A spectre is haunting Europe ...

[funinspace]

Fun with swaps

Which books were cooked, specifically, and how were they cooked?

To apply for EU membership country must meet certain economic/financial requirements
show their books, etc. Greeks lied on their application and Goldman Sucks helped them to do that by moving money/debt around. And I have little doubt that Goldman Sucks took advantage of this inside info playing against greek bonds when shit started hitting the fan.

Greece wasn’t the only one cooking the books…and Mario Draghi (then director-general of the Italian Treasury) was deep into the shit before joining Goldman Sachs in 2002. Good thing he is now emperor of the ECB.

http://www.nakedcapitalism.com/2013...entry-italy-stuck-with-derivative-losses.html

A new story by Financial Times shows that Draghi and the ECB had far more to hide than the Greece scandal. It appears Draghi was directly involved in arranging similar, much larger transactions for Italy while Draghi was the director general of the Bank of Italy, in 1999. Draghi then went to Goldman. The FT also reports that Draghi’s deputy on these deals, who left the Bank of Italy in 2000, returned as director general in 2012 with Draghi’s support. Sure looks like payback time.
The scandal is coming to a head now because the Italian government is set to lose billions of euros as a result of restructuring of derivatives, including the 1999 derivatives, at the worst of the crisis. The FT stresses that all the details are not known, but the losses look to be troubling:

The report does not specify the potential losses Italy faces on the restructured contracts. But three independent experts consulted by the FT calculated the losses based on market prices on June 20 and concluded the Treasury was facing a potential loss at that moment of about €8bn, a surprisingly high figure based on a notional value of €31.7bn.

The names of the banks involved in these transactions have not been disclosed, but previous reports show that Morgan Stanley and JP Morgan have been among the Italy’s counterparties.

 

[dismal]

Sure, but you're only looking at half the picture. What's happening is that the Greek government is threatening the Eurozone.

Kinda like the scene in Blazing Saddles where the Sherriff Bart takes himself hostage?

Back in reality Greece doesn't mean shit to the Eurozone. They'd be better off without it is it can't act as a responsible member.

So Greece has finally, as it has been threatening to do for years now, elected a government with a clear mandate to sort the situation out, one way or another. In effect, they either get better terms or declare bankruptcy. This is highly inconvenient for bondholders, and those with a vested poltiical interest in keeping the Euro afloat, but it's normal business practice throughout the western world. It's how the system is supposed to work.

And this voice of the people being represented by the new government is a voice saying "we demand more stuff paid for by other people". The problem remains that they failed to identify any other people willing to pay for the stuff. The people who have been paying for it face different electorates.

 

[Togo]

Back in reality Greece doesn't mean shit to the Eurozone. They'd be better off without it is it can't act as a responsible member.

If you say so. I happen to know both market traders and governmental officials that disagree, and certainly the actions taken by the EU suggest that they are keen to avoid a Greek exit, but you're certainly entitled to your opinion.

So Greece has finally, as it has been threatening to do for years now, elected a government with a clear mandate to sort the situation out, one way or another. In effect, they either get better terms or declare bankruptcy. This is highly inconvenient for bondholders, and those with a vested poltiical interest in keeping the Euro afloat, but it's normal business practice throughout the western world. It's how the system is supposed to work.

And this voice of the people being represented by the new government is a voice saying "we demand more stuff paid for by other people".

.. or we quit your financial agreement. That's the kind of negotiation you make with your bank when you tell them you're thinking of moving your custom elsewhere, or with your boss when you ask for a raise. Shopping around for the best credit card rate is quitting a financial agreement because the new one gets more stuff paid for by other people.

Is it that you don't approve of declaring bankruptcy? You think companies should never be restructured but rather that their debts should acrue to the original stockholders in perpetuity? Or is it different when it's companies? I can understand if you don't like the fact that soverign states can follow the same rules as companies, but you're not suggesting an alternative here.

The point you seem to be missing is that quitting the Euro and defaulting on the debt is a legal option, has always been a legal option, and would have explicitly covered in the loan agreements when they were made. You'd prefer that loan agreements didn't have such terms?

 

[ksen]

Togo, contracts should only benefit those lending you money. Everyone knows this.

 

[dismal]

If you say so. I happen to know both market traders and governmental officials that disagree, and certainly the actions taken by the EU suggest that they are keen to avoid a Greek exit, but you're certainly entitled to your opinion.

So Greece has finally, as it has been threatening to do for years now, elected a government with a clear mandate to sort the situation out, one way or another. In effect, they either get better terms or declare bankruptcy. This is highly inconvenient for bondholders, and those with a vested poltiical interest in keeping the Euro afloat, but it's normal business practice throughout the western world. It's how the system is supposed to work.

And this voice of the people being represented by the new government is a voice saying "we demand more stuff paid for by other people".

.. or we quit your financial agreement. That's the kind of negotiation you make with your bank when you tell them you're thinking of moving your custom elsewhere, or with your boss when you ask for a raise. Shopping around for the best credit card rate is quitting a financial agreement because the new one gets more stuff paid for by other people.

Is it that you don't approve of declaring bankruptcy? You think companies should never be restructured but rather that their debts should acrue to the original stockholders in perpetuity? Or is it different when it's companies? I can understand if you don't like the fact that soverign states can follow the same rules as companies, but you're not suggesting an alternative here.

The point you seem to be missing is that quitting the Euro and defaulting on the debt is a legal option, has always been a legal option, and would have explicitly covered in the loan agreements when they were made. You'd prefer that loan agreements didn't have such terms?

I deal with loan agreements for a living. They certainly do not have terms that allow you to breach them. A clue exists in very definition of the word "breach". It means you have broken the agreement.

You can of course elect to breach an agreement. Feel free to try it with your auto loan or mortgage. But there are consequences.

 

[untermensche]

If you say so. I happen to know both market traders and governmental officials that disagree, and certainly the actions taken by the EU suggest that they are keen to avoid a Greek exit, but you're certainly entitled to your opinion.

So Greece has finally, as it has been threatening to do for years now, elected a government with a clear mandate to sort the situation out, one way or another. In effect, they either get better terms or declare bankruptcy. This is highly inconvenient for bondholders, and those with a vested poltiical interest in keeping the Euro afloat, but it's normal business practice throughout the western world. It's how the system is supposed to work.

And this voice of the people being represented by the new government is a voice saying "we demand more stuff paid for by other people".

.. or we quit your financial agreement. That's the kind of negotiation you make with your bank when you tell them you're thinking of moving your custom elsewhere, or with your boss when you ask for a raise. Shopping around for the best credit card rate is quitting a financial agreement because the new one gets more stuff paid for by other people.

Is it that you don't approve of declaring bankruptcy? You think companies should never be restructured but rather that their debts should acrue to the original stockholders in perpetuity? Or is it different when it's companies? I can understand if you don't like the fact that soverign states can follow the same rules as companies, but you're not suggesting an alternative here.

The point you seem to be missing is that quitting the Euro and defaulting on the debt is a legal option, has always been a legal option, and would have explicitly covered in the loan agreements when they were made. You'd prefer that loan agreements didn't have such terms?

I deal with loan agreements for a living. They certainly do not have terms that allow you to breach them. A clue exists in very definition of the word "breach". It means you have broken the agreement.

You can of course elect to breach an agreement. Feel free to try it with your auto loan or mortgage. But there are consequences.

The difference of course is individuals enter into contracts to buy cars and houses.

The Greek people did not enter these agreements.

It is a game of politicians and bankers.

But the Greek people did suffer because of these agreements.

And the agreements were capricious and harmful and not necessary or particularly productive.

They were agreements that favored rich investors and were shoved down the throats of the Greeks.

That isn't an agreement anybody should defend.

 

[Togo]

If you say so. I happen to know both market traders and governmental officials that disagree, and certainly the actions taken by the EU suggest that they are keen to avoid a Greek exit, but you're certainly entitled to your opinion.

So Greece has finally, as it has been threatening to do for years now, elected a government with a clear mandate to sort the situation out, one way or another. In effect, they either get better terms or declare bankruptcy. This is highly inconvenient for bondholders, and those with a vested poltiical interest in keeping the Euro afloat, but it's normal business practice throughout the western world. It's how the system is supposed to work.

And this voice of the people being represented by the new government is a voice saying "we demand more stuff paid for by other people".

.. or we quit your financial agreement. That's the kind of negotiation you make with your bank when you tell them you're thinking of moving your custom elsewhere, or with your boss when you ask for a raise. Shopping around for the best credit card rate is quitting a financial agreement because the new one gets more stuff paid for by other people.

Is it that you don't approve of declaring bankruptcy? You think companies should never be restructured but rather that their debts should acrue to the original stockholders in perpetuity? Or is it different when it's companies? I can understand if you don't like the fact that soverign states can follow the same rules as companies, but you're not suggesting an alternative here.

The point you seem to be missing is that quitting the Euro and defaulting on the debt is a legal option, has always been a legal option, and would have explicitly covered in the loan agreements when they were made. You'd prefer that loan agreements didn't have such terms?

I deal with loan agreements for a living. They certainly do not have terms that allow you to breach them. A clue exists in very definition of the word "breach". It means you have broken the agreement.

You can of course elect to breach an agreement. Feel free to try it with your auto loan or mortgage. But there are consequences.

Interesting. I deal with debt instruments for a living, including soverign debt.

Of course there are consequences. All the various laws around breach of contract and default come into play. Noone is suggesting there are no consequences, merely that the consequences may be better than sticking with the existing terms.

There's an interesting analysis in the Economist on the threat the Greek government poses to the Euro, and the consequences of a Greek exit. It's the issue with a big Greek statue pointing a gun.

 

[dismal]

The difference of course is individuals enter into contracts to buy cars and houses.

The Greek people did not enter these agreements.

Their government did, and their government will suffer the consequences of breaching the agtreements.

And since this is a thread about their government getting and spending more money that would seen to be rather relevant, and your attempted distinction rather meaningless.

 

[dismal]

If you say so. I happen to know both market traders and governmental officials that disagree, and certainly the actions taken by the EU suggest that they are keen to avoid a Greek exit, but you're certainly entitled to your opinion.

So Greece has finally, as it has been threatening to do for years now, elected a government with a clear mandate to sort the situation out, one way or another. In effect, they either get better terms or declare bankruptcy. This is highly inconvenient for bondholders, and those with a vested poltiical interest in keeping the Euro afloat, but it's normal business practice throughout the western world. It's how the system is supposed to work.

And this voice of the people being represented by the new government is a voice saying "we demand more stuff paid for by other people".

.. or we quit your financial agreement. That's the kind of negotiation you make with your bank when you tell them you're thinking of moving your custom elsewhere, or with your boss when you ask for a raise. Shopping around for the best credit card rate is quitting a financial agreement because the new one gets more stuff paid for by other people.

Is it that you don't approve of declaring bankruptcy? You think companies should never be restructured but rather that their debts should acrue to the original stockholders in perpetuity? Or is it different when it's companies? I can understand if you don't like the fact that soverign states can follow the same rules as companies, but you're not suggesting an alternative here.

The point you seem to be missing is that quitting the Euro and defaulting on the debt is a legal option, has always been a legal option, and would have explicitly covered in the loan agreements when they were made. You'd prefer that loan agreements didn't have such terms?

I deal with loan agreements for a living. They certainly do not have terms that allow you to breach them. A clue exists in very definition of the word "breach". It means you have broken the agreement.

You can of course elect to breach an agreement. Feel free to try it with your auto loan or mortgage. But there are consequences.

Interesting. I deal with debt instruments for a living, including soverign debt.

Of course there are consequences. All the various laws around breach of contract and default come into play. Noone is suggesting there are no consequences, merely that the consequences may be better than sticking with the existing terms.

There's an interesting analysis in the Economist on the threat the Greek government poses to the Euro, and the consequences of a Greek exit. It's the issue with a big Greek statue pointing a gun.

Great. I'm happy for the Greeks to make their choice and live with the consequences.

People get the government they deserve.

Or, as Mencken said "Democracy is the theory that the common people know what they want, and deserve to get it good and hard."

 

[untermensche]

The difference of course is individuals enter into contracts to buy cars and houses.

The Greek people did not enter these agreements.

Their government did, and their government will suffer the consequences of breaching the agtreements.

And since this is a thread about their government getting and spending more money that would seen to be rather relevant, and your attempted distinction rather meaningless.

They have a new government.

 

[ksen]

The difference of course is individuals enter into contracts to buy cars and houses.

The Greek people did not enter these agreements.

Their government did, and their government will suffer the consequences of breaching the agtreements.

And since this is a thread about their government getting and spending more money that would seen to be rather relevant, and your attempted distinction rather meaningless.

What breaching? How do you know the greek government isn't going to exercise fully agreed upon clauses in the negotiated deal that the lenders don't want them to exercise?

 

[dismal]

Their government did, and their government will suffer the consequences of breaching the agtreements.

And since this is a thread about their government getting and spending more money that would seen to be rather relevant, and your attempted distinction rather meaningless.

What breaching? How do you know the greek government isn't going to exercise fully agreed upon clauses in the negotiated deal that the lenders don't want them to exercise?

What fully negotiated clauses in the negotiated deal are you talking about?

 

[ksen]

What breaching? How do you know the greek government isn't going to exercise fully agreed upon clauses in the negotiated deal that the lenders don't want them to exercise?

What fully negotiated clauses in the negotiated deal are you talking about?

What breaches are you talking about? I asked you first.

 

[dismal]

What fully negotiated clauses in the negotiated deal are you talking about?

What breaches are you talking about? I asked you first.

Well, they have a debt to GDP cap they agreed to as part of the EU common currency that they are about 3X over.

They also agreed to a series of conditions in conjunction with accepting the bail outs, some of which are described here:

http://www.bbc.com/news/business-13798000

And here:

The Troika behind the second bailout package defined three requirements for Greece to comply with in order to receive the money. The first requirement was to finalize an agreement whereby all private holders of governmental bonds would accept a 50% haircut with yields reduced to 3.5%, thus facilitating a €100bn debt reduction for Greece. The second requirement was that Greece needed to implement another demanding austerity package in order to bring its budget deficit into sustainable territory. The third and final requirement was that a majority of the Greek politicians should sign an agreement guaranteeing their continued support for the new austerity package, even after the elections in April 2012.[9]

http://en.wikipedia.org/wiki/Second_Economic_Adjustment_Programme_for_Greece

 

[T.G.G. Moogly]

Why did Hoover get elected in 1928 and then get royally thumped in 1932?

Why does that matter? We are talking about an agreement here. An agreement to which Greece said "yes" to in 2010, fully aware of the pros and cons of the agreement. They determined that the pros were greater than the cons, and said yes, we will abide by this agreement in exchange for the benefits received. Do agreements mean nothing to you? Is your word no good and should it be mistrusted? Should Greece demonstrate that it is not trustworthy and, if so, what does that say about its ability to make agreements with others in the future?

You know why it matters. And you know that a shift in popular sentiment has consequences. The champions of austerity weren't unemployed, living desperately, going to soup kitchens, accepting charity for their families like large parts of the population. It's not difficult to comprehend. These are the people who didn't sign any loyalty oaths as dismal has so eloquently pointed out.

 

[Togo]

What breaches are you talking about? I asked you first.

Well, they have a debt to GDP cap they agreed to as part of the EU common currency that they are about 3X over.

They also agreed to a series of conditions in conjunction with accepting the bail outs, some of which are described here:

http://www.bbc.com/news/business-13798000

And here:

The Troika behind the second bailout package defined three requirements for Greece to comply with in order to receive the money. The first requirement was to finalize an agreement whereby all private holders of governmental bonds would accept a 50% haircut with yields reduced to 3.5%, thus facilitating a €100bn debt reduction for Greece. The second requirement was that Greece needed to implement another demanding austerity package in order to bring its budget deficit into sustainable territory. The third and final requirement was that a majority of the Greek politicians should sign an agreement guaranteeing their continued support for the new austerity package, even after the elections in April 2012.[9]

http://en.wikipedia.org/wiki/Second_Economic_Adjustment_Programme_for_Greece

They've fulfilled all three of these haven't they? I mean, granted the same politicians are no longer in office...

 

[Loren Pechtel]

Does it ever occur to you that the US isn't the cause of everything bad in the world?

The US wasn't directly behind the European bubble that burst as soon as the US bubble burst but Europe was just following the US example.

At most our economic problems were the straw that broke the Greek camel's back. The collapse was inevitable.

- - - Updated - - -

Still I would like to know where all these money went, I have little doubt that part was simply stolen just want to know how much.
And new Greek government can in principle try to get some of these stolen money back.

The money was spent on social programs.

That's why their social programs are in such poor shape now--they were funding them with deficit spending and the tap pretty much got turned off.

 

[Loren Pechtel]

The Greek people did not enter these agreements.

It is a game of politicians and bankers.

But the Greek people did suffer because of these agreements.

And the agreements were capricious and harmful and not necessary or particularly productive.

They were agreements that favored rich investors and were shoved down the throats of the Greeks.

That isn't an agreement anybody should defend.

1) Greece is a democracy. They could have voted out the leaders if they weren't doing the will of the people.

2) The main beneficiary of those loans was the average Greek.


Yes, they were hurt badly in the bailout--no surprise, when you run out of credit it's always painful.

 

[T.G.G. Moogly]

The Greek people did not enter these agreements.

It is a game of politicians and bankers.

But the Greek people did suffer because of these agreements.

And the agreements were capricious and harmful and not necessary or particularly productive.

They were agreements that favored rich investors and were shoved down the throats of the Greeks.

That isn't an agreement anybody should defend.

1) Greece is a democracy. They could have voted out the leaders if they weren't doing the will of the people.

2) The main beneficiary of those loans was the average Greek.


Yes, they were hurt badly in the bailout--no surprise, when you run out of credit it's always painful.

The problem seems to be these lender institutions know today they should never have made these loans - apart from the guys who laughed all the way to the bank that is. Greed works in strange ways. Well, actually not so strange. The behavior is quite obvious and predictable actually, unless you're the one presently under its spell. Oh to be a fly on the wall.

 

[ksen]

Greece is a democracy. They could have voted out the leaders if they weren't doing the will of the people.

And they did just that.