Banking and money

[johnhemming2]

on assuming that Greece had an exit plan from the Euro:

“…it didn’t even occur to me that they would be prepared to make a stand without having done any contingency planning ...amazingly - they thought they could simply demand better terms without having any backup plan. So certainly this is a shock. But, you know, in some sense, it’s hopeless in any case. …it’s not as if the terms that they were being offered before were feasible. I mean, the new terms are even worse, but the terms they were being offered before were still not going to work. So I, you know, I may have overestimated the competence of the Greek government.”

I agree with him about the competence of the Greek goverrnment (and particularly Varoufakis)

[3rdRock]

http://www.bbc.co.uk/news/business-33595861

Peston @ the Beeb:

Greek banks face full nationalisation

Just because the doors of Greek banks are open today, don't be fooled into thinking they and the Greek economy are anywhere near back to recovery.

[3rdRock]

http://www.econotimes.com/Corporate-bon ... down-65756

Corporate bond issuance back in demand as Greece settles down

After a long mute, over Greek debt drama, European corporate bond market has started to rattle again.

With Greece gone focus now turning on to monetary policy once more. With assurance that European Central Bank (ECB) will be keeping rates at very low level in foreseeable future has kicked of the rally in corporate bonds once more.

That's OK then. The world can now stop worrying about the poor folk at the bottom of the Greek economy. I suddenly feel very nauseous.

[johnhemming2]

That in part is what the privatisation fund is for. It is for recapitalising the banks. In the UK some banks were fully nationalised and others were part nationalised. In Greece full nationalisation is quite likely. There is an interesting greek bank bond on the US market (NBG-A) which still has some market value and I am not sure it is going to be protected even though it is outside the greek jurisdiction.

It is a USD25 bond which has lost about 80% of its value and another 5% today of (USD 5 not USD 25).

It was trading really low a couple of years ago, but I am not sure what its realistic value is.

This is what a bank bailout is. The common equity holders will be mainly or all wiped out, the bond holders will be bailed in, if they are lucky deposit holders (of that bank created broad money) won't be bailed in, but that is not to be guaranteed.

[kenneal - lagger]

I will admit to not having read much of the weekends posts here as I had a life in the garden and haven't go the time to catch up.

Firstly on liquidity, because all the banks are making new money all the time many transfers between banks would be paper balance transactions with a low value transfer. Would that need liquidity?

Secondly, many banks parcel up their dodgy loans and sell them on to create more liquidity. These transactions were given high credit ratings by the ratings agencies although the original loans were "sub prime", i.e. not worth the paper they were printed on.

Why, on a slightly different tack, have there been no criminal prosecutions for fraudulent trading and why have there been no civil actions against the selling banks and the ratings agencies?

Is it because the banks are afraid of being the catalyst in bringing the whole rickety edifice crashing down?

[emordnilap]

Finally! got a copy of The Global Minotaur. Epic, poetic, depressing, heroic, easily digestible by even someone like me, do yourself a huge favour and read it if you’ve not already.

How the world has changed since its publication - yet it’s still entirely relevant. Greed will never go out of fashion.

It’d be fascinating to read his take on the current meddlings of the beast.