tag:blogger.com,1999:blog-4102429195693595750.post8281453984976039202..comments2024-02-24T19:10:00.395+02:00Comments on Sudden Debt: How To Restructure PIGS Debt - A Modest ProposalHellasioushttp://www.blogger.com/profile/03564511281240682625noreply@blogger.comBlogger16125tag:blogger.com,1999:blog-4102429195693595750.post-74845755620287396912011-01-23T10:59:42.422+02:002011-01-23T10:59:42.422+02:00re: a modest proposal
is there really too much a ...re: a modest proposal<br /><br />is there really too much a difference between the proposal of Mr. Swift and the loads of future obligations we put on our childrens future?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-65045117598243446772011-01-13T19:49:53.594+02:002011-01-13T19:49:53.594+02:00this may trigger restructuring clauses in CDS, as ...this may trigger restructuring clauses in CDS, as there is a reduction in the face amount of the bonds should the ECB do an exchange. Obviously a question for the lawyers, but the solution may be more complex if CDS is not to be triggered. Good overall idea, though.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-15051311987966053852010-12-08T12:31:49.151+02:002010-12-08T12:31:49.151+02:00Hey Thanks a lot for sharing this with us.Hey Thanks a lot for sharing this with us.Penny Auctionhttp://www.bidchargers.com/noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-70974089671357270272010-12-06T21:17:53.293+02:002010-12-06T21:17:53.293+02:00"ECB may be stuck with too many sovereign bon..."ECB may be stuck with too many sovereign bonds for too long." -> This will happen only if nations themselves don't quickly put their finances in order. <br /><br />As I see it, nations won't quickly put their finances in order. If they could, they wouldn't be having these problems now, would they?<br /><br />I guess this will be the major point of discussions, if some will happen.Heatherhttp://ilovetoronto.org/noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-68818543466077346812010-11-29T00:11:59.770+02:002010-11-29T00:11:59.770+02:00Sorry late hour, stupid typos making it harder to ...Sorry late hour, stupid typos making it harder to understand:<br />... say today 60, next month 59, then 58 and so on .. to create some urgency to sell for the bondholders?Hubertnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-57928686289594362662010-11-29T00:09:08.547+02:002010-11-29T00:09:08.547+02:00(sorry for late comment, just back)
Brilliant inde...(sorry for late comment, just back)<br />Brilliant indeed, but ....<br />what if the bond holders just ride the issue knowing that the ECB has a bid underneath and wait till maturity, forcing the binary thing: repayment or default?<br />Okay, one would still get a good effect in the CDS market but is it more than a good bluff to gain time ?<br />Would it not be a good solution for the ECB to slowly drop the bid for the bonds: say today 60 nest month 59, than 58 and so on, to create some urgency to sell by the holders?Hubertnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-50118284235122454212010-11-26T14:26:03.315+02:002010-11-26T14:26:03.315+02:00Hell,
Many thanks for your thoughtful reply. A lo...Hell,<br /><br />Many thanks for your thoughtful reply. A lot wiser now.<br /><br />GDP as a proxy for 'growth'? It is quite frightning how many believe this as an absolute truth. Hope you are completely wrong about the 'war' bit.<br /><br />Maybe you might re-publish Albert Bartlett's little warning about exponents. <br /><br />Best regards, BrianBrian Woodsnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-17849286245448757932010-11-26T11:49:12.674+02:002010-11-26T11:49:12.674+02:00Thanks Roland.
Yes I saw the news. Russia and Ch...Thanks Roland.<br /><br />Yes I saw the news. Russia and China have agreed to use their national currencies for bilateral trade, instead of using the dollar. I don't know how much they were using dollars in their trade to begin with, but the move has quite a bit of symbolic importance, given US pressure on Beijing to let the yuan float.<br /><br />But, what's the REAL difference, anyway. The yuan is firmly pegged on the dollar anyway! Now, if the yuan were to float AND be used for international trade...that WOULD be news.<br /><br />Regards,<br />H.Hellasioushttps://www.blogger.com/profile/03564511281240682625noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-76035629070757985672010-11-26T03:50:12.431+02:002010-11-26T03:50:12.431+02:00You offer a very interesting and informative analy...You offer a very interesting and informative analysis of the current debt crisis. I look forward to reading more from you. I found you by accident whilst surfing the internet for financial news. Do you know about the Russian-Chinese agreement Wednesday (24 Nov. 2010) to stop using U.S. Dollars in their business transactions? Big news. I hope you will write about it in future articles on this site. Thank you<br />Regards,<br />RolandRolandnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-15150834016963330182010-11-25T11:43:58.793+02:002010-11-25T11:43:58.793+02:00Dear Brian,
Your question of growth multipliers i...Dear Brian,<br /><br />Your question of growth multipliers includes several sub-questions, the most difficult of which is "what constitutes growth"? But let's stick to the "classical" interpretation, i.e. growth is the increase of GDP, as defined decades ago.<br /><br />There's no question that debt, particularly if it grows much faster than the economy's underlying potential to generate activity without excess inflation, does act as a multiplier, a booster.<br /><br />It usually does this through asset inflation. the wealth effect (people feel richer so they spend more), and through asset-backed loans that are used to increase consumption.<br /><br />Other multipliers are technological innovations. There's no question that the steam engine, the electricity grid, petroleum, PCs, the Web, even such mundane things as the shipping container have acted as activity multipliers.<br /><br />I hate to say it, but the excess capacity that was put into place in the 1920s was, for the most part, only put back into use because of WWII.<br /><br />So there you have it: WAR is also an economic activity multiplier.Hellasioushttps://www.blogger.com/profile/03564511281240682625noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-16142488969640358212010-11-25T11:19:06.860+02:002010-11-25T11:19:06.860+02:00Hell,
Many thanks.
Some questions.
1. Multip...Hell,<br /><br />Many thanks. <br /><br />Some questions.<br /><br />1. Multipliers: These are some class of 'thing' that are supposed to amplify, or de-amplify, aggregate economic activity. Are these 'real' entities, or 'virtual' attributes? I have asked, and all I get by way of an answer is that they must exist because aggregate economic activity does respond in a manner which suggests that they do exist! What are they? Credit + debt? <br /><br />2. The 1930s downturn (an excess of productive capacity and involuntary inventory accumulation) was slowly cured (as in very slow) by a rundown in accumulated inventory. Eventually some idled productive capacity was brought back on-line - more persons employed, more wages, more demand ... ...<br /><br />This downturn is due to an excess of credit + debt? But debt GROWS! - unlike inventory in a warehouse.<br /><br />How does one cure an exponentially growing debt-weed? Financial herbicide? <br /><br />BrianBrian Woodsnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-35784488811289613762010-11-25T07:30:05.571+02:002010-11-25T07:30:05.571+02:00To: Brian Woods Go ahead and paste..
As for the s...To: Brian Woods Go ahead and paste..<br /><br />As for the savings. Yes. it would "only" be 5 billion. But the debt load, the debt/GDP ratios would be cut in half. That's enormous. I don't think such a massive cut is possible under such a plan.<br /><br />Instead what could happen is a normalization of the bond market plus some debt reduction.<br /><br />Also, if you think about it, your "Only 5 billion" statement reveals that the problem is indeed very small in money terms. The media have made a mountain out of this molehill.<br /><br />Why? Because there's a ton of money to be made in the CDS market.<br /><br />More on that in the next post.Hellasioushttps://www.blogger.com/profile/03564511281240682625noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-46587114192902708972010-11-25T05:12:02.475+02:002010-11-25T05:12:02.475+02:00Just trying to get a sense of scale here.
You sug...Just trying to get a sense of scale here.<br /><br />You suggest the ECB could buy about half the outstanding Greek & Irish bonds for around 100 Billion Euro. <br /><br />Assuming for simplicity that the bonds are trading at half face value, that means the ECB buys 200 Billion worth of bonds.<br /><br />If the coupon is (for simplicity) 5%, the original bonds are paying interest of 10 Billion Euro per year. The reissued bonds at the lower current value would be paying 5 Billion Euro per year -- a saving to the issuing govt of 5 Bill Euro per year.<br /><br />A quick check of some newspapers suggests that the Greek govt annual deficit has been reduced to about 20 Billion Euro per year. A further 5 Billion Euro reduction in interest payments would still leave the Greek govt 15 Bill Euro in the hole -- if these back of the envelope calculations are in the ballpark.<br /><br />Bottom line - the Modest Proposal would help, but it would be far from being enough. Or am I missing something?Kinuachdrachhttps://www.blogger.com/profile/13275320683766290581noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-77116275893036008382010-11-24T21:09:17.232+02:002010-11-24T21:09:17.232+02:00Hell,
May I copy + paste your article on to Irish...Hell,<br /><br />May I copy + paste your article on to Irisheconomy.ie.? Or maybe you would prefer to do the job yourself.<br /><br />Your proposals will be critiqued by some (allegedly) sophisticated financial and economic folk. Would be very interesting.<br /><br />Thanks, and best wishes.<br /><br />BrianBrian Woodsnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-28681653661660488392010-11-24T19:06:56.239+02:002010-11-24T19:06:56.239+02:00Way to reasonable to be accepted right now. . . Co...Way to reasonable to be accepted right now. . . Come back when the wheels are really coming off. Maybe I'm being paranoid, but there are probably too many people "making" money on CDS roulette to shut the casino down just now.<br /><br />Is it utterly callous of me to think that there are players who don't want the problems solved? Where is Major Strasser when you need him?But What do I Know?noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-55972835759761439732010-11-23T23:06:30.410+02:002010-11-23T23:06:30.410+02:00Brilliant!Brilliant!Anonymousnoreply@blogger.com