Longwave Group
  Renew Your Subscription
Login Subscribe Here
Email: info@longwavegroup.com

 
  • HomeHome
  • About UsAbout Us
    • Our Team
    • Our Gold Fever Collection
    • Appearances
    • Testimonials
    • Japanese Overview
    • FAQ
  • Our PrincipleOur Principle
    • Presentations
      • Longwave Principle
      • Fourth Kondratieff Winter
      • Dow 1,000
      • Inflation or Deflation?
      • Lifetime Economic, Financial & Investment Map
    • Q & A
  • Market InformationMarket Information
    • Charts
    • Investing in Junior Mining
    • Booklets
    • Companies We Like
    • Dow Gold Ratio
  • LWG PublicationsLWG Publications
    • Economic Winter
    • The Week That Was
    • Special Editions
    • Ian's Insights
    • Ian's Investment Insights
    • Related Articles
    • Recommended Reading
    • Blog
  • NewsNews
 

 

 

A solution to the Greek debt problem
Kiron Sarkar
September 28, 2011

Hi there,

This presentation (view presentation) was doing the rounds yesterday. On the face of it, it seems great, but, in my humble view, its a load of old rubbish. Greece initially proposed to privatise E50bn of assets. These "assets" are worth a fraction of the E50bn. JPM estimate around E10bn - E15bn. There is a huge problem re title in Greece, particularly re land. As a result, where do the Greeks get the E125bn of "assets" - well that's a real Greek fable.

If Greece gets its money up front and buys back its debt at a discount (buying back debt at a massive discount is a good idea as it will reduce debt to GDP), it has got the EU by the "short and curlies". The Greeks have never been known to deliver - if they have the money up front, they will be less inclined to do so in the future. Yes, they could be subject to sanctions re further aid etc unless they comply, but its a huge risk. The only way this works is to drip feed Greece aid on the basis that they meet predetermined commitments. You have to maintain the pressure on them.

Roland Berger - met some of their execs a long time ago. They were involved in pretty small stuff, as I recall. Certainly not a leading firm.

In summary, if the Euro Zone goes for something like this (I remain unconvinced), it's further proof as to just how clinically insane they really are.

Reducing Greek debt to GDP by buying back debt at a large discount is a great idea.The Troika is likely to forecast that Greek debt to GDP will approach 200% - they revisit Athens today. The EU target was for debt to GDP to be a max of 60% - remember that. It is why I expect a haircut on Greek debt to be over 70%. However, providing funds, secured on Greek "assets" - well.........

I suppose there is one born every minute.

The key today is not whether the Germans pass the changes to the EFSF legislation - they will, as the opposition SPD and Greens will vote for it. It is how many of members of Merkels party/coalition partners vote against the legislation. In addition, it is clear that the EFSF is not at all flexible and unfit for the role it is intended to do. US markets believe that Europe has come up with a solution - Europe has not. It will, but its not at all there as yet.

Be careful.

Best
Kiron

 

Use of this Website and documents and information displayed on or available through this Website are subject to important disclaimers which are available by clicking here.

OUR PRINCIPLE | THE LONGWAVE PRINCIPLE | THE FOURTH KONDRATIEFF WINTER
DOW 1000 | IAN'S INSIGHTS

SITEMAP

Longwave Group - Japanese Tranlation

© 2011 Lucidlab. All rights reserved. © 2011 Longwave Group. All rights reserved.