It would still be problematic as the future earnings would be converted at different exchange rates with a bias toward more AUD per USD, thus capping the upside of the trade
Nice summary by Rosengren. Figure 8 in particular is quite supportive for the front end http://www.bos.frb.org/news/speeches/rosengren/2010/050510/050510b/index.htm
Krugman makes a good point, Greece has an around 8.5% of GDP primary deficit(deficit before interest payments). Which means even if you were to cut down Greek debt through a reestructuring they would still be running unsustainable deficits and likely would have high interest rates from private investors So they pretty much HAVE to suceed in their fiscal reform, the decline in the EUR is helping(by helping growth a little), which begs the question, how come the ECB isnt running a ZIRP policy?I cant find many reasons other than their tendencies of suicidal hawkishness
Krugman and good point are not two things usually seen in the same sentence, but even a stopped clock ... Let's be clear ... what happens to Greece and the Greek people is irrelevant here. This is a bailout of the banking system. I will go to the grave wondering why in the hell no 1st world government will allow any banking system to ever book a loss. If it wipes out all the capital, so be it. Asset values are too high. Let's mark 'em down, re-capitalzie, and start over.
Hugh Hendry surfaces to participate in this panel discussion about Greece. Entertaining as always ... http://www.prisonplanet.com/hugh-hendry-the-greek-bailout-is-really-a-bailout-of-french-banks.html
"1320 GMT [Dow Jones] The trouble in Europe presents risks to the US, said St. Louis Fed's Bullard in the text of a press release for a speech. The central banker is worried about the "fallout" from government debt defaults "as conditions continue to deteriorate in Greece and other countries." Bullard said the rising cost of debt protection in Greece, Portugal, Spain and Italy, were all worrisome. The prepared materials for Bullard's address were brief. He did not say anything about the monetary policy outlook, but he was upbeat about the economy." Exteded period not going anywhere
If you like the dude, you will like Invisible Hands by Drobny. Hendry is the 'Plasticine Macro Trader', even though the book does not reveal the identity of most traders, I'm 98% sure its him given the facts he outline in the interview
It's likely to go to 40+ tomorrow... Last I checked 3m USD depo out of tomorrow was 40 bid, no offer. We be having a scramble for funding here, right and proper.