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PIIGS / Europe's Debt Troubles


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#1 chris ct

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Posted 03 February 2010 - 08:30 PM

PIIGS / Europe's Debt Troubles
Portugal, Ireland, Italy, Greece, Spain, etc.
=====================================================

I don't think we have a general Portugal/Italy/Ireland/Greece/Spain thread yet, but please feel free to merge if we do!

This news is not very encouraging.. they were only trying to raise money for ONE YEAR notes and failed.
http://www.bloomberg...id=achpanjSq3AI

Portugal sold 300 million euros ($417 million) of 12-month bills today
after indicating it planned to issue 500 million euros
The securities were sold to yield 1.38 percent, compared with 0.93 percent at a Jan. 20 auction.

http://tinyurl.com/yjnqo5p
All I wanna hear is that JPM is soon going to explode in a gigantic supernova that will take the Fed, Goldman, AIG, UBS, HSBC, Citi, and BofA with it, leaving behind a white dwarf that we will name "God's work".
The reason for this? see 1984 thread: "http://tinyurl.com/yepltr6" ak47 bomb bioweapon semtex ar15 glock 7.62mm allah jesus buddah fuse ricin plot plan operation grenade rocket ied phone poison anthrax airport runway invasion armor body bullet explosive hollowpoint explode gas mask NBC dirty plutonium nuke suitcase gas needle hypodermic

#2 chris ct

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Posted 03 February 2010 - 08:43 PM

How to properly do a tax-strike... Billy Bragg where are you!?

http://www.bloomberg...6...NNLQ&pos=13
QUOTE
Spain’s Tax-Cheat Landlords Add to Rising State Debt
Feb. 3 (Bloomberg) -- More than half of Spain’s landlords are dodging taxes as the rental market expands, depriving the financially strapped government of more revenue each year.

Owners are asking for payment in cash from tenants to avoid tax on 2.5 billion euros ($3.5 billion) of earnings annually, the Gestha union of tax inspectors estimates. An increase in rental properties nationwide hasn’t generated any more tax revenue.

The Spanish government, seeking to pull the country out of its deepest recession in 60 years, needs all the money it can get right now.

Rent fraud is just the tip of the iceberg, with Spaniards avoiding tax on income of 240 billion euros, equivalent to 23 percent of the economy, according to Gestha.

http://tinyurl.com/yjnqo5p
All I wanna hear is that JPM is soon going to explode in a gigantic supernova that will take the Fed, Goldman, AIG, UBS, HSBC, Citi, and BofA with it, leaving behind a white dwarf that we will name "God's work".
The reason for this? see 1984 thread: "http://tinyurl.com/yepltr6" ak47 bomb bioweapon semtex ar15 glock 7.62mm allah jesus buddah fuse ricin plot plan operation grenade rocket ied phone poison anthrax airport runway invasion armor body bullet explosive hollowpoint explode gas mask NBC dirty plutonium nuke suitcase gas needle hypodermic

#3 fitkid

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Posted 03 February 2010 - 09:15 PM

http://news.bbc.co.u...ess/8495174.stm

Greece to face European Commission economic scrutiny

QUOTE
Greece will face the most stringent monitoring of any European Union country as it attempts to balance its finances over the next few years.

Dont TRADE and lose your knickers.

#4 chris ct

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Posted 04 February 2010 - 09:11 AM

http://www.bloomberg...6...eMKqg&pos=5
Italy Seizes Bank of America, Dexia Assets Amid Probe
QUOTE
Feb. 3 (Bloomberg) -- Italy’s financial police are seizing 73.3 million euros ($102 million) of assets from Bank of America Corp. and a unit of Dexia SA as part of a probe into an alleged derivatives fraud in the region of Apulia.
...
The region, also known as Puglia, joins more than 519 Italian municipalities that face 990 million euros in derivatives losses, according to data compiled by the Bank of Italy. In Milan, prosecutors seized assets from four banks including JPMorgan Chase & Co. and UBS AG in April and requested they stand trial for alleged fraud.
...
The seizure of Apulia’s semi-annual repayment of the bond will neither affect the interest payments bondholders receive nor will it affect the final repayment, the prosecutor said. Apulia is rated A1 by Moody’s Investors Service, four levels below the top investment grade.

http://tinyurl.com/yjnqo5p
All I wanna hear is that JPM is soon going to explode in a gigantic supernova that will take the Fed, Goldman, AIG, UBS, HSBC, Citi, and BofA with it, leaving behind a white dwarf that we will name "God's work".
The reason for this? see 1984 thread: "http://tinyurl.com/yepltr6" ak47 bomb bioweapon semtex ar15 glock 7.62mm allah jesus buddah fuse ricin plot plan operation grenade rocket ied phone poison anthrax airport runway invasion armor body bullet explosive hollowpoint explode gas mask NBC dirty plutonium nuke suitcase gas needle hypodermic

#5 G0ldfinger

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Posted 04 February 2010 - 09:42 AM

QUOTE (chris ct @ Feb 4 2010, 09:11 AM) <{POST_SNAPBACK}>
QUOTE

The region, also known as Puglia, joins more than 519 Italian municipalities that face 990 million euros in derivatives losses, according to data compiled by the Bank of Italy.


This is just incredible. Who tricked these (rural?) municipalities into playing with derivatives first place? No wonder they seize the banksters' assets now.
You can't tax deflation.
“Currency Induced Cost-Push Hyperinflation” vs “Demand-Pull (non-hyper) Inflation.”
The "no income --> no inflation"-thesis is as wrong as the "price control --> inflation control"-thesis.
Don't TRADE gold! You might lose your shirt in the biggest bull run ever. That would be embarassing. © possibly by Swampy
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#6 G0ldfinger

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Posted 04 February 2010 - 10:12 AM

http://www.bloomberg...6..._ainY&pos=4
QUOTE
Spanish Borrowing Costs Jump at 2.5 Billion-Euro Bond Auction
By Matthew Brown

Feb. 4 (Bloomberg) -- Spanish borrowing costs rose at a sale of three-year notes on concern that the government will struggle to narrow its budget deficit.

The government sold 2.5 billion euros ($3.5 billion) of the securities to yield 2.63 percent today, compared with 2.14 percent the last time the notes were issued on Dec. 3. The sale attracted 4.6 times as many bids as securities on offer, up from 1.72 at the last sale.

You can't tax deflation.
“Currency Induced Cost-Push Hyperinflation” vs “Demand-Pull (non-hyper) Inflation.”
The "no income --> no inflation"-thesis is as wrong as the "price control --> inflation control"-thesis.
Don't TRADE gold! You might lose your shirt in the biggest bull run ever. That would be embarassing. © possibly by Swampy
Posted Image
Gold, silver, property, currencies, commodities charts.

#7 chris ct

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Posted 04 February 2010 - 10:15 AM

QUOTE (G0ldfinger @ Feb 4 2010, 10:12 AM) <{POST_SNAPBACK}>
The sale attracted 4.6 times as many bids as securities on offer, up from 1.72 at the last sale.
...
yield 2.63 percent today, compared with 2.14 percent the last time the notes were issued on Dec. 3


Interesting that the bid-to-cover was so high, yet the yield went up so much.. ? hmm... something smells fishy.

http://tinyurl.com/yjnqo5p
All I wanna hear is that JPM is soon going to explode in a gigantic supernova that will take the Fed, Goldman, AIG, UBS, HSBC, Citi, and BofA with it, leaving behind a white dwarf that we will name "God's work".
The reason for this? see 1984 thread: "http://tinyurl.com/yepltr6" ak47 bomb bioweapon semtex ar15 glock 7.62mm allah jesus buddah fuse ricin plot plan operation grenade rocket ied phone poison anthrax airport runway invasion armor body bullet explosive hollowpoint explode gas mask NBC dirty plutonium nuke suitcase gas needle hypodermic

#8 G0ldfinger

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Posted 04 February 2010 - 10:23 AM

QUOTE (chris ct @ Feb 4 2010, 10:15 AM) <{POST_SNAPBACK}>
Interesting that the bid-to-cover was so high, yet the yield went up so much.. ? hmm... something smells fishy.

Yes, I wondered too. Is it just that people are interested in the debt as long as the yield is right? Sounds almost too simple to be true.
You can't tax deflation.
“Currency Induced Cost-Push Hyperinflation” vs “Demand-Pull (non-hyper) Inflation.”
The "no income --> no inflation"-thesis is as wrong as the "price control --> inflation control"-thesis.
Don't TRADE gold! You might lose your shirt in the biggest bull run ever. That would be embarassing. © possibly by Swampy
Posted Image
Gold, silver, property, currencies, commodities charts.

#9 chris ct

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Posted 04 February 2010 - 10:36 AM

QUOTE (G0ldfinger @ Feb 4 2010, 10:23 AM) <{POST_SNAPBACK}>
Yes, I wondered too. Is it just that people are interested in the debt as long as the yield is right? Sounds almost too simple to be true.

Yes, almost like the 'Primary Dealers' (if they have such a thing in Portugal) were told they had to bid, and the enthusiasm was so intense that the yield went up 25%.
http://tinyurl.com/yjnqo5p
All I wanna hear is that JPM is soon going to explode in a gigantic supernova that will take the Fed, Goldman, AIG, UBS, HSBC, Citi, and BofA with it, leaving behind a white dwarf that we will name "God's work".
The reason for this? see 1984 thread: "http://tinyurl.com/yepltr6" ak47 bomb bioweapon semtex ar15 glock 7.62mm allah jesus buddah fuse ricin plot plan operation grenade rocket ied phone poison anthrax airport runway invasion armor body bullet explosive hollowpoint explode gas mask NBC dirty plutonium nuke suitcase gas needle hypodermic

#10 chris ct

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Posted 04 February 2010 - 11:40 AM

A VERY WORRYING article... got insurance?

Regarding the last line, Ithink it was CGNAO who said the derivative beast has now grown larger than individual countries.....
http://www.telegraph...o-Portugal.html
QUOTE
Greece under EU protectorate as funds shift fire to Portugal
The European Commission has ordered Greece to slash public spending and spell out details of its austerity plan within "one month", invoking sweeping new EU Treaty powers to impose a radical shake-up of the Greek economy.

Greece's labour federation immediately called a general strike for February 24, dashing hopes that Europe's provisional backing for Greek crisis policies would restore investor confidence.

Brussels invoked new EU powers under Article 121 of the Lisbon Treaty, allowing it to reshape the structure of pensions, healthcare, labour markets and private commerce – a step-change in the level of EU intrusion.

One banker described events as eerily similar to market confusion before the failure of Bear Stearns and Lehman Brothers in 2008, this time involving sovereign states rather than banks.

http://tinyurl.com/yjnqo5p
All I wanna hear is that JPM is soon going to explode in a gigantic supernova that will take the Fed, Goldman, AIG, UBS, HSBC, Citi, and BofA with it, leaving behind a white dwarf that we will name "God's work".
The reason for this? see 1984 thread: "http://tinyurl.com/yepltr6" ak47 bomb bioweapon semtex ar15 glock 7.62mm allah jesus buddah fuse ricin plot plan operation grenade rocket ied phone poison anthrax airport runway invasion armor body bullet explosive hollowpoint explode gas mask NBC dirty plutonium nuke suitcase gas needle hypodermic

#11 romans holiday

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Posted 04 February 2010 - 12:01 PM

From above:

QUOTE
The gap between what EU demands and what ordinary Greeks seem willing to accept is so wide that it may prove extremely hard for Mr Papandreou carry the country. The top union bloc said the government had "succumbed to the will of the markets" but would now have to face the stronger will of the people.

Samir Patel, from the consultancy BH2, said austerity plans will "almost certainly send Greece into a deflationary spiral", and tip its banking system "into the Mediterranean Sea". Greece is being told to carry out IMF-style retrenchment without the IMF cure of devaluation.

Modern money "shorts" the currency, and is backed by debt. The debt is real. A debt deflation will lead to a prolonged period of deleveraging, where the short-covering of currencies will strengthen currencies relative to asset prices. At the global level, in the FX market, central currencies will benefit from deleveraging at the expense of peripheral currencies. Due to instability and uncertainty, gold will benefit against all currencies as it continues to be re-monetized.

Hold on to your hats for hyper-deflation, where cash is king, and gold the King of cash.
[Silver? A Volatile Queen].

#12 aliveandkicking

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Posted 04 February 2010 - 01:03 PM

QUOTE (chris ct @ Feb 4 2010, 10:36 PM) <{POST_SNAPBACK}>
Yes, almost like the 'Primary Dealers' (if they have such a thing in Portugal) were told they had to bid, and the enthusiasm was so intense that the yield went up 25%.


In practice it works mechanically differently to the way you are describing it in words. The interest rate per face value remains constant and you get to buy them cheaper if others dont want them. If you think you can get them cheaper because of a temporary crisis you will aim to buy more at a cheaper price with the same fixed interest. As you know of course.

#13 chris ct

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Posted 04 February 2010 - 01:57 PM

QUOTE (aliveandkicking @ Feb 4 2010, 01:03 PM) <{POST_SNAPBACK}>
In practice it works mechanically differently to the way you are describing it in words. The interest rate per face value remains constant and you get to buy them cheaper if others dont want them. If you think you can get them cheaper because of a temporary crisis you will aim to buy more at a cheaper price with the same fixed interest. As you know of course.

yes sure, thanks. I think you are trying to say:
The coupon remains as the issuer set it, but the price the Primary Dealer pays might go below par if they aren't very enthusiastic. This means the Yield would go above the coupon.

It's the level of enthusiasm that's surprising, IMO. I would not want govt debt unless it were at MUCH higher yields. The CBs are setting a trap I think. Holding on to 2-3% yield to maturity when IR's hit 10% is a huge loss over 10+ years .. and the bond prices will reflect that if and when it happens. Bonds don't seem such a safe investment to me.


http://tinyurl.com/yjnqo5p
All I wanna hear is that JPM is soon going to explode in a gigantic supernova that will take the Fed, Goldman, AIG, UBS, HSBC, Citi, and BofA with it, leaving behind a white dwarf that we will name "God's work".
The reason for this? see 1984 thread: "http://tinyurl.com/yepltr6" ak47 bomb bioweapon semtex ar15 glock 7.62mm allah jesus buddah fuse ricin plot plan operation grenade rocket ied phone poison anthrax airport runway invasion armor body bullet explosive hollowpoint explode gas mask NBC dirty plutonium nuke suitcase gas needle hypodermic

#14 G0ldfinger

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Posted 04 February 2010 - 02:05 PM

I guess it makes sense that the buyers are there when the yield looks right.

Meanwhile AEP on Spain:
QUOTE
Fears that the slow fuse on Spain's political crisis may soon detonate a timebomb is creeping into the markets.



You can't tax deflation.
“Currency Induced Cost-Push Hyperinflation” vs “Demand-Pull (non-hyper) Inflation.”
The "no income --> no inflation"-thesis is as wrong as the "price control --> inflation control"-thesis.
Don't TRADE gold! You might lose your shirt in the biggest bull run ever. That would be embarassing. © possibly by Swampy
Posted Image
Gold, silver, property, currencies, commodities charts.

#15 aliveandkicking

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Posted 04 February 2010 - 02:08 PM

QUOTE (chris ct @ Feb 5 2010, 01:57 AM) <{POST_SNAPBACK}>
yes sure, thanks. I think you are trying to say:
The coupon remains as the issuer set it, but the price the Primary Dealer pays might go below par if they aren't very enthusiastic. This means the Yield would go above the coupon.

It's the level of enthusiasm that's surprising, IMO. I would not want govt debt unless it were at MUCH higher yields. The CBs are setting a trap I think. Holding on to 2-3% yield to maturity when IR's hit 10% is a huge loss over 10+ years .. and the bond prices will reflect that if and when it happens. Bonds don't seem such a safe investment to me.


I have no doubt that the cbs give the players the nod to buy this stuff with the reassurance they can be sold to the CB's at some profitable amount if the time comes. The ECB for example wants inflation and is desparate to remove the current 'abnormal constraints in the supply of credit' so that the current small recovery can be maintained.

Meanwhile we get this kind of news from top european companies:

Konecranes Q4 pretax dives 75 pct yr/yr

and

"According to the Confederation of Finnish Industries´ January business tendency survey, the very weak business cycle continued to weigh down Finnish companies," the EK added.

"Significant recovery has not yet taken place, even though the business outlook did gradually stabilise towards the end of last year."


#16 G0ldfinger

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Posted 04 February 2010 - 03:38 PM

A comment on the AEP article:
http://www.telegraph...o-Portugal.html
QUOTE
"Yields on 10 year Portugese government bonds jumped 21 basis points yesterday as funds switched their fire to the next "domino".

As Chelyabinsk has noted before, the City/Canary Wharf speculators and Mayfair hedge funds are hoping for a re-run of the 1996 SE Asia currency crises. Except this time the "dominoes" are sovereign bond markets not national currencies.

These same speculators will turn their attention on UK bond markets and sterling
, if not stopped, especially as the Bank of England today is ending its programme of quantitative easing. The UK bond market is looking highly vulnerable.
Fingers crossed for sterling and UK gilts, otherwise UK interest rates will rocket.

You can't tax deflation.
“Currency Induced Cost-Push Hyperinflation” vs “Demand-Pull (non-hyper) Inflation.”
The "no income --> no inflation"-thesis is as wrong as the "price control --> inflation control"-thesis.
Don't TRADE gold! You might lose your shirt in the biggest bull run ever. That would be embarassing. © possibly by Swampy
Posted Image
Gold, silver, property, currencies, commodities charts.

#17 Modigliani

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Posted 04 February 2010 - 03:48 PM

QUOTE (G0ldfinger @ Feb 4 2010, 10:42 AM) <{POST_SNAPBACK}>
This is just incredible. Who tricked these (rural?) municipalities into playing with derivatives first place? No wonder they seize the banksters' assets now.


Bloomberg folks used the wrong word there, they should have used "regions, provinces and townhalls" and I bet most of them are hardly rural. Puglia is not a municipality but a region of over 4 million people.
From what I read on Italian websites, BoA and another Italian bank (Crediop) made investments in funds on behalf of these state institutions. Guess the returns where not that good.


#18 bandwagon

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Posted 04 February 2010 - 08:33 PM

Has anyone come up with a decent acronym using the letters PIIGS and UK?


#19 douche dore

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Posted 04 February 2010 - 08:44 PM

QUOTE (chris ct @ Feb 3 2010, 08:30 PM) <{POST_SNAPBACK}>
I don't think we have a general Portugal/Italy/Ireland/Greece/Spain thread yet, but please feel free to merge if we do!


I have a long term thread (since 2008) on the euro going to hell where i have been monitoring the bond spreads to detect the first signs of a country likely to come under pressure to leave the euro. But, our threads are sufficiently different and so no point merging. Back in 2008 i wrote the following:

QUOTE
The spread between 10 yr bunds and other key € bonds as of 18th July is:

Greece 64 basis points, Italy 54 points, Portugal 45 and Spain 30. I will monitor these spreads going forward.


These spreads seemed quite large at the time, though obviously not flagging the problems that we now have. They are now obviously massively bigger and signalling real problems.

http://www.greenener...mp;#entry155266

#20 douche dore

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Posted 04 February 2010 - 08:45 PM

QUOTE (bandwagon @ Feb 4 2010, 09:33 PM) <{POST_SNAPBACK}>
Has anyone come up with a decent acronym using the letters PIIGS and UK?

Only when you include France.... FUK PIIGS




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