If they auction off the Parthenon,

[RobinFinderson]

The DOW is down over 700 and still over an hour before closing.

current snapshot, from NYT.

[Solon]

Here is why a bailout for Greece most likely won't help them escape bankruptcy...

Perfect quote, Ted, and thanks for the link. Looks like my trip to Greece next summer will be three weeks instead of two.

[Uncle Ted]

Perfect quote, Ted, and thanks for the link. Looks like my trip to Greece next summer will be three weeks instead of two.

While you are there you may be able to pick up a cheap Greek island or two and create your own country.

[Solon]

Help me out Viking - and anyone else who knows.

How is this different from a default?

If things run to form, the risk of imminent, disorderly default will be deferred this week. Most private-sector creditors will agree to swallow a big loss on their holdings of Greek bonds; and Greece will legislate to ensure that hold-out creditors are forced to accept the same terms. Official creditors will nod through a €130 billion ($172 billion) bail-out, enabling Greece to meet a big bond payment due in March.

http://www.economist.com/blogs/newsb...2/greeces-woes

Isn't forcing creditors to accept losses a degree of default? Granted it's not 100% loss, but I still don't understand why anyone would ever buy another Greek bond.

[Omaha 680]

Help me out Viking - and anyone else who knows.

How is this different from a default?



http://www.economist.com/blogs/newsb...2/greeces-woes

Isn't forcing creditors to accept losses a degree of default? Granted it's not 100% loss, but I still don't understand why anyone would ever buy another Greek bond.

The thing that baffles me (and I'd like input from the financial wizzards on the board as well because I am very much an amateur) is not what happens to Greek bonds going forward, but why in the world the yield was so low for the past two years. Everyone has known for a while that Greek bonds are junk if you consider the ability of Greece to pay. While the yield was higher than other European countries, it wasn't that much higher, and certainly not as high as you'd expect given their fiscal crisis. This says to me that there was a demand for Greek bonds even at the depressed yields because everyone expected the Eurozone countries to continue to bail Greece out.

I heard some financial writer on the radio a couple months back explaining that if you're going to set up a zone with a common currency among governments, you can either go the USA route where the central authority places no budgetary restrictions on the member governments, but no member government can be liable for the debt of another. Or you can do what the EU was supposed to be: members will help with the debt of other members, but in return everyone commits to certain debt/GDP limits. Either way should work in theory. He said that in practice the EU hasn't held any members to the debt/GDP guidelines and that is why there are battles over how much the EU will aid governments that are approaching bankruptcy.

[Uncle Ted]

Help me out Viking - and anyone else who knows.

How is this different from a default?



http://www.economist.com/blogs/newsb...2/greeces-woes

Isn't forcing creditors to accept losses a degree of default? Granted it's not 100% loss, but I still don't understand why anyone would ever buy another Greek bond.

If they go into the bankruptcy then the creditors will most likely get nothing and, yes, no one would want to buy Greek bonds if that happened. It the creditors all take a loss then they may be able to recover some of their investment and there would still be a market for Greek bonds given that it would be expected to get bailouts still. They would most likely have to offer a higher yield because of the risk, however.

[Moliere]

Help me out Viking - and anyone else who knows.

How is this different from a default?



http://www.economist.com/blogs/newsb...2/greeces-woes

Isn't forcing creditors to accept losses a degree of default? Granted it's not 100% loss, but I still don't understand why anyone would ever buy another Greek bond.

It's likely a voluntary reduction in principal, and this not technically a default. It's probably similar to someone with a lot of credit card debt that negotiates a write down in balance, which balance is then paid in full. The credit card company gets something (instead of nothing in a bankruptcy) and the consumer avoids bankruptcy.

I do wonder why some are holding out. It might be that they also own credit default swaps on the debt and therefore are hedged against a default, meaning they get paid out no matter what either by Greece or by the bank from which they bought the CDSs.

[Solon]

I'm on an island in the north Aegean right now. It's probably at about 10-15% of its normal capacity as a tourist destination in mid-May. In Athens on Wednesday and Thursday, I was the only person staying in my little hellhole of a hotel.

I heard a couple of stories today about the current financial crisis in Greece. The first is that the fascist party is getting stronger - they got 7% of the vote in the last election (6 days ago - on Sunday the 6th). This shocked everyone - I mean, who's fascist anymore? Apparently, the fascists are offering protection to old people just like Don Corleone on the day of his daughter's wedding. My hotel proprietor had a friend who lived somewhere around Thessaloniki, who went to work in Dubai for a couple of years. He locked up the family residence and took off for a couple of years. When he got back, there were people from Pakistan who had moved in as squatters and changed the locks. Rather than deal with the legal proceedings to move them out, the police told this guy to call the fascist party. The party sent some representatives to the immigrants, roughed them up a bit, and they were out of the house in three days. And they painted it before they left. Crazy. The party now is starting to put people in parks or neighborhoods to make sure the old ladies don't get mugged and cars don't get broken into (so the reputation is). I guess with the financial crisis over here, the mostly younger immigrants are pretty desperate, bored, and unemployed - so they turn to petty crime. Or, maybe all the Greeks are turning to petty crime and the immigrants are being blamed.

The other example is the girl at the cafe who has a master's degree in finance from some school in NYC. Perfect English speaker, but she can't find a job in Greece other than working at a beachside cafe. She and her husband are going to move to London later this summer in efforts to find work, but it really sucks. Unemployment in Greece for people under age 30 is at 50%. I'll bet it's at, like 110% for people with liberal arts degrees. Yikes.

[Portland Ute]

http://www.guardian.co.uk/commentisfree/2012/may/11/greece-golden-dawn-flares-fascism

[edward777]

Greece needs to take inventory of the debts as Iceland did. Once they found out most of the debt was not incurred by the Icelandic people they decided not to pay it back.

The economies of western Europe and the USA are just about ready to take a dive. It is not a question of if but rather when.

[Pheidippides]

Help me out Viking - and anyone else who knows.

How is this different from a default?



http://www.economist.com/blogs/newsb...2/greeces-woes

Isn't forcing creditors to accept losses a degree of default? Granted it's not 100% loss, but I still don't understand why anyone would ever buy another Greek bond.

Effectively it looks like the concept that it's your problem if you owe the bank a million dollars, but if you owe the bank 100 million its the bank's problem.

[Uncle Ted]

Solon, your chance may be coming...

Psst, Wanna Buy Rhodes? Have I Got a Deal for You...

Pssst ... wanna buy Rhodes? Headline of the morning: "Greece May Sell Islands as Juncker Urges Asset Sales." Greek Prime Minister Antonis Samaras is on a charm offensive this week as he is meeting with German and French leaders. He is now suggesting the government may sell or lease some of the country's islands to raise money.

OK, he's not talking about selling Santorini. Not yet. He seems to be talking about uninhabited islands.

http://www.cnbc.com/id/48750550

[il Padrino Ute]

Solon, your chance may be coming...



http://www.cnbc.com/id/48750550

Who does Obama think built Rhodes?

[Joe Public]

Pssst ... wanna buy Rhodes? Headline of the morning: "Greece May Sell Islands as Juncker Urges Asset Sales." Greek Prime Minister Antonis Samaras is on a charm offensive this week as he is meeting with German and French leaders. He is now suggesting the government may sell or lease some of the country's islands to raise money.

That would be colossal.

[Solon]

That would be colossal.

I don't think J.P. ever got the kudos he deserved for this one.

Things are pretty tense here in Athens right now. There are police everywhere and a lot of the statues in the public squares are wrapped in plastic to deter vandalism. There are multiple demonstrations scheduled for tomorrow (6-17). The city looks shabby. The trash is rarely picked up and is heaped in enormous piles; there are many more homeless people sleeping rough, and lots more beggars asking for alms than there were the last time I was here in 2012. On the bright side, anyone paying in cash can strike some pretty good deals.

I'm starting to think that Greece might really be on its way out of the Euro.