World economy talk

[Monseratto]

EUR/USD 1.3161 -0.0232

Dow 10,991.99 -213.04 -1.90%

Oil 81.74 -0.70 -0.86%

The only one that wasn't red...

[Monseratto]

Even Greek citizens have lost faith and are moving out...

Greek banks hit by wealthy citizens moving their money offshore

Greek banks are being hit by a wave of redemptions as the country's most wealthy citizens and corporations look to move their money offshore or to international financial institutions perceived as safer homes for their assets

[More than €3bn (£2.6bn) of deposits held by Greek households and companies left the country in February, while in January about €5bn of deposits were moved out, according to the latest figures available from the Bank of Greece.

Switzerland, the UK and Cyprus have been the largest recipients of the money, with the wealthiest Greeks looking to move their deposits to Swiss banks accounts to escape the more punitive tax measures many fear will be introduced in the wake of the country's economic crisis.

John Raymond, a banks analyst at CreditSights, said that on a visit to Athens last week capital flight was the number one issue worrying most Greek bankers. "The banks themselves are concerned by it because they can't get funding elsewhere at the moment," he said.

"Greek banks won't be able to increase lending volumes if deposits don't increase, and a continued deterioration in their deposit base will lead them to cut back lending even more, stifling real economic growth."

Greek Stock Market

The funding crisis is finally becoming a stock market crisis. Greek bond pricing service HDAT has suspended all bond trade indications. The banking sector is now down 17%.

[Monseratto]

Fear Gauge

[uls]

i've been following Greece since late last year

this is one freaking slow motion train wreck

anyway, the problem isnt only the losses to be faced by holders of Greece bonds (most of them European banks)

it's the contagion effect

bank runs will not stop at Greece

people in Portugal, Spain, Italy could also pull money out of their banks

the market is already making it more expensive for other EU countries to borrow money

that's contagion

[uls]

Fear Gauge

the VIX goes up when there's selloff in equities

like last night

during the equities meltup, sobrang baba ng VIX

[uls]

Ohayou gozaimasu

[uls]

last night in the futures market



in a sea of red, only 3 green -- Gold, USD, JPY

no better example of flight-to-safety

[tidus1203]

Could this be another Asian financial crisis type of crisis but this time in the Eurozone? Very devastating yan and for believers of so-called W recovery this could be the trigger...

[uls]

no doubt the EU is in crisis right now

question is how bad things are gonna get

there are people who say Greece is so small it doesnt really matter in the grand scheme of things

well, it's not actually Greece that we're really concerned about...

it's the contagion effect... the global financial system is highly interconnected

if holders of Greece debt suffer losses, entities that do business with them will be affected, and so on

and bond investors will reprice ALL sovereign bonds

specially bonds of higher risk borrowers (like the Philippines)

it short, it can go global

we already see the effect today in Asia:

Stocks Fall, Asia Default Swaps Climb on Greece, Portugal Debt
http://www.bloomberg.com/apps/news?p...nDLz_o84&pos=1

April 28 (Bloomberg) -- Stocks slid worldwide for a second day and the cost to insure against bonds losses rose to a two- month high after credit-rating downgrades of Greece and Portugal fueled concern about sovereign defaults. The euro strengthened from a one-year low against the dollar.

The MSCI Asia Pacific Index declined 1.5 percent to 125.28 at 1:17 p.m. in Tokyo after the Standard & Poor’s 500 Index lost 2.3 percent, the most since February. The cost of protecting Asian bonds from default jumped to the highest in two months. The euro traded at $1.3211 from $1.3145 in New York trading. S&P 500 futures rose 0.2 percent.

The Markit iTraxx Asia index of credit-default swaps on 50 investment-grade borrowers outside Japan jumped 10 basis points to 110.5 basis points as of 7:50 a.m. in Singapore, its highest since Feb. 26, according to Deutsche Bank AG and CMA DataVision.

The Markit iTraxx Australia index rose 10 basis points to 98, the highest since Feb. 19, according to Nomura Holdings Inc. and CMA. The Markit iTraxx Japan index jumped 8 basis points to 106, according to Morgan Stanley. The jump was the biggest since Feb. 5 and puts the index on track for its highest close since April 1, according to CMA.

last night, i posted tumaas ang Philippines CDS

here's a report:

http://asia.news.yahoo.com/rtrs/2010...s-7318940.html

The Asia ex-Japan iTraxx investment-grade index <ITAIG5Y=MP> moved out 5 basis points to 100/102 bps. The Thomson Reuters Index of Asia emerging credit was quoted at 119 on a simple average basis, and at 111.11 on a weighted average basis.

Sovereign credit default swaps were mostly wider with Philippines <PHGV5YUSAC=MG> 8 bps wider at 160/168, China <CNGV5YUSAC=MG> 2 bps wider at 65/68 and Thailand <THGV5YUSAC=MG> 12 bps wider at 133/139.

[uls]

Greece govt bans short selling

Greek Stocks Regulator Bans Short Selling From Today to June 28
http://www.bloomberg.com/apps/news?p...sDIec2vs&pos=6

April 28 (Bloomberg) -- Greece’s securities regulator banned short selling on the Athens stock exchange for two months from today after shares slumped yesterday and Standard & Poor’s Ratings Services downgraded the nation’s credit rating to junk.

“The Capital Markets Commission, taking into account the extraordinary conditions prevailing on the Greek market, decided a ban on short selling on the Athens exchange,” the Athens- based Hellenic Capital Market Commission wrote in an e-mailed statement today. The ban is effective today through June 28, it said.

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HDAT (the Greece electronic bond trading system) might not open today

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Lisbon stocks crashing

[james00112233]

Oil slides to near $82 in Asia on Greece debt woes

http://www.gmanews.tv/story/189578/o...eece-debt-woes

[uls]

sentiment has turned

Greece CDS has tightened from over 900bps to below 700bps in just a matter of hours

market probably reacting to unconfirmed reports that IMF-EU will increase Greece bailout fund to 120B euros

[uls]

S&P downgrades Spain

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[tidus1203]

April 30 (Bloomberg) -- Spain’s unemployment rate rose above 20 percent for the first time in more than a decade, undermining Prime Minister Jose Luis Rodriguez Zapatero’s fight to cut the euro region’s third-largest budget deficit.

http://www.businessweek.com/news/201...-update1-.html

Paktay na! How can you try to trim deficits if 1 of every 5 people DON't PAY TAXES and on top of that the Europeans have a very nanny state economy compared to the US and Asia. They can't just say NO to unemployment benefits! Greece and Portugal together is only 5% of the Eurozone economy pero itong Spain 4X bigger yan the Greece!

[uls]

yep

problem talaga Eurozone, dude

they haven't even bailed out Greece yet

Greece has debt maturing May 19

malaking chance the IMF-EU loan will be ready for Greece before that date

but after that, ano na?

Greece has a more debt coming due after that

are they gonna provide more money to Greece?

Portugal pa... Spain pa...

the IMF-EU can't bail out everyone

sooner or later something has to give

will someone have to leave the EU?

will the EU break apart?

will the currency survive?

[uls]

Gold



Gold price is at its highest for the year

[Monseratto]

What if the Germans left the Euro and goes back to the ole DM instead of waiting for it to be dragged down...

[tidus1203]

Unlikely. Germany is one of the two brains behind the EMU along with France which was done so they can compete effectively with the US in the international markets. More likely kung may mawawala yung mga mahihina ang tatangalin!

[uls]

possible but unlikely scenario

it is to Germany's advantage if it abandons the Euro and goes back to the DM

Germany will only get dragged down by other EMU countries if it sticks with the euro

[uls]

the big fat Greek bailout

EU + IMF loan for Greece = 110 billion euros over 3 years

(EU = 80 billion, IMF = 30 billion)

around 30 billion will be available for this year

BUT the bailout has to pass through EU member parliaments first... where there's strong public resistance in Germany

Greece has 8.5 billion euros in debt coming due May 19