[Aberlour10]

kenberg, on Mar 14 2010, 07:08 AM, said:

As to Greece, taking your request for comment at face value, I know even less about that crisis. But I get the idea that some of the psychology is the same. Apparently the normal retirement age in Greece is a few years earlier than in Germany, and a sizable portion of a rescue would involve money transferred from Germany to Greece. Some Germans, and other Europeans, are wondering why they should do that. Again the full analysis is immensely more complicated but the psychology is there.

Psychology plays in this special crisis enormous role. Greece needs at the moment from EU-partner like Germany more psychological support on the finacial markets than fresh cash. Several EU states gave such "signals" and the result was: the new greek state bonds over several billions € have been sold out within 60 minutes last week. The financial market tursted in these psychological signals of the European support.

[Winstonm]

Quote

I'm not all that interested in helping someone who has a bigger house than I have meet his mortgage payments. I am not interested in helping people who made bad investments recoup their losses. I hope that both the borrowers and the lenders can work this out themselves, because I doubt that much additional outside help will be forthcoming.

Ken,

We argued for totally unencumbered free markets, and then when those decisions produced massive losses we refused to allow laissez-faire to operate, and bailed out the failed institutions and their bondholders with public funds.

It is imperative to know the reasons behind the attempts to keep foreclosures to a minimum - the actual reason is to keep more home inventory from coming onto the market and further depressing home prices, (further diluting MBS values and causing another wave of bank write-downs) although prices are still 15-20% above historical norms.

Sometimes you are required to look back in order to know whose solution to trust.

[kenberg]

Aberlour10, on Mar 14 2010, 12:36 PM, said:

kenberg, on Mar 14 2010, 07:08 AM, said:

As to Greece, taking your request for comment at face value, I know even less about that crisis. But I get the idea that some of the psychology is the same. Apparently the normal retirement age in Greece is a few years earlier than in Germany, and a sizable portion of a rescue would involve money transferred from Germany to Greece. Some Germans, and other Europeans,  are wondering why they should do that. Again the full analysis is immensely more complicated but the psychology is there.

Psychology plays in this special crisis enormous role. Greece needs at the moment from EU-partner like Germany more psychological support on the finacial markets than fresh cash. Several EU states gave such "signals" and the result was: the new greek state bonds over several billions € have been sold out within 60 minutes last week. The financial market tursted in these psychological signals of the European support.

Sounds like good news. I'm glad to hear it.

[Gerben42]

Quote

Psychology plays in this special crisis enormous role. Greece needs at the moment from EU-partner like Germany more psychological support on the finacial markets than fresh cash. Several EU states gave such "signals" and the result was: the new greek state bonds over several billions € have been sold out within 60 minutes last week. The financial market tursted in these psychological signals of the European support.

This is really crazy because the public is okay with giving "psychological support" but do not want one cent of tax payer's money to flow to Greece. What bothers me most is why the governments promised measures to make the banking system more crash-safe and so far nothing happens.

[kenberg]

Winstonm, on Mar 14 2010, 03:47 PM, said:

Quote

I'm not all that interested in helping someone who has a bigger house than I have meet his mortgage payments. I am not interested in helping people who made bad investments recoup their losses. I hope that both the borrowers and the lenders can work this out themselves, because I doubt that much additional outside help will be forthcoming.

Ken,

We argued for totally unencumbered free markets, and then when those decisions produced massive losses we refused to allow laissez-faire to operate, and bailed out the failed institutions and their bondholders with public funds.

It is imperative to know the reasons behind the attempts to keep foreclosures to a minimum - the actual reason is to keep more home inventory from coming onto the market and further depressing home prices, (further diluting MBS values and causing another wave of bank write-downs) although prices are still 15-20% above historical norms.

Sometimes you are required to look back in order to know whose solution to trust.

Different people will have different reasons. The only justification that I bought into was that there really was a serious possibility of crashing th e whole system. A vague phrase surely, but ominous.

I am not a banker. Or a financial analyst. Or etc. Most people whose support is needed for any program are not bankers or financial analysts or etceteras. Do I trust Paulson, Geitner, Bernanke, those guys? Well, yes in the sense that I don't think that they are crooks. And I fully accept that they are proabably just generally smarter than I am and most certainly they are more experienced, better informed, better educated and so on in these matters. Still, basically they collectively said we need 800B or so to fix this, we gave it to them. Coming back and saying oops we need some more will not play well. This won't be because I think I know more than they do, but it still won't play well. If a plumber can fix a leak for $200 and I give him #200, I expect the pipes not to leak. If someone says they can fix the financial crisis for 800B, it's best if when they get the cash they fix the problem.

So I have no idea what happens next, but I suggest that the principals in all this figure out what to do without coming back for more cash.

[Aberlour10]

kenberg, on Mar 14 2010, 04:43 PM, said:

Sounds like good news. I'm glad to hear it.

Sure but its only the first success on the long and hard way out of this crisis.
EU expects consideration for their support....massiv cuts in all greek budgets, knowing Greece it can easily lead to serious social upheavals, street fighting, totally politcial destabilsation... I hope it wont happen.

[phil_20686]

Aberlour10, on Mar 14 2010, 05:03 PM, said:

kenberg, on Mar 14 2010, 04:43 PM, said:

Sounds like good news. I'm glad to hear it.

Sure but its only the first success on the long and hard way out of this crisis.
EU expects consideration for their support....massiv cuts in all greek budgets, knowing Greece it can easily lead to serious social upheavals, street fighting, totally politcial destabilsation... I hope it wont happen.

Greece will never seriously start to tackle its deficit problems until it gets serious about tax evasion. The vast majority of greeks to not pay the full taxes that they owe. The keep revenue streams off the books, and pay a lot in cash. Estimating these things is fraught with diffculty, tut the times suggested that the greek goverment was losing betweeny a quarter and a third of its tax revenue.

[Aberlour10]

I wonder a bit about the rare situation in there % of the private issued bonds is lower than % of the comparable goverment bonds. But ,it is the case in the USA at the moment, if we compare loans emitted by Berkshire, Protector & Gamble or Johnson & Johnson with US Treasury Bonds. The "risk add-on" is normally reversed or?