Canada: The New America?

June 15th, 2011 • No Comments

There has been a sharp change in the nature of Canadian politics over the last few years. Canada’s political scene has been typified by a politeness and respect not found in many other developed nations. It was a cross between Britain without the heckling in parliament and America without the sharp contrasts in policy. And Stephen Harper has been the one to change all that.

Starting in 2006, and continuing through the 2011 elections campaign, Canadians saw for the first time serious attack ads coming from the Conservative Party. These were followed, no less, by similar responses from the Liberals and NDP. These attack ads take comments out of context and target personal traits and faults in MPs and party leaders. Mostly, they are a tool of fear-mongering politicians to convince voters that the world will end if the other side gets into power. Attack ads are the sign of weakness of a party (and I am pointing fingers at all Canadian parties here), they are done based on a fear that when policies line up there will not be enough to differentiate one from one’s opponent. Continue reading ‘Canada: The New America?.’

Greece’s Sovereign Debt Rating Downgraded to CCC

June 13th, 2011 • No Comments

Standard & Poor’s has downgraded the Greek economy to a rating of CCC from B, the lowest possible. They believe that there will likely be one or defaults on the failing country’s national loans. “Risks for the implementation of Greece’s EU/IMF borrowing program are rising, given Greece’s increased financing needs and ongoing internal political disagreements surrounding the policy conditions required,” said S&P in a statement.

No other sovereign nation has as low a rating as Greece does, and only Ecuador has a worse rating. This comes after Obama has pressed Germany to structure a new bailout for Greece. It is possible that the economy could be downgraded to an ‘SD’, or selective default, if Greece has to take on a debt restructuring or a maturity extension on terms that constitutes a distressed debt exchange. This whole issue has arisen because of a failure of the Greek government to accurately portray the national debt and a slow as a result of economic recession.

S&P has said they would rather have Greece refinance their debt than using a bond swap or extended maturity on bonds as a method of debt management. The outlook is also negative, with the distinct possibility that there will be another downgrade coming in the next 12 to 18 months. Greece has made statements to the effect that they feel that S&P has overlooked all of the EU/IMF deliberations that are currently going on to figure out a way out of the intense clusterfuck of the Greek economic crisis.

Read more about Greece’s economic troubles here.

Obama Pushes for New Greek Bailout

June 8th, 2011 • 4 Comments

President Obama has pressed the EU to consider a second bail out for the Greek economy and has pledged his country’s help in saving Greece from defaulting on its’ initial bailout. He is concerned that a repeated crisis in the Euro zone would indicate the same for the United States.

Obama met with Angela Merkel and talked about the importance of Germany’s leadership in shoring up and growing the Greek economy. “Other countries in the euro zone are going to have to provide them a backstop and support,” he said.” And frankly, people who are holding Greek debt are going to have to make some decisions, working with the European countries in the euro zone, about how that debt is managed.”
Merkel will have to walk a fine line in coming months as she balances pressure from within Germany to avoid becoming the financial savior of Europe with the pressure from other countries to do exactly that. A preliminary proposal is in the works to give between 80 and 100 billion Euros of aid to Greece.

Greece first accepted a 100 billion Euro loan to cover its debts in April 2010 from the EU and 40 billion Euros from the IMF bailout package. Stock markets and the Euro declined in response to Standard & Poor decreasing the debt rating to BB+, essentially a junk rating. In May a series of austerity measures were implemented, which were met with rather minor objections. Greece’s bailout occurred at the same time as the one in Portugal.

The bailout has not seemed to work very well, and Greece is in danger of defaulting on its loans. The original problem came from the fact that the government had for years estimated the budget deficit rate at was at 6-8% of GDP. The new Socialist government in 2009 revised this to 15.4%. This, along with massive increases in personal debt, led to increased borrowing costs. There are also concerns that Greece has tried to cover up the extent of its debt in the midst of the recession.