Archive

Debt

Check out a series of video reporting from Greece by the Reelnews network, “an activist video collective, set up to publicise and share information on inspirational campaigns and struggles.”

 

Look at their playlist for the following short videos:

1) Our Present is Your Future: How to destroy public health services (Reel News) Over a third of hospitals to close. Exhorbitant charges. Healthworkers not being paid. But doctors are leading an astonishing fightback.

2) It’s still like being in a war zone — Immigrants in Greece (Reel News)

3)  Crisis (Reel News)  Don’t believe the lies — the Greek public debt is down to the banks and the rich. With extracts from the film “Debtocracy”.

4) That’s Our Power — Rank and File Organising (Reel News) The growth of rank and file committees, featuring the three longest all out strikes ever in Greece (steel factory, national newspaper & TV station), plus hospital occupations.

5)  Solidarity — Not Charity: Community Organising (Reel News)  Local assemblies are springing up all over Greece, organising community kitchens, clothing exchanges and other acts of practical solidarity.

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Public debt, in billions of euros, fourth quarter 2011

http://online.wsj.com/article/SB10001424052702304203604577393964198652568.html?mod=europe_home#project%3DEZNUMBS0312%26articleTabs%3Dinteractive

The 17-nation euro zone is a collection of countries with vastly different economic profiles. Far from stimulating “convergence” toward a single economy, the eurozone has perpetuated divergence.  Despite the predominance in the mainstream that Greece, Ireland and Portugal should be punished for deviating from the Maastricht rules these graphics show that the majority of countries are well beyond the 3% deficit and 60% debt threshold ratios.

 

Budget Balance in 2011

 

http://online.wsj.com/article/SB10001424052702304203604577393964198652568.html?mod=europe_home#project%3DEZNUMBS0312%26articleTabs%3Dinteractive

The 17-nation euro zone is a collection of countries with vastly different economic profiles. Far from stimulating “convergence” toward a single economy, the eurozone has perpetuated divergence.  Despite the predominance in the mainstream that Greece, Ireland and Portugal should be punished for deviating from the Maastricht rules these graphics show that the majority of countries are well beyond the 3% deficit and 60% debt threshold ratios.

“Hedge funds have been known to use hardball tactics to make money. Now they have come up with a new one: suing Greece in a human rights court to make good on its bond payments.”

Article From the NY Times. The international pressure on Greece is mounting as bondholders do all they can to extract maximum value from the ticking time bomb of its debt. Yet as this chart shows, the ‘all-important’ bond market only constitutes a third of greek debt holdings:

If Greece were to announce a default its own banks, pension funds and household savers would also suffer huge losses, possibly plunging the country into a more acute crisis. The situation then, is far more complex than ‘greece vs. the international money markets’. The question of how or even if greece can resolve the contradictions of its current predicament remains open.

With all the fear and speculation surrounding the current wave of credit rating downgrades, this chart gives a useful indication of the global situation (liable to change at any moment mind!).

A credit rating gives an indication of how risky an investment a state is percieved to be. Although ostensibly only a ‘guide’ provided by the rating agency, a lower rating almost always leads to higher borrowing costs for a govenrment. This means big trouble when states ‘refinance’ (basically renewing old debt), as they are suddenly hit with a much higher interest bill on their debts.

Here’s a run down of what Standard & Poor’s (one of the three main rating agencies, along which Moody’s and Fitch) ratings indicate:

AAA: The best-quality borrowers, reliable and stable

AA: Quality borrowers, a bit higher risk than AAA

A: Economic situation can affect finance

BBB: Medium-class borrowers, which are satisfactory at the moment

BB: More prone to changes in the economy

B: Financial situation varies noticeably

CCC: Vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments.

CC: Highly vulnerable.

C: Even more highly vulnerable.

D: Defaulting on commitments.

Ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

State debt and the crisis in the Eurozone

“The fact that almost every state in the world is in debt – and the more powerful it is the bigger the debt – first of all begs the following questions: why have these states permanently contracted debt? Why is it that most of the states in the world were able to pile up their debt over such a long time without any problems? Who are the creditors and why have they readily and increasingly accommodated loans / lent money to the states?”

From the Wine and Cheese appreciation society of greater London. The first of a four part series explaining how state debt functions and its role in the eurozone crisis.