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US Public Finances Worse Than Greece

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Reported in ZeroHedge is a great chart showing the US debt including all its commitments and the amazing thing is its more indebted than Greece. Opps!! Check out the full article from ZeroHedge including a further breakdown of the debt.

A rather curious phenomenon that has been observed in the popular press lately is that on those rare occasions when total global public debt is demonstrated correctly on a country by country basis, i.e., including contingent liabilities, as well as various trans-national, public-sector backed guarantees (such as EFSF backstops), and most importantly the Net Present Value of pensions and healthcare, or the cost of the welfare state expressed in current dollars, there is one country that is  systematically excluded. That would be the United States. Today we set the record straight by adding the US to the list where it rightfully belongs, and also answer the rhetorical question of why the US just so happens to be consistently omitted from such column-chart based, hair-raising classifications.

Source: ZeroHedge

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Hedge Funds Line Up Against Spain

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Its a cruel world in finance. After working their way through Greece and Spain, hedge funds are now eyeing up whats on offer in Spain.

(Reuters) – Hedge funds have spotted money-making opportunities in Spain, betting that market fears over the southern European country’s deepening debt crisis have made some assets too cheap relative to other securities.

Managers have been exploiting what they see as the mispricing of credit default swaps, government and corporate bonds and stocks, after months of growing market concern that Spain might need an international bailout, using relative value trades – betting on one security versus another.

The moves echo the earlier stages of the euro zone crisis, when hedge funds – renowned as being among the nimblest of investors – bought CDS – designed to pay out in the event of default – on Greece and other weaker euro zone countries.

When the trade became more popular they quickly took profits and moved onto countries such as France and Belgium.

Spanish stocks are already suffereing.

Spain’s stocks .IBEX have tumbled 17.1 percent this year while the 10-year government bond yield has risen from less than 4.7 percent at the start of February to more than 6 percent earlier this week as investors fretted over its debt-laden banks and consumers and its shrinking economy.

A number of hedge funds bought Spanish CDS at the start of the month, say industry insiders, helping drive up the price to more than 500 basis points earlier this week from below 350 basis points in February.

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Some funds who have long-term bets on Spanish banks recovering and who are unwilling to sell at current prices have gone short a basket of Spanish stocks as a hedge, specially weighted to counter further sharp falls in bank stocks.

“If banks are a long-term position for you you’ve maybe put on a market hedge, but because banks have higher beta you’ve overhedged,” the prime broker said.

Its not just Spain who should be worried. France has not escaped attention either.

“We all agree that Spain is facing many difficulties, but so are other neighbouring countries. I find it more interesting to buy France or Portugal CDS at current levels,” he said.

“France is interesting, as, if Mr (Francois) Hollande is elected President, he will certainly request an audit of public accounts, which will certainly not look nice.”

Source : Reuters

 

Greek Government Provides Emergency Cash For Electricity Supplier

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Greece is on the verge of the electricity network collapsing, but the government is to provide €250 million in emergency funding to keep the lights on. You could argue that it was the fault of government policies that caused the situation in the first place. The power utility PPC was used as a property tax collector but ultimately many desperate people choose not to pay and have their electricity cut off instead. Greece also has to pay over the odds to secure fuel for generating power as a result of mistrust of suppliers of Greece paying its bills.

Greece will provide 250 million euros  in emergency funds to its ailing electricity providers to prevent a California-style energy crisis, government officials said on Friday.

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The temporary aid will shore up the accounts of main power utility PPC, allowing it to maintain operations and reimburse other suppliers of electricity and natural gas on whom the smooth functioning of the country’s energy system depends.

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Greece’s energy market has fallen into disarray due to a combination of stagnant power demand, rising fuel costs and a government decision to use PPC as a tax collection vehicle.
 
An increasing number of consumers stopped paying their electricity bills after the government started collecting a 1.7 billion euro property tax through them last year, in a desperate effort to meet its budget targets under an EU/IMF bailout.
 
Non-payments blew a hole into the accounts of PPC, which is Greece’s biggest power producer and its sole electricity retailer. PPC, which posted a record loss in the fourth quarter, is also the biggest client for upstart producers generating about 23 percent of Greece’s electricity.
Source: Athennews

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