Beware Of Greeks Bearing Bonds

Here is the article by Michael Lewis on the Greek crisis and its origins. A very good read.

Alekos Papadopoulos’ Truths

Still, after more than 12 months since the beginning of the crisis in Greece, Greeks do not want to realize the situation they are in. Alekos Papadopoulos though, ex minister of finance, takes up the role of letting the public know how bad the situation is in Greece – something the politicians still do not want to reveal to the public -- and what is needed in order to to have a chance after many years of austerity and recession. Here is a must read article of a short version of  Alekos Papadopoulos talk at ELIAMEP, in Greek.  The whole speech can be found here. Some of the measures he proposes are:

“Σύμφωνα με μελέτες, το 30% περίπου του σημερινού κράτους είναι περιττό. Γι’ αυτό πέρα από τις καθολικές αποκρατικοποιήσεις των δημοσίων επιχειρήσεων προτείνω όλως ενδεικτικά την άμεση κατάργηση τμημάτων πανεπιστημίων και ΤΕΙ, δημοτικών επιχειρήσεων, ατροφικών νομικών προσώπων δημοσίου και ιδιωτικού δικαίου, άεργων διπλωματικών αντιπροσωπειών, στρατοπέδων, συγχώνευση μητροπόλεων, κατάργηση απολιθωμένων κρατικών υπηρεσιών, αποκεντρωμένων υπηρεσιών και γενικών γραμματειών διαφόρων υπουργείων. Περιορισμό του μεγάλου αριθμού στρατηγών, ναυάρχων, πτεράρχων και ταξιάρχων των ενόπλων δυνάμεων και των σωμάτων ασφαλείας, περιορισμό του πολυάριθμου διδακτικού προσωπικού με αύξηση των ωρών διδασκαλίας, δραστική περικοπή κατά 70% τουλάχιστον των πολυάριθμων Γενικών Διευθυντών και Διευθυντών υπουργείων και οργανισμών, δραστική μείωση του μεγάλου αριθμού των αντιπροέδρων των Ανωτάτων Δικαστηρίων και τέλος εξορθολογισμό ή κατάργηση και άλλων πολυάριθμων αφανών δημοσίων καταλυμάτων, τα οποία περιθάλπουν χρόνια τώρα τον κρατικό ανορθολογισμό”.

Two Opposite Articles On WSJ

Here are two opposite articles on WSJ published on the same day. The first one, accuses the FED’s policy for bringing into a difficult position Brazil and the rest of the world, and even accuses the U.S. for mindlessness and purposeful action to damage the other countries. The second one, explains that buying medium to long-term Treasuries is a valid monetary policy of the FED in order to stimulate the economy. The first one is written by a journalist. The second one by Alan Blinder, economics professor at Princeton. Who speaks logic is your call. Just read them.

World’s Debt

The above picture, published in the Economist shows the levels of government debt in 1932 and 2009. Another very interesting interactive page provided also by Economist, is the one that shows the levels of debt as well as the the measures of debt per person and the debt as % of GDP, for the globe for the last 11 years. It can be found here.

The Evolution Of The Greek Debt From The 60s

Greece’s 2010 Deficit At 9.3%

Greece’s deficit for 2010 has been revisited upwards to 9.3%, much higher than the 7.8% target for 2010. An article in Greek.

China’s Dagong Credit Rating Firm Lowers U.S. Credit Rating

China’s Dagong credit rating firm lowers U.S. credit rating from AA to A+. At the same time Moody’s rates the U.S. credit at AAA, the highest credit rating according to the same firm. You can read about today’s developments on Bloomberg, on Barrons, on MarketBeat and other sources.

Even though the reasons why the credit rating of the U.S. may come under pressure is self evident, it is interesting to see how the articles treat the downgrade by the Chinese firm. They clearly state that their downgrade may be politically motivated and connected with the exchange rates war that is currently ongoing.

Bloomberg’s article mentions that Dagong’s application to become a Nationally Recognized Statistical Rating Organization in the U.S. was denied by the SEC. And Barron’s article mock’s the logic of Dagong’s report that the U.S. has been using the “virtual” financial economy to improve its GDP numbers.

El-Erian On Bloomberg About Greece

In a conference organized by the magazine Economist El-Erian, the CEO of PIMCO, talked about the choices of Greece and the likelihood of default. The Bloomberg article can be found here. In El-Erian’s own words:

“It’s in Greece’s interest to default as long as you can contain the contagion to other countries and it is done through orderly restructuring and repricing to retain competitiveness. Like Latin America’s “lost decade” in the 1980s, the alternative doesn’t promise growth and employment generation,” he said.

“I have never seen an 11 percent adjustment on the fiscal side being delivered” under the current program’s assumptions, said El-Erian, who worked at the IMF for 15 years. “Eleven percent is heroic.”

“The fiscal adjustment that Greece needs to do is unprecedented,” Giada Giani, senior European economist at Citigroup Inc., said at a conference in Brussels today. “There is a limit to the amount of fiscal tightening a country can bear and support without the tightening becoming self-defeating, so detrimental for economic growth that it doesn’t really deliver an improvement.”