Financial Crisis in Greece

[George S.]

i wonder the irish weren't happy after joining the eu.Eu taking their fish from their sea.They were rethinking whether it was really beneficial with the eu by outweighing the disadvantages.?
Voltron other member states are pissed off with what greece has done.It has affected the eu dollar big time & even affected as far away as australia.If greece borrows heavilly & cannot repay massive debts then it falls back on member states to bail them out.I don't think many states are happy to bail people who are silly & deliberately squandering money on loans.

[Pelister]

The New Greeks are frauds and liars. Anyone recall that time the Greek State had announced that there were 300,000 Greeks living in the Republic of Macedonia around 1992? It is just another example of these New Greeks entirely fabricating data.

[Voltron]

i wonder the irish weren't happy after joining the eu.Eu taking their fish from their sea.They were rethinking whether it was really beneficial with the eu by outweighing the disadvantages.?
Voltron other member states are pissed off with what greece has done.It has affected the eu dollar big time & even affected as far away as australia.If greece borrows heavilly & cannot repay massive debts then it falls back on member states to bail them out.I don't think many states are happy to bail people who are silly & deliberately squandering money on loans.

George, do you have any idea how much money they have made off of us ? Billions ! They short sale our bonds and make more money that you or I will ever see in our lifetime ( unless your loaded, I dont know ).

Everything else is just "noise". There never was EU unity and never will be. Its a disaster and hopefully it will implode on itself soon. They have all been compromised to how America is setup. Its all about money and nothing else. You not losing much.

[julie]

George, do you have any idea how much money they have made off of us ? Billions ! They short sale our bonds and make more money that you or I will ever see in our lifetime ( unless your loaded, I dont know ).

Everything else is just "noise". There never was EU unity and never will be. Its a disaster and hopefully it will implode on itself soon. They have all been compromised to how America is setup. Its all about money and nothing else. You not losing much.

Absolutely, pity the Macedonian government is hell bent on gaining entry into this bullshit club, at the expense of our Macedonian name

[Makedonetz]

The acropolis outside my Greek neighbour's house might not have been from ancient times. But the one in Athens Makedonetz? Did aliens put it there a few years ago?

RTG yeah remember a race of aliens came from Hellenopolis and shit out hellens to inhabit Greece. man ur neighbor sure is a pure hellen eh wow does he pray to mt olympas on his front yeard?

[George S.]

well voltron you are admitting that the membership of the eu is really awaste of time unless you want to ripp them off.Either way they are ripping you off anyway.You just confirmed there is no value in being a member of the eu so what does a silly country like macedonia want from the eu.Especially where they have to compromise on it's name.Definitely all about money it's allready impacting & the value of the eu dollar is falling.

[Voltron]

The EU is used as a springboard for foreign investments and stability. Under this reasoning countries in Europe aspire to be members. Countries like Switzerland and UK already have this and is the reason why they stay away. It is not in their interests.

Balkan countries like ours however dont have that type of advantage and in a way we are "forced" to join in order to obtain those perks. Its a trap, because once your a member your no longer in control and you cannot devalue your currency when your in a tight spot. Its a catch 22 scenario.

All in all I am very disappointed on how the EU project turned out. It had a lot of potential, but unfortuantly European leaders today do not have any type of vision.

[George S.]

they meant well but in reality created a monster which is going to implode from within.Simply because it can't keep going the way it is.Also a lot of members are disenchanted.Voltron do you think a country should change their name just to get into the eu.Is that a fair way.?
At the same time as the boss of the imf has said greece is steeped in shit.

[Risto the Great]

All in all I am very disappointed on how the EU project turned out. It had a lot of potential, but unfortuantly European leaders today do not have any type of vision.

They have a vision. Unfortunately the general prosperity of the citizens is not part of it.

[Bill77]

CNN NEWS

"Greece credit rating has just gone to Double B minus" (BB-)

Don't know what that means, but can't be good.

[George S.]

Bill in answer to your question read this
Credit Ratings by Country
This year has seen a lot of interest in credit ratings as many countries have seen their credit ratings downgraded due to a deteriorating fiscal position.

Firstly credit ratings are an evaluation of how likely a country is to default on government debt (bonds)

•A triple A rating is known as prime lending. A triple A rating means there is no risk of the country defaulting on its debt.
•An A- means there is a small risk of default.
•A B- indicates the investment is highly speculative with a reasonable chance of default
•A CCC rating indicates the investment is highly speculative with the country starting to default with little chance of recovery. It is also sometimes referred to as junk status. The Ukraine has currently a CCC rating

•A D Rating indicates ' junk' status with the country in default.
Implications of a Lowered Credit Rating

If a country has a credit rating reduced it has certain effects.

•It becomes more expensive for government to borrow. If investors see a countries bonds as risky, they will require a higher interest rate to compensate for risk. The greater the risk, the higher the interest rate required. If you are borrowing £175bn a year, even a 1% increase in bond yields can cause a large increase in interest payments on your debt.
•More expensive to insure against default. In Feb of 2009 it would have cost $5.95 million in advance and $500,000 a year to insure against $10 million of Ukraine government bonds for 5 years. In other words if you bought $10 million Ukraine bonds you would have to spend about $8.5 million in insuring against default. This reflects the markets anticipation of debt default.

•Downward pressure on currency. If investors felt the UK was likely to default, foreigners would be less willing to hold UK bonds and therefore UK currency. This lower demand would cause a depreciation in the currency.
•Smaller Current Account Deficit. If less foreigners want to hold US treasuries, it means there are less capital flows into the US, therefore, the US would have to run a smaller current account deficit. This could limit US growth.
•Risk of Hyperinflation. If you have junk status and noone wants to buy your debt, there is a risk a government would resort to printing money thereby causing inflation.

Dealing With Downgrade in Credit Rating

The problem is that borrowing increases because of a recession. The solution to a downgrade in credit rating is to reduce governments deficit. This could involve higher tax or lower spending. But, in a recession, this fiscal tightenening could worsen the recession.

The other solution is to monetise the debt. i.e. create money to deal with deficit. However, this can very easily lead to inflation and a depreciation in the currency, making foreigners less willing to hold your currency.

It can be a fine line to walk between running a fiscal deficit to boost growth and not borrowing too much to cause a credit rating downgrade.

Countries who have seen Sovereign Credit Ratings downgraded this year

•Ireland, Spain, Greece, Iceland, Latvia (reduced to junk status)
So greece is in a lot of strife.

[Voltron]

^^^ those credit agencies are really overdoing it now. I mean I know they did this to destabalise the Euro in the first place, but cmon...

Even the EU blowhards are getting upset over this.

http://www.reuters.com/article/2011/03/30/eu-credit-agencies-idUSLDE72T18V20110330

[Belomorec]

Again Voltron, it was the "New World Order" or whatever you want to call it that CREATED your country in the first place! I mean, it was them who gave the couple of thousand Albanians and Vlasi living in villages here and there a state, a nationality, a language (other than their own), a religion and advised them to shut up about the '4000 years' bullshit. And now you are attacking them? Bit hypocritical.

[Onur]

After Greece and Ireland, Portugal requested for bailout from EU

After Greece and Ireland, Portugal became 3rd who asked for financial help from EU. Portuguese analysts says that Portugal needs around 80 billion Euro to recover from debt crisis. Economists expects that Spain would be the next victim;

Portugal's PM calls on EU for bailout

Prime minister José Sócrates makes last resort plea for a rescue package could total €80bn

Portugal has joined Greece and Ireland on the casualty list of Europe's sovereign debtors after its prime minister, José Sócrates, requested a European Union bailout.

The dramatic decision came in the middle of a political crisis that has left the country in limbo and with spiralling interest rates on its debt.

"I want to inform the Portuguese that the government decided today to ask ... for financial help, to ensure financing for our country, for our financial system and for our economy," Sócrates said in a televised address. "This is an especially grave moment for our country," he added. "Things will only get worse if nothing's done."

Sócrates said that the bailout, which analysts said could be between €70bn (£61bn) and €80bn was "the last resort".

The move was immediately welcomed in Brussels. "This is a responsible move by the Portuguese government for the sake of economic stability in the country and in Europe," the European commission's economic and monetary affairs commissioner, Olli Rehn, told Reuters.

Sócrates did not say how much aid Portugal had asked for, but promised to negotiate the best possible conditions.

Analysts said Portugal was expected to need up to €80bn, an amount the EU's bailout fund, the European financial stability facility, can easily cover. The European commission's president, José Manuel Barroso, promised a swift response.

Portugal's troubles differ from Ireland, which pledged to cover huge losses at its banks, and Greece, which lied about its debt. Instead, it had allowed debt to mushroom during a decade in which its economy grew at just 0.7% a year.

The yield or interest on Portugal's 10-year bonds, which stood at 5.8% a year ago, was at 8.54% on Wednesday.

Economists had said that anything over 7% was too high for Portugal, which has growing unemployment and is predicted to enter a double-dip recession this year.

Ratings agencies had downgraded Portugal's bonds to a notch above junk level and even its own bankers warned they could not keep buying national debt as they tussled with liquidity problems of their own.

The caretaker government immediately blamed opposition parties for rejecting an austerity package on 23 March, bringing Sócrates's socialist government down and forcing 5 June elections. It came on top of three earlier packages of cuts and tax hikes.

"The country was irresponsibly pushed into a difficult situation in the financial markets," Portugal's finance minister, Fernando Teixeira dos Santos, told the Jornal de Negócios shortly before the announcement.

The call for help comes from a weak caretaker government which may hand over the reins of the country to a minority centre-right government led by the Social Democrats after the elections.

Teixeira dos Santos said that other political parties would have to fall into line with the bailout request. "Faced with a difficult situation that could have been avoided, I believe it is necessary to use the financial mechanisms that are available in Europe within the terms of the current political situation," he said. "That will need, as well, the involvement and compromise of the main political forces and institutions in the country."

Social democrat leader Pedro Passos Coelho said his party supported the aid request. "This needs to be seen as the first step in not hiding the truth," he said.

The government had admitted earlier on Wednesday that the political crisis was causing "irreparable damage" as borrowing costs rocketed.

Portugal sold a billion euros in short-term debt yesterday but saw the yield on 6-month and 12-month bills hit spikes of over 5%.

Portugal admitted last week that the 2010 budget deficit had been 8.6 percent of gross domestic product, far above its 7.3 percent target.

The caretaker government still claimed this year's goal of 4.6% would be met.

As Portugal became the third eurozone domino to fall, attention was expected to switch to Spain, though it has seen its debt yields improve recently as austerity measures bring down its deficit and growth returns.

International Monetary Fund boss Dominique Strauss-Kahn told El País newspaper yesterday that Spain - a far larger and more important economy - was safe from a bail-out.

7 April 2011

http://www.guardian.co.uk/world/2011...gal-eu-bailout

[Risto the Great]

The suggestion is that it is all business as usual. Europe and USA are apparently on the rise now and the EU will be able to withstand a Portugal downturn. We shall see I suppose.