11/28/2012 archive


Euro Zone, IMF Reach Deal to Cut Long-Term Greek Debt


Published: November 26, 2012 at 8:39 PM ET

The IMF’s share, less than a third of the total, will only be paid out once a buy-back of Greek debt has occurred in the coming weeks, but IMF Managing Director Christine Lagarde said the Fund had no intention of pulling out of the program.

To reduce Greece’s debt pile, ministers agreed to cut the interest rate on official loans, extend their maturity by 15 years to 30 years, and grant Athens a 10-year interest repayment deferral.

They promised to hand back 11 billion euros in profits accruing to their national central banks from European Central Bank purchases of discounted Greek government bonds in the secondary market.

They also agreed to finance Greece to buy back its own bonds from private investors at what officials said was a target cost of around 35 cents in the euro.

Germany and its northern European allies have hitherto rejected any idea of forgiving official loans to Athens, but EU officials believe that line may soften after next year’s German general election.

Schaeuble told reporters earlier that debt forgiveness was legally impossible, not just for Germany but for other euro zone countries, if it was linked to a new guarantee of loans

A source familiar with IMF thinking said a loan write-off once Greece has fulfilled its adjustment program would be the simplest way to make its debt viable, but other methods such as forgoing interest payments, or lending at below market rates and extending maturities could all help.

No figures were announced for the debt buy-back in an effort to avoid triggering a rise in market prices in anticipation of a buyer. But before the meetings, officials had spoken of a 10 billion euro buy-back, that would achieve a net reduction of about 20 billion euros in the debt stock.

How the official sector restructures, Greece edition

Felix Salmon, Reuters

Nov 27, 2012 14:36 UTC

This deal isn’t just the latest chassé in the long dance between Greece and its creditors; it’s a blueprint for every other European country with unsustainable official-sector debts as well. Including Greece itself, which will surely require another deal like this down the road. And it encapsulates the big difference between the way the private sector likes to deal with big debts, in contrast to the way the official sector does it.

The private sector likes a big one-and-done deal, where you start with a massive debt stock, and then you swap it for something smaller. The key number is the “NPV haircut”: the value of a bond is the net present value of its future cashflows, and so a big cut in coupons, or a terming out of interest payments, can be just as drastic, from a bondholder’s point of view, as a cut in principal. There’s nothing sacred about principal: what matters is the mark-to-market value of the bond.

The official sector, by contrast, holds principal highly sacred. That allows the Germans and others to say that they aren’t forgiving any debt; it also means that no national parliament needs to ratify a bill writing off any Greek debt. On the other hand, the official sector is happy to term out maturities until, as Buchheit puts it, the 12th of never, and also cut coupon payments at the same time.

This is the big difference between the private sector and the official sector. The private sector, if it’s owed $1 billion on April 15, expects $1 billion on April 15, whether the debtor can really afford it or not. Failure to make that payment is a default, and if default is a real possibility, then there’s certainly no way the private sector will lend the country new money to make the payment.

The official sector, in contrast, if it sees a big $1 billion payment due on April 15, will simply term it out for a few years. That doesn’t impair the value of the asset on any official-sector balance sheet: it was $1 billion before, and it’s still $1 billion. And so it doesn’t really help with respect to anybody calculating Greece’s debt-to-GDP ratio, since the nominal amount of debt outstanding never actually does down. But in reality, Greece’s ability to manage those debts is much greater than it would be if the debts were mostly private. Because the official sector, deep down, in its heart of hearts, doesn’t actually expect to ever be repaid.

Punting the Pundits

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Wednesday is Ladies’ Day

Follow us on Twitter @StarsHollowGzt

Amanda Marcotte: Sorry, John McCain, But Anti-Choicers Are Judged on Actions, Not Words

This video of John McCain on Fox News Sunday morning is getting a lot of traction, because it seems like he’s telling Republicans to back off their opposition to abortion rights.

But as with Bobby Jindal before, if you actually listen to what he’s saying, he’s not actually telling Republicans to make substantial changes to either what policies they advocate for or even necessarily telling them to tone down their actual passion for stripping women of their reproductive rights. He’s just telling them to be quiet about it, and hope the voters don’t notice.

Ana Marie Cox: Fiscal cliff hype and the future of Grover Norquist’s taxpayer pledge

The renewal of President Obama’s mandate showed Americans favour a more complex solution to US debt than just ‘no’ to taxes

There are many the similarities between Los Angeles and Washington, DC (the most true one having to do with DC being “Hollywood for ugly people), but the hullabaloo around the “fiscal cliff” – technically, a snorefest of sequestration agreements – brings to mind the importance of raising the stake every time you make a sequel. Just as the non-specific excitement of “Star Wars: A New Hope” gave way to the menace of “The Empire Strikes Back”, and then the personal vengeance promised by “The Return of the Jedi”, so must the muscular comity of the “supercommittee” morph into a joined-at-the-hip leap off the “fiscal cliff” – which, itself, in the manner of all trilogies, is followed by more of the same but with bigger explosions: that is, “Taxmaggedon.” [..]

If nothing else, Washingtonians’ hyperbole has proven another LA maxim: violence is good for ratings. More Americans followed the debate over the sequestration package than they did the Petraeus’ own euphemistic scandal. Or at least, that’s what they told Pew Research.

Cherie Blair: Putting the Rule of Law Behind Women’s Rights

(Yes, that Cherie Blair. TMC)

All over the world, the infrastructure of justice is failing women. In some cases, it is the laws themselves that legitimise discrimination – whether on property rights, freedom of movement or women’s control over their own bodies. In many more societies, however, the problems stem from a justice system which fails to recognise the informal and often unconscious bias against women. [..]

It is not enough to put the right laws in place to root out discrimination, important as this is. We also have to find the commitment, knowledge and resources to enforce them fairly. And crucially, we need to change attitudes, though that can be harder to bring about than changes in the law. Yet one often leads to the other and both are needed to deliver real change throughout society.

So what is working? It is important to note the progress around the world and how it is being achieved.

Katrina vanden Heuvel: Governor Cuomo’s Choice

Democrats are still celebrating big Election Day victories, and not just in the White House. The party took back many state legislative seats seized by Tea Partiers in 2010, and added to majorities in already blue states. In California and Illinois, Democrats achieved legislative super-majorities, removing some of the last obstacles to enacting a progressive agenda in two of our largest states. [..]

Which brings us to the current conundrum. One would have thought that a Democratic governor would have worked hard to reverse the Tea Party’s 2010 gains in his state. You’d think he’d be working even harder to ensure that no renegade legislators “flip” to the GOP. You would hope that a governor with his eyes on the White House would prefer to cooperate with the diverse progressive legislators of the Democratic/Working Families Party majority rather than the all-white, nearly all-male moderate-to-conservative GOP minority.

Annette Bernhardt and Dorian Warren: The Missing Living Wage Agenda

Now that the election is over, our hope is that we can finally move beyond the vacuous invocations of an imaginary middle class where everyone is in the same boat. It’s time to get real about the concrete policies needed to take on the multiple inequalities that run deep through the U.S. labor market. And we’re not talking about the “skills mismatch,” another red herring routinely flung into this debate by both sides (including by President Obama as recently as the last week of the campaign).

What we’re talking about is a broad, multi-year agenda to give America’s workers a living wage and voice on the job and to take on the continuing exclusion of workers of color, immigrants, and women from good jobs. The media may have discovered inequality last year with the surprise emergence of Occupy Wall Street, but in truth, there is a 30-year backlog of policies to fix the extreme maldistribution of wages and opportunity in the labor market.

Isabeau Doucet: Canada, The Surprise ‘Pariah’ of the Kyoto Protocol

Some Canadians doubt whether their country should have any say in negotiating the second Kyoto protocol after it became the only nation to reject the first one

Of all the delegations in the room in Doha, the Canadians adopt the lowest profile. Some question whether they should be there at all: The country’s first and only Green party MP, Elizabeth May, said: “Having Canada in the room negotiating to weaken the second Kyoto, when we have already signalled that not only will we not be participating in taking on new targets in the second period but we’re legally withdrawn from the protocol, should make us pariahs.”

“I can’t imagine how anybody would want us in the room.”

Canada’s current greenhouse gas (GHG) emissions are 23% over the country’s Kyoto protocol target, and federal government estimates place Canada 28.8% over the target by 2014. Canada is the only country to have repudiated Kyoto, the sole legally binding international policy tool to date to deal with the emissions, and ranks just behind the US and Australia in the table of worst global emitters per capita.

This is because of Canada’s size, its cold climate and its resource-based economy, especially the energy-intensive, carbon-emissions-heavy oil boiled from large swaths of bitumen know as the Alberta tar sands.

On This Day In History November 28

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future

Find the past “On This Day in History” here.

November 28 is the 332nd day of the year (333rd in leap years) in the Gregorian calendar. There are 33 days remaining until the end of the year.

On this day in 1970, George Harrison’s “My Sweet Lord” is released.

WH Advisor David Plouffe and Goldman Sachs CEO Agree That Medicare and Medicaid Must be Cut

Yes, it’s true. If the White House would like to disavow David Plouffe’s words now is the time. Time is running short but it’s pretty obvious that he speaks for the White House given that David Plouffe is the President’s closest confidante. If you have the stomach to sit through this forum it’s right there for you to see, but I’ll post the relevant portion that matches up with Lloyd Blankfein’s mentality that the 99% need to sacrifice Medicare and retire later for the fantasy deficit crisis he, the White House, and Congress are peddling to the American people.

The President’s closest adviser is telling his base that additional cuts to pay down the deficit(not the 716 billion to Advantage, fraud, or providers from the 2010 CBO baseline on the effects of the ACA) in Medicare and Medicaid are coming and to be ready for them.

Senior White House advisor David Plouffe warns Republicans and Democrats alike must take political hits in order for deal to be had

“The only way that gets done is for Republicans again to step back and get mercilessly criticized by Grover Norquist and the Right, and it means that Democrats are going to have to do some tough things on spending and entitlements that means that they’ll criticized on by their left,” Plouffe said at his alma mater in conversation with former McCain campaign manager Steve Schmidt.


Plouffe added that while the White House wants to engage in comprehensive tax reform, they know they must also “carefully” address the “chief drivers of our deficit”: Medicare and Medicaid.

Lloyd “Sell them shitty deals with the blessing of the US DOJ” Blankfein whole heartedly agrees with Plouffe. He’s also visiting the White House today. I have a feeling whatever good feelings labor and progressive groups had yesterday were perhaps misguided given the statement we just heard from David Pouffe. That and of course basically the priority of making capital whole on the backs of labor as 93% of the “recovery” goes into Lloyd Blankfein’s pocket since 2010.

Goldman Sachs CEO: Entitlements must be contained

BLANKFEIN: You’re going to have to undoubtedly do something to lower people’s expectations — the entitlements and what people think that they’re going to get, because it’s not going to — they’re not going to get it.

PELLEY: Social Security, Medicare, Medicaid?

BLANKFEIN: You can look at history of these things, and Social Security wasn’t devised to be a system that supported you for a 30-year retirement after a 25-year career. … So there will be things that, you know, the retirement age has to be changed, maybe some of the benefits have to be affected, maybe some of the inflation adjustments have to be revised. But in general, entitlements have to be slowed down and contained.

Still no sign of land

‘Cannibal cop’ planned to kidnap, eat woman for Thanksgiving: prosecutor

By BRUCE GOLDING, The New York Post

8:48 AM, November 21, 2012

Forget white meat or dark meat – he wanted “girl meat” for Thanksgiving.

Gilberto Valle, the NYPD officer busted by the feds as an alleged cannibal wannabe, saw his alleged holiday hopes dashed yesterday when prosecutors said he’d planned to dine on human flesh tomorrow.

Public defender Julia Gatto argued that Valle’s online chats were only “sick, twisted” sexual fantasies he shared on the Web with like-minded fetishists.

Gatto said her own, reluctant investigation into her client’s “subculture” – which she likened to “Star Trek geeks and science-fiction movie guys who dress up and go to conventions” – had apparently uncovered the site Valle frequented.

“All over the Web site, it says: No matter how real this sounds, this is all fantasy,” she insisted.

It is well known that we now have the problem relatively under control.

Man pleads not guilty to cooking wife


Published: Nov. 22, 2012 at 8:51 AM

VISTA, Calif., Nov. 22 (UPI) — A California man pleaded not guilty to the murder of his wife, who police found dismembered, with body parts cooking on the stove and her head in the freezer.

Police found three pans of “meat” cooking on the stove and realized it was pieces of the victim, Anna Faris, 73, Deputy District Attorney Katherine Flaherty said. They found Faris’ head in a plastic bag inside the freezer and multiple pieces of freshly cut bone throughout the house.

“They also found a work area set up in the bathroom, with saws, a boning knife and other cutting instruments,” Flaherty said.

“There is no evidence of cannibalism at this time,” she added.

Opportunity Society!

Millions chase record $425M Powerball jackpot

By JEFF McMURRAY, Associated Press

18 minutes ago

It’s the gambler’s mantra: Somebody’s gotta win, so why not me?

It’s true to say that you have a better chance of being struck by lightning than winning the Powerball. But that woefully understates the danger of lightning.

Tim Norfolk, a University of Akron mathematics professor who teaches a course on gambling, puts the odds of a lightning strike in a person’s lifetime at 1 in 5,000 (or 1 in 9 million on one particular day). The odds of winning the Powerball jackpot: 1 in 175 million – with no assurances that you won’t have to split the prize with others.

While it may seem counterintuitive, Barrow (Clyde Barrow, professor director of the Center for Policy Analysis at UMass-Dartmouth) says gambling activity often increases as the economy gets worse and people have less disposable income. However, his research – which focused mainly on New England – found the trend reversed in the latest downturn.

“The Great Recession has been so deep and so long, it’s suppressed any kind of discretionary spending across the board,” said Barrow, who added about the same percentage of people are playing the lottery – they’re just buying fewer tickets.

“For 2 bucks, it’s worth a chance,” he said. “What else am I going to do with that $2? I’ll just waste it on something else.”