Tito's Blog

Greece $400 Billion vs Lehman $600 Billion

To put things in perspective, Lehman Brothers had $600 billion in assets (and higher liabilities). Greece has a gross public debt of $400 billion.

Citigroup’s Willem Buiter Joins The Doomsday Crew

Willem Buiter Issues His Most Dire Prediction Yet: Sees “Unprecedented” Fiscal Crises, US Debt Inflation And Fed Monetization | zero hedge

Buiter 4.26

Guess Which EU-15 Country Last Defaulted?

Germany did, in 1948.

“They’ll probably go to the IMF, have a credible standby program and then aid from Brussels and bilateral aid from selected sovereign governments in Europe and the U.S. will be available,” Buiter said in a Bloomberg Television interview. “We could see the first all EU-15 sovereign default since Germany had it in 1948.”

Source: Almunia Says EU Ready to Assist Greece in Budget Plan (Bloomberg)

Government Bonds Auctions Can Fail. And They Just Did.

It had to happen sooner or later. It happened in the UK.
Via The Telegraph:

The UK Debt Management Office (DMO) attracted just £1.67bn in bids for its sale of £1.75bn of 2049 gilts this morning, its first uncovered auction of conventional gilts since 1995.

The cover of just 0.93 times is believed to be the lowest in history and far worse than the 0.99 times in 1995. The average cover of the last three auctions was 2.1 times.

Key Figures of Euro Area Public Debt

Some macro figures from The Economist on the Euro area’s troubles:

• Public debt to be raised by Euro-area countries, Britain and Switzerland in 2009: €2 trillion or 17% of their GDP
• Public debt to be raised by Italy alone: €377 billion or 23% of GDP. Yet, Italy can borrow for 10 years at 4.6% a year
• Public debt to be raised by Ireland alone: €47 billion or 24% of GDP
• 10-year government bond spread between PIGS and German bunds increased from well below 50 basis points at the beginning of 2008 to over 250 bp for Greece and over 100 bp for Italy, Portgual, Spain. Ireland spread is over 200 bp.

Scariest sub-title yet: “What a default might look like”