Greece Debt affairs are stinking. Default to be timed..?

Press Statement from the Co-Chairmen of the Steering Committee of the Private Creditor-Investor Committee for Greec

Athens, January 13, 2012 — Charles Dallara and Jean Lemierre, Co-Chairs of the Steering Committee of the Private Creditor-Investor Committee (PCIC) for Greece, continued discussions today in Athens with Prime Minister Lucas Papademos and Deputy Prime Minister and Finance Minister Evangelos Venizelos on a voluntary PSI for Greece, against the background of the October 26/27 Agreement with the Euro Area Leaders. Unfortunately, despite the efforts of Greece’s leadership, the proposal put forward by the Steering Committee of the PCIC—which involves an unprecedented 50% nominal reduction of Greece’s sovereign bonds in private investors’ hands and up to €100 billion of debt forgiveness— has not produced a constructive consolidated response by all parties, consistent with a voluntary exchange of Greek sovereign debt and the October 26/27 Agreement.

Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach. We very much hope, however, that Greece, with the support of the Euro Area, will be in a position to re-engage constructively with the private sector with a view to finalizing a mutually acceptable agreement on a voluntary debt exchange consistent with the October 26/27 Agreement, in the best interest of both Greece and the Euro Area.

source :

It seems the Wild Goose of Greece is now cooked in fully. It will be matter of time and Timing when Greece shall be freed from the clutches of Lenders and Some strong European nations. 

The Private Lenders appear to given under coercion and buying time to pull Guns on Greece. The hard boiled talks, which amounted in ' Change of Guard' and ' Silent revolution ' in December put the curtain on what seems to be the ' Unfair Promise' . 

All this behind the curtain talks and veiled threats may not get the full glory of media. But, the hazed topic may soon appear like a Party spoiler and wealth destabilise the Europe, as the spring unwinds. 

SO ALL IN ALL, GREECE'S EXIT SEEMS TO BE MATTER OF TIME AND TIMING. Investor shall be better off, if they not venture in the fall ensuing.

Obama Tax, falling Market's, Greek Desperation

Greek's Conference marathon to continue : Desperation, palpable 


Greece's conference call with the European Commission, the International Monetary Fund and the European Central Bank could last until Tuesday or later, according to published reports. Markets around the world have been in turmoil during recent days over the possibility of a Greek default. Monday's conference call came after Greece Finance Minister Evangelos Venizelos promised to hurry budget reforms and make cuts to the nation's civil-service staff. 

Dollar Libor at the yearly High :


The cost to borrow money in dollars remained at the highest level in more than a year on Monday while the rate to borrow euros was little changed. The London interbank offered rate, or Libor, for three-month dollar loans traded at 0.35133%, little changed from Friday and up from 0.34289% a week ago, according to FactSet Research. The three-month Libor rate for euros was little changed at 1.48375%, near the highest since early 2009. The one-week Libor rate for euros was 1.05063%, also unchanged from Friday and down from higher levels seen in early August.


Gold Sinks with all metals and Commodities :


 Gold futures fell 2% Monday to close at their lowest level in more than three weeks, pressured by broad losses in the U.S. stock market and commodities, as a stronger U.S. dollar dulled demand for the metal. Gold for December delivery fell $35.80 to close at $1,778.90 an ounce on the Comex division of the New York Mercantile Exchange. That was the lowest closing level for futures prices since Aug. 25. Given how long the European debt crisis has been going on, it's no surprise that gold's failing to get a lift from the Greek debt concerns and right now, the movement in gold is really focused on the stronger U.S. dollar, said Jeffrey Wright, senior analyst of metals and mining equity research at Global Hunter Securities.

Obama's tax adventure :

 In a blunt rejoinder to congressional Republicans, President Barack Obama called for $1.5 trillion in new taxes Monday, part of a total 10-year deficit reduction package totaling more than $3 trillion. He vowed to veto any deficit reduction package that cuts benefits to Medicare recipients but does not raise taxes on the wealthy and big corporations.

"We can't just cut our way out of this hole," the president said.

The president's proposal would predominantly hit upper income taxpayers but would also reduce spending in mandatory benefit programs, including Medicare and Medicaid, by $580 billion. It also counts savings of $1 trillion over 10 years from the withdrawal of troops from Iraq and Afghanistan.

The deficit reduction plan represents an economic bookend to the $447 billion in tax cuts and new public works spending that Obama has proposed as a short-term measure to stimulate the economy and create jobs. And it gives the president a voice in a process that will be dominated by a joint congressional committee charged with recommending deficit reductions of up to $1.5 trillion.

His plan served as a sharp counterpoint to Republican lawmakers, who have insisted that tax increases should play no part in taming the nation's escalating national debt. Obama's plan would end Bush-era tax cuts for top earners and would limit their deductions.

"It's only right we ask everyone to pay their fair share," Obama said from the Rose Garden at the White House.

In issuing his threat to veto any Medicare benefits that aren't paired with tax increases on upper-income people, Obama said: "I will not support any plan that puts all the burden for closing our deficit on ordinary Americans."

Responding to a complaint from Republicans about his proposed tax on the wealthy, Obama added: "This is not class warfare. It's math."

The Republican reaction was swift and derisive.

"Veto threats, a massive tax hike, phantom savings, and punting on entitlement reform is not a recipe for economic or job growth_or even meaningful deficit reduction," Senate Republican leader Mitch McConnell said in a statement issued minutes after the president's announcement. "The good news is that the Joint Committee is taking this issue far more seriously than the White House."

Obama's proposal comes amid Democratic demands that Obama take a tougher stance against Republicans. And while the plan stands little chance of passing Congress, its populist pitch is one that the White House believes the public can support.

The core of the president's plan totals just over $2 trillion in deficit reduction over 10 years. It would let Bush-era tax cuts for upper income earners expire, limit deductions for wealthier filers and close loopholes and end some corporate tax breaks. It also would cut $580 billion from mandatory programs, including $248 billion from Medicare. It also targets subsidies to farmers and benefits programs for federal employees.

Officials cast Obama's plan as his vision for deficit reduction, and distinguished it from the negotiations he had with House Speaker John Boehner in July as Obama sought to avoid a government default.

As a result, Obama's proposal includes no changes in Social Security and no increase in the Medicare eligibility age, which the president had been willing to accept this summer.

Administration officials also said that Obama's $1.5 trillion in new taxes is a goal that Congress could achieve through a broad overhaul of the tax code. They said the president's specific proposals represent one way to get to that goal under the existing tax code.

Coupled with about $1 trillion in cuts already approved by Congress and signed by the president, overall deficit reduction would total more than $4 trillion, a number many economists cite as a minimum threshold to bring the nation's debt under control.

Key features of Obama's plan:

—$1.5 trillion in new revenue, which would include about $800 billion realized over 10 years from repealing the Bush-era tax rates for couples making more than $250,000. It also would place limits on deductions for wealthy filers and end certain corporate loopholes and subsidies for oil and gas companies.

—$580 billion in cuts in mandatory benefit programs, including $248 billion in Medicare and $72 billion in Medicaid and other health programs. Other mandatory benefit programs include farm subsidies and federal employee benefits. Administration officials said 90 percent of the $248 billion in 10-year Medicare cuts would be squeezed from service providers. The plan does shift some additional costs to beneficiaries, but those changes would not start until 2017.

—$430 billion in savings from lower interest payment on the national debt.

— $1 trillion in savings from drawing down military forces from Iraq and Afghanistan.

Republicans have ridiculed the war savings as gimmicky, but House Republicans included them in their budget proposal this year and Boehner had agreed to count them as savings during debt ceiling negotiations with the president this summer.

Illustrating Obama's populist pitch on tax revenue, he suggested that Congress establish a minimum tax on taxpayers making $1 million or more in income. The measure — the White House calls it the "Buffett Rule" for billionaire investor Warren Buffett — is designed to prevent millionaires from taking advantage of lower tax rates on investment earnings than what middle-income taxpayers pay on their wages.

That minimum rate, however, is not included in the White House revenue projections. Officials said it was a suggestion for Congress if it were to undertake an overhaul of the tax code.

.At issue is the difference between a taxpayer's tax bracket and the effective tax rate that taxpayer pays. Millionaires face a 35 percent tax bracket, while middle income filers fall in the 15 or 25 percent bracket. But investment income is taxed at 15 percent and Buffett has complained that he and other wealthy people have been "coddled long enough" and shouldn't be paying a smaller share of their income in federal taxes than middle-class taxpayers.

Associated Press

French Bank more downgrade Imminent by Moody's

While S&P appears to have completely forgotten about the country of Belgium, Moody's has realized that should Greece default, which is now inevitable, there may be aftershocks. On June14th 2011, it focused on France, and its three main banks Credit Agricole, SocGen and BNP, all of which it has put on downgrade review with a one notch maximum downgrade potential (except for SocGen which is two). Moody's also refreshed those who care that its downgrade review of Belgium's Dexia is ongoing and could result in a two-notch downgrade. 

From Moody's

Moody's Investors Service had placed the standalone financial
strength ratings and long-term debt and deposit ratings of three
French banking groups -- Credit Agricole SA (CASA), BNP Paribas
SA (BNPP), and Societe Generale SA (SocGen) on review for possible
downgrade.

The primary focus of all three reviews will be the banks' credit
exposures to Greek government debt and the Greek private sector and the
potential for inconsistency between the impact of a possible Greek default
or restructuring and current rating levels. The review of SocGen
will also assess the likelihood of future government support since our
systemic support assumption is currently higher than the average for the
French banking system.

Moody's also noted that exposures to Greece are to be included within
the ongoing review for possible downgrade of Dexia Group's core
operating banks.

The specific rating actions taken today are:

- Credit Agricole SA (CASA): standalone credit strength C+
/ mapping to A2 on Moody's long-term scale, with an
adjusted baseline credit assessment (BCA) of Aa3 and a senior long-term
rating Aa1, all on review for downgrade.

- BNP Paribas SA (BNPP): B-/A1 and Aa2 ratings on
review for downgrade.

- Societe Generale SA (SocGen): C+/A2 and Aa2 ratings
on review for downgrade.

The short-term Prime-1 ratings of the three French banking
groups have been affirmed.

Moody's notes that CASA's and BNPP's reviews are unlikely
to lead to downgrades of more than one notch. SocGen's debt
and deposit ratings could be downgraded by as much as two rating notches
because its review will include a reassessment of the uplift it receives
from systemic support, which is currently higher-than-average
for the French banking system.

A full list of affected entities and ratings can be found at the end of
this press release.

RATINGS RATIONALE

Today's actions reflect Moody's concerns about these banks'
exposures to the Greek economy, either through direct holdings of
government bonds or credit extended to the Greek private sector directly
or through subsidiaries operating in Greece, a key factor for CASA
and SocGen due to their local Greek banks. The magnitude and composition
of these exposures differ substantially across these banking groups.

Potential mitigants to these concerns are the strong financial profiles,
substantial scale and earnings diversification of the French banking groups
covered by this review. Moody's will focus on the potential
impact of various scenarios for Greek government and private-sector
credit exposures on the profitability, capital and funding positions
of these banks.

Moody's may take similar actions on other banks with direct exposures
to Greece in the coming weeks, if it considers that their ratings
may be inconsistent with the potential impact of a Greek default or restructuring.
Additionally, we are closely monitoring the risks that would likely
result from a Greek default scenario, e.g. the potential
impact on weaker countries, the capital markets, and funding
conditions, and are taking those risks into consideration in our
ratings of banks across the Eurozone.

DETAILED RATIONALE AND REVIEW CONSIDERATIONS FOR CASA, SOCGEN AND
BNPP

CREDIT AGRICOLE SA (CASA)

For CASA, the principal direct risk in Moody's view arises
from the group's local subsidiary, Emporiki, and from
its private sector credit exposures in Greece. Indeed on 3 June
2011, Moody's downgraded the standalone credit assessment
and the senior long-term deposit ratings of Emporiki to Caa1 and
B1 respectively, in response to the downgrade of the Greek government.
Emporiki reported a net customer loan book of EUR21.1 billion at
31 March 2011 compared to Groupe Credit Agricole's consolidated
Core Tier 1 capital of EUR50.8 billion. Moody's therefore
considers that the secondary effects of a Greek default scenario could
have a significant impact on the bank, owing to these direct exposures
to the local economy, and the ratings agency's belief that
CASA will continue to provide funding and capital support to Emporiki.
Moody's review will therefore focus on the potential impact of the
various scenarios on the group's profitability, capital and
funding.

Moody's expected the direct impact of a default or restructuring
of Greek government bonds to be limited in the case of CASA, given
the rating agency's view that it has a relatively modest exposure
to such debt (EUR0.6 billion net at 31 March 2011).

SOCIETE GENERALE

Similarly to Credit Agricole SA, SocGen has a majority stake in
a local bank, General Bank of Greece (Geniki), and thus faces
risks from its private sector credit exposures in the country (Geniki
reported a net customer loan book of EUR3.4 billion at 31 March
2011, of which we understand a material proportion relates to multi-national
companies, compared to SocGen's consolidated Core Tier 1 capital
of EUR29.4 billion). Moody's also downgraded on 3
June 2011 the standalone credit assessment and senior ratings of Geniki
to Caa1 and B1 respectively, and the ratings agency believes that
SocGen will continue to provide funding and capital support to its subsidiary.

However a default or restructuring of Greek government bonds would be
more material for SocGen than it would be for CASA, given SocGen's
exposure to Greek government debt, reported to be EUR2.5
billion net as at 31 March 2011, although we understand that this
exposure has since been reduced. Moody's review will therefore
focus on the potential impact of the various scenarios on the bank's
profitability, capital and funding.

Furthermore, in its review, Moody's will also re-assess
the systemic support assumptions currently factored into the long-term
ratings to reflect the post-crisis support environment.
The group currently benefits from a three-notch uplift from its
intrinsic financial strength equivalent on the long-term rating
scale (above average for France), compared to the two-notch
uplift assigned prior to Moody's downgrade of the financial strength
rating on 14 April 2009.

BNP PARIBAS

Unlike CASA and SocGen, BNPP does not have a local subsidiary bank
in Greece and, as such, its relative exposure to the local
economy is more modest. Instead, BNPP's main risk arises
from its substantial direct holdings in Greek government debt: EUR5.0
billion of net exposure as at 31 December 2010, compared to Common
Equity Tier 1 capital of EUR56.6 billion at end-March 2011,
in addition to exposures to other weaker Eurozone countries, e.g.
Portugal (EUR1.9 billion of net government debt exposure as at
31 December 2010).

Moody's therefore expects the review of BNPP's ratings to
focus on the direct and indirect impact of a Greek government debt default/restructuring
on the bank's profitability, capital and funding.

DEXIA

Dexia reported EUR3.5 billion of gross banking book exposure to
the Greek government as at 31 March 2011, compared to Core Tier
1 capital of EUR17.0 billion, and which is part of the group's
total maximum reported credit risk exposure to Greece of EUR5.4
billion at the same date.

In our existing review for possible downgrade of Dexia's three main
operating banks, (Dexia Credit Local, Dexia Bank Belgium and
Dexia Banque Internationale à Luxembourg), opened on 28 March,
2011, we identified three main factors we would consider.

- Dexia's ability to raise long-term funding at a cost that
preserves the economics and the viability of its public finance core business;

- Its ability to continue deleveraging its legacy assets without
adversely affecting the average quality and duration of the bond portfolio
in run-off; and

- The potential impact of Basel III regulations on Dexia's liquidity
management and the group's capitalisation.

We will also consider the potential impact of a Greek government default/restructuring
on Dexia within our review, which we expect to conclude in the coming
weeks. As previously stated at the opening of our review,
we see the potential downside to the A1 long-term senior debt and
deposit ratings to be limited to one or possibly two notches. Our
decision to affirm the Prime-1 short-term ratings was driven
by our expectation that systemic support would be forthcoming for Dexia's
financing needs, as it was in the past.

OTHER BANKS' EXPOSURES TO GREECE AND POTENTIAL SIMILAR ACTIONS

With regard to the other large French banks rated by Moody's --
namely, Banque Federative du Credit Mutuel, Credit Industriel
et Commercial, Credit Mutuel Arkea and BPCE -- the rating agency
perceives their exposures to be lower compared to those of CASA,
SocGen, BNPP and Dexia.

As stated, Moody's will consider similar actions for other
banks, should the rating agency believe that their ratings would
be potentially inconsistent with the direct or indirect impact of a Greek
default or restructuring.