- Член од
- 17 март 2005
- Мислења
- 11.493
- Поени од реакции
- 1.592
Не може вака во недоглед да го одлагаат пороблемот бидејќи грчкава работа некого го чини многу.
Истовремено, што подолго одлагаат реструктуирање на долгот, тоа полошо за јужните.
Ако додадеме на тоа нестабилноста на банкарскиот систем низ цела Европа, Јунанистан ЌЕ МОРА да фалира (default). Текстов подоле вели дека заради политички причини ќе го наречат “доброволно реструктуирање’’, но во суштина Јунанистан ис гоинг даун. Целта е што подолго да останат во шемата на ЕУ/ММФ
Greece Must Face the Music
By VITO J. RACANELLI
SATURDAY, MAY 7, 2011
Postponing restructuring of its debt will only increase the country's pain on default—and add to banking instability throughout Europe.
Despite repeated official protests to the contrary, Greece will eventually be forced to default. It won't be tomorrow and at first it will be politely called a voluntary restructuring. But the economic numbers don't lie. Short of a miracle, Greek bonds will have their maturities extended and possibly see a haircut to the principal.
The country owes about 325 billion euros and has an annual gross domestic product of about €225 billion. Within two years, debt will rise to 160% of GDP, from 140% now, notes Lombard economist Charles Dumas. Greece pays roughly 10% of GDP in interest costs alone and is staring at a likely third straight year of GDP contraction, says Dumas. There's no way of avoiding a default without more bailout funds, he adds. The denominator here, GDP, won't grow fast enough—if at all—to stabilize the debt ratio.
Effectively, each Greek man, woman and child in its 11 million population owes €30,000 or about 1.5 times annual average income. The 2010 government budget deficit was 10.5% of GDP. As economic contraction continues and after the austerity already extracted, the chances that the deficit will drop to 3% by 2014, as promised, are minimal. Here are more sobering figures: Greece must pay roughly 20% of GDP each year from 2015 to 2019 in interest and principal, according to High Frequency Economics. With tourism and shipping its main industries, where is this money to come from if GDP isn't growing at a Herculean rate? Higher tax collections of €15 billion and €50 billion in promised privatizations are estimates that are too rosy, and won't close the gap. Meanwhile, the European Union has likely reached a bailout maximum politically.
WHEN THE RESTRUCTURING COMES, there will be nasty writedowns for European banks, especially domestic ones, holding Greek paper, and a lot of pain for the average Greek, as living standards drop and pensions lose value. Athens says a restructuring won't happen because it would be catastrophic. But the depth of the pain has little to do with its probability.
Beyond little Greece, the concern in a restructuring is the domino effect around Europe, notes David Owens, Jefferies' chief European economist: "There is a fear of Lehman-like bank contagion across Europe." A restructuring now, however, would ultimately cost less than one later. The current EU/IMF bailout plan threatens to grind Greece down for years, while restructuring now would recalibrate the debt and allow Greece to grow back into a healthier state.
At a certain point, Greece will have to say "OXI!"—Greek for No!—and throw in the towel. The suffering that will have to be inflicted on its people for many years may prove to be seriously destabilizing to Greek society.
If Hercules were still around, Greece might avoid a default. Unfortunately he's not. Greek 10-year bonds are priced at 57 cents to the euro. Even a 30% haircut might start a Greek bond rally, but Greek bank stocks would plunge.
SEPARATELY, GLENCORE INTERNATIONAL last week set an initial public offer price range of £4.80-to-£5.80 for its shares as it seeks to raise $10 billion. That implies a $61 billion market value for the Swiss commodities trader. Unrestricted London trading begins May 24, and the day after in Hong Kong.
And, the Stoxx Europe 600 index fell 1% last week, to 281.33.
Истовремено, што подолго одлагаат реструктуирање на долгот, тоа полошо за јужните.
Ако додадеме на тоа нестабилноста на банкарскиот систем низ цела Европа, Јунанистан ЌЕ МОРА да фалира (default). Текстов подоле вели дека заради политички причини ќе го наречат “доброволно реструктуирање’’, но во суштина Јунанистан ис гоинг даун. Целта е што подолго да останат во шемата на ЕУ/ММФ
Greece Must Face the Music
By VITO J. RACANELLI
SATURDAY, MAY 7, 2011
Postponing restructuring of its debt will only increase the country's pain on default—and add to banking instability throughout Europe.
Despite repeated official protests to the contrary, Greece will eventually be forced to default. It won't be tomorrow and at first it will be politely called a voluntary restructuring. But the economic numbers don't lie. Short of a miracle, Greek bonds will have their maturities extended and possibly see a haircut to the principal.
The country owes about 325 billion euros and has an annual gross domestic product of about €225 billion. Within two years, debt will rise to 160% of GDP, from 140% now, notes Lombard economist Charles Dumas. Greece pays roughly 10% of GDP in interest costs alone and is staring at a likely third straight year of GDP contraction, says Dumas. There's no way of avoiding a default without more bailout funds, he adds. The denominator here, GDP, won't grow fast enough—if at all—to stabilize the debt ratio.
Effectively, each Greek man, woman and child in its 11 million population owes €30,000 or about 1.5 times annual average income. The 2010 government budget deficit was 10.5% of GDP. As economic contraction continues and after the austerity already extracted, the chances that the deficit will drop to 3% by 2014, as promised, are minimal. Here are more sobering figures: Greece must pay roughly 20% of GDP each year from 2015 to 2019 in interest and principal, according to High Frequency Economics. With tourism and shipping its main industries, where is this money to come from if GDP isn't growing at a Herculean rate? Higher tax collections of €15 billion and €50 billion in promised privatizations are estimates that are too rosy, and won't close the gap. Meanwhile, the European Union has likely reached a bailout maximum politically.
WHEN THE RESTRUCTURING COMES, there will be nasty writedowns for European banks, especially domestic ones, holding Greek paper, and a lot of pain for the average Greek, as living standards drop and pensions lose value. Athens says a restructuring won't happen because it would be catastrophic. But the depth of the pain has little to do with its probability.
Beyond little Greece, the concern in a restructuring is the domino effect around Europe, notes David Owens, Jefferies' chief European economist: "There is a fear of Lehman-like bank contagion across Europe." A restructuring now, however, would ultimately cost less than one later. The current EU/IMF bailout plan threatens to grind Greece down for years, while restructuring now would recalibrate the debt and allow Greece to grow back into a healthier state.
At a certain point, Greece will have to say "OXI!"—Greek for No!—and throw in the towel. The suffering that will have to be inflicted on its people for many years may prove to be seriously destabilizing to Greek society.
If Hercules were still around, Greece might avoid a default. Unfortunately he's not. Greek 10-year bonds are priced at 57 cents to the euro. Even a 30% haircut might start a Greek bond rally, but Greek bank stocks would plunge.
SEPARATELY, GLENCORE INTERNATIONAL last week set an initial public offer price range of £4.80-to-£5.80 for its shares as it seeks to raise $10 billion. That implies a $61 billion market value for the Swiss commodities trader. Unrestricted London trading begins May 24, and the day after in Hong Kong.
And, the Stoxx Europe 600 index fell 1% last week, to 281.33.
