Cyprus-Forum.com

[miltiades]

America sneezes and the whole world catches a cold as recent international fiscal events have shown.
Greece on the other hand has caught pneumonia , the question is Europe immunized sufficiently to withstand the effects ? I think yes .
As for Cyprus catching pneumonia not on your ..Zorba. A small economy not a juggernaut , it can be manoeuvred , easily controlled and might , just might mind you perhaps ..sneeze !
The Cypriot economy is healthy . In 2008 it ranked 32nd on the list of IMF ADVANCED ECONOMIES in the world , Cyprus was the only developed economy to have enjoyed growth through the 2009 financial crisis.
While some people are rejoicing at Greece's' financial plight let me remind them that should Turkey suffer a cold the economy of the "trnc" will collapse since we all know that being an unrecognized "state" it can not arrange financial assistance , loans etc.!!

[Me Ed]

The EU would never expel any of its member states - its not the european way.

We europeans like to help each other, even after millenia of conflict and wars we have learned to work and co-operate with each other.

Turkey on the other hand needs a complete change in its approach to the EU and could be in within 5 years.

What Turkey needs to do first is sign the Ankara Protocol, because the AP was not designed to help the RoC but Turkey itself, and send the region towards peace.

[Nikitas]

Some amateur economists on the forum think that Turkey will escape the crisis. This is a wave going through all economies.

As to its seriousness, you can judge by the fact that France wants Greece to buy 5 frigates at 5 billion Euros and Germany wants Greece to buy 50 Eurofighters at 100 million Euros a pop. They obviously are not banking on bankruptcy.

[Malapapa]

erolz3 - You are a rare breed. Too bad we do not have more of your kind.

Always a pleasure reading what you have to say.

It must certainly be a concern for you that erolz appears to be the only person - certainly that I've come across here - who can at least make a stab at putting forward a credible, cogent argument, from a specifically TC position. And he does so without ever resorting to the nasty, "ya-boo-sucks, might-is-right, we won the war in 1974". Or, more recently, the pathetic, "it's not fair... but we don't care".

A rare breed indeed. But ultimately a futile position; and I don't envy him.

[Viewpoint]

erolz3 - You are a rare breed. Too bad we do not have more of your kind.

Always a pleasure reading what you have to say.

It must certainly be a concern for you that erolz appears to be the only person - certainly that I've come across here - who can at least make a stab at putting forward a credible, cogent argument, from a specifically TC position. And he does so without ever resorting to the nasty "ya-boo-sucks, might-is-right, we won the war in 1974". Or, more recently, the pathetic, "it's not fair... but we don't care".

A rare breed indeed. But ultimately a futile position; and I don't envy him.

He is in a league of his own and can knock the stuffing out of any debator, you have been know to throw a tantrum, sarcastic and abusive remarks.

[Malapapa]

erolz3 - You are a rare breed. Too bad we do not have more of your kind.

Always a pleasure reading what you have to say.

It must certainly be a concern for you that erolz appears to be the only person - certainly that I've come across here - who can at least make a stab at putting forward a credible, cogent argument, from a specifically TC position. And he does so without ever resorting to the nasty "ya-boo-sucks, might-is-right, we won the war in 1974". Or, more recently, the pathetic, "it's not fair... but we don't care".

A rare breed indeed. But ultimately a futile position; and I don't envy him.

He is in a league of his own and can knock the stuffing out of any debator, you have been know to throw a tantrum, sarcastic and abusive remarks.

Hey, I was paying your champion a compliment. I never said I was perfect... far from it.

[yialousa1971]

Relax, the Greeks are doing fine

February 13, 2010
All this Greek stuff isn't exactly good for the old fear factor but let's keep it in perspective. If you look at the problem on a debt-to-GDP basis the Greek government has a debt that equates to 125 per cent of GDP. Let's put this in human terms (apologies to economists).

This is like an Australian family earning $100,000 a year having a mortgage of $125,000 and on that equivalent the Greek government is cruising because the average adult wage in Australia is about $64,906 and the average mortgage is $354,000. In other words, the average mortgaged adult in Australia has a debt-to-GDP ratio of 545 per cent. Put another way, Greece is like an average Australian with an $81,000 mortgage and the average Australian is worse off than Zimbabwe (300 per cent debt-to-GDP ratio), Japan (192 per cent), the US (60 per cent) and Britain (47 per cent). Not too flash is it. On this basis, the US is cruising, Britain is flush and Greece can still afford to buy a boat.

I spoke to an economist before I made this analogy. I asked at what point does debt as a percentage of GDP become a problem. His reply was "When people think it's a problem."

And this is why Greece is now the problem. Because people think it is. It is also why the US dollar is not a problem. Because people don't think it is. The US economy's annual income can easily fund their debt repayments, and the greenback will remain the world's reserve currency and a safe haven as long as that's the case.

So when does your mortgage become a problem? The answer is the same, "when the bank thinks it's a problem".

When I first got a mortgage the banks had a rule of thumb that said our relationship would become a problem if my interest costs got over 30 per cent of my gross income. But with an average mortgage of $354,000 and a variable mortgage rate of 6.74 per cent the average mortgaged adult is paying $23,859 in interest a year. That's 36.7 per cent of the average gross income, 47 per cent of net income and 58 per cent if they repay capital as well. The average mortgaged adult is spending well over half their total net income on servicing debt.

Clearly the banks have relaxed a little since my day, no doubt because the median house price is approaching $500,000, meaning the average mortgage is only about 70 per cent of the average house value, which gives the banks about 30 per cent of your house or $146,000 of your equity as a buffer before they really need to worry about your ability to service the interest. With that sort of cushion the banks aren't really too fussed about your income and whether you have enough income to eat, they'll only start worrying when your debt gets bigger than your asset.

The fact is, Greece is better off than the average Australian. The only reason it is under the pump is because people think it's a problem. In the same way the only reason the US dollar isn't in a hole is because people don't think it's a problem and the only reason you aren't in a panic to pay off your mortgage is because you don't think it's a problem. Which, as long as house prices hold up, it isn't.

But debt is becoming what it used to be, a liability not an opportunity and while this continues the sharemarket will increasingly discount companies with debt issues. Speculation is out, preservation is in. The question now is how long it goes on.

Unfortunately the last perception of debt lasted 22 years. Let's hope this one doesn't. Parties are so much more fun.

Marcus Padley is a stockbroker with Patersons Securities and the author of the daily stockmarket newsletter Marcus Today.

http://www.smh.com.au/business/relax-the-greeks-are-doing-fine-20100212-nxh4.html

[SKI-preo]

Greece needs a good kick up the bum to shake off the overstaffed public service and to modernize. I do not see Greece being kicked out of the EU although it probably would be a good threat for reform.

I do not think this is relevant to the Cyprus problem. Am I wrong?

[DT.]

The debt alone is not a problem, the spreads Greece is having to pay now is the problem due to their default risk. As I said before a clear indication of a country's default risks can be found in the Credit Default Swaps which are freely traded. If the price of the CDS for Greece is anything to go by then there's no risk of default.

One important aspect to remember is that France has the most to lose since its French Banks that have the biggest exposure to Greek debt and would be the first to go down in case of a Greek default.

[Paphitis]

Relax, the Greeks are doing fine

February 13, 2010
All this Greek stuff isn't exactly good for the old fear factor but let's keep it in perspective. If you look at the problem on a debt-to-GDP basis the Greek government has a debt that equates to 125 per cent of GDP. Let's put this in human terms (apologies to economists).

This is like an Australian family earning $100,000 a year having a mortgage of $125,000 and on that equivalent the Greek government is cruising because the average adult wage in Australia is about $64,906 and the average mortgage is $354,000. In other words, the average mortgaged adult in Australia has a debt-to-GDP ratio of 545 per cent. Put another way, Greece is like an average Australian with an $81,000 mortgage and the average Australian is worse off than Zimbabwe (300 per cent debt-to-GDP ratio), Japan (192 per cent), the US (60 per cent) and Britain (47 per cent). Not too flash is it. On this basis, the US is cruising, Britain is flush and Greece can still afford to buy a boat.

I spoke to an economist before I made this analogy. I asked at what point does debt as a percentage of GDP become a problem. His reply was "When people think it's a problem."

And this is why Greece is now the problem. Because people think it is. It is also why the US dollar is not a problem. Because people don't think it is. The US economy's annual income can easily fund their debt repayments, and the greenback will remain the world's reserve currency and a safe haven as long as that's the case.

So when does your mortgage become a problem? The answer is the same, "when the bank thinks it's a problem".

When I first got a mortgage the banks had a rule of thumb that said our relationship would become a problem if my interest costs got over 30 per cent of my gross income. But with an average mortgage of $354,000 and a variable mortgage rate of 6.74 per cent the average mortgaged adult is paying $23,859 in interest a year. That's 36.7 per cent of the average gross income, 47 per cent of net income and 58 per cent if they repay capital as well. The average mortgaged adult is spending well over half their total net income on servicing debt.

Clearly the banks have relaxed a little since my day, no doubt because the median house price is approaching $500,000, meaning the average mortgage is only about 70 per cent of the average house value, which gives the banks about 30 per cent of your house or $146,000 of your equity as a buffer before they really need to worry about your ability to service the interest. With that sort of cushion the banks aren't really too fussed about your income and whether you have enough income to eat, they'll only start worrying when your debt gets bigger than your asset.

The fact is, Greece is better off than the average Australian. The only reason it is under the pump is because people think it's a problem. In the same way the only reason the US dollar isn't in a hole is because people don't think it's a problem and the only reason you aren't in a panic to pay off your mortgage is because you don't think it's a problem. Which, as long as house prices hold up, it isn't.

But debt is becoming what it used to be, a liability not an opportunity and while this continues the sharemarket will increasingly discount companies with debt issues. Speculation is out, preservation is in. The question now is how long it goes on.

Unfortunately the last perception of debt lasted 22 years. Let's hope this one doesn't. Parties are so much more fun.

Marcus Padley is a stockbroker with Patersons Securities and the author of the daily stockmarket newsletter Marcus Today.

http://www.smh.com.au/business/relax-the-greeks-are-doing-fine-20100212-nxh4.html

No wonder Greece is going down in flames.

They have idiots like YiaLoser cooking the books.

Australians have BIG debt because Australians also have BIG incomes and can service those loans. The banks would not be handing out cash it that was not the case. Furthermore, along with Cyprus, Australia has the healthiest economy amongst the developed world!

Greeks on the other hand, have itsy bitsy, teeny weeney, tiny incomes.

To put things into perspective, I have 6 investment mortgages. These investments generate income and provide good capital gains which allow me to borrow even more. I, and others like me, increase the average. And in case you're wondering, people like you will fall over if I tell you what my revenue and wealth creating liabilities are!

GO Australia!!!!

Capitalism rocks!