The Credit Crisis Financial Stocks Short Journal

I remember Bill Gross saying that the cost of financing GDP cant be greater than the return of GDP, this seems to make sense. The Greece situation seem to be tough to solve

€265b GDP
€300b Gov debt
€13 interest costs(5% cost)

With their debt at 7% they are in a death spiral since they would eventually roll over debt at 5% to 7%, meanwhile their GDP grew in the years leading up to the crisis by 4%, they could grow tax revenues by more than 4% by raising taxes, but that would hurt GDP growth.
As a result they are in a hole for which the solution is inflation or large spending cuts along with some tax hikes. There is always of course, default. IMF or EU loans or bailouts wont solve this basic math(unless they loan cash at virtually no cost), the country is over levered and cant support its debts as a result they need to restructure either through large fiscal reform or an official default. How they will do it I don't know
 
Jim Grant on The Head Jew ...

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Quote from Martinghoul:

As I mentioned in another thread, this is a truly excellent comment on Greece (from the former IMF Chief Eco):
http://baselinescenario.com/2010/04/06/greece-and-the-fatal-flaw-in-an-imf-rescue/
More...

Interesting article. Greece has a bigger debt to gdp(almost double) compared to Hungary, so I'm not sure where soros is getting his optimism from. I think this guy is right, the IMF will make a mistake again, the pressures to not let the first ship go down are great
 
Quote from Daal:

Interesting article. Greece has a bigger debt to gdp(almost double) compared to Hungary, so I'm not sure where soros is getting his optimism from. I think this guy is right, the IMF will make a mistake again, the pressures to not let the first ship go down are great
More...
In my view, Greece is a lost cause... There really is nothing that can be done, either by the IMF or the EU. It would be properly like throwing good money after bad. Obviously, then it becomes a dilemma in terms of whether it's still worth doing, given the probability of another Leh-like sh1tshow.
 
Don Kohn apparently just made 'extended period' useless

'Although the FOMC has stated that the federal funds rate is likely to remain exceptionally low for an extended period, this statement explicitly depends on an economic outlook similar to the one I have given today. We cannot provide a precise timetable for when short-term interest rates will begin to return to normal because that depends on the evolution of actual and projected activity and inflation.'

"It will depend on the data", funny I remember of NO references for that last year. So now 'extended period' means a forecast from fed for how long they will keep rates low if their forecasted data comes in line with their expectations
 
FOMC members who moved markets in 2009
http://macroadvisers.blogspot.com/2010/04/which-fomc-members-moved-markets-most.html

This is an interesting chart
http://3.bp.blogspot.com/_CT4aRzYk2JY/S732tlFhWMI/AAAAAAAAADQ/T9f83l7OLVM/s1600/WMM09F6.jpg

It shows that the net effect of Fed communications was hawkish as interpreted by the marginal 2y UST market participant. Meanwhile the Fed held rates a 0% the whole time and already did for 3 months in 2010(likely for at least another 5-6 months). That didnt prevent the 'rate scares' from taking over everytime the Fed communicated, this goes to show how crazy the 2y and front end can be and why I like to trade there. It appears that they dont pickup in nuances of the Fed words and as a result misinterpret their intentions
 
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