The director of Communications at Standard & Poor's, has cleared up the definition of "selective default" for us, after the ratings agency said Greece was likely to be downgraded to it: An obligor rated 'SD' (selective default) or 'D' has failed to pay one or more of its financial obligations (rated or unrated) when it came due. An 'SD' rating is assigned when Standard & Poor's believes that the obligor has selectively defaulted on a specific issue or class of obligations, excluding those that qualify as regulatory capital, but it will continue to meet its payment obligations on other issues or classes of obligations in a timely manner. ...To make a long story short, it means that Greece would default on bonds, but not other obligations... Louise Cooper of BGC Partners reckons that traders "clearly believe" the comments from politicians that a deal will still be done. She wrote today that: Equity and bond markets have barely reacted to the news today that Athens will have to go back to bondholders and like Oliver Twist, ask for more. Very publicly the head of the IIF said at the weekend that they had offered the "maximum" concessions - markets are taking the view that this was a negotiating position and the game of brinkmanship will continue. Cooper also pointed to the lingering effects of the European Central Bank's offer of almost €500bn of cheap loans last month. This liquidity injection is helping to push down bond yields (as banks buy up government debt). The Long Term Repo Operation (LTRO) is being compared to Quantitative Easing which had such a beneficial on the stock market in the US, suggesting there may be more to go. Today's debts auctions went smoothly. Spain sold €2.5bn of short-term debt at sharply lower borrowing costs, and received bids for €13.5bn worth of debt. The yield on Spanish three-month debt dropped to 1.285% (down from 1.735% at the last auction of this type), while it got its six-month paper away at 1.847% (down from 2.435%). The Netherlands, meanwhile, showed the value of a solid AAA credit rating. It sold thirty-year bonds at a yield of just 2.690%, down from 4.03% at its previous auction nine months's ago. The Netherlands also sold €495m of 2013 bonds at yield of just 0.074%, or almost zero. The Wall Street Journal is reporting that "investors, economists and politicians" fear the Portuguese government may not be able to access affordable borrowing in 2013, when it is due to return to the financial markets.
Access Investments-Building Awareness - European Union-ROMANIA
Wednesday, January 25, 2012
The director of Communications at Standard & Poor's, has cleared up the definition of "selective default" for us, after the ratings agency said Greece was likely to be downgraded to it: An obligor rated 'SD' (selective default) or 'D' has failed to pay one or more of its financial obligations (rated or unrated) when it came due. An 'SD' rating is assigned when Standard & Poor's believes that the obligor has selectively defaulted on a specific issue or class of obligations, excluding those that qualify as regulatory capital, but it will continue to meet its payment obligations on other issues or classes of obligations in a timely manner. ...To make a long story short, it means that Greece would default on bonds, but not other obligations... Louise Cooper of BGC Partners reckons that traders "clearly believe" the comments from politicians that a deal will still be done. She wrote today that: Equity and bond markets have barely reacted to the news today that Athens will have to go back to bondholders and like Oliver Twist, ask for more. Very publicly the head of the IIF said at the weekend that they had offered the "maximum" concessions - markets are taking the view that this was a negotiating position and the game of brinkmanship will continue. Cooper also pointed to the lingering effects of the European Central Bank's offer of almost €500bn of cheap loans last month. This liquidity injection is helping to push down bond yields (as banks buy up government debt). The Long Term Repo Operation (LTRO) is being compared to Quantitative Easing which had such a beneficial on the stock market in the US, suggesting there may be more to go. Today's debts auctions went smoothly. Spain sold €2.5bn of short-term debt at sharply lower borrowing costs, and received bids for €13.5bn worth of debt. The yield on Spanish three-month debt dropped to 1.285% (down from 1.735% at the last auction of this type), while it got its six-month paper away at 1.847% (down from 2.435%). The Netherlands, meanwhile, showed the value of a solid AAA credit rating. It sold thirty-year bonds at a yield of just 2.690%, down from 4.03% at its previous auction nine months's ago. The Netherlands also sold €495m of 2013 bonds at yield of just 0.074%, or almost zero. The Wall Street Journal is reporting that "investors, economists and politicians" fear the Portuguese government may not be able to access affordable borrowing in 2013, when it is due to return to the financial markets.
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The International Monetary Fund has slashed its growth forecasts for most major countries in 2012 and urged governments to adjust the "rhythm" of their austerity measures to avoid derailing economic recovery.
In an update of the forecasts in its autumn World Economic Outlook, the IMF said output in most major economies were, "decelerating but not collapsing". It pinned much of the blame on the debt crisis in the eurozone, where it expects GDP to shrink by 0.5% during this year.
On the IMF's central projection, "most advanced economies avoid falling back into a recession, while economic activity in emerging and developing economies slows from a high pace." It is now expecting world GDP growth of 3.3% in 2012, down from the 4.1% it forecast in September.
Growth for the UK in 2012 will be a paltry 0.6%, the IMF says. That's a sharp reduction from the 1.6% the IMF was expecting in September – but similar to the 0.7% pencilled in by the independent Office of Budget Responsibility.
So we slowly get dragged back into recession (we're already there, some say) but the Crazy Cut Kids will say 'yeah, but it's all about the debt'. Except it isn't, or shouldn't be.
The International Monetary Fund has slashed its growth forecasts for most major countries in 2012 and urged governments to adjust the "rhythm" of their austerity measures to avoid derailing economic recovery.
what recovery?
Madame Tango tells European taxpayer to adjust to more of their tax going to banks insteadd of useful public services such as schools, hospitals etc.
In an interview ahead of a speech at the World Economic Forum in Davos, the 81-year-old said that for the first time in his career he was baffled by the current state of the market, and saw no way to avoid a violent crisis which at its worst could result in the total collapse of the financial system.
Known as the "man who broke the Bank of England" after betting against the pound on Black Wednesday in 1994, Mr Soros plans to use his Davos address to issue a stern warning that he now considers it "more likely than not" that Greece will default in 2012. And unless Europe's leaders do more to stop it, the euro is likely to collapse with a devastating impact on the rest of the world, he will add.
The financier compared the crisis to the collapse of the Soviet empire and the Great Depression, adding that the old belief in the power of the market to prevent turmoil could no longer be relied upon.
He told Newsweek: "The euro must survive because the alternative – a break-up – would cause a meltdown that Europe, the world, can't afford. I'm not here to cheer you up. The situation is about as serious and difficult as I've known in my career. We are facing now a general retrenchment in the developed world.
"The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system. We need to move from the Age of Reason to the Age of Fallibility in order to have a proper understanding of the problems."
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