As Eurozone Finance Ministers Hold An Emergency Meeting In Attempt To Narrow Differences Over Seigniorage Aid For Greek … An Inquiring Mind Asks … Is Greece A Sovereign Nation State?

Report on the Euro, European Financials, and Bonds for June 14, 2011

1) … Open Europe reports Eurozone finance ministers meet to solve dispute between ECB and Germany as S&P downgrades Greece again making it the world’s lowest rated economy.
Standard & Poor’s has today downgraded Greece’s debt by three notches, to CCC, giving it the lowest credit rating in the world and leaving it only four notches above a default rating. The move sent the Greek, Irish and Portuguese cost of borrowing to new record highs, while the Spanish cost of borrowing also began increasing again
Meanwhile, eurozone finance ministers will hold an emergency meeting today in an attempt to narrow differences over the structure of a second Greek bailout. The FT reports that the second bailout is likely to reach €85bn, comprised of new loans and private sector involvement, according to EU officials. The main dispute is between the ECB and Germany over the role of private bondholders. Germany wants to force them to swap their current bonds for ones with longer maturities (a bond swap) while the ECB prefers a voluntary purchase of new debt by those holding bonds which expire in the next few years (a bond rollover).
Sources close to the discussions suggested that the ECB line looks more likely to win out as they have hardened their position and continue to receive widespread backing including from France. However, Germany has received backing from both Luxembourg and the Netherlands in recent days. A decision is not expected today but discussions should form the basis for one next week.
NRC Handelsblad reports that Dutch Finance Minister Jan Kees de Jager yesterday confirmed figures cited by Dutch Central Bank Governor Nout Wellink, that a Greek default would cost the Dutch Central Bank around €4bn as a result of losses incurred by the Eurosystem. Open Europe’s Raoul Ruparel appeared on CNBC India discussing the ECB’s exposure to the current Greek crisis. The IHT and the Economist’s Free Exchange blog cite Open Europe’s findings that the ECB has an exposure of €444bn to the PIIGS and holds €190bn in Greek assets.
FT WSJ CityAM EurActiv European Voice Independent Coulisses de Bruxelles Le Monde EUobserver Les Echos Les Echos 2 EurActiv France La Tribune Le Soir SvD Irish Independent IHT Handelsblatt Guardian El Pais Zeit FTD Kathimerini Ethnos Isotimia Ta Nea Eleftherotypia Vima FT 2 FT 3 FT 4 SZ Bloomberg Bloomberg 2 Eleftherotypia 2 Kathimerini 2 Vima 2 Kathimerini 3 Kathimerini 4 Ethnos Irish Independent 2 NRC Handelsblad Report by Dutch Finance Minister to Dutch Parliament Capital Economist blogs: Free Exchange

2) … Theyenguy reports Jean-Claude Juncker backs Germany’s proposals of a soft restructuring which would cause a default.

3) … Mike Mish Shedlock reports ECB Governor Christian Noyer Warns “Default Would Mean Financing the Entire Greek Economy”; 10-Year Yields at Record High; Emergency Session Underway.

4) … Bloomberg reports Minnesota Tea Party Michele Bachmann Enters 2012 Presidential Race. U.S. Representative Michele Bachmann, a Minnesota Republican known for her uncompromising views and firebrand style, said today that she plans to run for the 2012 Republican presidential nomination.

5) … A bounce up in stocks means that the rally in bonds is now over as Bonds, BND, fell parabolically lower.

6) … An Inquiring Mind Asks … Is Greece A Sovereign Nation State?
With sovereign debt interest rates at 19% and the Greece sovereign cds hitting another new record high again today, and European Leaders meeting in emergency summit to hopefully provide seigniorage aid … an inquiring mind asks, is Greece a sovereign nation state?

Are those in Greece living beholding to others superior to them for their economic well being?

Is a region of global economic governance rising, where one is no longer a resident of a nation but rather a citizen living in a continental trading group?   

If the people in Greece are no longer sovereign individuals, do they have responsibilities to the sovereigns who provided them seigniorage?

In MessageBoard, JohnUSA, writes on the vanishing sovereignty of Greece  Greece is the birthplace of democracy. As a result of the financial crisis, it might become the first European Union country to, in effect, give up democracy as the debt crisis morphs into a political crisis. We all know that Greece has already become a client state of the so-called Troika – the EU, the International Monetary Fund and the European Central Bank. The first two supplied €110-billion ($157-billion) in bailout loans to Athens a year ago and are preparing a second bailout package, worth perhaps €60-billion, as Greece teeters on the brink of bankruptcy. For its part, the ECB loaded up on Greek bonds and supplied liquidity to Greek banks.

I believe, a Chancellor, a Sovereign, and a Banker, the Seignior, will rise to power and apply all the debt to all the peoples, that is every man, woman and child in Europe.

7) … Keywords and Symbols
EUFN, BND, FXE, European Sovereign Debt Crisis, Sovereign Debt Crisis, Sovereign Individual, Sovereignty, Seigniorage,


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