Thursday, 22 April 2010 07:44

As I Explicitly Forwarned, Greece Is Well On Its Way To Default, and Previously Published Numbers Were Waaaayyy Too Optimistic!

As was literally guaranteed by the BoomBustBlog analysis, Greece is well on its way to default, or at least the acceptance of significant aid in an (probably futile) attempt to avoid default. For a refresher, see Greek Crisis Is Over, Region Safe”, Prodi Says – I say Liar, Liar, Pants on Fire!. Subscribers should reference the Greece Public Finances Projections. Of particular note is how accurate we have been in forecasting the nonsensical optimism embedded in the Greek Government's economic numbers, see Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse!. Now, let's peruse the news of the morning...

In Bloomberg: Greece, Ireland Lead Euro-Area Budget Deficit Widening to Double EU Limit

April 22 (Bloomberg) -- The euro area’s budget deficit widened to more than double the European Union’s 3 percent limit in 2009, led by Greece and Ireland. I explicitly warned that these two countries were at the top of the risk chain throughout the year, culminated with a forensic report on Ireland. See Many Institutions Believe Ireland To Be A Model of Austerity Implementation But the Facts Beg to Differ! Subscribers should reference Ireland public finances projections. Ireland is in a particularly precarious position, potentially more so that Greece!

ireland_claims_against_piigs.jpg

The total budget gap for the 16-nation euro region widened to 6.3 percent of gross domestic product last year, the biggest since the introduction of the euro in 1999, from 2 percent in 2008, the EU’s Luxembourg-based statistics office said today. At 14.3 percent of GDP, Ireland had the largest shortfall, while Greece’s deficit was 13.6 percent. I'm not going to say I told you so!

... Overall government debt across the euro region swelled to 78.7 percent of GDP last year from 69.4 percent in 2008, the statistics office said.

Ireland and Greece

The European Commission in Brussels had previously forecast the euro region’s deficit to reach 6.4 percent of GDP in 2009, with Ireland and Greece at 12.5 percent and 12.7 percent, respectively. In 2010, the euro region’s deficit may widen to a record 6.9 percent of GDP, while state debt is seen surging to 84 percent of output, according to EU forecasts that are due to be revised on May 6.

The IMF said earlier this week that the main sources of sovereign risk in the 16-member euro region have shifted to reflect market concerns about fiscal sustainability. Greece and Portugal have become the “main contributors to inter-sovereign risk transfer,” the Washington-based fund said.

“Greece is a wake-up call,” Jose Vinals, director of the IMF’s monetary and capital markets department, told reporters on April 19. “What we are saying is ‘do not let the financial situation get out of hand and undertake the necessary measures precisely to remain on the safe side.”

Yeah, right! As if we are going to believe what the EU and IMF have to say... As excerpted from Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse!

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and the EU on goverment balance??? Way, way, way off.

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Hey, if you think tha's bad, try taking a look at what the govenment of Greece has done with these fairy tale forecasts, as excerpted from the blog post "Greek Crisis Is Over, Region Safe", Prodi Says – I say Liar, Liar, Pants on Fire!

greek_debt_forecast.png

You are going to get negative surprises from Greece for quite some time, since they have been lying about their conditions for just as long.

For anyone so inclined to refer BoomBustBlog's investigative analysis to the reporters who penned the Bloomberg piece, you can reach them here: Simone Meier in Dublin at This email address is being protected from spambots. You need JavaScript enabled to view it.. Maybe we can get my "version of the Truth", (you know, the mathematical edition) published in the mainstream!

From the Greek Banking site, bankingnews.gr:

The uncertainty around the time the action mechanism of Greece will be directly, it will be in mid May, combined with the negative reports by Goldman Sachs and Morgan Stanley, provided that the country would result in a rescheduling of debt and re-revision of the deficit to 13.6% in 2009 dramatically changed the climate for bonds twoards the negative. In the bond spread to 562 basis points to 3 years to 10 years with the spread reached 785 basis points as a record of all time. The yield on 3 years at 8.7% is close to 9%. Also recorded in the CDS record which reached about 570 basis points.
The great increase in the spread in short periods is justified because of concerns that Greece or will not meet its obligations or epanadiparagmateftei debt developments and are extremely negative. In ASE climate obviously negative because investors realize that Greece is at an impasse.

It is unclear whether Greece refer to the IMF-EU directly or through May supported by the German finance minister is certain is that the market bet on a quick xekatharisma.Sto Mkt initial wait and became a new sell-off after the new jump in the deficit .

Greece Greece can not be disbursed earlier than May 17 is strictly necessary funds from the EU and the ...
Direct recourse to the IMF-EU to Greece? Not until mid-May said Soimple-How to move Mkt, bonds 22/04/10 - 07:00 The use of Greece's support mechanism for the IMF and the EU is the only way there is no other solution ...

More Bloomberg on the Greek tragedy:

The Pan-European Sovereign Debt Crisis, to date:

  1. The Coming Pan-European Sovereign Debt Crisis – introduces the crisis and identified it as a pan-European problem, not a localized one.
  2. What Country is Next in the Coming Pan-European Sovereign Debt Crisis? – illustrates the potential for the domino effect
  3. The Pan-European Sovereign Debt Crisis: If I Were to Short Any Country, What Country Would That Be.. – attempts to illustrate the highly interdependent weaknesses in Europe’s sovereign nations can effect even the perceived “stronger” nations.
  4. The Coming Pan-European Soverign Debt Crisis, Pt 4: The Spread to Western European Countries
  5. The Depression is Already Here for Some Members of Europe, and It Just Might Be Contagious!
  6. The Beginning of the Endgame is Coming???
  7. I Think It’s Confirmed, Greece Will Be the First Domino to Fall
  8. Smoking Swap Guns Are Beginning to Litter EuroLand, Sovereign Debt Buyer Beware!
  9. Financial Contagion vs. Economic Contagion: Does the Market Underestimate the Effects of the Latter?
  10. Greek Crisis Is Over, Region Safe”, Prodi Says – I say Liar, Liar, Pants on Fire!
  11. Germany Finally Comes Out and Says, “We’re Not Touching Greece” – Well, Sort of…
  12. The Greece and the Greek Banks Get the Word “First” Etched on the Side of Their Domino
  13. As I Warned Earlier, Latvian Government Collapses Exacerbating Financial Crisis
  14. Once You Catch a Few EU Countries “Stretching the Truth”, Why Should You Trust the Rest?
  15. Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse!
  16. Ovebanked, Underfunded, and Overly Optimistic: The New Face of Sovereign Europe
  17. Moody’s Follows Suit Behind Our Analysis and Downgrades 4 Greek Banks
  18. The EU Has Rescued Greece From the Bond Vigilantes,,, April Fools!!!
  19. How BoomBustBlog Research Intersects with That of the IMF: Greece in the Spotlight
  20. Grecian News and its Relevance to My Analysis
  21. A Summary and Related Thoughts on the IMF’s “Strategies for Fiscal Consolidation in the Post-Crisis
  22. Euro-Gossip Debunked, Courtesy of Trichet and the IMF!
  23. Greek Soap Opera Update: Back to the Bailout That Was Never Needed?
  24. Many Institutions Believe Ireland To Be A Model of Austerity Implementation But the Facts Beg to Differ!

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  • Last modified on Thursday, 22 April 2010 07:44

    1 comment

    • Comment Link Reggie Middleton Thursday, 22 April 2010 11:09 posted by Reggie Middleton

      Markets Alert from The Wall Street Journal

      Moody's Investor Services downgraded its rating on Greece's sovereign debt and warned that further downgrades could be in the offing.

      The credit ratings agency's move to reduce its rating on Greece to A3 from A2 came after the European Union's statistical authority cast fresh doubt on the accuracy of Greece's financial reports and said the country's 2009 budget deficit--already yawning--was wider than previously thought.

      The news sent Greek bonds into a tailspin, with the yield on a Greek 10-year bond nearing 8.7%, and all but dashed any remaining hopes that Greece might borrow afresh from international markets.

      The euro also dropped on the news to $1.3257, its lowest level since May 2009.

      http://online.wsj.com/article/SB10001424052748703876404575199520197362174.html?mod=djemalertMARKET

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