Greece preparing for the future.

Dreaded_Estate

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Greece preparing for the future, Ireland?

Greece has asked its banks to prepare for the withdrawal of the unlimited ECB funding.

Greek Bond Spread Is Widest in 4 Months on Finances (Update2) - Bloomberg.com
Greece’s central bank asked domestic lenders to outline potential funding sources in coming months as the European Central Bank begins to tighten the liquidity it provides to Europe’s banking system, Euro2day reported.

In a letter to the institutions, the Athens-based central bank said Greek lenders as a whole had borrowed amounts that were proportionally greater than other countries in the 16- nation euro area, the Web site said, without saying where it got the information. Greek banks have borrowed a total of 42 billion euros ($63 billion) of the 570 billion euros the ECB has pumped into the system, according to Euro2day.
I wonder if the government has planned how NAMA is going to cope once the ECB withdraws the unlimited repos.
It is going to quite tricky to roll over €54bn when these facilities have been withdrawn.

“There’s uncertainty about the ECB talking about exit strategies, and this is putting pressure on the weaker countries and that’s mostly Greece and Ireland at the moment,” said Michiel de Bruin, head of European government bonds at F&C Asset Management in Amsterdam. “There’s also uncertainty about next year’s supply, liquidity drying up toward the end of the year, and now we are seeing volatility returning to the market.
 
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eyeswideopen

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Greece has asked its banks to prepare for the withdrawal of the unlimited ECB funding.

Greek Bond Spread Is Widest in 4 Months on Finances (Update2) - Bloomberg.com


I wonder if the government has planned how NAMA is going to cope once the ECB withdraws the unlimited repos.
It is going to quite tricky to roll over €54bn when these facilities have been withdrawn.

Oh but isn't the ECB backing NAMA...giving us a charitable digout...printing money to give it to the Irish etc. etc. etc.
 

Conor

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I wonder if the government has planned how NAMA is going to cope once the ECB withdraws the unlimited repos.
It'll be the bank's problem then, not NAMA's.

It is going to quite tricky to roll over €54bn when these facilities have been withdrawn.
Not tricky, just dearer. Presumably, this extra cost will be passed on to borrowers, as will subsequent base rate increases. 2010 will be a tight time for anyone who's overextended themselves on credit. Let's hope there's not too many around in that unfortunate position.
 

eyeswideopen

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It'll be the bank's problem then, not NAMA's.


Not tricky, just dearer. Presumably, this extra cost will be passed on to borrowers, as will subsequent base rate increases. 2010 will be a tight time for anyone who's overextended themselves on credit. Let's hope there's not too many around in that unfortunate position.
The Irish are the most indebted population in the EU in terms of personal debt, by quite a long way. For people who think that if they have no debt, increasing the cost of repaying this debt won't affect them, its like someone on the Titanic thinking they would be OK because they were good at the breast stroke.

Martin Wolf rightly suggested last week that Ireland may well be facing default and that the personal debts are unlikely to be repayable in full.
 

Dreaded_Estate

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It'll be the bank's problem then, not NAMA's.


Not tricky, just dearer. Presumably, this extra cost will be passed on to borrowers, as will subsequent base rate increases. 2010 will be a tight time for anyone who's overextended themselves on credit. Let's hope there's not too many around in that unfortunate position.
The Irish government has about €15bn in short term bills outstanding.
 

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cyberianpan

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You'll have to elaborate.
The banks, including non Irish banks, have been buying huge quantities of short term Irish Government Debt ... using liquidity monies(money printed from air) from the ECB...

The ECB of course can't print money and use it to buy Irish Government Debt as that breaks the rules

The Greeks have been bold , bold boys who won't do what the ECB/EC tell them

The ECB/EC shows more forebearance with Ireland, and from above threads you can see the rudiments of a two-track monetary policy

cYp
 

Conor

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The Greeks have been bold , bold boys who won't do what the ECB/EC tell them
I don't see where you're getting that from. Nor do I see how this creates any problems for NAMA.
 

cyberianpan

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I don't see where you're getting that from. Nor do I see how this creates any problems for NAMA.
It doesn't necessarily create problems for Nama... though it does raise the question of whether the ECB will raise rates on the funding it gives to the banks for the Nama gunk they swapped.

Greece got rapped by the EC lately, their attempts at correction have been pathetic

The ECB won't IMF Greece unless it behaves... if we are good boys the ECB will continue IMFing us as per the above

cYp
 

Conor

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It doesn't necessarily create problems for Nama... though it does raise the question of whether the ECB will raise rates on the funding it gives to the banks for the Nama gunk they swapped.
It doesn't raise that question at all. There's no question of the ECB treating the NAMA bonds as anything different from other government bonds. Collateral is either eligible or it isn't; rates are determined by reverse tender. The collateral used in refinancing operations doesn't bear upon the rate at which liquidity is issued.

The ECB won't IMF Greece unless it behaves... if we are good boys the ECB will continue IMFing us as per the above
The ECB isn't IMFing us. There's nothing to indicate the ECB has any problem whatsoever continuing to accept Greek gov. bonds as collateral. This letter from the the Greek CB has nothing to do with Greek government's fiscal correction efforts or otherwise.
 

cyberianpan

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The collateral used in refinancing operations doesn't bear upon the rate at which liquidity is issued.
Indeed it currently doesn't ... however my claim is that for anything to work properly it may have to be treated differently.

The current quoted ECB rates for the Nama gunk , clearly appertain to its emergency liquidity funding. This liquidity needs to be withdrawn from the Eurozone generally when the time is right, as else it will cause horrid bubble/inflation. However I'm dubious as to whether it should be withdrawn from Ireland at that stage... I think our banks will need to rely on it during the "3 year kick to touch" ... and by extension so will we:

The ECB isn't IMFing us.
It actually is:
The ECB is printing money & lending to Ireland via the banks

Without the above our sovereign debt rates would be crazily dear...and the ECB/EC are closely "wacthing" fiscal matters here. We've had , what in effect amounts to, an IMF intervention.

And overall, continuance of such measures, would be an acceptable way to achieve a two track monetary policy

We shall see what happens when they need to raise rates generally... and shut the emergency bank liquidity window

cYp
 

toughbutfair

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International investors are still loaning us money (another 1bn yesterday) and oversubscribing too so they obviously have confidence in our ability to repay.
 

bormotello

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It'll be the bank's problem then, not NAMA's.
What was the reason to pay banks 54 Bn, for assets which not worst half of this amount, if banks will collapse anyway and taxpayer will bailout them again?
 

bormotello

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I don't see where you're getting that from. Nor do I see how this creates any problems for NAMA.
All valuations of NAMA assets were based on assumption that country will have banks, which will lend money with low interest
 

cyberianpan

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International investors are still loaning us money (another 1bn yesterday) and oversubscribing too so they obviously have confidence in our ability to repay.
They have confidence that they will be repaid... not necessarily in our ability for same.

The ECB's subtle signalling in allowing €7.5b+ of its "funny money" to be used for buying Irish debt has worked wonders in keeping short term yields "acceptable"

cYp
 

Conor

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Indeed it currently doesn't ... however my claim is that for anything to work properly it may have to be treated differently.

The current quoted ECB rates for the Nama gunk , clearly appertain to its emergency liquidity funding. This liquidity needs to be withdrawn from the Eurozone generally when the time is right, as else it will cause horrid bubble/inflation. However I'm dubious as to whether it should be withdrawn from Ireland at that stage... I think our banks will need to rely on it during the "3 year kick to touch" ... and by extension so will we:
Sure, but that's pure speculation, and has no real bearing on this thread. There's been no indication, and no reason to think, that the NAMA bonds will be treated any differently from other Irish government bonds, or other eurozone government bonds for that matter.

Of course, it'd be unfavourable to withdraw liquidity from Ireland at a time when we need it. But those are the breaks of a single currency - sometimes (as has been the case here for the past decade), monetary policy won't suit a local economy. They didn't have a two-track policy then, there's no reason to think they will now. Sort of defeats their purpose.


It actually is:
The ECB is printing money & lending to Ireland via the banks
Without the above our sovereign debt rates would be crazily dear...and the ECB/EC are closely "wacthing" fiscal matters here. We've had , what in effect amounts to, an IMF intervention.
Calling it an IMF intervention doesn't make it so, or anything like it. The IMF bails out governments conditional on the implementation of the IMF's preferred fiscal policies. The ECB lends money on the strength of government bonds as collateral, conditional on nothing really. Since when has the ECB given a sh!t about any eurozone country's fiscal policy? It's well outside their remit.

Yes, if Irish government bonds weren't acceptable as collateral to the ECB, the yields would be higher. That's true of any eurozone country. Likewise, if banks - internationally, not just in Ireland - were unwilling to buy Irish bonds, the yields would be higher. If we weren't in the Euro, our yields would be higher. What this has to do with an IMF-style bailout is quite beyond me.

Anyway, what's this you were saying about Greece being "bold boys" and getting treated differently to ourselves?
 

cyberianpan

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Sure, but that's pure speculation, and has no real bearing on this thread. There's been no indication, and no reason to think, that the NAMA bonds will be treated any differently from other Irish government bonds, or other eurozone government bonds for that matter.

Of course, it'd be unfavourable to withdraw liquidity from Ireland at a time when we need it. But those are the breaks of a single currency - sometimes (as has been the case here for the past decade), monetary policy won't suit a local economy. They didn't have a two-track policy then, there's no reason to think they will now. Sort of defeats their purpose.
Tis indeed speculation... luckily we are so tiddly piddly in size that they could afford a two track policy

Calling it an IMF intervention doesn't make it so, or anything like it. The IMF bails out governments conditional on the implementation of the IMF's preferred fiscal policies. The ECB lends money on the strength of government bonds as collateral, conditional on nothing really. Since when has the ECB given a sh!t about any eurozone country's fiscal policy? It's well outside their remit.

Yes, if Irish government bonds weren't acceptable as collateral to the ECB, the yields would be higher. That's true of any eurozone country. Likewise, if banks - internationally, not just in Ireland - were unwilling to buy Irish bonds, the yields would be higher. If we weren't in the Euro, our yields would be higher. What this has to do with an IMF-style bailout is quite beyond me.
The EC is closely watching our fiscal situation and has certified us as "making a good effort" .... the ECB is agreeing that the Nama gunk can be swapped and is also allowing the liquidity money buy Irish Debt (!!!)

The EU has a lot of power between those 2 things... if we were on the wrong track ... they'd not be so flexible

IT

It would be wrong to characterise the ECB’s support for Ireland as a bad thing, or even clandestine. The information on Irish bank holdings of Government bonds are published by the Central Bank. It’s just something that no one – for obvious reasons – is all that keen to highlight.
...
But moderation prevails. It is fair, however, to postulate that the ECB would not have extended all this credit to Ireland unless it was reassured that corrective measures were being put in place both to stabilise the exchequer finances and clean up the bank system.
...
Did they have to tell us what to do, or did we figure out for ourselves what we had to do in order to obtain their support? Did we have a choice either way? A bit of all of the above, one suspects.
...
The notion that the ECB now has its hand – even partially – on the economic tiller
Anyway, what's this you were saying about Greece being "bold boys" and getting treated differently to ourselves?
Greece has been censured by the EC over budgetary matters ...

irishtimes.com - Last Updated: Wednesday, November 11, 2009, 18:14
The Commission set deadlines between 2012 and 2014/15 for 13 EU countries today to cut their budget gaps below 3 per cent of GDP and said it would step up disciplinary budget action against Greece.
and is now telling its banks to prepare for the dry up of cheap/emergency liquidity ...

I'm just joining dots ...

cYp
 


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