Talking Greece down

Sun Feb 28 12:27:01 CET 2010

REPLY TO: D66 at nic.surfnet.nl

Wat gebeurt er als een land zijn kredieten niet kan aflossen, omdat het geen
nieuwe leningen lan financieren? Dus zijn staatsobligaties niet bijtijds
aflost. Wat kunnen de schuldeisers tegen die staat ondernemen?
Begrijp dat dat hier de betekenis is van credit of government default... 
Er komt nog de term swap om de hoek kijken als een derde de risico's afdekt
kennelijk... tegen een beloning maar met een taak als het risico optreedt.

Fritz van Rikxoort

-----Original Message-----
From: owner-d66 at NIC.SURFNET.NL [mailto:owner-d66 at NIC.SURFNET.NL] On Behalf
Of Cees Binkhorst
Sent: Sunday, February 28, 2010 8:55 AM
To: Discussielijst over D66
Subject: Talking Greece down

REPLY TO: D66 at nic.surfnet.nl

De heer Rogoff vertelt:
- na een bankencrisis stoppen gewoonlijk een paar landen met
terugbetalen van de schulden
- de USA zal gaan snijden in de uitgaven NADAT de rente op leningen de
pan uitrijsen

Maar de alledaagse praktijk is dat de USA gewoon doorgaat met hun banken 
te financieren met een goedkope rente (terwijl diezelfde banken de eigen 
onderdanen 30% laten betalen op hun creditcards).

Groet / Cees

PS. Obama overweegt (waarschuwt de banken dus) inmiddels het opzeggen 
van hypotheken te verbieden ;)

Harvard's Rogoff Sees Sovereign Defaults, 'Painful' Austerity
http://www.bloomberg.com/
By Aki Ito and Jason Clenfield

Feb. 24 (Bloomberg) -- Ballooning debt is likely to force several
countries to default and the U.S. to cut spending, according to Harvard
University Professor Kenneth Rogoff, who in 2008 predicted the failure
of big American banks.

Following banking crises, "we usually see a bunch of sovereign defaults,
say in a few years," Rogoff, a former chief economist at the
International Monetary Fund, said at a forum in Tokyo yesterday. "I
predict we will again."

The U.S. is likely to tighten monetary policy before cutting government
spending, sending "shockwaves" through financial markets, Rogoff said in
an interview after the speech. Fiscal policy won't be curbed until
soaring bond yields trigger "very painful" tax increases and spending
cuts, he said.

Global scrutiny of sovereign debt has risen after budget shortfalls of
countries including Greece swelled in the wake of the worst global
financial meltdown since the 1930s. The U.S. is facing an unprecedented
$1.6 trillion budget deficit in the year ending Sept. 30, the government
has forecast.

"Most countries have reached a point where it would be much wiser to
phase out fiscal stimulus," said Rogoff, who co- wrote a history of
financial crises published in 2009. It would be better "to keep monetary
policy soft and start gradually tightening fiscal policy even if it
meant some inflation."

Failed Marriage

Rogoff, 56, said he expects Greece will eventually be bailed out by the
IMF rather than the European Union. Greece will probably announce an
austerity program "in a few weeks" that will prompt the EU to provide a
bridge loan which won't be enough to save the country in the long run,
he said.

"It's like two people getting married and saying therefore they're
living happily ever after," said Rogoff. "I don't think Europe's going
to succeed."

Investors will eventually demand higher interest rates to lend to
countries around the world that have accumulated debt, including the
U.S., he said. The IMF forecast in November that gross U.S. borrowings
will amount to the equivalent of 99.5 percent of annual economic output
in 2011. The U.K.'s will reach 94.1 percent and Japan's will spiral to
204.3 percent.

"In rich countries -- Germany, the United States and maybe Japan -- we
are going to see slow growth. They will tighten their belts when the
problem hits with interest rates," Rogoff said at the forum, which was
hosted by CLSA Asia-Pacific Markets, a unit of Credit Agricole SA,
France's largest retail bank. Japanese fiscal policy is "out of
control," he said.

Euro Concerns

So far concerns about the euro zone's ability to withstand the
deteriorating finances of its member nations have outweighed the U.S.'s
deficit woes, propping up the dollar.

"The more they suck in Greece, the lower the euro goes, because it's not
a viable plan," Rogoff said. "Clearly the dollar is going to go down
against the emerging markets -- there's going to be concern about
inflation and the debt."

The dollar has surged more than 9 percent against the euro in the past
three months. Ten-year Treasuries yielded 3.72 percent as of 10:16 a.m.
in New York.

The U.S. government will delay any efforts to contain the deficit until
Treasury yields reach around 6 percent to 7 percent, Rogoff said.

"The U.S. is in a state of paralysis in its fiscal policy," he said.
"Monetary policy will tighten first, and I don't think it's the right mix."

Fed Exit

The Federal Reserve last week raised the discount rate charged to banks
for direct loans, and plans to end its $1.25 trillion purchases of
mortgage-backed securities in March. President Barack Obama's
administration is proposing a $3.8 trillion budget for fiscal 2011 to
spur the recovery.

"When they start tightening monetary policy even a little bit, it's
going to send shockwaves through the system," Rogoff said.

In an interview a month before Lehman Brothers Holdings Inc. went
bankrupt in 2008, Rogoff said "the worst is yet to come in the U.S." and
predicted the collapse of "major" investment banks. His 2009 book "This
Time Is Different," co- written with Carmen M. Reinhart, charts the
history of financial crises in 66 countries.

"We almost always have sovereign risk crises in the wake of an
international banking crisis, usually in a few years, and that's
happening," he said. "Greece is just the beginning."

Greece's debt totaled 298.5 billion euros ($405 billion) at the end of
2009, according to the Finance Ministry. That's more than five times
more than Russia owed when it defaulted in 1998 and Argentina when it
missed payments in 2001.

The cost of protecting Greek bonds from default surged in January, then
declined this month as concern eased over the country's
creditworthiness. Credit-default swaps on Greek sovereign debt have
fallen to 356 basis points from 428 last month, according to CMA
DataVision. That's up from 171 at the start of December.

"Greece just highlights that one of those risks is sovereign default,"
said Naomi Fink, a strategist at Bank of Tokyo-Mitsubishi UFJ Ltd.
Still, "it doesn't justify the situation where we're all in a panic and
are going back to cash in the post-Lehman shock."

To contact the reporters on this story: Aki Ito in Tokyo at
aito16 at bloomberg.net; Jason Clenfield in Tokyo at jclenfield at bloomberg.net.
Last Updated: February 23, 2010 10:19 EST

**********
Dit bericht is verzonden via de informele D66 discussielijst
(D66 at nic.surfnet.nl).
Aanmelden: stuur een email naar LISTSERV at nic.surfnet.nl met in het tekstveld
alleen: SUBSCRIBE D66 uwvoornaam uwachternaam
Afmelden: stuur een email naar LISTSERV at nic.surfnet.nl met in het tekstveld
alleen: SIGNOFF D66
Het on-line archief is te vinden op:
http://listserv.surfnet.nl/archives/d66.html
**********
No virus found in this incoming message.
Checked by AVG - www.avg.com 
Version: 9.0.733 / Virus Database: 271.1.1/2713 - Release Date: 02/27/10
20:34:00

**********
Dit bericht is verzonden via de informele D66 discussielijst (D66 at nic.surfnet.nl).
Aanmelden: stuur een email naar LISTSERV at nic.surfnet.nl met in het tekstveld alleen: SUBSCRIBE D66 uwvoornaam uwachternaam
Afmelden: stuur een email naar LISTSERV at nic.surfnet.nl met in het tekstveld alleen: SIGNOFF D66
Het on-line archief is te vinden op: http://listserv.surfnet.nl/archives/d66.html
**********