DRT wrote:Where does one purchase this fine work to ensure that the author receives his appropriate share?
The author’s share is about £1 per copy.jdaw1 wrote:Pricing Money (2001), J. D. A. Wiseman
Ah, so it’s the old tension between English-as-is-it-commonly-used and English-as-rendered-into-a-mathematical-formula?jdaw1 wrote:It seems that you were paying plenty of attention. Market participants treat a directional outlook (positive or negative) as a fractional move in rating.
But sometimes companies being taken over have a non-directional ‘events might move this up or down’ outlook, which doesn’t quite fit the same model.
I was going to say that whilst I was not paying enough attention in my statistics lessons, I did read enough Adam Smith to realise that acceptance of this guarantee would have the opposite effect compared to that which was intended and that I would offer a guarantee of buying two copies of a new edition of Pricing Money if published in or before July 2013 by the same author but then I read this which rendered it all moot:jdaw1 wrote:Guarantee: if a new edition of Pricing Money by the same author is published in or before July 2013, I’ll swap your old for a copy of the new.
jdaw1 wrote:The author’s share is about £1 per copy.
No. You buy Pricing Money today. Then I write the new edition this being neither started nor even envisaged. In that case, you may but are not obliged to swap your copy of the 2001 edition for a copy of the new, at no further cost to you.JacobH wrote:I was going to say that whilst I was not paying enough attention in my statistics lessons, I did read enough Adam Smith to realise that acceptance of this guarantee would have the opposite effect compared to that which was intended and that I would offer a guarantee of buying two copies of a new edition of Pricing Money if published in or before July 2013 by the same authorjdaw1 wrote:Guarantee: if a new edition of Pricing Money by the same author is published in or before July 2013, I’ll swap your old for a copy of the new.
The European Central Bank, in a press release entitled [url=http://www.ecb.int/press/pr/date/2011/html/pr110707_1.en.html]ECB announces change in eligibility of debt instruments issued or guaranteed by the Portuguese government[/url], wrote:The Governing Council of the European Central Bank (ECB) has decided to suspend the application of the minimum credit rating threshold in the collateral eligibility requirements for the purposes of the Eurosystem’s credit operations in the case of marketable debt instruments issued or guaranteed by the Portuguese government. This suspension will be maintained until further notice.
The Portuguese government has approved an economic and financial adjustment programme, which has been negotiated with the European Commission, in liaison with the ECB, and the International Monetary Fund. The Governing Council has assessed the programme and considers it to be appropriate. This positive assessment and the strong commitment of the Portuguese government to fully implement the programme are the basis, also from a risk management perspective, for the suspension announced herewith.
The suspension applies to all outstanding and new marketable debt instruments issued or guaranteed by the Portuguese government.
Especially given the change in reasoning for the downgrade after the Treasury Department pointed out the colossal error in S&P's math.jdaw1 wrote:The title of this thread is ‟Portugal and the credit crisis”, but S&P’s downgrade of the USA is related, fascinating, and even more frightening.
I agree. However, S&P first attempted to explain the rating change based on some sort of math. In doing so, they made a 2 TRILLION dollar error which the Treasury Department gleefully pointed out. S&P then changed their reasoning to the above.jdaw1 wrote:S&P’s reasoning is not really about ability to pay. It is about willingness to pay. if the politicians want to fight at the cliff-edge, it is the job of the rating agencies to notice.
If the politicians were to repeal the law creating the debt ceiling, then S&P’s reasoning would compel a reinstatement of triple-A.
Don't tempt me.DRT wrote:There is a very distressing and sickening undercurrent to the debate that took this to the edge of the cliff.
The BBC, in a story entitled [url=http://www.bbc.co.uk/news/business-14737176]Portugal plans biggest spending cuts for 50 years[/url], wrote:The Portuguese government is planning the country's biggest spending cuts in 50 years, a move its finance minister described as "unprecedented".
Vitor Gaspar said the centre-right Social Democratic administration would reduce public spending from the current 44.2% of Portugal's annual economic output or GDP to 43.5% by 2015.
The government is aiming to meet its budget deficit reduction targets.
These were agreed when Portugal required a bailout in May.
The BBC, in a story entitled [url=http://www.bbc.co.uk/news/world-14716410]Portugal's jobless graduates flee to Africa and Brazil[/url], wrote:Thousands of young unemployed professionals are escaping Portugal's crippling economic crisis by finding jobs in former colonies, such as Brazil and Angola. The reversal of traditional migration patterns is fuelling talk of a "lost generation".
Those with long memories will recall that jdaw1, in a letter to his aunt dated 7th March 1997 and published as [url=http://www.jdawiseman.com/papers/prose/aunty.html]Dear Aunty: an essay on EMU[/url], wrote:The second possible stabilisation mechanism is labour mobility. When there are no jobs in Alabama the native Alabamans (or is that Alabamois?) pack their possessions, rent a small truck and drive to Illinois or New York or California, and work there instead. But this fails miserably in Europe: of course the Irish will continue to work in the UK, but language barriers hinder the movement of labour between the English-, French-, Spanish- and German-speaking blocks. Language is not a total barrier, but is a high enough barrier enough to allow enormous wealth disparity.
Wow, Paul didn't mince his words!RAYC wrote:A 3-month old story, but only just seen by me (and not something i have come across on this board).
Amazingly, as part of their strategy to close the deficit, the Portuguese government has swiped EUR8m of built-up IVDP reserves (alongside, it would seem, reserves of other public institutions in Portugal)
Full story, together with Paul Symington's thoughts on this turn of events, here
Standard & Poor’s wrote:• Standard & Poor's has placed its 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on the Republic of Portugal on CreditWatch with negative implications.
• The CreditWatch placement is prompted by our concerns about the potential impact on Portugal of what we view as deepening political, financial, and monetary problems within the European Economic and Monetary Union.
• Our CreditWatch review will focus on the "political", "external", and "monetary" scores we have assigned to Portugal in accordance with our criteria.
• We expect to conclude our review as soon as possible after the European summit on Dec. 9, 2011.
Standard & Poor’s wrote:
[/size]FRANKFURT (Standard & Poor's) Jan. 13, 2012--Standard & Poor's Ratings Services said today that it lowered its long-term sovereign credit rating on the Republic of Portugal by two notches to 'BB' from 'BBB-', and its short-term rating to 'B' from 'A-3'. The outlook on the long-term rating is negative.
- We are lowering our long- and short-term sovereign credit ratings on Portugal to 'BB/B' from 'BBB-/A-3'.
- The downgrade reflects what we view as the negative impact of deepening political, financial, and monetary problems within the European Economic and Monetary Union (eurozone) on Portugal's already challenging readjustment path and its elevated vulnerabilities to external financing risks.
- We are assigning a recovery rating of '4' to Portugal, which reflects our assessment of "average" (30%-50%) recovery in the event of a sovereign default.
- The outlook on the long-term rating is negative.
Our transfer and convertibility (T&C) assessment for Portugal, as for all eurozone members, is 'AAA', reflecting Standard & Poor's view that the likelihood of the European Central Bank restricting nonsovereign access to foreign currency needed for debt service is extremely low. This reflects the full and open access to foreign currency that holders of euro currently enjoy and which we expect to remain the case in the foreseeable future.
At the same time, we assigned a recovery rating of '4' to Portugal's debt issues, indicating our expectation of "average" (30%-50%) recovery for debtholders in the event of a debt restructuring or payment default.
The downgrade reflects our opinion of the impact of deepening political, financial, and monetary problems within the eurozone, with which Portugal is closely integrated. It also reflects our view of sustained external financing pressures on Portugal's private sector, and what these may imply for growth performance and, in turn, public finances.
The outcomes from the EU summit on Dec. 9, 2011, and subsequent statements from policymakers, lead us to believe that the agreement reached has not produced a breakthrough of sufficient size and scope to fully address the eurozone's financial problems. In our opinion, the political agreement does not supply sufficient additional resources or operational flexibility to bolster European rescue operations, or extend enough support for those eurozone sovereigns subjected to heightened market pressures.
We also believe that the agreement is predicated on only a partial recognition of the source of the crisis: that the current financial turmoil stems primarily from fiscal profligacy at the periphery of the eurozone. In our view, however, the financial problems facing the eurozone are as much a consequence of rising external imbalances and divergences in competitiveness between the eurozone's core and the so-called "periphery". As such, we believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating, as domestic demand falls in line with consumers' rising concerns about job security and disposable incomes, eroding national tax revenues.
Accordingly, in line with our published sovereign criteria, we have adjusted downward the political score we assign to Portugal (see "Sovereign Government Rating Methodology And Assumptions," published on June 30, 2011). This is a reflection of our view that the effectiveness, stability, and predictability of European policymaking and political institutions (with which Portugal is closely integrated) have not been as strong as we believe are called for by the severity of a broadening and deepening financial crisis in the eurozone.
For Portugal, we believe this weakened policy environment could complicate domestic political support for the implementation of the EU/IMF program, put the government's fiscal consolidation strategy at risk, and trigger further increases in Portugal's already high net general government debt stock, which is expected to end 2012 at 106% of GDP. In our view, the debt restructuring process in Greece could further alienate potential investors in Portuguese government debt and reduce the likelihood that Portugal might be able to return to capital markets some time in 2013.
We have also lowered Portugal's external score according to our criteria, to reflect our view of the impact on Portugal of what we consider to be rapid deterioration in the European financial markets. We believe there are significant risks to Portugal's external financing over the next two years as creditors of its private sector, primarily other eurozone banks, are likely to reduce their exposures to Portugal more rapidly than previously anticipated, partly due to uncertainties on the EU's future crisis management policies. We believe that the proposed sale by Portuguese banks of external assets--given the deteriorating financial environment in Europe--is unlikely to generate financial inflows as planned. We think this will likely force the banks to deleverage more rapidly, and with a greater focus on domestic assets, than we had previously expected.
Portugal's ratings are also constrained by what we view as the country's very high public sector debt and weak economic growth potential. The ratings are supported by our view of the currently strong commitment to fiscal consolidation and extensive program of structural reform under the EU/IMF program.
Together with the lowering of our ratings on Portugal to 'BB/B', we have also assigned a recovery rating of '4' to Portugal's debt. This is in keeping with our policy to provide our estimates of likely recovery of principal in the event of debt restructuring or a debt default for issuers with a speculative-grade rating. A recovery rating of '4' reflects our current expectation of "average" (30%-50%) recovery for holders of Portuguese government debt.
The outlook on the long-term rating on Portugal is negative, indicating that we believe there is at least a one-in-three chance that we could lower the ratings again in the next 12 months. In our view, a more severe economic contraction could result in a worsening political environment in Portugal and further negative adjustment in our political score, according to our criteria. In particular, continued fiscal austerity without improving growth prospects could result in widespread unemployment, which could negatively affect social cohesion and political support for the EU/IMF program. We could also lower the ratings if we come to the view that the potential cost of recapitalizing Portuguese banks is likely to increase the government debt burden substantially.
Conversely, the ratings could stabilize at the current level if Portugal achieves full compliance with the EU/IMF official lending program, in particular, fully implementing structural reforms and lifting growth prospects; or successful sales of assets in the public and private sectors generate substantial inflows of funds to mitigate external liquidity constraints.
Continued in that article in the FT.The FT, in an article entitled [url=http://www.ft.com/cms/s/0/486cf342-411e-11e1-b521-00144feab49a.html]Portugal moves into default territory[/url], wrote:Portugal is trading in default territory after investors offloaded the country’s bonds this week amid rising fears of contagion. Worries are mounting that the private sector and Greece will fail to agree a restructuring package for Athens’ debt.
Many investors were also forced to sell Portuguese bonds after Standard & Poor’s downgraded the country to junk on Friday. Other funds sold Portuguese debt after Lisbon was removed from Citigroup’s European Bond Index, which these investors track, because of its fall to junk status.
All three main credit rating agencies, S&P, Moody’s, and Fitch, rate Portugal as junk, below investment grade. In the eurozone, only Greece is also rated junk by all the agencies.
The markets are pricing in a 65 per cent chance that Portugal will default over the next five years, according to credit default swaps as these instruments, which protect investors from default, leapt to record highs this week.
Portuguese bond prices have slumped to levels considered by many investors to be in default territory. Bond prices for benchmark 10-year debt were trading at 52 per cent of par, recovering from levels below 50 per cent on Monday.
Continued in the FT.The FT, in an article entitled [url=http://www.ft.com/cms/s/0/5505261c-474d-11e1-b847-00144feabdc0.html]Portuguese borrowing costs hit record[/url], wrote:Portugal’s borrowing costs leapt to fresh euro-era highs on Wednesday amid growing worries that Lisbon could eventually default on its debt commitments.
Portuguese yields, which move inversely to prices, hit the highs for five- and 10-year bonds, while the cost of buying insurance against default, as measured by credit default swaps, also rose to a record.
One banker said: ‟Greece will default. The market is convinced of that. But now Portugal is increasingly being considered as likely to follow. There is not enough time for the country to bring its economy round and bring government bond yields back to sustainable levels.”
The [url=http://www.ecb.int/press/pr/date/2012/html/pr120228_1.en.html]European Commission, ECB, and IMF[/url] wrote:The programme is on track, but challenges remain. Policies are generally being implemented as planned, and economic adjustment is under way. In particular, the large fiscal correction in 2011 and the strong 2012 budget have bolstered the credibility of Portugal’s front-loaded fiscal consolidation strategy. Financial sector reforms and deleveraging efforts are advancing, while steps are being taken to ensure that credit needs of companies with sound growth prospects are met. Reforms to increase competitiveness, growth and jobs have also progressed, although many reforms still await full implementation. The broad political and social consensus that is underpinning the programme is a key asset.