Question for Generali (Greece & Goldman)

Road_Hog

I see the Greek defence minister is (proposed) sacking and replacing all the chiefs of staff, in case of a military coup.

TruckerT

Road_Hog wrote: »

I see the Greek defence minister is (proposed) sacking and replacing all the chiefs of staff, in case of a military coup.

As I have posted before, take nothing for granted, and read the writing on the wall...

TruckerT

sabretoothtigger

Friday is a vote of confidence and Im not sure of a referendum.

Sounds to me like Goldman as a market maker contrived an inflated note of credit that favoured Greece. At a fixed point in time that value deflated, in the mean time Greece had used their enhanced status to borrow against this asset.
Wasnt the main thing that Goldman enabled them to join the Euro

Maybe Im thinking more of what Lehman did or that all these tricks are similar in their total effect. Prices shifted while value declines

Even with zero debt Greece would need to lend next year

Thats why its a bad solution probably. Austerity would be when they got no choice but to cut non essential spending, to me it cannot be when you are still increasing your debt.

None of the governments have arrived at this conclusion yet but at some point I expect politics gives way to reality and spending is halved maybe


I think the amount of gold reserves will at some point reflect in a countrys prospects and ability to trade on credit, etc When we are doing that not supposing it, we are closer to the end of the cycle


Fast cars and loose fiscal morals: there are more Porsches in Greece than taxpayers declaring 50,000 euro incomes

breadlinebetty

Wookster wrote: »

So Goldman helped Greece conceal the true extent of their borrowings.

Do you know exactly how? Through what mechanism this nefarious act was committed?

Wookster, why - and how - would Generali know? I don't understand why you assume he would know! lol

drc

breadlinebetty wrote: »

Wookster, why - and how - would Generali know? I don't understand why you assume he would know! lol

He is the fount of all knowledge on MSE.

Generali

drc wrote: »

He is the fount of all knowledge on MSE.

If you believe that you'll believe anything!

If someone asks me a direct question I'll give them a direct answer.

From your quote then I recall why I have that poster on ignore. I'd forgotten about that troll. I make a point never to read posts from posters on ignore.

lemonjelly

Generali wrote: »

Purch's explanation is closest to my understanding.

Governments, especially those with dodgy credit histories, often issue debt in foreign currencies usually Yen or US Dollars. However they need the cash in their own currency so they enter into a currency swap. This is simply where you agree 2 FX trades, one today to convert the USD to EUR and a future one dated when the debt is repayable to swap the currencies back so you can repay the debt.

What happened in the Goldmans deal is that the FX rates used were higher than market rates. That meant that Greece got more EUR on the first FX trade and agreed to repay more in future. This meant that Greece got more cash up front, flattering their net debt position as it meant the debt was unchanged but the cash in the bank increased. It is an oddity of national accounting that this works as I don't think it would for a company.

Is it dodgy? Probably. Illegal? I don't think so. Fiendishly clever? Damn right. Deals like this fill me with a mix of hatred and admiration.

Is it dodgy? Is it legal?

What about "is it ethical?";)

4Chickens

So supposing Greece defaults, I assume they would be kicked out of the European Union as well as the Euro Currency. But would they be kicked out of the United Nations?
The reason that I ask this is that after default the Greeks are going to be floundering a bit and if they get into real trouble, surely they can go cap in hand to the United Nations, IMF etc? or am I wrong about this.

gagahouse

4Chickens wrote: »

So supposing Greece defaults, I assume they would be kicked out of the European Union as well as the Euro Currency. But would they be kicked out of the United Nations?
The reason that I ask this is that after default the Greeks are going to be floundering a bit and if they get into real trouble, surely they can go cap in hand to the United Nations, IMF etc? or am I wrong about this.

No they wouldn't be kicked out of UN, don't see why it would follow after ejection from Euro or EU, they are separate organisations with very different structures and objectives.

The UN doesn't generally disburse money to stricken nations in this way, that is the job of the IMF - they can go to the IMF but the IMF would demand the austerity they have just rejected before giving any money so Greece is a bit fooked in that respect.

4Chickens

gagahouse

Thanks for the reply, 'fooked' made me chuckle.

I get this feeling though that it's like the Cuban Missile Crisis. Who is going to blink first?
Greece would appear to have nothing left to lose.
The EU will have a huge amount of egg on its face if Greece tells them to either b u g g e r off or demand a bigger reduction in the write off of debts along with less harsh austerity measures.

Who is going to blink first?