That's like reading a comic book; it's all fiction.
“… uncertain whether market access can be restored in the immediate post-programme years…” (I mean, would you lend your own money to this lot?)
“Debt dynamics under an alternative unchanged policies scenario” (Think of it like alternative comedy…. It’s not the worst case scenario — jeez, you definitely don’t want to see that…)
“The Greek authorities may not be able to deliver structural reforms and policy adjustments at the pace envisioned…” (Hey, can you blame them? They have to live there…)
“Greater wage flexibility may in practice be resisted by economic agents” (Turkeys don’t vote for Christmas…)
“Service market liberalisation may continue to be plagued by strong opposition from vested interests” (Expect more riots…)
...The debt trajectory is extremely sensitive to program delays, suggesting that the program could be accident prone, and calling into question sustainability
How much do you think the debt of other European nations will be worth once it sinks in that insurance on EU debt is a scam???
oralloy wrote:How much do you think the debt of other European nations will be worth once it sinks in that insurance on EU debt is a scam???
I am not sure that is a deal breaker.....the money needs to go somewhere, where do you suggest it go? China, US and Japan are all deeply economically and politically troubled people as well. As all those people who believed "diversify and you will be fine" found out differently in 2008 sometimes (usually?) in a true collapse there is no safe harbor from the storm.
As of March 13 these were the prices - for Greece and Portugal close to market prices for their bonds - and even serial bankrupts like Russia and Argentina have managed to do better!
Good observation there, hawk, but we must not only be careful about the incompetence of those that evaluate risk, but must also educate ourselves in how to best preserve our assets.
What is your point....that amateurs can do this with no expert guidance?
.... Greek banks might be natural buyers of the new bonds on offer, but it seems unlikely they will be bidding in size ahead of their bailouts. Moreover, many of these holders will probably not be familiar enough with CDS auctions to want to use the opportunity either to buy or sell large quantities of bonds, or at least be nervous enough of the unusual mechanics to be cautious. Therefore, the most significant investor buying or selling will probably be French, German, UK or international banks as well as non-banks. On balance we think these investors will be under less pressure than before to hold Greek bonds and are more likely to use the opportunity to sell, rather than buy, more assets.
Big buyers of defaulted debt may also be less active than usual in this auction. Distressed debt investors tend to prefer recovery plays which are more dependent on micro-analysis than the politics of the EU, ECB, IMF and Greek government. Equally, the new bonds that are likely to be delivered are long dated, with a small 2% coupon. This is likely to prove an unattractive combination for many distressed investors, who typically prefer high coupons and short maturities, potentially reducing the size of the bid that one might otherwise expect.
On balance, therefore, we think there is more potential for a squeeze down in price than a squeeze up.