Financial Crisis in Greece

[Onur]

I cannot understand these guys. Does anyone get a 13th and 14th pay.

Why not? I would demand even 15th salary if German and French people gives me like the situation in Greece.

Maybe they needed their extra salaries for breaking more dishes at the taverns?

[Makedonetz]

the greeks need to pay off their debt on their new Mercedes benzs, those Datsun's just cant make it up those mountians of debt that is piling up in Grease

[Venom]

Greek debt fears rock US, European stock markets

THE dollar opened one per cent lower today after a credit ratings downgrade of Greece and Portugal raised investor worries about the ability of the eurozone nations to repay their sovereign debt.

At 7am AEST, the dollar was trading at $US0.9154/56, down 1.02 per cent from yesterday's close of $US0.9247/50.

From 5pm AEST yesterday, the local unit traded between $US0.9137 and $US0.9260.

High-yielding assets such as equities and commodity-driven currencies weakened after international ratings agency, Standard & Poor's, downgraded the government debt of Greece and Portugal.

Investors are concerned that those nations' problems could spread across Europe and stifle economic growth.

Greece's credit rating has been downgraded to junk status, indicating debt holders have an average chance of between 30 to 50 per cent of their money being repaid following a debt restructuring or default.

Standard & Poor's downgraded its credit rating on Portugal to A- amid mounting concerns about the nation's ability to manage its debt.

A ratings agency downgrades a nation's credit rating when they assess it a higher risk for investment.

Equity markets slid on the reports, with the London stock market closing down 2.61 per cent, while The Dow Jones Industrial Average in the US fell 1.90 per cent.

"We have had a pretty eventful North American session after S&P downgraded Greece and Portugal sovereign bonds, which created a minor panic in markets," corporate dealer with online currency trader OzForex, Darren Richardson said from Toronto.

"That is the main focus and pushed everyone to risk aversion trades - buying US dollars, buying gold, and selling high yielding assets and high-risk currencies like the Aussie dollar."

Economic events due today include the consumer price indices (CPI) from the Australian Bureau of Statistics (ABS) for the March quarter.

An AAP survey of 13 economists found the median forecast was for headline CPI to have risen by 0.8 per cent in the March quarter for an annual pace of 2.8 per cent.

This compares with a headline CPI of 0.5 per cent in the December quarter, for an annual rate of 2.1 per cent.

The AAP survey also showed underlying inflation is expected to have risen by 0.7 per cent in the March quarter, for an annual pace of 3.0 per cent in the year to March 31, down from 3.4 in the year to the end of December.

For the domestic session today, Mr Richardson forecast the dollar to trade between $US0.9100 and $US0.9200.

Mr Richardson said the negative sentiment following the ratings downgrade would weigh on markets at the start of the Asian session, but traders would look at the CPI report "very closely".

"If we see a higher than expected CPI figure, that will signal to the market that interest rate increases are still on the RBA's plan, and that will support the Aussie dollar," he said.

http://www.news.com.au/business/breaking-news/dollar-down-on-debt-worries/story-e6frfkur-1225859131247

What does everyone think of this?

[Risto the Great]

Inflation bloody inflation.
Resources go up, inflation goes up, rates go up.
Meanwhile ... most of the rest of the world is broke!
Something odd going on here.

[Onur]

Meanwhile ... most of the rest of the world is broke!
Something odd going on here.

Maybe Capitalism doesn't work anymore as Michael Moore says??? I don't know...


P. S : Greece and Portugal wears a straitjacket called "Euro". They cant decide an inflation for themselves. Germany and France should accept it first but its bad for them unlike Greece and Portugal. So, i think that best solution would be to dismiss them from Euro money zone, i guess.... dunno

[Risto the Great]

Greek bonds rated 'junk' by Standard & Poor's

http://news.bbc.co.uk/2/hi/business/8647441.stm

Global stock markets tumbled after Greece's debt was downgraded to "junk" by rating agency Standard & Poor's over concerns that the country may default.

It makes the struggling nation the first eurozone member to have its debt downgraded to junk level.

Portugal's debt was also lowered on fears of "contagion", adding to the markets' rout and a fall in the euro.

Germany immediately said it would not "let Greece fall", and there were signs that an aid package could be increased.

Greece wants 40bn euros (£34bn) from eurozone governments and the International Monetary Fund (IMF) to shore up its finances.

But there are fears it will not meet conditions needed to access the funds it needs to make looming debt repayments.

Doubts intensify

When ratings agencies downgrade the country's credit rating - it means they think it is now a riskier place to invest. If it reaches junk status, a country loses its investment grade status. Some financial institutions have rules prohibiting them from investing in "junk" bonds.

Greece's 2-year government bond yield surged to almost 15% on Tuesday, making it highly expensive for the country to borrow from the debt market.

Greek 5-year yields hit 10.6%, higher than many emerging market economies, including Ecuador at 10.5% and Ukraine at 7.1%.

The 2-year Portuguese bond yield jumped to 5.23% from 4.16%.

S&P said it was lowering its rating on Greece's debt to BB+ from BBB-. It also reducing Portugal's debt rating by two notches to A- as doubts intensified about countries with substantial debt relative to GDP.

Greece's finance ministry said in a statement that the downgrade "does not correspond with the real data of the Greek economy." We know they always tell the truth ... RTG

Portugal's finance minister, Fernando Teixeira dos Santos, also hit back, denouncing an "attack from the markets".

In a statement he described the downgrade and reaction from the markets as "a decisive moment".

"We must remain calm and bring serenity back to the markets," he said. "As in the past, we will do what is necessary to reduce the deficit and promote the competitiveness of the Portuguese economy."

News of the downgrades rocked markets in Europe and the US.

In London, the FTSE 100 index closed down 2.6% with most of the losses following S&P's downgrade of Greece.

Germany's Dax index slid 2.7% and the French Cac-40 lost 3.8%.

On Wall Street, the Dow Jones index closed down 213 points, or 2% at 10,991.

Meanwhile shares in Greek banks slumped by more than 9%, the largest one-day fall in bank shares for 18 months.

'Prohibitive' rates

Despite earlier hesitation, German Chancellor Angela Merkel on Monday pledged German support to a European financial aid package for Greece, provided "certain conditions" were met.

Germany could provide Greece with up to 8.4bn euros in loans this year. But German public opinion is deeply opposed to the bailout.

In an interview to be published on Wednesday in the business newspaper Handelsblatt, Germany's finance minister says his country will not abandon Greece.

Wolfgang Schaeuble said: "We now have to realise and implement the rescue plan... and thus send a clear signal that we will not let Greece fall.

"We are putting on pressure for quick decisions," he said.

Meanwhile, the Financial Times reported that the International Monetary Fund is considering raising its contribution to the bail-out by 10bn euros to 25bn euros.

Greece needs to raise 9bn euros by 19 May, but has said it cannot go to the markets because of "prohibitive" interest rates.

The Greek government's cost of borrowing on the money markets has reached record levels in recent days amid investor concern over whether a 40bn euro bail-out package will be agreed.

Eurozone countries, together with the International Monetary Fund, have yet to agree details of the package.

Investors are also concerned that the Greek government's austerity measures - designed to cut domestic spending and reduce its ballooning budget deficit - will prove highly unpopular with the Greek public.

S&P warned holders of Greek debt that they only had an "average chance" of between 30% and 50% of getting their money back in the event of a debt restructuring or default.

It said its action to cut the rating resulted from its "updated assessment of the political, economic and budgetary challenges that the Greek government faces in its efforts to put the public debt burden onto a sustained downward trajectory".

The agency added Greece's weak long-term growth prospects made it less credit-worthy.

Very alarming stuff.

[julie]

Maybe if they had not spent so much money on anti-Macedonian rascist propaganda and behaviour and stopped spending billions of dollars on arming themselves, their great grandchildren will not be left with a debt.

The EU if it had any integrity would kick them out

[Onur]

Maybe if they had not spent so much money on anti-Macedonian rascist propaganda and behaviour and stopped spending billions of dollars on arming themselves, their great grandchildren will not be left with a debt.

The EU if it had any integrity would kick them out

Remind you that Greece bought around 12 billion dollars worth military equipment at 2009, which was about %6-7 of their GDP. I don't think any other reasonable country spends %7 of its money to weapons. Turkey spent about %1,8 of it`s GDP to the army last year which is about 14 billion dollars.

[Makedonetz]

Remind you that Greece bought around 12 billion dollars worth military equipment at 2009, which was about %6-7 of their GDP. I don't think any other reasonable country spends %7 of its money to weapons. Turkey spent about %1,8 of it`s GDP to the army last year which is about 14 billion dollars.

Not going to do them any good if they can't afford the ammunition

[Daniel the Great]

Macedonia spends 2.2% of its GDP.
One thing i dident understand is it had two different types of GDP expenditures which one were you looking at Onur regarding the Turkish and Greek GDP expenditure ?

Macedonian expenditure:

expenditure > % of GDP...................2.2 %

Expenditures....................6 % of GDP

And it came out to $200,000,000.00.

http://www.nationmaster.com/country/mk-macedonia-republic-of/mil-military

[fyrOM]

Junk bonds and a junk country. I hope they fall completely and drag the whole eu with them and to hell with the world economy. Ive been gradually reducing my debts over the last year and everyone should be doing so as best they can in anticipation. China and asia will keep clicking and so keep Australia rolling. Their fall might make Macedonians not so eager to join so quickly. Timing will effect macedonias prosperity as well as seeking other trading partners to counter any dip from greek trade. Even poor greeks will keep buying cheap priced food fom Macedonia. I don’t think the fallout will be that bad.

[Onur]

Macedonia spends 2.2% of its GDP.
One thing i dident understand is it had two different types of GDP expenditures which one were you looking at Onur regarding the Turkish and Greek GDP expenditure ?

Macedonian expenditure:

expenditure > % of GDP...................2.2 %

Expenditures....................6 % of GDP

And it came out to $200,000,000.00.

http://www.nationmaster.com/country/...f/mil-military

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29



Divide the military expenditure value to this total amount of GDP value and find the percentage.

Looks like i knew the earlier numbers of it and Greece cut his military expenses a bit at 2008 and 2009 but its still like %4,8 of Greece`s GDP, while Turkey spent only like %1,5...

[Stojacanec]

I found this article enlightening:

http://business.asiaone.com/Business/News/Story/A1Story20100430-213345.html

My favourite comment comes at the end:

"....Papandreou appealed to Greeks to help "change everything in this country, the economy, the state, habits, mentalities, behaviour."

[fyrOM]

Greek crisis could threaten the banking sector in the region

http://www.idividi.com.mk/Biznis/SvetBiznis/597770/index.html

Brussels, April 29, 2010 (Reuters) - Greek crisis could threaten stability in the Balkan sector of Southeast Europe, particularly in Bulgaria and Serbia, where Greek banks occupy important positions in local banking markets, but not only them, are assessed in analysis of the Brussels-based agency "IHS Global Insight," which deals with financial analysis.

As the author considers the analysis Toby White, the crisis in Greece could affect the ability of banks to provide liquidity to their affiliates in the region, because it weakened their required reserves and the extent to which they can provide additional loans.

Such a situation affecting not only the credit activity of banks in Greece itself, but also the extent to which they can support and provide capital and liquidity of its banks abroad, "said White.

- It will reflect the credit activities of branches in Serbia and their ability to provide loans to their clients. The obligations undertaken with the Vienna initiative remain intact, but the extent to which Greek banks will be willing and able to meet those obligations is somewhat limited, it is estimated in the analysis the Brussels agency.

On the other hand, the stakes of Serb savers in branches of Greek banks will not be affected because they are covered by guarantees and local agreements with the Central Bank on the basis of operating in Serbia, found in the analysis of agency Global Insight.

You got to love it - one dushmans misery f another and another.

[Mikail]

Greek crisis to dominate ECB meeting in Lisbon

Greek crisis to dominate ECB meeting in Lisbon
Monday May 3, 2010, 6:09 am


FRANKFURT (AFP) - European Central Bank governors travel this week to Lisbon for a meeting sure to be dominated by Greece's crisis and fears it could spread to other eurozone nations wrestling with swollen deficits.

The choice of Portugal for the ECB meeting was made more than a year ago, months before the Greek crisis plunged the central bank and other European Union bodies into desperate efforts to shore up the euro's foundations.

Eurozone finance ministers endorsed a 110-billion-euro (146-billion-dollar) rescue plan for Greece Sunday in return for deep spending cuts, but the ECB warned that Athens could have to tighten its belt further in the coming years.

Portugal now finds itself on the front line too: markets have targeted it as potentially the next eurozone country to face problems financing its debt.

Considerations of ECB interest rates, at a record low of 1.0 percent for the past year, and unwinding exceptional monetary support measures have been swept away by the eurozone's worst crisis ever.

"Comments on monetary policy as well as the economic outlook will likely be of minor interest," UniCredit analyst Nikolaus Keis remarked.

Eurozone finance ministers voted to "activate" a three-year EU-International Monetary Fund rescue package for Greece that should be confirmed by the leaders of the 16-nation euro bloc at a summit on Friday.

The IMF should approve its share of the loans, around 30 billion euros, "within the week," managing director Dominique Strauss-Kahn said on Sunday.

The ECB warned Greece however that it might have to cut its austerity budget more even after euro partners and the IMF pump in emergency funds.

The central bank advised Athens to "stand ready to take any further measures that may become appropriate," in a sign that bank governors sought to maintain a strong defence of eurozone fiscal discipline.

The ECB's bailout role could require a painful rethink of its rules, if for example it had to water down criteria again to ensure that Greek debt remains eligible as collateral for bank loans despite having been cut to junk status.

"In fact, the ECB is now being asked to consider substantial purchases of government bonds as a last resort in case contagion intensifies," UniCredit's chief economist Marco Annunziata noted.

He referred to fears that other eurozone members might come under financial market pressure as well.

Large-scale ECB acquisitions of low-grade sovereign bonds would raise troubling questions about the quality of the central bank's assets.

The Portuguese and Spanish public deficits are also way above eurozone limits and their sovereign debt ratings were downgraded last week.

Greece's deficit could reach 14 percent of gross domestic product (GDP), its finance minister has said, compared with an EU limit of 3.0 percent.

Athens is also buried under some 300 billion euros in debt.

"With contagion rocking Portugal and Ireland and tremors felt also in Spain and Italy, investors now fear we might be heading towards a systemic crisis that could engulf the eurozone's sovereign bond markets and its financial system," Annunziata said.

Lisbon has vowed to cut its deficit from 9.4 percent of GDP, but there is "no guarantee that Portugal will not face serious liquidity problems in the months to come," Commerzbank economist Ralph Solveen warned.

The general economic picture for the 16-nation eurozone is mixed: while business and household confidence is at a two-year high, unemployment is at an all time peak of 10 percent, and inflation has begun to creep higher.

"The ECB is trapped," Annunziata concluded, since only eurozone governments can reduce deficits.

The central bank might be asked "to inflate the debt problem away," but that would be "its own version of hell," he added.

ECB president Jean-Claude Trichet pressed eurozone members Thursday to make a "leap forward in policy surveillance and policy adjustment" and respect EU Security and Growth Pact rules that underpin Europe's single currency.