Now that Greece has defaulted, the whole game is going to change.  

This is just the beginning.

The "restructuring deal" was approved by approximately 84 percent of all Greek bondholders, but the key to triggering the payouts on the credit-default swaps was the fact that Greece decided to activate the "collective action clauses" which had been retroactively inserted into these bonds.  These collective action clauses force most of the rest of the bondholders to go along with this restructuring deal.

A recent article by Ambrose Evans-Pritchard explained why so many people were upset about these "collective action clauses":
The Greek parliaments retroactive law last month to insert collective action clauses (CACs) into its bonds to coerce creditor hold-outs has added a fresh twist. These CAC's are likely to be activated over coming days. Use of retroactive laws to change contracts is anathema in credit markets.
If a government can go in and retroactively change the terms of a bond just before it is ready to default, then why should private investors invest in them?

That is a very good question.


But for now the buck has been passed on to those that issued the credit-default swaps.  As mentioned above, the ISDA says that there are approximately $3.2 billion in Greek credit-default swaps that will need to be paid out.

However, that number assumes that a lot of hedges and offsetting swaps cancel each other out.  When you just look at the raw total of swaps outstanding, the number is much, much higher.  The following is from a recent article in The Huffington Post.
If you remove all hedges and offsetting swaps, there's about $70 billion in default-insurance exposure to Greece out there, which is a little bit bigger pill for the banking system to swallow. Is it possible that some banks won't be able to pay on their default policies? We'll find out.
Yes, indeed.  We will find out very soon.

If some counterparties are unable to pay we could soon see some big problems cascade through the financial system.

But even with this new restructuring deal with private investors, Greece is still in really bad shape.

German Finance Minister Wolfgang Schaeuble told reporters recently that it "would be a big mistake to think we are out of the woods".

Even with this new deal, Greek debt is still projected to be only reduced to 120 percent of GDP by the year 2020.  And that number relies on projections that are almost unbelievably optimistic.
 
In addition, there are still a whole host of very strict conditions that the Greek government must meet in order to continue getting bailout money.


Also, the upcoming Greek elections in just a few weeks could bring this entire process to an end in just a single day.

So the crisis in Greece is a long way from over.

The Greek economy has been in recession for five years in a row and it continues to shrink at a frightening pace.  Greek GDP was 7.5 percent smaller during the 4th quarter of 2011 than it was during the 4th quarter of 2010.

Unemployment in Greece also continues to get worse.

The average unemployment rate in Greece in 2010 was 12.5 percent.  During 2011, the average unemployment rate was 17.3 percent, and in December the unemployment rate in Greece was 21.0 percent.

Young people are getting hit the hardest.  The youth unemployment rate in Greece is up to an all-time record of 51.1 percent.

The suicide rate in Greece is also at an all-time record high.

ED: AH, the plan is working. They are killing themselves and saving us the trouble. How considerate our Greek citizens can be!

Unfortunately, there is no light at the end of the tunnel for Greece at this point.  The latest round of austerity measures that are now being implemented will slow the economy down even more.

Sadly, several other countries in Europe are going down the exact same road that Greece has gone.

Investors all over the globe are wondering which one will be the "next Greece".

Some believe that it will be Portugal.  The following is from a recent article in The Telegraph.
"The rule of law has been treated with contempt," said Marc Ostwald from Monument Securities. "This will lead to litigation for the next ten years. It has become a massive impediment for long-term investors, and people will now be very wary about Portugal."
Right now, the combination of all public and private debt in Portugal comes to a grand total of 360 percent of GDP.

In Greece, the combined total of all public and private debt is about 100 percentage points less than that.

So yes, Portugal is heading for a world of hurt.  The following is more about Portugal from the recent Telegraph article mentioned above:
Citigroup expects the economy to contract by 5.7pc this year, warning that bondholders may face a 50pc haircut by the end of the year. Portugal's €78bn loan package from the EU-IMF Troika is already large enough to crowd out private creditors, reducing them to ever more junior status.
So why should anyone invest in Portuguese debt at this point?

Or Italian debt?

Or Spanish debt?

Or any European debt at all?

The truth is that the European financial system is a house of cards that could come crashing down at any time.

 

German economist Hans-Werner Sinn is even convinced that the European Central Bank itself could collapse.
There is a Der Spiegel article that everyone out there should read.  It is entitled "Euro-Zone Central Bank System Massively Imbalanced". It is quite technical, but if this German economist is correct, the implications are staggering.

The following is from the first paragraph of the article:
More than a year ago, German economist Hans-Werner Sinn discovered a gigantic risk on the balance sheets of Germany's central bank. Were the euro zone to collapse, Bundesbank losses could be half a trillion euros ~ more than one-and-a-half times the size of the country's annual budget.
So no, the European debt crisis is not over.

It is just getting warmed up.

Get ready for a wild ride.

5 comments:

  1. "Huffington Post (controlled opposition?) on u$70 billion (in reality - much higher):

    "... a little bit bigger pill for the banking system to swallow."

    it won't be difficult at all - as the banksters merely snap their fingers at their politicians who pass all losses off to the people and allow the turn over of national wealth (which is now being done, as ordered, in Greece) i.e. "austerity" (a.k.a. theft of wealth BY DECEPTION (blackmailing politicians (or finding those who are totally corrupt) to accept the banksters' terms - hence legalizing the theft)- in the Mid-East the banksters just send in the military to steal all they desire; they must play a more subtle game against the Western nations - as military thuggism won't succeed there - unless such nations slow the progress - then it's time for global war 3 (the other method of global theft at disposal of the international banksters' masters)

    "Particular controversy surrounds the government’s promise to raise €50bn in "privatisation" proceeds by 2015. State holdings in utilities, banks, the former telecommunications monopoly and other businesses such as Opap, the lottery and sports betting company that is the biggest in Europe, are supposed to be put up for sale."

    http://www.ft.com/cms/s/0/fb089200-8a25-11e0-beff-00144feab49a.html

    so who on earth has ability to buy all these Greek assets - no nations - almost all are broke ...

    banksters and the banksters owners are the only people who can qualify (and will do so - under the table - disguised as corporations, other national governments e.g. EU, IMF, rothchilds' "central banks")

    on the latest, greatest scam of international banksters - the CDS (credit default swaps)

    "Credit Default Swap Fraud Exposed/Confirmed"

    http://etfdailynews.com/2012/03/05/credit-default-swap-fraud-exposedconfirmed/

    "One of the most poorly kept secrets in Wall Street’s empire of fraud was that credit default swaps were never anything but pretend-insurance. The credit default swap market is a $60+ trillion paper Ponzi-scheme. The Wall Street crime syndicate claiming to “back” this insurance have nothing more than a few $billion of liquidity apiece. It is a fact of arithmetic that these fraud-factories never intended to honour these contracts.

    "Given the magnitude of this fraud and the audacity of the perpetrators, this alone is reason enough to abolish the Wall Street fraud-factories, abolish the credit default swaps market, and (indeed) to abolish the entire derivatives market – so that the banksters cannot perpetrate a similar crime again in the future. Indeed, credit default swaps were banned in th U.S. for many decades, based upon anti-gambling statutes.

    However the CDS fraud itself only scratches the surface on the monstrous evil behind this scheme. As I have written about frequently in the past, the CDS fraud is a tool which the banksters have used to perpetrate an even greater crime: the sabotage and/or destruction of most of Europe’s debt markets.

    better to leave it all to the chosenite experts (the world's smartest peoples and the very same who got the world into the mess it's now in); better yet - just take my nation and all our wealth, because it's all so confusing and complex - until you realise it's a criminal scam with a lot of strange terms (sort of like cabala magic)

    which nation is next isn't the question to be asked - rather it is how many more will the banksters get away with robbing until the world has had enough ... (at which time Plan B will go into action: global war 3)

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  2. Once again, as usual - the blame is being applied onto the Germans ... (ref the political cartoon above - Merkel driving the EU bus; very subtle racist hate speech "but it's funny - yes"; no it racist hate speech) when in fact the contrived crisis is the work of the usual suspects). Also playing a supporting role in the blame game are the Greek people:

    Were Greeks informed of the consequences - up front - of the borrowing their politicians did supposedly on the people's behalf? Did their politicians ever inform the Greek people what they were up to when borrowing massive sums of money with sovereignty of the Greek nation being offered as collateral? Likely not. Did their politicians lie and deceive them every step of the way? Likely they did.
    This is called DECEPTION and fraud, breach of contract and is the same for every nation has experienced that has ever entered into any contract with international money masters (via their international banking systems, e.g. IMF) - almost all nations.
    Fraud - defrauding people is a crime in all other situations - excepting the international banksters' frauds committed against all nations.

    This - yet another greatest scam - perpetrated by banksters - is not the fault of Germans or anybody, but the banksters their masters (who are the masters of deception) and their willing useful politician-idiots.

    ReplyDelete
  3. The Apocalypse, the Book of the Revelation: 6.

    2. The Breaking of the First Six Seals

    War

    Rv:6:
    1 ¶ And I saw that the Lamb had opened [1] one of the seven seals: and I heard one of the four living creatures, as it were the voice of thunder, saying: Come and see. … Scripture reference – Rev.: 3:5; 6:7, 9, 12, 8:1
    2 And I saw: and behold a white horse, [2] and he that sat on him had a bow, and there was a crown given him, and he went forth conquering that he might conquer. … Scripture reference – Rev.: 19:11; Zach. 6:3!

    EXEGESIS: This warrior is a variety of warriors sent by God to punish ungodly nations and peoples; first was the Roman general Titus with his legions in 70 A.D. who destroyed Jerusalem and the ungodly Jews.
    At the end, Christ Himself will finally and utterly destroy the false nation of Israel headed by the Antichrist (Dajjal) a Jew, the perfidious Jews, and the false prophet utterly, completely and eternally. Armageddon The Apocalypse, the Book of the Revelation: 19.

    Strife

    3 ¶ And when he had opened the second seal, I heard the second living creature saying: Come and see. … Scripture reference – Rev.: 6:1!
    4 And there went out another horse that was red. [3] And to him that sat thereon, it was given that he should take peace from the earth: and that they should kill one another. And a great sword was given to him. … Scripture reference – Zach.: 6:2![from there go to Zach.1:8]

    EXEGESIS: Two world wars staged to promote strife everywhere and Kissinger’s and Oded Yinon’s plans for cold war and expansionism in the world centering on the Middle East including Iran, Iraq, Afghanistan, Pakistan, Libya, Syria etc., as it is now, are part of this.

    Death

    5 And when he had opened the third seal, I heard the third living creature saying: Come and see. And behold a black horse. [4] And he that sat on him had a pair of scales in his hand. … Scripture reference – Rev.:6:1!; Zach. 6:2
    6 And I heard, as it were a voice in the midst of the four living creatures, saying: Two pounds of wheat for a penny, [5] and thrice two pounds of barley for a penny: and see thou hurt not the wine and the oil.

    EXEGESIS: The economic war against all people by the forces of the Antichrist are the core of this.

    Hell

    7 And when he had opened the fourth seal, I heard the voice of the fourth living creature saying: Come and see. … Scripture reference – Rev.: 6:1!
    8 And behold a pale horse: [6] and he that sat upon him, his name was Death. And hell followed him. And power was given to him over the four parts of the earth [the whole earth], to kill with sword, with famine and with death and with the beasts of the earth. … Scripture reference – Zach.: 6:3!

    EXEGESIS: The famine and plagues that accompany the wars of the Antichrist’s empire building.

    The Martyrs

    9 ¶ And when he had opened the fifth seal, I saw under the altar the souls of them that were slain for the word of God and for the testimony which they held. [7] … Scripture reference – Rev.:6:1!; 1:2, 9; 20:4
    10 And they cried with a loud voice, saying: How long, O Lord (Holy and True), dost thou not judge and revenge our blood on them that dwell on the earth? … Scripture reference – Rev.:3:7; 19;:2!
    11 And white robes were given to every one of them one; And it was said to them that they should rest for a little time till their fellow servants and their brethren, who are to be slain even as they, should be filled up. … Scripture reference – Rev.:3:5!; IV Esr. 2:39;

    EXEGESIS: Throughout all, the Christians and Muslims faithful to God will undergo suffering and tribulation but at the end will emerge glorified by God.

    Armageddon The Apocalypse, the Book of the Revelation: 19.

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  4. ستيف في فيستا said...

    "EXEGESIS: The economic war against all people by the forces of the Antichrist are the core of this."

    Ναι. Οι λεπτομέρειες είναι εδώ. (Yes. Details are here.)

    Pashtun Resist: La vérité sur la Grèce, par Mikis Theodorakis - Pierre-Olivier Combelles

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  5. A bit more info on the $60-70 trillion scam called Credit Default Swaps (CDS)

    CDS concept was developed by British Blythe Masters; the CDS scam - in large part made the MBS (mortgage backed securities) scam possible - which directly lead to the collapse of the housing markets in USA, Australia, EU, (Canada ?) which in turn led to global economic collapse of 2007/8 and continue to this day.

    Even global criminals say CDS system is massive scam:

    A Nobel prize-winning economist (George Akerlof) predicted in 1993 that CDS would cause the next meltdown

    Warren Buffett ("world's richest man" - what family is the world's richest and why does nobody talk about them) called them “weapons of mass destruction” in 2003


    Newsweek called CDS “The Monster that Ate Wall Street”

    George Soros says the market is still unsafe, and that credit- default swaps are “toxic” and “a very dangerous derivative” because it’s easier and potentially more profitable for investors to bet against companies using them than through so-called short sales.


    "Carbon Derivatives" a "new and improved massive scam" are now in development ...

    From 2006 to March 2012, Blythe Masters was the head of Commodity Trading at JP Morgan-Chase (that is in turn the main control over the entire North American markets and nearly the majority of the entire global market); that is she (at behest of her masters) almost single-handed controls things like the prices of silver and gold. And, yes, silver and gold markets are 100% controlled and literally daily manipulated by and for the very top of the global crime cabal.

    ReplyDelete

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