Tuesday, 06 April 2010 10:11

Grecian News and its Relevance to My Analysis

Greece has been in the news a lot over the last 24 hours. Let's recap:

Bloomberg: Greece May Find Lukewarm U.S. Reception for Its Bonds

April 7 (Bloomberg) -- Greece may discover it’s no cheaper to sell bonds in the U.S. than in Europe as the government seeks to persuade investors it can plug the region’s biggest budget deficit.

Investors may demand a yield of as much as 7.25 percent to buy Greek 10-year dollar bonds, 410 basis points more than benchmark German bunds and 330 basis points more than Treasuries, according to Paris-based Axa Investment Managers, which oversees about $669 billion. TCW Group Inc., which manages $115 billion in assets from Los Angeles, says Greece may have to offer a premium of as much as 400 basis points over Treasuries.

Petros Christodoulou, director general of Greece’s Public Debt Management Agency, said March 31 the country planned a “roadshow” in the U.S. and maybe Asia to drum up investor demand for a sale of dollar-denominated bonds. The country may offer as much as $10 billion of the securities, the Wall Street Journal reported the same day. Greece is struggling to tackle a budget deficit that is equivalent to 12.7 percent of gross domestic product, more than four times the European Union’s 3 percent limit.

Anybody present at these road shows should print out a copy of the post Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse! and"Greek Crisis Is Over, Region Safe", Prodi Says - I say Liar, Liar, Pants on Fire!. Be sure to have the salespersons answer the hard questions posed in those pieces. Subscribers can feel free to whip out the subscription material and ask for explanations and clarifications - File Icon Greece Public Finances Projections. I am anxious to hear what would be said in response. At this point, I see a Greek effective default as a foregone conclusion.

More on this topic: Euro, Greek Bonds Drop on Rescue Concern; Most U.S. Stocks Gain

From CNBC: Greek Banks Hit by Money Moved Offshore: Report

Greek banks are being hit by a wave of redemptions as rich citizens and companies look to move their money to big global banks or offshore as the country's debt crisis rages, the Telegraph newspaper reported on its website.

The report appeared to contradict recent data from the European Central Bank and comments to Reuters by analysts and Greek banking sources, who said there was no clear evidence of a major, extended deposit outflow from Greek banks.

The UK newspaper said late on Monday that big depositors have been clamoring to move their cash to international financial firms such as HSBC or France's Societe Generale, which operate large branches in the country.

They are among those to have received several billion euros of new money, it said without specifying sources.

... More than 3 billion euros ($4.05 billion) of deposits held by Greek households and companies left the country in February, while in January about 5 billion euros of deposits were moved out, the Telegraph quoted figures from Bank of Greece as showing.

Switzerland, the UK and Cyprus have been the largest recipients of the money, with the wealthiest Greeks looking to move their deposits to Swiss banks accounts to escape the more punitive tax measures many fear will be introduced in the wake of the country's economic crisis, the newspaper said.

Subscribers should reference:

From the Greek banking site, bankingnews.gr: [coarsely translated] Greek long bond investors - <a href="http://www.bankingnews.gr/ΟΛΑ-ΤΑ-ΝΕΑ/item/2159-Πουλάνε-ελληνικά-ομόλογα-και-οι-long-επενδυτ

Last modified on Saturday, 17 April 2010 11:01

1 comment

  • Comment Link Reggie Middleton Monday, 12 April 2010 10:18 posted by Reggie Middleton

    Comments pulled over from my legacy site:
    written by shaunsnoll, April 07, 2010
    Greek and Italian CDS blowing out again this morning and check out stock price of Greece's largest bank..... very surprised to see US equity markets pretending this stuff doesn't matter.

    +2


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    written by Reggie Middleton, April 07, 2010
    The banks' price was relatively low to begin with, thus took relatively little capital to short. The positions taken in the banks detailed in the subscription docs, if taken carefully, should have turned out to be very, very profitable and probably have a decent run to go. The other countries have yet to truly crack.

    +2


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    JP
    written by NDbadger, April 07, 2010
    It must make you scream to read Dimon's shareholder letter in which he claims JP didn't need a government bailout.

    +0


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    written by NDbadger, April 07, 2010
    I still think their derivatives book is going to give them trouble.

    +0


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    written by shaunsnoll, April 07, 2010
    it is funny because if you look at historical headlines from the early innings of sovereign default waves they are so similar.

    1. they ALWAYS say that the default of this country does not impact economic growth of "insert home country name here"

    2. then once some credit spreads start blowing out they then say the damage is contained.

    3. due to negative feedback loops and banking exposure it is nearly impossible to contain damage like this and it basically always has serious impact to the growth profile of neighbors and trade partners.


    doesn't matter if its 1870 or 1990, I see these same similarities in the news from the time....

    Report
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