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More on exposure to Greek debt
Topic Started: Apr 28 2010, 05:13 AM (344 Views)
jon-nyc
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Handy graphic from BarCap (ht FT).

Posted Image

S&P expects recoveries in default to be 30-50%, so figure the above groups stand to lose over half of their exposure.


The way to look at this therefore is that France and Germany will either bail out Greece or bailout their banks and insurance companies.
In my defense, I was left unsupervised.
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1hp
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Fulla-Carp

So, the way I heard this story a year ago was that some eastern bloc countries would default on loans, most of which were held by western Europe. That would cause a crash in Europe, which would eventually spread across the Atlantic, and then possibly across the Pacific. What happened to these so called eastern bloc issues - are they going to still appear and compound the Greek problem?

There are 10 kinds of people in this world, those that understand binary and................
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jon-nyc
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Austria had to rescue several banks due to Eastern European debt exposure. Having said that, I think the crisis hasn't been as bad as was feared due to IMF involvement is many (like 10) of the countries in the region.
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1hp
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Stocks slide as new doubt about Greek aid emerge

Stocks plunged around the world Tuesday as fears spread that Europe's attempt to contain Greece's debt crisis would fail. The dollar spiked against the embattled euro, sending prices for oil and other commodities sharply lower.

The Dow Jones industrial average fell about 250 points, erasing its 143-point gain from Monday. The Dow and broader indexes each fell more than 2 percent. Treasury prices rose on increased demand for safety investments.

Stocks have seesawed sharply in the past week as Europe's efforts to agree on a bailout package for Greece proceeded in fits and starts. An agreement finally came together over the weekend, but its ballooning size of $144 billion has investors worried that Europe would have an even tougher time assembling an aid package if a larger country such as Spain or Portugal were to get in trouble.

Meanwhile protests erupted throughout Greece against the spending cuts the country has promised to make in order to receive the bailout loans. A general strike has been called for Wednesday. Greece agreed on Sunday to slash public spending by $40 billion to secure the loans.

While Greece's economy is relatively small, investors worry that other cash-strapped European governments could follow Greece into asking for emergency loans. Markets have been increasingly skeptical that Europe can act on its own restore the credibility of its shared currency, the euro.

"Everybody is worried about who is going to be next," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York.


There are 10 kinds of people in this world, those that understand binary and................
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John D'Oh
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MAMIL
The house of cards teeters....
What do you mean "we", have you got a mouse in your pocket?
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1hp
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1hp
 
So, the way I heard this story a year ago was that some eastern bloc countries would default on loans, most of which were held by western Europe. That would cause a crash in Europe, which would eventually spread across the Atlantic, and then possibly across the Pacific. What happened to these so called eastern bloc issues - are they going to still appear and compound the Greek problem?


jon-nyc
 
Austria had to rescue several banks due to Eastern European debt exposure. Having said that, I think the crisis hasn't been as bad as was feared due to IMF involvement is many (like 10) of the countries in the region.


Jon - are you still in agreement with what you printed earlier?

Fears intensify that Euro crisis could snowball


........................Initially, it was Greek and Portuguese banks that got the cold shoulder from American lenders. But over the last two weeks big banks in Spain, Ireland and Italy have struggled to secure short-term funds from the United States as the anxiety has spread.

By Friday, even banks in solid European economies like France, Germany and the Netherlands were caught in the undertow, according to market analysts and traders.



.................................Furthermore, financial policy makers find themselves running out of weapons in their arsenal.

After borrowing trillions to stimulate their economies and ease credit concerns during the last wave of fear in late 2008 and early 2009, governments cannot borrow trillions more without risking higher inflation and shoving aside other borrowers like individuals and companies. Short-term interest rates, already near zero in the United States, cannot be lowered any further. And vital steps like raising taxes or cutting spending increases could snuff out the beginnings of a recovery in northern Europe and worsen the pain in recession-battered economies like Spain, where unemployment recently passed 20 percent.

With the exception of wartime, “the public finances in the majority of advanced industrial countries are in a worse state today than at any time since the industrial revolution,” Willem Buiter, Citigroup’s top economist, wrote in a recent report.





In other words, the politicians have continually taken the easy route to bolster their image, rather than make the tough decisions to do what's best for the country. And now everyone has used up all their easy solutions. Kinda like the new ceo who cuts heads to bolster the bottom line, takes his huge bonus and walks away leaving a company in shambles.

Edited by 1hp, May 17 2010, 07:33 AM.
There are 10 kinds of people in this world, those that understand binary and................
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jon-nyc
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1hp
May 17 2010, 07:32 AM
jon-nyc
 
Austria had to rescue several banks due to Eastern European debt exposure. Having said that, I think the crisis hasn't been as bad as was feared due to IMF involvement is many (like 10) of the countries in the region.


Jon - are you still in agreement with what you printed earlier?
Sure. Keep in mind I was talking about the eastern european crisis, not the latest concern over the PIIGS and Britain.
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