Thread: Greece given Ultimatum

oh oh, sounds like the Greek PM plan has backfired,

Europe's Greece Ultimatum
France, Germany Say the Nation Must Decide Whether to Stay in Euro or Go

Europe Gives Greece an Ultimatum - WSJ.com

CANNES, France—Europe's leaders, making plain that they've reached the end of their patience with Greece, demanded that the beleaguered nation declare whether it wants to stay in the euro currency union—or risk going it alone in a dramatic secession.

"Does Greece want to remain part of the euro zone or not," German Chancellor Angela Merkel said. "That is the question the Greek people must now answer."

French President Nicolas Sarkozy said the Greeks would get no more euro-zone rescue aid—"no French taxpayer money, no German taxpayer money"—until the question is answered. Without aid, Greece would be bankrupt within weeks.

The extraordinary rupture with the rest of Europe—whose leaders have insisted for months that an exit from the currency union is simply inconceivable—follows Greek Prime Minister George Papandreou's stunning decision Monday to call a referendum on his country's bailout.

what seemed impossible last week is now becoming possible, Greece out of the EURO

legally and financially not sure how they can do it though, Greece have Germany and France by the balls and they know it

The next 8bn euros of rescue loans will be withheld from Greece until after its referendum on the eurozone rescue plan, European leaders say.

BBC News - Bailout money withheld from Greece

Originally Posted by Butterfly

oh oh, sounds like the Greek PM plan has backfired,

Europe's Greece Ultimatum
France, Germany Say the Nation Must Decide Whether to Stay in Euro or Go

Europe Gives Greece an Ultimatum - WSJ.com

CANNES, France—Europe's leaders, making plain that they've reached the end of their patience with Greece, demanded that the beleaguered nation declare whether it wants to stay in the euro currency union—or risk going it alone in a dramatic secession.

"Does Greece want to remain part of the euro zone or not," German Chancellor Angela Merkel said. "That is the question the Greek people must now answer."

French President Nicolas Sarkozy said the Greeks would get no more euro-zone rescue aid—"no French taxpayer money, no German taxpayer money"—until the question is answered. Without aid, Greece would be bankrupt within weeks.

The extraordinary rupture with the rest of Europe—whose leaders have insisted for months that an exit from the currency union is simply inconceivable—follows Greek Prime Minister George Papandreou's stunning decision Monday to call a referendum on his country's bailout.

Amazing it's taken so long for them to call the Greek bluff. The referendum was just another stalling tactic; like all the other stalling tactics the Greeks have tried.

Throwing good money after bad has never been a sound practice....what made the EU think it had changed?

Greece should have been ex-communicated from the Eurozone/EU right after it was discovered that they had entered under false pretenses. What kind of "union" is it when members are allowed to get away with shit like what the Greeks pulled. Mai pen rai????

it's also possible that it's their passive aggressive way of saying to EU members that they want out of the EURO, but France and Germany are not letting them

I see it differently. Merkozy seem here to accept that a referendum is going to provide a final answer. (Rather than saying - 'you must not have a referendum' - which felt like the initial reaction)

I presume all political parties in Greece will back acceptance of the Eurozone package in whatever referendum emerges.

^ that's the very optimistic version and how I read it first,

but the way it was done by the Greek PM, not sure if greeks want to stay in the EURO and the PM might go for an angle we don't know yet and find out later, like he had in the past

maybe the referendum is a polite way to say "no fuck you very much" to the EURO and EU members bailout package, something the PM couldn't do personally

I tend to think the Greek PM is simply trying to protect his job, by allowing the electorate to decide on this issue. He is probably indifferent about the Eurozone, but would still quite like to keep his premiership whatever decision is taken.

^ it's not sure he will have a job until the referendum, there could be an early election if opposition go ahead with their plan

he did something very foolish, should have disclosed it first, knew the reaction from Mersarko would have been "fuming"

I suspect he is trying to provoke a "reboot" of the whole debt issue, that is a full default. Technically, he is right, the full default of the debt is a much better plan for Greece, why wouldn't he do it ?

Originally Posted by Butterfly

he did something very foolish, should have disclosed it first, knew the reaction from Mersarko would have been "fuming"

He just did disclose it.

Yes he knew they would fume. How could he disclose it any earlier? The Eurozone decisions were only taken last week.

In countries with parliamentary or democratic systems, they have to do things like this. He alone can't arbitrarily decide to quit the Euro, or reinstate the Drachma. He and those in similar elected roles do not have the authority.

Originally Posted by Butterfly

the full default of the debt is a much better plan for Greece

Have you thought this thru'? Maybe you are right, but you have to factor in the fact that Greek borrowing costs would be very high after default, with an obviously depressing economic effect for several years. They would no longer have the safety net of euro borrowing costs, having been kicked out or resigned.

Personally however, I'm all for it- nothing to do with Greece. Turf out the rotten apple, and let the banks take their loss on the chin.

Originally Posted by sabang

that Greek borrowing costs would be very high after default, .

But if they default in full, they won't have any borrowings.

And in five years time, some young tyros in Investment Banking and the media will trumpet 'New Greece' - after some miniscule changes take place - and lenders will start lending again.

It will take time to organise a referendum, in the mean time Greece cannot pay its police force, teachers , doctors or any civil servants, no fuel at the pumps, no lpg,

They may no be so keen to leave the EU after a Christmas in the dark.

Prime Minister George A. Papandreou of Greece emerged from a meeting with Europe’s leaders here on Wednesday pledging to hold a referendum on a new European debt deal on Dec. 4 or 5.


.....
The two leaders also said that no more aid would be given to Greece until after the referendum. This would include the next $11 billion installment of aid; Greek officials have said that without the additional funds, the country will run out of money by mid-December....

http://www.nytimes.com/2011/11/03/wo...bt-crisis.html

Originally Posted by Butterfly

I suspect he is trying to provoke a "reboot" of the whole debt issue, that is a full default. Technically, he is right, the full default of the debt is a much better plan for Greece, why wouldn't he do it ?

the more I think about it now, the more I think they have every interests to default for obvious reasons, they could renegotiate the debt under their own terms, and go for the full 75% or even 90% discount. Until now, Merksarko were there to protect "debt holders" interests and were hard negotiators. With a full default, everything is on the table and we are in a full reset mode, debt holders will have no choice but go along with what Greece has to offer, and that could mean 90% discount on the debt.

Originally Posted by OhOh

The CDS holders are unable to pay as they have no cash or assets of "value" and if they try to sell any they have, the "value" dissapears.

CDS holders don't pay, they hold the "policy", you mean the CDS issuers. CDS are typically issued by CDOs so depending on the tranches and how much cash those CDOs investors have put up in the tranches or how badly the tranches have been "depleted" already for other poor investments, it could held. The total is quite small actually. Much smaller than the Subprime mess.

Originally Posted by The_Ghost_Of_The_Moog

He just did disclose it.

that's not disclosing it, that's making a surprise announcement. You disclose before or during the negotiation, not after. It's plainly dishonest what he did.

Originally Posted by The_Ghost_Of_The_Moog

He alone can't arbitrarily decide to quit the Euro, or reinstate the Drachma. He and those in similar elected roles do not have the authority.

quite right, and I suspect this might be what he is trying to do, refuse the bail out and the EURO through a referendum, which would be the only way to do it. See my previous post about it.

Originally Posted by Bower

It will take time to organise a referendum, in the mean time Greece cannot pay its police force, teachers , doctors or any civil servants, no fuel at the pumps, no lpg,

They may no be so keen to leave the EU after a Christmas in the dark.

apparently the next debt payment is expected around mid december,

Originally Posted by Butterfly

Originally Posted by OhOh

The CDS holders are unable to pay as they have no cash or assets of "value" and if they try to sell any they have, the "value" dissapears.

CDS holders don't pay, they hold the "policy", you mean the CDS issuers. CDS are typically issued by CDOs so depending on the tranches and how much cash those CDOs investors have put up in the tranches or how badly the tranches have been "depleted" already for other poor investments, it could held. The total is quite small actually. Much smaller than the Subprime mess.
.

Not CDOs here. Nor tranches.

These are sovereign credit default swaps - written on the Greek sovereign bonds. Not sub prime linked CDOs where a basket of various risks is split up into tranches.

They may or they may not be able to have this referendum within 6 weeks but it took the Euro zone countries so long to come up with a plan. They want China's help but this can hardly be encouraging, or does it just give China a stronger hand ?

Surely Greece only have 2 options, the hard way with EU help or the very hard way on their own ?

Originally Posted by Butterfly

what seemed impossible last week is now becoming possible, Greece out of the EURO

legally and financially not sure how they can do it though, Greece have Germany and France by the balls and they know it

I am willing to bet a fair sum of money that Greece stays in the Eurozone, no matter what.

Originally Posted by The_Ghost_Of_The_Moog

Not CDOs here. Nor tranches.

These are sovereign credit default swaps - written on the Greek sovereign bonds.

CDS are privately issued, and you need a CDO for that, it doesn't matter the underlying instruments, sovereign or corporate bonds is only the underlying, not the CDS per se.

It's like talking insurance contracts without mentioning who is the insurance company, insurance companies needs "equity reserve" to absorb future insurance contract losses. Same with CDS, you need the "tranche" structure because of the particular risk involved.

do you think Somchai can actually insure anyone no matter what he says on the contract ? you need a sophisticated investment vehicle for those CDS, and there are CDOs, and that means "tranches".

Originally Posted by The_Ghost_Of_The_Moog

Not sub prime linked CDOs where a basket of various risks is split up into tranches.

CDOs had more than subprime, and the issue wasn't only subprime but the PSA models used to compute prices on those CDOs tranches, they were becoming unstable and unreliable, basically assumptions made for the quality rating and spread of those tranches couldn't hold eventually.

If a fund is issuing CDS (even for risk free sovereign debt issues) by using a simple equity structure (single equity tranche) then it's foolish to even assume they could return anything to their investors since they have no structural protection.