News Analysis: Greek exit? Euro-zone may be ready

Commissioned-dragging and brinkmanship over the past few years have won the other members of the currency union valuable time to prepare for life without Greece. The banks recorded losses of Greek investments, companies are drawing up plans to deal with emergencies and Europe is zazdraviha of rescue for other vulnerable countries such as Portugal, Ireland and Spain.

These measures are also minimized the risks to the United States, making it less likely that “Lehman moment” will spread panic through global financial markets. American investment funds and banks are also sharply reduced their investments in Europe.

But some experts say the Europe preparations remain incomplete and the potential costs of a Greek exit, are highly uncertain and potentially significant. That reality, helps to explain why Germany continues to profess its determination to keep Greece from currency union if possible.

Still, European leaders are not optional — even eager reduced — to publicly comment on the possibility that Greece will leave something they long refused to countenance, not only because relations with Greece to continue to deteriorate, but also as a result of their preparations.

“We have worked hard to mitigate against such a scenario,” Dutch Finance Minister, Jan KEES de Jager, told Reporters after a meeting of Ministers of the European finance early this week. “That is why contagion risk is much, much less than one and a half years.”

What once seemed unthinkable is being reduced to a budget line. Economists in German Bank recently calculated that a Greek exit will cost the German Government about 100 billion euros (127 billion dollars), or about 3% of the nation’s annual economic output.

François Baroin, departing French Finance Minister, said this week that Greek exit will cost France to 50 billion euro, a similar proportion of its production to its economically.

“Greece is not in itself of large transactions. It is not a significant risk and our banks and insurance companies will be able to absorb it, “Mr Baroin told French radio station Europe 1, on Tuesday.

More urgent matter since goes to say, Mr Baroin to consequences for other struggling countries in the lower end of Europe. He warned that the departure of each article may spilt “doubt and suspicion” in the minds of foreign investors on the health of the euro. Stock markets declined around the world and that Europe and will nothing.

The first project of the Finance Minister is to convince the markets that everything is under control, and in recent days, European officials have lined up to insist that the euro will survive.

“They look pretty in ease, quite resigned to the fact that they could deal with it, which I think is a result of the months in which they had to prepare,” says Jacob Funk Kirkegaard, research fellow at the Institute for international economics Peterson here.

He said the current round of negotiations is intended primarily to influence the outcome of the Greek elections next month, but he added that that Europe is lawfully in a better position to deal with the worst case.

But Kenneth s. Rogoff, a professor at Harvard and former Chief Economist of the International Monetary Fund, said Europe made progress, but not yet adequately prepared to monitor deposition. He said, Europe without sufficient mechanisms to ensure that loans remains available for other troubled countries, Spain and Italy. In addition, there is no political consensus for support for a loan from the local governments and private companies. And finally, he said, there is no reliable long term to ensure the viability of the euro.

“These are difficult political decisions, that they not only are ready for,” he said. “They must be. They had two years to think about it. But they are not ready. “

This article has been revised to reflect the following correction:

Correction of 19 may 2012

Article on analysis on Friday for Europe readiness of Greece possible exit of euro misstated, some editions, the relative price of such exit to the Government of Germany. Actual expenditure, around 127 billion dollars, which is noted properly 3% of annual economic results of Germany, is not less than one-tenth of a percent of the 1.

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Pledging Greek bonds paid for ‘ Vulture Fund ‘

When on Tuesday Greece announced that it had made 436 million Euro Bond payment hold out investors who reject the historical debt of the country, revamping transaction in March, the decision came as no surprise. Ultimately, with the Government of Athens in turmoil and investors, wary of having nothing to do with Greece, now will be foul weather to make things worse by ots?stvalata the bond payment.

What is news is where most of that money went. Almost 90% is delivered to the coffers of the Dart, secretive investment fund, based on the Cayman Islands, according to people with direct knowledge of the transaction.

DART is one of the most well known of the so-called vulture funds that have a track record of purchasing of the bonds of the difficulties of the almost bankrupt countries – and if they are not paid, suing the Government for money. DART and other large vulture fund, contact Elliott, enhanced this strategy during the various Latin America debt crisis during the past years.

By accumulating the most of these bonds at prices which dealers forecast to be from 60 to 70 cents per dollar, Dart is to heavy profit, which have received 100 cents on the dollar – as a result, may be particularly galling Greek banks and other local institutions, which have been forced to 75 percent loss of Greek Bond Holdings.

Large winning bet of Dart may presage more aggressive tack of vulture funds, if Greece was forced to restructure their debt for the second time.

Lynn Smith, spokesman for Dart, said that the firm does not comment on market speculation.

The DART payday and may propose promoting other fortresses among investors, now owned by around 6 billion euro, or bonds, 7.6 billion dollars, in Greek. Another payment is due in September, although for smaller amount.

Greek officials insisted Tuesday that the reason to pay largely had to do with the fact that Greece is not Government. But there are afraid that the Dart, or smaller holders of bonds of the same, immediately sued Greece – something that potentially could engage the liquidity of European funds, which is counting on the country to remain in business.

“They caught us weaker time possible,” says Hardouvelis Gikas, Senior Economic Adviser to the Prime Lucas Papademos, who was involved in the decision of the decision-making process. “But this is without prejudice to future decisions on this matter.”

Greece is scheduled to take place elections next month. And under the new Government, especially one that may include leading left wing vote-getter, Alexis Tsipras, is confident about the hardening of attitudes to win investors. Not to mention the fact that Greece may default level if Europe finally cut off funds.

In fact, concerns are mounting for subsequent payments, which Greece is obliged to provide the 50 billion euro or that of its bonds held by the European Central Bank.

On 18 may, for example, the country must make such payment, worth 3.3 billion euros. For now the liquidity funds are set to meet these obligations. But if these funds are cut, Greece will be in no position to future Bond payments.

Already the decision to pay the Dart and other fortresses is challenging in Greece, not only of the left politicians, but from the market experts to provide that would enrage thousands of young Greek investors who haircuts of their holdings of government bonds.

“I think this is a huge error to pay these guys,” says Jason Manolopoulos, Greek hedge fund investor and author of the book the burden of debt of Greece. “This only provides left more ammunition to attack the proevropejskite parties.”

The Fund’s founder is Kenneth Dart Dart, heir to the cup of business billion foam and United States tax exile who lives in Cayman Islands. Dart Fund invests in debt after 1980. DART, along with Elliott Associates, also is suing Argentina, which defaulted on its debt in 2002 Funds looking for up to $ 2 billion in payments from the country by the courts of the United States.

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News Analysis: Greek exit? Euro-zone may be ready

Commissioned-dragging and brinkmanship over the past few years have won the other members of the currency union valuable time to prepare for life without Greece. The banks recorded losses of Greek investments, companies are drawing up plans to deal with emergencies and Europe is zazdraviha of rescue for other vulnerable countries such as Portugal, Ireland and Spain.
These measures are also minimized the risks to the United States, making it less likely that “Lehman moment” will spread panic through global financial markets. American investment funds and banks are also sharply reduced their investments in Europe.
But some experts say the Europe preparations remain incomplete and the potential costs of a Greek exit, are highly uncertain and potentially significant. That reality, helps to explain why Germany continues to profess its determination to keep Greece from currency union if possible. Still, European leaders are not optional — even eager reduced — to publicly comment on the possibility that Greece will leave something they long refused to countenance, not only because relations with Greece to continue to deteriorate, but also as a result of their preparations.
“We have worked hard to mitigate against such a scenario,” Dutch Finance Minister, Jan KEES de Jager, told Reporters after a meeting of Ministers of the European finance early this week. “That is why contagion risk is much, much less than one and a half years.” What once seemed unthinkable is being reduced to a budget line. Economists in German Bank recently calculated that a Greek exit will cost the German Government about 100 billion euros (127 billion dollars), or about 3% of the nation’s annual economic output.
François Baroin, departing French Finance Minister, said this week that Greek exit will cost France to 50 billion euro, a similar proportion of its production to its economically. “Greece is not in itself of large transactions. It is not a significant risk and our banks and insurance companies will be able to absorb it, “Mr Baroin told French radio station Europe 1, on Tuesday.
More urgent matter since goes to say, Mr Baroin to consequences for other struggling countries in the lower end of Europe. He warned that the departure of each article may spilt “doubt and suspicion” in the minds of foreign investors on the health of the euro. Stock markets declined around the world and that Europe and will nothing. The first project of the Finance Minister is to convince the markets that everything is under control, and in recent days, European officials have lined up to insist that the euro will survive.
“They look pretty in ease, quite resigned to the fact that they could deal with it, which I think is a result of the months in which they had to prepare,” says Jacob Funk Kirkegaard, research fellow at the Institute for international economics Peterson here. He said the current round of negotiations is intended primarily to influence the outcome of the Greek elections next month, but he added that that Europe is lawfully in a better position to deal with the worst case.
But Kenneth s. Rogoff, a professor at Harvard and former Chief Economist of the International Monetary Fund, said Europe made progress, but not yet adequately prepared to monitor deposition. He said, Europe without sufficient mechanisms to ensure that loans remains available for other troubled countries, Spain and Italy. In addition, there is no political consensus for support for a loan from the local governments and private companies. And finally, he said, there is no reliable long term to ensure the viability of the euro. “These are difficult political decisions, that they not only are ready for,” he said. “They must be. They had two years to think about it. But they are not ready. “
This article has been revised to reflect the following correction:
Correction of 19 may 2012

Article on analysis on Friday for Europe readiness of Greece possible exit of euro misstated, some editions, the relative price of such exit to the Government of Germany. Actual expenditure, around 127 billion dollars, which is noted properly 3% of annual economic results of Germany, is not less than one-tenth of a percent of the 1.