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Thread: Portugal Suffering Greek Contagion Pressures EU Bonds

  1. #21
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    Re: Portugal Suffering Greek Contagion Pressures EU Bonds

    Spain downgraded, Europe debt crisis widens - Yahoo! Finance

    it appears part of the CONTAGION we were talking about

    another example of the EXISTENTIAL THREAT

    so sad

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    Re: Portugal Suffering Greek Contagion Pressures EU Bonds

    Quote Originally Posted by PeteEU View Post
    Actually Greece need to implement a tax system that actually takes in taxes to pay for stuff.
    PeteEU,

    I agree that revenue-raising measures will need to be part of any credible austerity package. But if the IMF's August 2009 projections of Greece's public debt rising to 800% of GDP by 2060 are correct, one will need fairly aggressive revenue increases and spending reductions to address Greece's fiscal imbalances.

    Cut their pension system? You want retired people to be living on the streets?
    No. If I came across that way, that was not my intent.

    One can hold today's retirees harmless with respect to actual cuts while reducing benefit payments for future retirees. One can means-test retirees to determine whose benefits would immediately be reduced and whose would be left as they are. One can peg annual pension growth to inflation less a given percentage to slowly work out the imbalances. There are many ways to smooth the transition in bringing pension benefits in line with what can be financed.

    As for the health system, it is so corrupt. In Greece you can pay your way ahead of others in the public system because the doctors take bribes. I suspect there is a lot of waste in the system due to this corruption.
    To the extent that waste, fraud, and abuse can be cleaned out of the system, that would reduce other cost-saving measures.

    But the biggest thing that Greece has to do, is to regain the trust of the world markets and nothing will change as long as there is no trust and that again comes back to corruption in government that resulted in false information about debt ratios and budget deficits to be fed to the world markets and the EU.
    I agree. I believe Greece will need to offer a credible and transparent fiscal consolidation program to begin to regain trust. I have confidence that the Euro Zone will be up to the challenge in addressing Greece's immediate financing challenge. But the outcome of such financial relief will depend on Greece's efforts to address its structural imbalances.

    As for Portugal, they are sadly being caught up in this along with other nations who are no where near the problematic economic situation of Greece. But as long as you can hedge against countries then speculation will hurt small countries that cant fight off the big speculators, which is what we are seeing yet again here.
    I believe some of Portugal's debt-related challenges are of a magnitude that warrants reduced credit ratings i.e., structural budget deficit of nearly 8% of GDP and an enormous current account deficit of around 9% of GDP. Worse, that current account deficit is projected by the IMF to grow to 10.2% of GDP in 2011.

    It is also ironic, that we never hear anything about Ireland.. their economic situation is far far worse than Portugal's, but never a peep about that.. odd no?
    As for Ireland, I believe what has spared Ireland, at least so far, is that the country is running a small current account surplus, even as its structural budget deficit is about the same as Portugal's and its gross public debt is a little less than Portugal's. Ireland is also projected to see much more significant growth than Portugal in 2011 (+1.9% vs. +0.7%).
    Last edited by donsutherland1; 04-28-10 at 01:57 PM.

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    Re: Portugal Suffering Greek Contagion Pressures EU Bonds

    Quote Originally Posted by donsutherland1 View Post
    I have confidence that the Euro Zone will be up to the challenge in addressing Greece's immediate financing challenge.
    well, isn't that encouraging

    the forums' finest financial professional is confident

    LOL!

    too bad the markets aren't as sanguine

    Obama concerned about Greek debt, monitoring closely | Reuters
    Last edited by The Prof; 04-28-10 at 02:31 PM.

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    Re: Portugal Suffering Greek Contagion Pressures EU Bonds

    Quote Originally Posted by PeteEU View Post
    Considering most US debt came under Reagan, Bush Sr. and Bush Jr. then well this comment is a load of horse manure.
    No doubt you'll be crowing that 5 years from now as well.
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
    "Fly-over" country voted, and The Donald is now POTUS.

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    Re: Portugal Suffering Greek Contagion Pressures EU Bonds

    bernanke agrees with the egghead

    too bad no one's doing anything about it

    Bernanke says prompt action needed on deficit - Yahoo! News

    "soon," "imminent," "short term..."

    my, my

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    Re: Portugal Suffering Greek Contagion Pressures EU Bonds

    oh, my

    orszag too

    UPDATE 1-W.House's Orszag warns of dangers of huge deficits | Reuters

    why do all the eggheads always obfuscate the obvious with ornate oratory?

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    Re: Portugal Suffering Greek Contagion Pressures EU Bonds

    Quote Originally Posted by The Prof View Post
    well, isn't that encouraging...

    too bad the markets aren't as sanguine

    Obama concerned about Greek debt, monitoring closely | Reuters
    An agreement on the terms of financing, size of financing, and Greek commitments will likely be reached soon. "It’s completely clear that the negotiations between the Greek government, the European Commission and the IMF need to be speeded up now," German Chancellor Angela Merkel stated earlier today.

    Given the growing gravity of the situation and rising risk of contagion, there is even a chance that an agreement might be reached before the markets reopen on Monday.

    What Greece does with respect to its structural fiscal problems is an entirely different proposition.

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    Re: Portugal Suffering Greek Contagion Pressures EU Bonds

    even the emasculated debt commission chimes in

    ?Debt Like Cancer? Addressed by Obama Commission on U.S. Debt - Bloomberg.com

    like a cancer, they say

    now, there's some plain language

    it certainly sounds serious

    so sorry

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    Re: Portugal Suffering Greek Contagion Pressures EU Bonds

    Quote Originally Posted by donsutherland1 View Post
    What Greece does with respect to its structural fiscal problems is an entirely different proposition.
    i know, you already said that

    at least a dozen times

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    Re: Portugal Suffering Greek Contagion Pressures EU Bonds

    Quote Originally Posted by donsutherland1 View Post
    PeteEU,

    I agree that revenue-raising measures will need to be part of any credible austerity package. But if the IMF's August 2009 projections of Greece's public debt rising to 800% of GDP by 2060 are correct, one will need fairly aggressive revenue increases and spending reductions to address Greece's fiscal imbalances.
    And that is based on what? That there is no reaction by Greece to put their house in order. How realistic is that? That is the problems with such projections and studies, they are about as relevant as last months news. They cant and never take into account any reaction by politicians to change things, and only see the doom and gloom.

    No. If I came across that way, that was not my intent.
    Okie.

    One can hold today's retirees harmless with respect to actual cuts while reducing benefit payments for future retirees.
    I agree, however that is not how it sounded and that is not how many right wingers sound when talking about such entitlements. Cut cut cut, without thinking of the consequences of such cuts. Every dollar/Euro you take out of entitlements is less spending by said group (especially the elderly), which means less growth and in fact I would claim higher overall costs.

    One can means-test retirees to determine whose benefits would immediately be reduced and whose would be left as they are. One can peg annual pension growth to inflation less a given percentage to slowly work out the imbalances. There are many ways to smooth the transition in bringing pension benefits in line with what can be financed.
    Yes. But you cant really peg annual pension growth to inflation less anything. That would make the existing pension worth less while prices are going up.. might as well cut the pension out totally and kick old people on the street then.. would be less painful and more humane. Nothing worse that hearing about elderly that are dead because they could not afford with their pensions to heat their homes or eat.

    I agree. I believe Greece will need to offer a credible and transparent fiscal consolidation program to begin to regain trust. I have confidence that the Euro Zone will be up to the challenge in addressing Greece's immediate financing challenge. But the outcome of such financial relief will depend on Greece's efforts to address its structural imbalances.
    And yet the markets and speculators forcing this to spread to nations who are in no way as bad as Greece. Some even have better debt ratios than most major economies around the world. Take Spain. 53% debt vs GDP, a budget deficit that is falling and lets not forget the last decade Spain had a budget surplus!.. yea they do exist. I dont deny Spain has its problems (20 unemployment) but so do most other nations out there. That is why I suspect speculation being a large part of the attacks against Portugal and Spain, especially with the lack of attacks against all countries that are in a similar boat.. UK, Ireland, Italy, and the US.

    I believe some of Portugal's debt-related challenges are of a magnitude that warrants reduced credit ratings i.e., structural budget deficit of nearly 8% of GDP and an enormous current account deficit of around 9% of GDP. Worse, that current account deficit is projected by the IMF to grow to 10.2% of GDP in 2011.
    And? Seriously, if you have this view then the UKs and US's credit rating should be slashed several points because they are far far worse off than Portugal and doing nothing to change course, something that Portugal is. The UK budget deficit is way into the double digits as is the US. The UK growth is barely above 0.. one could easily claim if it was not for Browns spending then the growth would be massively negative.

    As for Ireland, I believe what has spared Ireland, at least so far, is that the country is running a small current account surplus, even as its structural budget deficit is about the same as Portugal's and its gross public debt is a little less than Portugal's. Ireland is also projected to see much more significant growth than Portugal in 2011 (+1.9% vs. +0.7%).
    Last I looked Ireland had a debt vs GDP ratio of 65% and it had climbed from 25% to 65% in 2 year. The latest numbers from Ireland I can find say a 14.3% deficit on the state budget which is higher than the Greek and far far far higher than Portugal and Spain. Oh and that was a revised number by the Eurozone statistics office because the Irish did not .. lets say they pulled a Greece. On top of that the Irish are still having to bail out their banks.

    As for Irish growth.. will believe it when I see it. Ireland´s largest trading partner is the UK followed by the US. The UK accounts for 25% of the trade and the UK is not exactly a bastion of economic growth at the moment. And companies are fleeing the country for Eastern Europe due to Ireland having high wages. Dell, Intel and others have all announced they are leaving Ireland.

    On top of that Ireland has some of the highest external debt holdings on the planet.. something like 1300% of GDP I believe. Granted it is a stupid number since it includes private debt (a large portion). However the "projected" state debt vs GDP is to hit 90% by the end of 2011.

    So again, why is Ireland not being thrown in the same bucket as Greece? Is it just because their over all state debt is not over 100% yet?
    Last edited by PeteEU; 04-29-10 at 04:33 AM.
    PeteEU

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