Wednesday 28 November 2012

Eurocouncil Bond risk. A new type of bond risk.

It is now clear that holding European government debt poses more dangers than previously thought. The collective action of Europe can influence all the national bond markets introducing a new type of risk the “Eurocouncil bond risk”. Thus a nation’s government bonds in some ways have become Eurobonds. This became apparent following the Greek PSI that used EU’s article 9 of 593/2008[i] . Now the Eurogroup wants to buy back 30 or more billions of Greek bonds without moving the market. The Greeks say that the appetite increases as you start eating. Europe’s politicians started the process of passing the blame to everyone else but themselves and they like it. One should expect more meddling and messing.
According to the decision taken by the Eurogroup on Greece, Europe and the IMF would decide on the 13th of December on the disbursement of the 43.7billion. Apparently, Eurogroup’s approval hinges firstly on the approval of the national parliaments but more importantly on a “review of the outcome of a possible debt by back by Greece”. Although we would be very surprised if the money is not given the debt buy-back is riskier for many reasons.

Monday 26 November 2012

Μπροστά μόνο με νέες πολιτικές δυνάμεις

Δημοσιεύτηκε στην Καθημερινή

Είναι πασιφανές πως η Ελλάδα περνάει όχι μία αλλά πολλαπλές κρίσεις τα τελευταία χρόνια. Στο μυαλό όλων έρχεται πρώτα πρώτα η οικονομική κρίση. Ομως αυτή είναι άμεση συνέπεια του τρόπου που έχουμε δομήσει το κράτος και τις αξίες της κοινωνίας. Η μεγάλη κρίση, η μητέρα των κρίσεων, δεν είναι οικονομική αλλά πολιτική.
Παρακολουθώντας τις συζητήσεις στη Βουλή ο απλός πολίτης μένει πραγματικά άφωνος. Ο θεατρινισμός, η τσαρλατανιά, οι ψευτομαγκιές, ο αβδηριτισμός, η απουσία επιχειρημάτων και λογικής είναι κυρίαρχο στοιχείο στις συνεδριάσεις του ύψιστου οργάνου του δημοκρατικού μας πολιτεύματος αλλά και στις κομματικές αντιπαραθέσεις. Οι εξαιρέσεις που πάντα υπάρχουν είναι λίγες. Τα κόμματα και οι βουλευτές, αντί να είναι το κόσμημα της δημοκρατίας ενός σύγχρονου και πολιτισμένου ευρωπαϊκού κράτους, έχουν γίνει άξιοι εμπτυσμού, περιφρόνησης και αποδοκιμασίας. Θα έλεγε λοιπόν κανείς πως είναι εύφορο το έδαφος για την καλλιέργεια νέων πολιτικών δυνάμεων και κομμάτων.

Friday 23 November 2012

The trials of Troika

Sherlock Holmes famously said that “When you eliminate the impossible whatever remains, however improbable must be the truth”. The latest 15 page confidential report produced by Troika on the sustainability of the Greek debt however follows another philosophy, “When you eliminate the logical whatever remains however irrational must be implemented”.
The document focuses on the dry and misleading debt/GDP ratio rather than on the serviceability of the debt and helping Greece to go back on a growth path. If the current price of the post-PSI Greek debt is correct then the total Net Present Value of the Greek debt is ¼ of 350billion or 42% of GDP. Lower than the 60% set by the Maastricht treaty. Focusing on the debt/GDP in 2022 is missing the forest. Troika is spending a disproportionate amount of time trying to make their excel pivot table work with Harry Potter spells.  In any case let’s briefly look at the main points of this document:
The money would be given after the 3rd of December and possibly in installments.
Troika set two prerequisites for considering the disbursement of the money

  • Segregated account with the Bank of Greece. The account that was created by law in March 2012 would be used to receive the EFSF or any other disbursements and pay the creditors of Greece. Moreover, all the proceeds from the so-called privatizations would go directly to this account to pay off Greece’s creditors. Any payments from this account are subject to prior reporting to the EFSF. Talking about sovereignty loss…..This condition apparently has been fulfilled by Greece. 
  • The other prerequisite or prior action was the passing of laws and ministerial decrees that complies Greece with most of the MOU demands. This too has to a great extend been fulfilled by Greece.

Tuesday 20 November 2012

Greece. The Endgame?

Δημοσιεύτηκε Ελληνικά στο News247

In the next few days we would know the exact timetable of when the Troika is going to release the 44 or so billion to Greece. Just as a reminder this is the money that Greece was supposed to get right after a successful PSI and implementation of reforms plus the next two installments.  The delay was due to the unnecessary double elections that were caused by Mr Samaras (4th PM since 2010) in his efforts to put the premiership on his otherwise lame and vacuous CV.  There is no doubt that Greece is going to get this money perhaps with some more strings attached to it.

Would this money be enough to save Greece? Would this money be enough to save the coalition government in Athens and Mr Samaras? These are some of the questions that are being asked. Let us ponder for a while.

Monday 12 November 2012

Helping Greece. The options.

In many ways the Greek government managed to deliver in its promises. The 3rd in line MOU was voted with 153 out 300 MPs and the budget was passed with even greater majority. Now all that remains is to see the resolve of the coalition to implement the law and save Greece from exiting the Eurozone. Europe must now stop playing games on the back of Greece. It is increasingly worrisome that Europe hits the “Greece crisis” button every time there is danger in Spain or other European countries. It seems that Greece is being used as a decoy in the war to deflect attention from the more significant problems of Spain and Italy. The so called sustainability of debt analysis is just a load of gobbledygook. None of the forecast or scenario analysis that was done materialized. In fact, most analysts and even policy makers knew that the PSI restructuring was not done to make the Greek debt serviceable. In any case, it was done and now we are back were we started. So what next? Another haircut to the post-PSI bonds? An OSI restructuring? A “silent” rollover of the debt? Here we look at the options.

Monday 5 November 2012

Greeks struggle for new MOU

It is November, barely hours before the most important elections in the world and guess who is making ripples once more. Yes you guessed right, Greek politicians. It is not Obama or the American elections but the completely unknown entity of Mr Roupakiotis, Minister for justice of the Hell.Republic. This morning Mr Roupakiotis refused to place his signature in the new MOU to be presented to the parliament. Without his signature the Greek government could not go to the parliament. Thankfully he was persuaded to change his deranged mind and everything is apparently, back on track.

But this is a sign of the times. Greece is literally hanging by the thinnest of threads. One false move and it is over. Currently the government consists of three parties that were supposed to form a coalition in order to exorcise the exit scenario. Instead we have one more of the same. Delays upon delays and political posturing to the last second.