Greece is A+

This open letter has been published in full-page ads in the main international financial newspapers this week.

32 replies on “Greece is A+”

So, an “investment firm that makes concentrated investments in underperforming global special situations.” is producing an effort to have Greece’s bonds, of which it probably has bought aplenty, ranking, or at least, reputation raised. A totally uninterested position, I guess…

It’s good to see Greek’s prospects improve but it needs more than the lavish use of superlatives and a ridiculous comparison with Singapore, to find a sustainable path.

Japonica, a US investor group, said in October that it is one of the larger if not the largest holder of Greek bonds, which it purchased as low as 11.4% of par with a yield-to-maturity on the 20-year bond of 25%.

” In the months ahead, Japonica will be a catalyst for change by relentlessly educating in private and public forums those who perpetuate systemic misperceptions about Greece.”

It holds about 10% of outstanding debt which it raised to €4bn in July according to Reuters.

Angel Gurria, OECD secretary general and a former finance minister of Mexico, raised the prospect of a haircut for Japonica this week:

“If Greek growth again disappoints, or deflation persists – even after the implementation of structural reforms – then it will be extremely difficult to reach the debt-to-GDP target of 120% by 2020. In this case, serious consideration should be given to reducing the current debt burden.”

The Netherlands was downgraded yesterday

This song seems appropriate :

Clouds in your Koffie …


Carney applies the brakes to the UK’s house price boom

It’s still a big mess.

There was a very interesting analogy in the FT the last time the the Elbe flooded

“Everybody [upstream] has walls all over the place but the water just gets quicker and deeper. It isn’t wise. It is simply passing on the problem”

Ní neart go cur le chéile

the point is, that these pump and dump schemes work so well.

And my expectation is, that one will too.

This is just the same at a higher (national) level.

Who of us would go beyond a little scoffing in a rare place like here, and do a public trash talk, …., for what reason ?

Greece continues to not miss one single occasion, to not stick to agreements

The japonica is an indirect play to secondary and tertiary citations

And my expectation is, that this will work with them.

Question from me:

After all these years, when I look at german news stands, like in railway stations, there are still a dozen or more “investor magazines”, where little unknown companies are pushed to the gullible, usually with some nice graphs or recent stock price increases.

Do you also have that in Ireland?

When I visit certain people, they have those on there desk.

When I try to explain to them, in careful words, to not affront them, that they should keep their hands of stuff they totally do not understand, it does not hit home with them. I would have to use drastic words, which they would see as arrogant and insulting.

@ francis

I am devoting some time to trying to decipher the coalition agreement. What VW does or does not do in the US is of more marginal interest.

By the way, the deference that German (and, it must be said, French) politicians expect of journalists seems to be on the way out in Germany.

The journalist has done freedom of the press a great service in Germany. The fact that she hit such a sensitive nerve with Gabriel shows the trepidation with which the vote by the grassroots of the SPD is viewed. It is also a decidedly odd procedure in a normal democratic context and the lawyers raising the constitutionality of it may have a point.

@ Frank Galton

That WSJ article covers a lot of ground.

Hans-Werner Sinn wrote in 2010:

Germany became the second-largest capital exporter after China since the euro announcement in the mid-1990s. The lion’s share of its savings flowed to other countries, instead of being invested at home.

On average, from 1995 to 2008 no less than 76% of aggregate German savings (private, governmental and corporate) were invested abroad, while only 24% found their way into the domestic economy.

Germany exhibited the lowest net investment rate of all OECD countries, together with the second-lowest growth rate among all European countries. The performance of a euro-winner ought to actually look a bit different than this.</blockquote

Stephen Fidler in the WSJ article says:

Two German economists, Daniel Gros and Thomas Mayer, have argued that Germany should create a sovereign-wealth fund to recycle its surpluses. Such a fund would be better placed than banks or private investors to take a long-term investment perspective, they say.

However, it wouldn’t be good either if Germany kept all its savings at home.

Or, as one commentator put it, the Masters of the Universe on Wall Street were gifted their Mercedes/Audi/BMW.

from japonica spin to real spin –

Text from Blind Biddy in Abu Dhabi:

@Cricket Ireland
Luvly hurlin!

@Trent Johnston

Luvly luvly hurlin!

The Netherlands were also downgraded in Abu Dhabi … they shudda put in their former finance minister for his ordoliberal duck.


I was also going through the 180 pages, pondering the numbers, long term implications, dynamics, what will be implemented when, or not, looking back on the last one, and before.
And getting older, I can actually enjoy certain features.
Pros and cons of minimum wages, in a time where some Cameron talks about reneging on EU freedom of movement.

To the Gabriel interview, I see this and other before of Marietta Slomka actually as a low light of german “journalism”.

She has done this before, replacing any kind of “investigative journalism” with arrogance and endlessly trying to twist words. She did it with Schäuble before.

And it actually induced in me some sympathy for SPD Gabriel, completely absent before, further enhanced by some subsequent standpoints he made in local SPD meetings. Even CSU Seehofer came out in support for him today.

I did so far underestimate them both a little bit, remember when I served up the
„die Ilse“ talking with Söder, the 2 potential heirs to the throne, about making Seehofer disappear in a Lasagna : – )
And I realized, that we groom the next political generation.

The Irish poet William Butler Yeats once wrote (wiki/The_Second_Coming_(poem)
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

This time the centre will hold, with a calm determination, and Röpke and Eucken under our pillows : – )

@ francis

You are waxing lyrical there and my knowledge of German is not such that I can send a suitable riposte from a German poet (although such certainly exists).

I disagree wholeheartedly with you on the basic point. The exchanges between Gabriel and the journalist were tame compared to what happens in the UK, and Ireland. But that is neither here nor there. The fact that Gabriel is back-peddling rapidly indicates that times are changing in Germany.

On free movement, Cameron is simply trying to assemble some chips for the European Council. Germany (and Austria) used the derogations in respect of free movement to the maximum (1 May 2012!). London allowed itself to be carried away by its own rhetoric with regard to enlarging the EU (with a view to weakening it?). Jack Straw, then the responsible minister, has admitted it.


its kind of getting ironic,

for me Gabriel is becoming actually the incarnation and insurance, that the correct things in Germany are NOT changing. It was left/green who decided Agenda 2010, not to forget.

Was it Fouche, who said, a French socialist police minister is first a police minister, and only after that French, and after that socialist ? Very likely a wrong quote, ….. anybody here who remembers that better?

McKinsey published a report in 2011 which suggests that Greece could add 520,000 job by 2020 while the OECD has identified 555 restrictions/regulations that it claims hinder growth.
The domestic market accounts for 70% of tourism compared with 34% in Portugal.

@ francis

The general reaction to the coalition agreement is that it is timid rather than radical.

Germany is already ageing and reducing the pension age for those who do not go on to third level, is a lot easier than raising it, as France knows.

The introduction of national minimum wages always prompt forecasts of doom.

Deutsche Bank says that under present conditions a minimum wage would make the so-called mini-jobs, where workers can earn a maximum of €450 per month tax-free and topped up by welfare, more attractive for employers as well as for employees.

It adds that the €8.50 level amounts to about 54% of the median wage in west Germany but to about 70% in east Germany.

The economists have estimated that even if Germany’s weakest regions were to grow a steady 4 percentage points faster than the strongest regions, it would them take more than 45 years to catch up.

On the issue of risk which we discussed last week, the Bundesbank has warned that the prices for houses and apartments have risen by a total of 8.75% over 3 years – hardly a bubble. Of course there are hotspots where prices are above that level.

Off topic: I’m not advocating that comments from anonymous posters (inc. real names without an identity) should be excluded. Emerging systems that are geared to reduce the abusive behaviour of a minority (whether teens or adults) when there is no accountability, are not practical in a non-commercial site such as this.

There have been examples of where unpalatable facts are met with questions on where I live, which once was a common feature in peasant Ireland. This type of ignorance should be challenged.

Faced only with the facts as presented by Japonica, I would run a mile from Greek debt. The country is running further and further behind potential, and its substantial and growing positive primary balance eliminates one of the main motivations they have for not again defaulting if the crisis re-intensifies.

@ BeeCeeTee

I do not buy into the argument, that Greece would have an incentive to default, if this first step of positive primary balance is reached.

This time they would default on London terms for their debt, like the Argentina saga. It makes actually a case for japonicas claim, that the real risk of Greece defaulting again is lower than the bond rates suggest.

For the German situation, those 2 links might be useful:


the coalition treaty:

and just for comparison citing the 98 pages, I have not read in detail and dont want to talk about for a province level red/green agreement

@ francis

The agreement has 185 pages. Insofar as any real change of direction can be identified, it is at page 56 under the heading “Democratic Europe” where there is a clear agreement to return to the institutional decision-making machinery of the EU rather than to continue with the ersatz “Union method” which Merkel espoused in a speech in Bruges some year ago and which she has seen implemented in relation to resolving the crisis in the euro i.e. a mishmash of EU and intergovernmental decision-making, the main result of which is an alphabet soup of institutional acronyms and a confused political and legal situation.

The change is undoubtedly attributable to the SPD and especially to the role played by Martin Schulz (president of the EP; and possible future president of the Commission?).

The topic may seem far from the status of Greek debt but I do not think it is. Like rock and roll, the euro is here to stay. The Greeks know that this means that they cannot be ejected. This must, in turn, impact on market perception.

On the UK, cf this poll by the Observer.

Cameron may huff and puff, but he has succeeded only in diminishing the role of the UK and to the point of creating serious alarm in his own backyard.

@Michael Hennigan

“timid” is the word.

Unintended Consequences: The Implications Of The German Coalition Agreement For Europe

[…] In European comparison the proportion of the workforce earning less than 60% of the median wage is highest in Germany, as is the average pay gap of the low-paid. High unemployment in the early and mid-2000s, coupled with labour market reforms, opened up the bottom of the labour market and were largely responsible for the fact that the rise in inequality at the bottom of the distribution in that period was among the most pronounced in the entire OECD. This, in turn, was a crucial element in the most important driver of the euro crisis: the opening up of competitiveness and current account imbalances between the euro core and periphery.

[…] The positive impact of domestic reforms needs to be weighed against the fact that Germany will apparently continue to be an obstacle to reforms in areas such as banking union and establishing a debt redemption fund or more aggressive monetary policies. For now at least, that fight within the country appears to have been lost. Merkel and Schäuble will continue to call the shots, untrammelled by Social Democratic interference.

Back to the SPD member vote, maybe it helps, when I cite
“stupid but constitutional” (the original is actually in CAPS)

Would I argue to make this SPD decision now a habit? No!

But to question the constitutionality? Huuugh?

Who is questioning the decision processes of whom? Based on what?
news announcer Slomka is completely bizarre.

@ Frank Galton, Michael

Of the 1 trillion of German accumulated CA surplus, about half is holed up in the Target 2 account, something we are definitely not happy about, but what can we do? Setting some illegal deadlines for the other national central banks to pay it back? Another 150 billion (gut estimate) in various EFSF or like funds. The WSJ link calls all that 800 b foreign-exchange reserves, as if we could withdraw that at will. For German companies it makes perfect sense to do FDI in factories abroad, building them closer to the customers, and eliminating exchange rate risks, they do that since the 1970ties.

I have my investments spread around the world, but how do I get my donkey countrymen to invest in stock? And it happened to me, that I said, buy some index ETFs, and then they bought some solarworld, when it was already up from 1 to 30, then went down again to 1 because of the chinesese competition, very predictable in my view. And then of course they have to blame somebody else for that, like me.

@ D O D

Financial discipline is German national consensus. Your views are here an extreme minority. Even the communists represent themselves as the true heirs of “Soziale Marktwirtschaft”.

The IT link from DOCM emphasizes, that now CDU and Green (headed by Tarek Al-Wazir, not the typical name of an Äppelwoi trinker : – ) are coming together in Hessen, because the Greenies could not agree with the West-Linke there on enough fiscal responsibility.

Mutual loathing is even some euphemism. Joschka Fischer and his Putztruppe were pretty effective in beating up the Frankfurt police, and there were police men murdered at the Startbahn West.

Ordolioberalism always emphasized, that market solution are strongly preferable, as long as a functioning market exists. Röpke explicitely wrote in 1950 “Ist die deutsche Wirtschaftspolitik richtig” that in other situations, like the housing market at that time, with 20% bombed away, the government has a legitimate role.

In Munich, with new house prices hitting 10 000 Euro / m^2, 3% youth unemployment, where even a non-German speaking cleaning lady can get 12 Euro, 8.5 Euro minimum wage is a pretty irrelevant joke.
As Michael Hennigan pointed out above, in Eastern Germany with GDP per capita still at 73% of the West, like my Dresden here, with house prices average at 1589 Euro /m^2, still about 10% unemployment, and 8.5 Euro/h representing 70% of median wage, that would be too high, to not cause some additional (2-3% gut feeling) unemployment.

But it comes only in 4 years, assuming us running 2.5 -3% Inflation during that period, to get to the Euro average target of <=2.0%, that would come to a gut feeling 0.5% employment loss, hopefully offset by some 2% other factors


I do read page 156 somewhat differently,
e.g. „In dieser Umbruchphase ist Deutschland als wirtschaftlich starker Mit-gliedstaat und Stabilitätsanker in eine gewachsene Verantwortung hineingewachsen und besonderen Erwartungen seiner Partner ausgesetzt „ (btw bad style: 2 times „gewachsen“),

„Damit die Bürger eine vertiefte Integration Europas stärker akzeptieren, ist es uner-lässlich, das Subsidiaritätsprinzip strikt einzuhalten“, „Der Umgang mit der deutschen Sprache in den europäischen Institutionen muss ihre rechtliche Stellung und ihren tatsächlichen Gebrauch in der EU widerspiegeln.“

Motivated by SPD Thomas Oppermann on german TV, and in response to „timid“ maybe a few more words to the present coalition treaty.

1. As Oppermann pointed out, at present CDU/CSU, FDP, AfD represent 51% of the vote, a clear majority with some 6% splinter weirdos, the SPD got 25% and made the most out of it.

2. If there would be new elections, the anti-Euro AfD might have seats in Parliament. It is a long standing tradition, that whenever something new develops on the right sight, the CSU will lean as much as needed to the right, to catch enough of those voters, to inhibit the permanent establishment of such a group. The road tax, catering to those who feel disenfranchised from paying that in nearly all countries to the south and the east, is one of the necessary steps.

3. “timid”

a) the national minimum wage is a big step for many of us here, and we have to see how this filters into reality. It is timed for before the 2017 elections, ensuring that the SPD stays on board until then, or sorry. The CSU has made pretty positive experiences with the Betreuungsgeld coming on this summer, public officer working hours reduced to 40 per week, the tuition fees abolished, the 10 Euro praxisgebühr abolished. You have to milk the goodies as maximal as possible for elections. The SPD learned from that :- )

b) by all fiscal parameters, Germany is not exactly in a situation where bold steps are needed, and look at what some bold step on 9/28/2008 Ireland has got from.

c) various attempts to change the present german pension system, like at 63 year age, after paying for 45 years !!! reflect the situation, that many folks here in the east have now pretty broken work histories, no fault of their own, making for very shitty pension entitlements in our strictly linear calculations, in comparison to a way more socialist America : – )
Bringing this closer to international average behavior is hardly a sign of profligacy. We have to look out for those who suffer in silence, and not just some public sector loud mouthes

4. “questions on where I live”

Where I live, there are also recent postings, with a dagger drawn into the back of Justitia, with remarkable detail to the splattering blood, and a “Deine Angst ist berechtigt, Eggers” spray paint still visible for a former saxonian police minister. The people around me are not only saints. I know why I am not posting here and in other places with clear name.

Looking at the trade volume of Greek government bonds in Germany, even assuming that there is a larger volume traded in Greece and some other places, Japonica would need years to get out of their position, without heavy discounts.

The probability of default is irrelevant, but more the question of who would buy the stuff for what reason.

That way, the advertising of Japonica looks actually as an act of desperation, after they found out, that some were willing to sell at 15, 30% of face value, but nobody wants to buy at 50% face value and an effective coupon rate of 4%, close to US bonds at 3.84% ^TVX. Sitting on this kind of stuff was certainly not, what Japonica had in mind : – )

That makes a wonderful example of illiquid, asymmetric markets.

A similar story happened end of June, when the Fed started taper talks. The bottom fell out of long term bonds, especially Munis.

With a delay, relative to Treasuries, of 3 days (one weekend) the stuff dropped by 10%, and the relevant ETF at another discount of 8% to the net asset value (NAV)

Thanks Philip for the example, and does anybody have more examples like that?

despite becoming a serial, unilateral poster with that,

@ Michael Hennigan. etc

An example of this “Rente mit 63” and the accompanying changes of what is counted which way:

This is of course too complicated for folks just making and reading headlines, but that goes as a complete package actually into a more just direction.

John, LOL, who else then you, I love you.

How would you trade Greek bonds in the US. lets say with TD Ameritrade, or similar?

ISIN’s dont seem to be a relevant way of talking

Hi francis,they all have been bought !
I will ask around and get back to you ok,it’s that time off the evening:)
But very mixed opinions on the above group,I think the top chap is speaking at a investor conf. today or tomorrow
More as I get it – FYI that bond buyer second link made a good play on irish bonds but Ukraine ouch !

Greece and its bank the National Bank of Greece was, repeat was, past tense A+ for the investor, from June 2012 through November 2013!!

Greece, since 2007 has been an investment wildcat, providing great gain for the wily investor who knew when to go short and when to go long; yes, yes, yes, A+.

Aristides N. Hatzis in WSJ posts Greece’s Reforms Have Only Cracked the Surface Last week Ángel Gurría, the secretary-general of the Organization for Economic Co-operation and Development, visited Athens to present the OECD’s latest economic survey of Greece. Since 2010, the report said, Greece “has made impressive headway in cutting its fiscal and external imbalances and implementing structural reforms to raise labor market flexibility and improve labor competitiveness.” But the OECD also emphasized that “more needs to be done.” The organization’s assessment of competition in four key sectors in Greece, also released last week, identified 555 problematic regulations and 329 provisions.

The EU is in late stage, better said terminal stage socialism, which had been saved up until now from collapse by the ECB’s LTRO 1, and 2, and OMT. So far this month, that is the first week of December 2013, Brazil Financials, BRAF, are leading Brazil, EWZ, lower; and Westpac Banking, WBK, is leading Australia, EWA, lower; and Shinhan Financial, SHG, is leading South Korea, EWY, lower. European Financials, EUFN, such as Greece’s NBG, Spain’s SAN, and Ireland’s EIRL, are leading European Stocks, EZU, lower, with Italy, EWI, Spain, EWP, France, EWQ, and Ireland, EIRL, down strongly. The picture here is one of the World Financials, IXG, leading Nation Investment, EFA, and World Stocks, VT, lower, with a real investment deflationary blackhole emerging in the Eurozone, if one believes bible prophecy of Revelation 13:1-4, to be true.

The trade lower in fiat wealth, that is World Stocks, VT, on December 2, 2013, coming on the rise of the Benchmark Interest Rate, ^TNX, to rise above 2.74%, at the debt deflationary hands of the bond vigilantes and competitive currency deflation hands of the currency traders, has pivoted the world out of liberalism and into authoritarianism.

Under liberalism one had economic life in the banker regime’s policies of investment choice and schemes of credit, which provided a moral hazard based life experience of prosperity. Dynamos such as corporatism, socialism, and globalism will be failing.

Now under authoritarianism, there is only a singular dynamo of regionalism, one has economic life in the beast’s regime’s policies of diktat of regional governance and schemes of totalitarian collectivism debt servitude establishing crushing austerity, as the world comes to cope with economic deflation. Destiny is at work, fate cannot be altered; the new normal is a life experience of austerity.

There will be no opportunity for Austrian economics designed work rule reform, easier standards to fire people, fewer government workers, lower minimum wages, less regulation, and less taxation. Nope, no way, and never, as a whole new economic age and paradigm has commenced; it is called authoritarianism, and it is coming regionally, first in the EU, and it is coming to provide the experience of totalitarian collectivism, this being foretold in Revelation 13:1-4

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