1 trillion to greece
- Thread starter joevol320
- Start date
BigPapaVol
Wave yo hands in the aiya
- Joined
- Oct 19, 2005
- Messages
- 63,223
- Likes
- 15
BigPapaVol
Wave yo hands in the aiya
- Joined
- Oct 19, 2005
- Messages
- 63,223
- Likes
- 15
yes, but i'm sure somone is holding the other side unhedged. it's not as though you can borrow this debt easily. history has proven that when the "no way they allow to happen" actually happens that the carnage isn't only local. also the amount of foreign bank debt and preferreds used as tier 1 capital for a lot of regional banks in the US in particural should not be ignored. any massive fails by banks in europe (and the europeans have a history of not supporting hte debt holders liket he US) would be a killer for many of smaller banks and probably some of the majors as well.
personally i think that europe and the US will do whatever we can to delay this problem a couple of years and hope that the world economy is in much better shape when greece has to default and withdraw from the EU in 2012 (almost inevitable unless the EU loans to them for literally zero interest) and therefore the effect will be relatively minimal. even if it means eating a couple hundred bill down the road.
BigPapaVol
Wave yo hands in the aiya
- Joined
- Oct 19, 2005
- Messages
- 63,223
- Likes
- 15
I seriously doubt our smaller banks have any exposure and majors it's probably a limited portion of tier 1 capital. I know much of our pension and mutual fund world has exposure, but not sure to what degree. I'm not arguing that collapse is anything but problematic, but I don't see collapse becoming reality. EU can't take the weakening coming if it does allow collapse, so why not play the game of chicken with them.
just look at the balance sheets of these regional banks. they allow preferreds in other banks to be listed as tier one. many of these regional banks own the other banks which is a big reason why they needed to be supported by tarp. i have no idea as to what the international exposure is, but i doubt it's small given the huge size of US $ denominated euro bank preferreds outstanding. the fannie and freddy preferreds going void (for instance) had a huge negative effect on many banks tier 1.
the euro union is going to issue $400 billion backed by france, italy, and germany. one wonders whether people will find those all that much better credits than greece.
HEARD ON THE STREET: French Cracks in the Euro-Zone Core - WSJ.com
Key to the €750 billion ($951 billion) euro-zone bailout package is the idea that the core will rescue the periphery. But how strong is the single currency's core?
Public finances in France, the second-biggest euro economy, are nowhere as poor as Greece's. But they are stretched in a country resistant to real fiscal reform.
At nearly 80%, France's ratio of government debt to gross domestic product was the fourth-highest in the euro zone in 2009. BNP Paribas predicts it will hit 90% in 2012.
French government refinancing this year is more onerous than the U.K.'s. France's budget deficit is forecast at 8% of GDP for 2010, above the euro-zone average of 6.6%. French tax receipts as a proportion of GDP are already the highest in the euro zone, making it risky to raise taxes.
President Nicolas Sarkozy has now prioritized reducing France's budget deficit. But his new measures don't go far beyond commitments France had already made to cut the deficit to 3% by 2013. The government has added a plan to close tax loopholes and is unwinding recent stimulus measures.
France might hit those targets. The recovery is boosting tax receipts. Domestic demand is recovering. A weaker euro helps exports. But financing France's ballooning social-security deficit is the main budgetary challenge. Mr. Sarkozy, weakened by poor midterm election results, faces powerful unions and a socialist opposition against change.
France's fiscal credibility rests on Mr. Sarkozy pushing through reforms which, though mild by Greek standards, have proved too much for French governments over the years.
HEARD ON THE STREET: French Cracks in the Euro-Zone Core - WSJ.com
Key to the €750 billion ($951 billion) euro-zone bailout package is the idea that the core will rescue the periphery. But how strong is the single currency's core?
Public finances in France, the second-biggest euro economy, are nowhere as poor as Greece's. But they are stretched in a country resistant to real fiscal reform.
At nearly 80%, France's ratio of government debt to gross domestic product was the fourth-highest in the euro zone in 2009. BNP Paribas predicts it will hit 90% in 2012.
French government refinancing this year is more onerous than the U.K.'s. France's budget deficit is forecast at 8% of GDP for 2010, above the euro-zone average of 6.6%. French tax receipts as a proportion of GDP are already the highest in the euro zone, making it risky to raise taxes.
President Nicolas Sarkozy has now prioritized reducing France's budget deficit. But his new measures don't go far beyond commitments France had already made to cut the deficit to 3% by 2013. The government has added a plan to close tax loopholes and is unwinding recent stimulus measures.
France might hit those targets. The recovery is boosting tax receipts. Domestic demand is recovering. A weaker euro helps exports. But financing France's ballooning social-security deficit is the main budgetary challenge. Mr. Sarkozy, weakened by poor midterm election results, faces powerful unions and a socialist opposition against change.
France's fiscal credibility rests on Mr. Sarkozy pushing through reforms which, though mild by Greek standards, have proved too much for French governments over the years.
Advertisement
