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Generational Dynamics Web Log for 25-Aug-2011
25-Aug-11 World View -- Euro crisis regains the spotlight

Web Log - August, 2011

25-Aug-11 World View -- Euro crisis regains the spotlight

Glenn Beck rally in Jerusalem stirs controversy

This morning's key headlines from GenerationalDynamics.com.

* Greek bonds crashing again as euro crisis regains the spotlight
* Finland refuses to back down on its demands for collateral
* Moody's warns that collateral deals may force a Greek default
* Alan Greenspan says that the euro is breaking down
* Rich EU members feel growing resentment of the 'Olive Zone'
* Japan's credit downgrade may affect Germany
* Iran unveils new cruise missiles with U.S. bases in range
* Sporadic fighting continues in Tripoli as Gaddafi eludes capture
* Glenn Beck rally in Jerusalem stirs controversy

Greek bonds crashing again as euro crisis regains the spotlight

Greece's 2 year bond yields at 44.025%

Greece's 2 year bond yields at 44.025%

With those lazy, hazy, crazy days of summer floating by, you may have thought that the Greece debt crisis was a thing of the past, but it's euro crisis time again. The last time I posted a graph of the Greek 2-year bond yields (interest rates) was July 19, when they were at a paltry 28.131%, lower than even a Citibank credit card. But yields have been rising since then, and in the last few days, Greek bond prices have completely crashed, pushing yields up to historically high 44.025% on Wednesday, a rate that would even make Citibank executives earning million dollar bonuses drool with jealousy. Furthermore, bond yields of other euro countries crept up, though to nowhere near the level of Greece. Reuters

Finland refuses to back down on its demands for collateral

The reason for the renewed crisis is that Finland's demand for collateral has thrown the entire recent bailout of Greece in doubt. (See "22-Jul-11 World View -- Europeans announce bailout plan allowing Greece to default") It turns out that Finland only agreed to that bailout if they received collateral from Greece for their share of the bailout. (The collateral is about 20% of the amount of money that Finland is contributing to the bailout. That is, Finland contributes X zillion euros, and receives back 20% of X zillion euros as collateral. This makes no particular sense to me -- but what does these days? But apparently it allows Finland's politicians to mislead Finland's public into thinking that there's no risk.) Now other countries, led by Austria, are demanding that they get the same collateral terms. Associated Press and Reuters

Moody's warns that collateral deals may force a Greek default

According to Moody's rating service: "The agreement between Greece and Finland, which is small by itself, assumes much greater significance. The pursuit of such agreements could delay the next tranche of financial support for Greece and so precipitate a payment default." If Greece is going to default anyway, then Greece's bonds are worth much less. That's why bond yields are above 44%. EurActiv

Alan Greenspan says that the euro is breaking down

Alan Greenspan

Alan Greenspan

According to former Federal Reserve Chairman Alan Greenspan: "The euro is breaking down and the process of its breaking down is creating very considerable difficulties in the European banking system." Business Insider

Rich EU members feel growing resentment of the 'Olive Zone'

The euro countries with AAA ratings are: Germany, France, Finland, Luxembourg, the Netherlands and Austria. The countries in serious trouble are: Greece, Portugal, Italy, Spain and Ireland. The rich countries of the northern euro zone are bearing the brunt of bailing out their debt-stricken fellow members. Resentment is growing among their populations, helping euroskeptic right-wing populists to win support. Der Spiegel

Japan's credit downgrade may affect Germany

Moody's Investors Service Inc. said Wednesday it had lowered the credit rating of Japanese government bonds one notch. The ratings agency cited the delay in economic recovery from the March 11 disaster and frequent administration changes, which made it difficult to implement long-term economic and fiscal management effectively, as reasons for the downgrade. Yomiuri

Germany’s government debt may be downgraded in the next three months after Moody’s decision to cut Japan’s credit rating reflects investor concern about developed nation debt. "The writing is on the wall" said one analyst, citing "weak fiscal fundamentals" in the country and risks from the euro-area structure. Bloomberg

Iran unveils new cruise missiles with U.S. bases in range

Iran on Monday unveiled a new cruise missile which it said has the capability to strike at warships at a range of 200 km, including U.S. bases in the Persian Gulf region. The missile designed for sea targets was put on display at a 'defence marine show' inaugurated by President Mahmoud Ahmadinejad. The missile called "Qader" (Able) is built indigenously by Iranian scientists and has a high destructive ability against coastal targets and warships, the state run TV said. PTI

Sporadic fighting continues in Tripoli as Gaddafi eludes capture

Gunfire is continuing in several Tripoli neighbohoods as fighters loyal to Muammar Gaddafi put up a stiff fight. The forests around Tripoli are full of Gaddafi snipers. Gaddafi himself is nowhere to be found. One analyst expressed the concern that Gaddafi might return to his stronghold in his hometown of Sirte, and attempt to set up a regional government there. Al-Jazeera

Glenn Beck rally in Jerusalem stirs controversy

Glenn Beck's speaking tour in Israel, while receiving enthusiastic audience applause, is generating controversy over his motives. Moshe Feiglin, head of Likud's Jewish Leadership faction, wrote: "I must admit that when a friendly non-Jew starts to quote the Bible, I get a bit nervous. It is not just the long history of anti-Semitism that has developed a genetic mutation in the noses of Jews, giving them great sensitivity to anything that smells of Christianity - but also my own personal experience with avowed lovers of Israel and the settlers who took great pains to mask their Christian motives." However, David Ha’Ivri responded, "Glenn Beck is one of those unique gentiles who appreciates the Jewish people and our national, historical and theological goals. His agenda is out in the open and very clear: he wishes us well as the Jewish people preserving our Torah culture on our Holyland." Israel National News

(Comments: For reader comments, questions and discussion, see the 25-Aug-11 World View -- Euro crisis regains the spotlight thread of the Generational Dynamics forum. Comments may be posted anonymously.) (25-Aug-2011) Permanent Link
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Generational Dynamics Web Log for 25-Aug-2011 25-Aug-11 World View -- Euro crisis regains the spotlight

Greek bonds crashing again as euro crisis regains the spotlight

Finland refuses to back down on its demands for collateral

Moody's warns that collateral deals may force a Greek default

Alan Greenspan says that the euro is breaking down

Rich EU members feel growing resentment of the 'Olive Zone'

Japan's credit downgrade may affect Germany

Iran unveils new cruise missiles with U.S. bases in range

Sporadic fighting continues in Tripoli as Gaddafi eludes capture

Glenn Beck rally in Jerusalem stirs controversy

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Generational Dynamics Web Log for 25-Aug-2011
25-Aug-11 World View -- Euro crisis regains the spotlight