Titoli di Stato area Euro GRECIA Operativo titoli di stato - Cap. 1

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Saturday, May 14, 2011

Is Argentina a Model for Greece?


For the past few days, and a result of an op-ed in the NY Times by Mark Weisbrot, there is more buzz about the merits of Greece leaving the Eurozone. I have written about this subject in the past, but I thought I would make some more observations about this idea.


Before looking more closely at the analogy, permit me two metaphors: Greece as a gambler with a debt problem and Greece as a fat prostitute. Now, the gambler can declare bankruptcy – the debt is gone, but the underlying cause that created the debt (the gambling addition) is untreated. Now think of the prostitute – her options to get more business are to hit the gym and eat right or to lower her price. In effect, the argument for Greece to default is akin to the gambler declaring bankruptcy but skipping out on the gamblers anonymous meetings; and dropping the euro is akin to the prostitute lowering her price. In other words, it solves a problem, but not *the* problem.


With the caveat that my knowledge of Argentina is more limited than my knowledge of Greece, I would like to make a few observations:

• Greece’s external balance is much worse than Argentina’s was before 1999: Argentina was running current account deficits of ~3.5% of GDP, while Greece’s 2010 current account deficit was 8.5%. So a sharp depreciation that would result from Greece exiting the euro would produce a more significant dislocation in Greece than in Argentina.
• Greece has a lot more state than Argentina: Argentina’s government revenues and expenditures were averaging ~25% of GDP before the crisis. By contrast, Greece’s numbers have ranged from high 30s for revenues to mid 50s for expenditures. So Greece needs to make a sharp curtailment in the state sector – neither default nor a new currency accomplishes that.
• Argentina has failed to produce macro-economic stability with inflation ranging from 8% to 10%, with one exception (2009). In other words, it has not resolved the propensity to run budget deficits – it has just shifted the financing mechanism from borrowing to printing money.
• Argentina is ranked 105th in Transparency International’s Corruption Perceptions Index 2010, tied with Algeria, Kazakhstan, Moldova and Senegal. In 2001, it was ranked 57th. The Heritage Foundation / Wall Street Journal Economic Freedom indicator shows that Argentina has experienced a sharp decline in economic freedom over the last ten years – the drop is similar to that experienced by Venezuela and just smaller than Bolivia’s.
• Looking at one sector I know well – natural gas – Argentinean is in a free fall: production, despite ample reserves, has fallen as companies refuse to invest. Exports have almost halted and imports have grown rapidly. Subsidized prices are fueling an unsustainable supply and demand dynamic. This subsidy to the rest of the economy has produced growth – but at a huge expense of an industry that will hit a brick wall unless it reforms quickly.

I know these observations do not cover the Greece-Argentina comparison fully. There are indeed some positive numbers to look at in Argentina. But did default help Argentina resolve structural weaknesses in its political economy? Not really.


And so the question is this: is Greece’s problem debt or is it a corrupt political system, an inefficient public sector built on clientelism, a highly regulated private sector that restricts competition and hampers entrepreneurship, and a weak state that cannot collect taxes or enforce decisions? If anyone thinks that taking off a few zeros from Greece’s debt or switching to a new drachma will eliminate these chronic problems, they are out of their minds. Greece faces a deep political crisis, not a debt problem. It needs political solutions, not financial engineering.[FONT=&quot]
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[Baro]

New York, Strauss-Kahn arrestato

Addio ad ogni velleità di successione a Sarcò.

 

[giub]

Addio ad ogni velleità di successione a Sarcò.

A me preoccupa il possibile cambio di linea del FMI sulla Grecia...
Khan, socialista, Papas socialista...

 

[Baro]

A me preoccupa il possibile cambio di linea del FMI sulla Grecia...
Khan, socialista, Papas socialista...

Su questo non mi preoccuperei, sono sempre i tedeschi a dirigere l'orchestra dove recentemente un gruppo di musicisti vuole scioperare (liberaldemocratici)....

 

[Baro]

I grandi raggruppamenti politici in seno alle istituzioni europee contano come il due di briscola e in fatto di lobby globale e di solidarietà solo perchè l'uno o l'altro fanno parte di quello schieramento ancora meno

 

[giub]

The Coming Greek Debt Default and Its Consequences for Europe

Greece is in its third year of recession. Three years of declining gross domestic product — a shrinking economy, and a lower standard of living for all Greek citizens. In order to pay off its international debt, Greece will remain mired in recession. Greece and Europe are facing from very difficult choices for Greece, but there is a graceful way out.

Greece is in its third year of recession. Three years of declining gross domestic product — a shrinking economy, and a lower standard of living for all Greek citizens. That is a long recession; longer than any Greece has experienced in the post World War II period. If Greece has to impose higher taxes on its citizens or cut domestic spending in order to pay off its international debt, there is very little chance that Greece can encourage economic growth; therefore, as matters stand today, Greece faces a prolonged recession with no particular time when economic growth would resume. Greece’s economy could shrink dramatically, and that would make paying off its debts and returning to prosperity even less likely. Greece is facing from very difficult choices.

The simple fixes for Greece’s problems are simple but alarming: secede from the common currency and return to the drachma as the Greek currency; reinstitute the Greek Central Bank to manage the currency and short-term domestic interest rates, and either default or restructure Greece’s foreign debt that will ultimately be paid in drachmas. These choices are alarming in that a default or forced restructuring of Greek debt will cause a reinstituted drachma to have very little value in the ensuing crisis of confidence that would result, and having the Greek debt declared non-performing will cause a huge drop in the capital ratios of many European banks. Thus, the repercussions of such a Greek default or restructuring would be very challenging for other European banks.

The European Central Bank knows that the Greek situation presents an inter-related set of problems for Greece and Western European banks. The ECB is trying to manage the crisis with a bailout that avoid a Greek debt default, and minimize the negative-growth consequences of an ECB austerity plan authored by the ECB and the International Monetary Fund. A bailout could work if it allows Greece to delay the day of reckoning on its foreign debt and the Greek economy begins to grow. Because the Greek foreign debt is denominated now in Euros, Greece cannot print more money to pay off its debt. The printing of more money to pay off debt is the traditional way for mismanaged countries to pay off their foreign debt — such action usually results in a steep rise in inflation in the local economy, and a devalued currency; however, this currency devaluation paves the way for foreign investment as the local country goods, land, and labor become relatively inexpensive due to the devaluation of the local currency. For Greece, a currency devaluation would likely mean a huge influx of tourist dollars because it would become very inexpensive to vacation in Greece, and it would spur exports of Greek goods, which would become inexpensive on world markets. These inflows of capital would spur growth in the Greek economy.

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[giub]

La fine del mondo? Nel 2012!

Sunday, May 08, 2011

D-Day for Greek Debt


Unless done early and voluntarily, a Greek default would be triggered by an inability to borrow, and that inability will be linked to money that the Greek state would need to raise in order to roll over debt. Remember that when Greece received its bailout in May 2010 it was ahead of a bond due on May 19, 2010 that the government said it could not pay. That set the timing for the rescue package. The problem is that Greece’s amortization needs in 2012 are frontloaded, meaning that the moment of truth comes early in 2012. On March 20, 2012 to be exact.


Greece has two expenditures for which it needs to raise funds: to finance its budget deficit and to roll over existing debts. To meet these, the government has three main financing options: privatizations, market borrowing and IMF/EC loans. From mid 2010 and in 2011, Greece met its needs by raising money in the short-term market and by borrowing from the IMF/EC. It did not need to raise money in the long-term market, where mistrust about the country’s ability to pay back debt has pushed up yields.


That changes in 2012, however. According to the IMF, whose estimates will rise in lieu of a bigger than expected drop in GDP in 2010 and a smaller than expected drop in the deficit, Greece needs to raise €27 billion in 2012 from long-term bonds. This number is driven by a large amortization requirement: according to the IMF, in 2011 Greece needs to pay down €35.2 billion in long-term debts and €10.3 billion in short-term debts. The Ministry of Finance, which publishes the graph below, shows a 2011 repayment need of ~€40 billion.
But when are these debts due? For now we can ignore the smaller amounts from short-term debts – these are usually €1-€2 billion and are unlikely to be the trigger of a default. Looking at long-term debts, 80% are due in the first half of 2012. Most worrisome are two 3-year bonds that are payable on March 20, 2012. Combined they account for over €21 billion. A third, 10-year bond for €8 billion is due May 18, 2012.


We can therefore call March 20, 2012 Greece’s D-Day. If the Greek government continues to bet that it can avoid default, this day will be its ultimate test – the day by which Greece will need to convince markets to lend it another €21 billion.

 

[ferdo]

Europas Schuldenkrise

Schäuble will Griechenland-Bericht gründlich prüfen

Griechenland und seine Wirtschaftskrise: Demnächst werden IWF, EZB und EU einen Bericht über das Land veröffentlichen. Diesen will Finanzminister Schäuble „besonders gründlich“ ansehen, kündigte er der Frankfurter Allgemeinen Sonntagszeitung an.


Bundesfinanzminister Wolfgang Schäuble

14. Mai 2011 2011-05-14 21:11:15
Bundesfinanzminister Wolfgang Schäuble (CDU) hat gegenüber der Frankfurter Allgemeinen Sonntagszeitung angekündigt, angesichts der Gerüchte auf den Finanzmärkten den Bericht von IWF, EZB und EU-Kommission über Griechenland „besonders gründlich“ anzuschauen.
esaminerà il rapporto IFM, BCE, UE in modo particolarmente approfondito
„Aber jetzt warten wir erst einmal diesen Bericht ab und schauen dann, wie die drei Institutionen IWF, EZB und EU-Kommission, die ja noch im März grünes Licht für die Auszahlung der vierten Tranche an Griechenland gegeben hatten, die Lage bewerten“, sagte er der F.A.S. Der Bericht ist für Juni angekündigt.
Zu einer möglichen Beteiligung der Gläubiger an der Rettung hoch verschuldeter Euro-Staaten sagte er: „Vertrauen in unsere wirtschaftliche Ordnung setzt voraus, dass die Gewinnchancen nicht nur bei den Investoren und die Risiken nicht nur beim Steuerzahler liegen. Deswegen brauchen wir Regelungen, die das Vertrauen nicht gefährden.“
le possibilità di riuscita devono essere non solo per gli investitori e i rischi non solo per chi paga le tasse
Er machte aber deutlich, dass dieses Vertrauen seiner Meinung nach schon durch den geplanten neuen Rettungsmechanismus ESM geschaffen wird. „Deshalb wird die Regierung an der Beteiligung der privaten Gläubiger im Rahmen des Europäischen Stabilisierungsmechanismus ESM, der ab 2013 die Stabilität der Eurozone sichern soll, so wie sie im März von den Staats- und Regierungschefs der Europäischen Union vereinbart worden ist, ohne Wenn und Aber festhalten.“
pertanto il governo terrà fermo senza se e senza ma la partecipazione dei creditori privati nell'ambito del ESM che da 2013 deve assicurare la stabilità dell'Eurozona, così come è stato concordato dagli stati europei

 

[ferdo]

Wer hat Informationen weitergegeben?

Schäuble lässt Mitarbeiter überwachen

Der Finanzminister zieht Konsequenzen aus der Weitergabe eines hausinternen Papiers zur Griechenlandkrise an Medien. Er hat in seinem Ministerium eine Prüfung angeordnet, die den „Maulwurf“ in den eigenen Reihen enttarnen soll.

Von Manfred Schäfers, Berlin
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Wolfgang Schäuble im Finanzministerium

12. Mai 2011 2011-05-12 17:26:50
Finanzminister Wolfgang Schäuble (CDU) lässt Mitarbeiter systematisch überwachen und ihre Verbindungsdaten von E-Mails, Faxen und Telefonaten auswerten. Dadurch will Schäuble feststellen, wer mit Medienvertretern in Kontakt steht und interne Informationen weiterreichen könnte. Die Überwachung reicht bis zu seinen eigenen Staatssekretären.
Anlass der Aktion ist ein Bericht vom vergangenen Freitag über einen Austritt Griechenlands aus der Währungsunion, was Ministerpräsident Georgios Papandreou anschließend dementierte. „Spiegel online“ hatte aus einer internen Vorlage des Bundesfinanzministeriums zitiert, in der vor den Folgen eines Austritts gewarnt wurde.

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Am Abend der Veröffentlichung fand ein geheimes Krisentreffen der Euro-Finanzminister zur Lage Griechenlands statt. Der Bericht hatte Auswirkungen auf den Finanzmärkten. Schäuble äußerte sich selbst skeptisch, ob so der Informant identifiziert werden kann: „Mein Optimismus, dass wir das herausbekommen werden, ist ein begrenzter“, sagte er.

 

[ferdo]

Sul corvo tedesco:

Wer hat Informationen weitergegeben?
Chi ha riferito le informazioni?

Schäuble lässt Mitarbeiter überwachen fa sorvegliare i dipendenti

Der Finanzminister zieht Konsequenzen aus der Weitergabe eines hausinternen Papiers zur Griechenlandkrise an Medien. Er hat in seinem Ministerium eine Prüfung angeordnet, die den „Maulwurf“ in den eigenen Reihen enttarnen soll.

Von Manfred Schäfers, Berlin
Wolfgang Schäuble im Finanzministerium

12. Mai 2011 2011-05-12 17:26:50
Finanzminister Wolfgang Schäuble (CDU) lässt Mitarbeiter systematisch überwachen und ihre Verbindungsdaten von E-Mails, Faxen und Telefonaten auswerten. Dadurch will Schäuble feststellen, wer mit Medienvertretern in Kontakt steht und interne Informationen weiterreichen könnte. Die Überwachung reicht bis zu seinen eigenen Staatssekretären.
Anlass der Aktion ist ein Bericht vom vergangenen Freitag über einen Austritt Griechenlands aus der Währungsunion (notizia di venerdì scorso su un'uscita della Grecia dall'Unione Europea), was Ministerpräsident Georgios Papandreou anschließend dementierte. „Spiegel online“ hatte aus einer internen Vorlage des Bundesfinanzministeriums zitiert, in der vor den Folgen eines Austritts gewarnt wurde.

Am Abend der Veröffentlichung fand ein geheimes Krisentreffen der Euro-Finanzminister zur Lage Griechenlands statt. Der Bericht hatte Auswirkungen auf den Finanzmärkten. Schäuble äußerte sich selbst skeptisch, ob so der Informant identifiziert werden kann: „Mein Optimismus, dass wir das herausbekommen werden, ist ein begrenzter“, sagte er.