Finland asks for bailout collateral from Greece...

Onward James · Aug 30, 2011

How smart is that? However, the other EU nations might also want collateral. And what would the assets be? Land? The Greek Parthenon? Olive fields? What do the recepients expect when there is a threat of default?

Little Finland is solvent, I think, but Portugal, big Spain, even Italy are not, evidently. So who is in good shape? Austria, Germany, France, maybe Lichtenstien, and Monoco.

Finlands Collateral Demand Leaves EU Faced With Rewarding Bailout Fatigue
http://www.bloomberg.com/news/2011-08-29/finland-collateral-demand-fueled-by-bailout-fatigue.html

waltky · Sep 21, 2011

Greece and European banks threaten world economy...

European Banks' Exposure to Greek Debt Erodes Market Confidence
September 20, 2011 - As Athens scrambles to meet the conditions for more bailout funds, alarm is also mounting about European banks that have lent Greece and other debt-strapped nations hundreds of billions of dollars. Some of the biggest lenders are located in Europe's two biggest economies: Germany and France.

Pushing a stroller on a weekday afternoon, 29-year-old Lucas Sulej ran an ordinary errand: he took out money at a bank machine in eastern Paris. But these days Sulej no longer takes his French bank, Societe Generale, for granted - not since Moody's cut its rating last week, partly because of its large exposure to Greek debt. "I have money in Societe Generale and maybe tomorrow it may disappear. Because you know the problems of Societe Generale," said Sulej.

Analysts say banking insurance and governments will protect ordinary European savers like Sulej. But the young father is not the only one concerned about the health of Societe Generale and other European banks which have lent hundreds of billions of dollars to debt-strapped governments like Greece. At issue, says Thomas Klau, head of the Paris office of the European Council on Foreign Relations, is not the downgrading of banks like Societe Generale - which overall still has a good credit rating. "The trouble is that the loss of confidence within the financial markets - but also within the core parts of the financial industry themselves - has now reached such proportions that any negative move can have extremely bad consequences," he said.

Analysts say part of the problem is a lack of transparency within Europe's banking sector and that is deepening the alarm in the markets. Simon Tilford is chief economist at the London-based Center for European Reform. "They don't know which banks are sitting on which debt, so they are becoming increasingly loathe to loan to European banks," said Simon Tilford, chief economist at the London-based Center for European Reform.

In a move to restore market confidence, major central banks around the globe agreed last week to inject dollars into Europe's banking system to fight fears it is running short of cash. But Tilford says the move is not enough. "All it does really is provide liquidity and that's useful, but the underlying problem is essentially a solvency one, in that there is an awful lot of debt that's going to get written off in Europe and that is going to impose very, very considerable losses on financial institutions," he said.

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waltky · Oct 3, 2011

Granny says it all gonna come tumblin' down like a house of cards...

Europe debt crisis: Greece teeters on brink of bankruptcy
October 3, 2011 - Greece revealed today that it is in more dire economic straits than envisioned when a 110 billion bailout deal was agreed to this summer, sparking concern that Europes debt crisis could deepen.

Greece is closer to default than previously thought, calling into question whether a second planned bailout will be enough to contain the European debt crisis and thus avoid plunging the world into another global recession. As finance ministers from the eurozone meet today in Luxembourg to address the debt crisis, Greece revealed that it is in even more dire straits than envisioned when international powers agreed to a 110 billion ($146 billion) bailout deal this summer.

Based on a draft budget sent to parliament today, Greece's deficit this year will be 8.5 percent of gross domestic product (GDP), well above the 7.6 percent outlined in the bailout deal. The higher deficit was chalked up to a deeper recession than forecast, which is projected to bring public debt to a whopping 172.7 percent of GDP by next year the worst ratio in the eurozone. Greece needs an 8 billion tranche from the 110 billion deal by mid-October to avoid bankruptcy, but that dispersal is not expected to be decided upon until an Oct. 13 meeting.

In addition to the Greek bailout, eurozone leaders are also pushing to expand a more general 440 billion rescue fund to 780 billion a move that received key backing from the German parliament last week. But even before today's gloomy news, experts cautioned that both the bailout and the rescue fund were no more than temporary solutions. What we are doing right now is buying time, said Ferdinand Fichtner of the German Institute for Economic Research in Berlin. Expanding the euro rescue fund, releasing more bailout money to Greece all that buys time. But in the end there will have to be a haircut, said Mr. Fichtner, referring to writing off a portion of the debt. Its the only solution for Greece.

A Greek raised in Germany
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Finland asks for bailout collateral from Greece...

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