Tuesday, September 20, 2011

Slovenian Government Ousted, Probably No Impact on Greek Talks (but what about my gold bonds?)

From Voice of America:
Slovenia’s Government Loses Confidence Vote
Slovenia's center-left minority government lost a confidence vote in parliament Tuesday, possibly forcing new elections late this year or early in 2012.

Prime Minister Borut Pahor's Social Democrats received just 36 confidence votes, while 51 members of the 90-seat assembly voted against the government.

Before the vote, Mr. Pohor had warned that ousting his government would bring “the risk of political paralysis” while parliament attempts to approve the EU rescue fund for debt-strapped eurozone nations. He added that he has done his best to serve the country....
The WSJ's Real Time Brussels blog paints the darkest picture:
Slovenia Could Delay EFSF
Now comes news that the government of tiny, mountainous Slovenia has collapsed. This could be bad for hopes to make changes to the EFSF quickly.

The 17 euro-zone countries agreed in July that they’d beef up the European Financial Stability Facility by increasing its size and broadening its powers.

How can the EFSF be changed? Only with unanimous consent of the countries. That could be hard–but not impossible–to do without a government in Slovenia.

The EFSF is a private-law company, governed by articles of incorporation and a “framework agreement.” It doesn’t make decisions in the normal framework of EU law. It’s just a company controlled by its shareholders, who are the euro-zone countries (16, since Estonia isn’t yet part). Each country appoints one director to the EFSF board.

The articles of incorporation require that directors give unanimous approval to bailout loans–and to any changes to the articles of incorporation. ....MORE
 Our last mention of Slovenia was in "So a Sicilian mafioso walks into HSBC…", a tale of fake Venezuelan bonds, real Slovene bonds and the Sicilian Mafia.
One of  the anecdotes:
For the longest time Carl Marks & Co. (or was it Herzog?) made markets in defaulted bonds, for some reason I remember the Kingdom of Serbs, Croats and Slovenes 8's of 1922.
It may have been a different S,C&S issue, I can't find any record of the paper. Off to Zagreb?
[try 'off too, Zagreb' -ed.]
Here's a quick story about this odd corner of the market, from Time Magazine, Aug 8, 1983...
Here's one of the gold-backed 8's of 1922. The New York Times' mention is below the pic:


From the NYT, June 15, 1922:
The initial offering of gold bonds of the Kingdom of the Serbs, Croats and Slovenes (Jugoslavia) is made today. The issue is $25,000,000 forty-year 8 per cent. secured bonds, offered at 93 and interest, yielding 8.40 per cent.
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The more things change...