Posts by "catnip"

The workaround is apparently accepted. It is basically a loan guarantee which becomes active if Greece fails to raise funds needed for roll over etc. IMF participates ( however I see no strcit commitment by IMF just a proposal) at cost of 3.26% .
The key however is
The lack of clarity regarding the mechanism for timely external financial support may have hindered Greeces access to market finance at affordable cost and hence further undermined confidence in the capacity of the government to meet its fiscal targets, Fitch said in an e-mailed statement.

EU has indeed no mechanisms established to react in real time to instabilities. Instead EU and local govts spent months debating the role of speculators.
One could expect EUR/USD to break over 1.35 and reach up to 1.36 JPY and GBP getting weaker and 10 year note yield to rise above 4%. But it won't last long, until May at most.

Yes there is. Kitco's Jim Willie, a USD perma bear, writes interesting thesis on how UST yields are capped ( artificially) with interest rate swaps. I consider to give his Hat Trick Letter a try.

The rumors re borrow at euribor + some hundred basis points is quantitative easing. If that qe is going to come it MUST be for all Euro members. And that is a very crucial point. It is not true that only FED BOJ BOE has been shoring up liquidity ECB did so in the same scale. The expectation in qe is, if it is to happen at all, that the industrially less developed PIGS could buy on credit industrial products from the economically strong. But how could that work if EU demands them to bring down debt to 3% of the respective GDP? I think it cannot. If it is not catch-22 it is the construction of a inflationary spiral. This
at the same time as FED tightens can only be a temporary lift of EUR.

Ok it is almost official: quantitative easing. EU banks are now supposed to buy Gr bonds with 4% premium to German bunds ( 10 y ) and dump the stuff at ECB's assets. Thereby EU banks get rid off
supposedly non perfoming GR bonds which they already hold.
Next logical step were to bring workload outsourced to China and Eastern Europe to Greece...but that won't happen. So wait for the next shoe to drop it won't be long.

I said EUR/USD may recover to 1.34 and so far it did. However I do NOT see any kind of bailout strategy so far it is all endless talk. The Greece problem is not Greece, it is unimportant. The big problems are
failed or just missing Eur zone common economy politics ( how could Greece Spain Portugal compete
with France and Germany ... with olives and red wine? )
the Maastricht and other treaties do not allow a bailout
so the focus is at the "constitution" of the Euro.
If there is a kind of qe ECB of G bonds the problem is still unsolved. Unless there is recovery of economy it will stay in focus.