Brandon Hill – the hill formerly known as Mutton Tump

Evidence of Bristol's pre-Christian and Welsh speaking past?

Reading the news, via Bristol 24-7, that there are plans to conduct an archaeological study of College Green, prompted me once again to revisit the hodge podge of notes I have collected over the years regarding the history of the site and its surrounding area. 

The College Green site itself is obviously historic with St Augustine's Abbey, now Bristol Cathedral, having been founded there in the 1140's, followed in the 1220's by the building of the Hospital of St Mark's (better known as Gaunt's Hospital), on the opposite side of the Green. There are several reasons for supposing that its religious significance might go back much earlier, and this will be returned to on this site at a later date.

However, it is not the hillock or mound now known as College Green I want to talk about in this article. It is its much higher neighbour Brandon Hill, separated from College Green by what was once a gulley running roughly along the line of Frogmore Street.

Brandon Hill has considerable historical significance of its own. In 1174 the summit of Brandon Hill was given to St James' Priory. As a result, a chapel dedicated to St Brendan the navigator, the patron saint of seafarers and mariners, was established. William Worcestre in his detailed description of Bristol in 1480 called it  “the church of the hermitage upon the very high hill of St Brandon”.

It appears therefore that today's more commonly known name of Brandon Hill may be derived from the establishment of the 12^th century chapel. Local tradition has an alternative name for the hill, which, for reasons explored below, probably pre-dates the chapel's construction: this name is Mutton Tump.

The usual explanation for the name of Mutton Tump is that it simply refers to the fact that sheep used to graze on the hill. “Sheep Hill” would seem to be a more obvious name, nevertheless the use of the word "mutton" to refer to the animal itself rather than just its meat can be traced back to the early 14^th century. It is still used in this way in New Zealand today.

However, what we may have with Mutton Tump is a situation where an element of a name which was taken from a lost language, having lost its meaning, mutates into something that seems meaningful in the current language.

An example is the village name of Churchill in Somerset where the first element "Church" actually comes from the Celtic crug meaning “hill”.  Anglo-Saxon speakers not knowing the meaning mutated it into the similar sounding "church" and then added their own word for “hill” to create Churchill. 

Obviously the change from Celtic "crug" into English "church" coulld only happen if there was actually a church on the hill to prompt the change.

If something similar has happened with "Mutton Tump", we need to try and work out what the original was.

Brandon Hill is not the only “Mutton Tump” in the Bristol area. At one end of Dundry Hill is the iron age fort known as Maes Knoll.  At one  end of the fort is a massive mound which, in my childhood, older people referred to as “Mutton Tump”. 

The third “Mutton Tump” in the Bristol area is the Netham recreation ground in Barton Hill. This low hill is on the border of the two Domesday manors of Barton (belonging to the King) and Blackswarth, which later became a possession of the Abbey of St Augustine. It is just to the south of the old Roman road from Bath to the sea port at Sea Mills.

Outside of Bristol, the Mutton Tumps I can find are all in Wales. Cwmparc in the Rhondda, Pontycymer in Bridgend, Blaina in Monmouthshire, Senghenydd in Caerphilly, another in Pontypridd, and so on.

Given the number of Mutton Tumps in Wales, and the fact that two of the three Mutton Tumps in Bristol are close to pre-Anglo-Saxon constructions (an Iron Age fort and a Roman road), prompts the question whether there might be a Romano-British/Welsh element to the name.

"Tump” initially seemed to me to be an obviously English word, and a check of the Oxford English Dictionary (OED) explained its meaning as;
1, A hillock, mound, a mole-hill, or ant-hill; a barrow, tumulus
2, A clump of trees or shrubs; a clump of grass, esp. one forming a dry spot in a bog or fen.

The OED went on to say that the word was not found in English before the end of the 16^th century. It also said that it was a local word, chiefly found in western England and the west midlands. It also decribed the word's origin as obscure.

However, the OED then went on to mention that there was an equivalent Welsh “twmp”, and also a related Welsh word “twmpath” - "a clump or tuft of rough grass, a barrow or tumulus".

OED also states that "twmpath"  is found in the Mabinogion – the collection of stories taken from medieval Welsh manuscripts and drawing on pre-Christian mythology.

The texts of the Mabinogion are, of course, considerably older than the 16^th century, dating back as they do to the 11^th and 12^th centuries. Although the OED suggests that the Welsh “twmp” may have come from the English “tump”, this looks like a Romano-British/Welsh word travelling in the opposite direction – that rare thing, an Anglo-Saxon word borrowing from the Romano-British.

“Twmpath” also means much more than just a clump of grass, a barrow or tumulus.

Twmpath is the Welsh equivalent of the Irish ceili and is associated in particular with the celebrations of “Calan Haf or “Calan Mai” (May Day) when the village green (“twmpath chwarae”) was opened at the beginning of Beltane, the season of warmth and growth.

“Through the summer months in some Welsh villages, the people would gather on the twmpath chwarae, (literally, tump for playing), the village green, in the evenings to dance and play various sports. The green was usually situated on the top of a hill and a mound was made where the fiddler or harpist sat. Sometimes branches of oak decorated the mound and the people would dance in a circle around it.”
http://www.applewarrior.com/celticwell/ejournal/beltane/wales.htm

So the impression given is that “tump” is likely derived from the Welsh “twmp” and is used of a mound (perhaps a barrow or tumulus of ancestral significance to the community) on top of a hill.  It is perhaps associated with a clump of trees, and is the location of summer dances and celebrations, associated with British or “Celtic” pre-Christian religious rituals.

A clump of trees associated with Celtic pre-Christian religious rituals in this way might also be described as a sacred grove, known as a Nemeton.

"A nemeton was a sacred space of ancient Celtic religion. Nemeta appear to have been primarily situated in natural areas, and, as they often utilised trees, they are often interpreted as sacred groves" 
Koch, John T. (2006). Celtic Culture: A Historical Encyclopedia

The word is related to the Nemetes tribe living alongside the Rhine and their goddess Nemetona. However we can bring the goddess Nemetona much closer to home thanks to a Roman altar stone found in Bath which has the following inscription;

PEREGRINVS SECVNDI FIL CIVIS TREVER LOCETIO MARTI ET NEMETONA VLSM

(Peregrinus, son of Secundus, a citizen of the Treveri, to Loucetius Mars and Nemetona willingly and deservedly fulfilled his vow).

Peregrine's tribe, the Treveri, with their centre at Augusta Treverorum (modern day Trier in Germany), were the neighbouring tribe to the Nemetes. Tribal territories were often in a state of flux but the Nemetes lived alongside the Rhine with the Treveri to their immediate west. As neighbours, it might be expected that they would share and exchange cultural beliefs such as that of the goddess Nemetona.

However, in the third century AD, these and other tribes living in the Rhineland were about to experience a major disruption.

In the third century, the Roman Empire experienced a severe crisis, as large numbers of “barbarians” crossed the Rhine. Villa owners in the lands belonging to the Treveri suffered particular devastation. 

The effect of the onslaught appears to have so weakened the confidence of many of the Treveri and their neighbours that large numbers, especially the wealthy elite, emmigrated looking for land and opportunities elsewhere that seemed to offer a more secure future.

Meanwhile Roman Britain had been left relatively unscathed, but the Bristol area, in comparison to some other parts of Roman Britain, especially the territory around Cirencester in the Cotswolds, seemed to be lagging behind in terms of the number and quality of its villas and other signs of Roman cultural development. 

It has been suggested that part of the reason for this lag was that the Bristol area with its considerable mineral resources such as lead and iron ore and its military port and roads had been placed under direct imperial and military rule. As a result, unlike the Cirencester area in particular, there was limited opportunity for conspicuous displays of wealth and culture by private estate owners

However, in the last quarter of  the 3rd century and into the 4^th century, there appears to have been significant new developments in villa architecture, mosaics, and other infrastructure. 

This has been linked to what might be called a period of “privatisation” probably related to a large scale migration of relatively wealthy refugees from the devastated Roman territories along the Rhine and the need for the empire to sell off imperial assets to raise funds to fight the "barbarians" at the gates of the Roman Empire. 

A number of villas in the Bristol area built during this boom period have features linked to a Rhineland influence including Kings Weston, Somerdale near Keynsham, Brislington and Chew Park.

It is to be expected that these  incomers would also bring their own religious practices along with them, including the practice of establishing sacred groves for the purposes of religious rituals, as well as their name for these sacred groves; Nemeton.

This brings us back to Mutton Tump. If Tump is indeed simply an Anglicisation of the Welsh “twmp”, what about the first element; Mutton? 

Is it too much to suggest that it derives from Nemeton, its original meaning forgotten as English replaced Welsh.  With Christianity becoming the dominant religion, pagan practices and sites were increasingly airbrushed out of history. 

This was as instructed by Pope Gregory in his 7^th century letter to Abbot Melitus before the Abbot joined St Augustine in his mission to convert the pagan English;

"Tell Augustine that he should by no means destroy the temples of the gods but rather the idols within those temples. Let him, after he has purified them with holy water, place altars and relics of the saints in them. For, if those temples are well built, they should be converted from the worship of demons to the service of the true God. Thus, seeing that their places of worship are not destroyed, the people will banish error from their hearts and come to places familiar and dear to them in acknowledgement and worship of the true God. ”
http://www.britannia.com/history/docs/mellitus.html

In such a situation it is perhaps easy to imagine how “neh-MEH-tun” could initially lose its first syllable, and then, later still, in the same way that Celtic “crug” turned into English “church”, the remaining “MEH-tun” could mutate into “MUHT-tun”.  Thus Nemeton Twmp becomes Mutton Tump. 

Unfortunately, clumps of trees tend not to leave much of an archaeological presence, and, in any case, any trace is likely to have been destroyed, if not by the creation of St Brendan's chapel in the 12^th century, then certainly by the building of the 17^th century civil war defences on the same site. 

By the time Cabot Tower was built in 1897, it is unlikely that there will have been anything left to find, even if something had been there to find in the first place.

Therefore it seems that we may never know if Brandon Hill really was a Nemeton – unless of course, it is by inference from a discovery made at one of the other Mutton Tumps.

Bedminster Town Team

Back To The Future?

(click on chart for larger image)

Looking back over the last 52 weeks, and using the Dow Jones index of the New York Stock Exchange as a guide, it is possible to track in broad strokes the effects of the Sovereign Debt Crisis on that crucial stock market.

The chart above (which indexes the Dow Jones based on the week of 19th September 2011 as 100) starts in November 2010 just as the 85 billion Euro bailout of Ireland was agreed accompanied by the toughest budget in the Irish Republic's history. This action itself followed on from an E110bn Greek bailout in May 2010 also accompanied by austerity measures. Following the rescue of the Irish banking system we saw the Dow Jones steadily climb until mid-February 2011 to the first of three market peaks, each of which turned out to be shortlived.

A further bout of market pessimism, despite the EU agreeing to the setting up of the E500bn European Stability Mechanism to replace the temporary European Financial Stability Framework in 2013, sees the market decline again in March.

A second peak in the Dow Jones is reached in late April, but once again Eurozone worries, with the Portuguese government admitting it cannot deal with its finances without EU help (resulting in a E78bn bailout in May) sees the market drop and economists also begin to talk about Greece being forced to leave the Eurozone.

However, the market begins to recover for a third time as new austerity measures are imposed upon the Greeks, despite huge levels of civil unrest, accompanied by the EU agreeing a second E109bn bailout. The market reaches a third peak in July.

But the respite is short-lived as August brings further doubts about the ability of the Greeks to remain in the Eurozone, and, again, opinion begins to be voiced as to whether it would be better if Greece defaulted, as concerns about contagion in the sovereign debt market lead to yields increasing on Spanish and Italian bonds.

An announcement by the European Central Bank that it will buy government bonds does not prevent a severe drop in the Dow Jones which is followed by a period of doubt and uncertainty with the market seeing alternating triple-digit falls and rallies.

Eventually, in October, a certain degree of bullishness settles into the market that the worst of the crisis is over, as an E130bn bail-out of Greece combined with a partial voluntary default on some private sector debt is agreed. This is accompanied by the appointment of an unelected technocrat to power in the cradle of democracy. A similar technocratic appointment in Italy, seen as the next domino in the bail-out stakes, accompanied by yet more austerity, sees the Dow Jones climb by some 14% before dropping back a little over the last week or so.

After a year that has saw three separate peaks, with the last followed by a major decline into a period of intense market volatility, there are those who suggest that the recent rally in the Dow Jones will be sustained - that the worse is over.

This scenario sees the Eurozone area experiencing a relatively moderate recession, and the UK and US a few years of moderate growth, but that the BRICs and other emerging nations will soon pull the World Economy back to the levels of growth experienced pre-crisis.

That might be a little optimistic.

Because we may have been here before.

Below is the same chart as above but I have now added a second set of data. This too is for the Dow Jones Index but this time covering the 52 week period up to the week of 28 April 2008 (with the week commencing 19th February 2008 set at 100).

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This time the chart begins in April 2007 by which time concerns about the subprime mortgage lending market in the United States were beginning to have major effects. By June, Bear Stearns announced the failure of two of its hedge funds and soon after the Dow Jones reached it's first peak in before declining.  The hedge funds' collapse was seen as an intensification of the subprime crisis rather than something deeper, however in August the European Central Bank stepped in to offer liquidity to banks.

The Dow Jones then began to creep up again, reaching a new, second peak, and its highest ever recorded level of over 14,000 in October.  But by this time the UK had seen its first run on a bank since 1866 as customers queued around the block to get their cash out of Northern Rock whilst banks like UBS and Citigroup now announced $3bn losses to subprime, with Merrill Lynch reported to have exposure of almost $8bn.

Nevertheless, perhaps buoyed by the IMF forecast of only slightly reduced World Economic growth of 4.8% in 2008 followed by 5.1% in 2009, the Dow Jones peaked for a third time in early December.

However over the Christmas period and into January, as worries about liquidity and the subprime exposure of individual banks increased, the Dow dropped by over 10%.  This did not prevent Wall Street from awarding itself $32 billion in bonuses of course.

Just as now, there then followed a volatile period in which the market seemed to change direction depending on conflicting news headlines and/or pure speculation.  Increasing commodity prices (Oil had been forecast to drop in price by 20%, but would instead increase in price by almost 50% by July) added to the mix, whilst the Federal Reserve reduced interest rates to 3.5%, and then, a week later, to 3%.  Meanwhile in February, the nationalisation of Northern Rock by the British government was finalised.

A key moment came on the 11th March, when the share price of Bear Stearns collapsed. After a weekend of frantic negotiations a company that had a market value of $18bn a year previously was sold to JP Morgan for $1/4 billion.

Just as in November 2011, the apparent resolution of a problem with an insolvent entity (for Bear Stearns read Greece), seemed to calm the market.  Over the next nine weeks, the Dow Jones steadily rose, even after the IMF published its Global Financial Stability Report estimated potential losses due to the crisis at $945 billion.  By the end of April, the nine week rally saw the Dow Jones hitting the 13,000 level again, which although still short of the 14,000 it had hit in October, seemed a good indicator that the global economy - and the financial system - would soon return to business as usual.

Comparing the two 52 week periods, the track of the Dow Jones show, in both cases, three separate peaks, followed by a decline.  There then followed a period of volatility, followed by a "recovery" when it was felt that the worse was over and the "bad apple" problem (Bear Stearns, Greece) had been resolved.

The difference is that for 2008, we now have the benefit of hindsight, and we can look back at 2008, and see what happened next.

(click on picture for larger image)

What came next, was, of course, the nationalisation of the US government-chartered mortgage institutions colloquially known as Fannie Mae and Freddie Mac, the collapse of Lehman Brothers, the nationalisation of RBS, the $700bn US government asset purchase system, the bailout of AIG, etc, etc, etc.

From a level of 14,000 in October 2007, the Dow Jones dropped to 6,600 by March 2009. Similar effects were felt on Stock Markets around the globe as $50 trillion worth of assets were destroyed. The effect in the real economy saw millions made unemployed as the world experienced its first year of negative growth since the end of World War II. 

The OECD countries saw a drop of almost a trillion dollars in private fixed investment between the beginning of 2008 and the end of 2009.  In the UK, by the first quarter of 2010, GDP had dropped by £18.6 billion with over £10 billion of fixed investment lost, while personal spending saw a decline of over £8 billion as people tightened their purse strings.

In response, politicians have inflicted austerity cuts on those least culpable whilst many of those individuals and corporations who benefited most in the years of boom continue to take advantage of tax loopholes to avoid paying taxes of between £35-£220 billion per year in the UK alone - tax revenues that could otherwise protect frontline services like healthcare, education, and welfare.

The fact that the Dow Jones in 2011 has unerringly retraced the ebbs and flows of the Dow Jones in 2007-08 does not in itself mean that we are about to have a global recession as we had in 2008/09.  Past performance is, after all, no guarantee of future performance.

But there is a feeling amongst many that the financial crisis further revealed the underlying weaknesses of the current financial system that already been exposed by the Asian banking crisis and the default of Russia in the late 90's. It has demonstrated the unsustainable nature of a global economic system in which massive trade imbalances are sharpened by private consumption.  Private consumption that, due to wage repression, is itself reliant on debt creation fueled by massive credit transfers from producer countries and historically cheap interest rates. 

The response to the $1.4 trillion subprime mortgage shock of bailing out the banks has merely served to transfer an unsustainable debt problem from private banks to the public sector where it has exacerbated an existing problem caused by politicians caught in the trap of promising both low taxes AND decent levels of public services.  In comparison to subprime, the combined sovereign debt bill of Portugal, Ireland, Italy, Greece and Spain is in the region of $4.8 trillion, and financial institutions are placing bets on the yields from government bonds for the PIIGS just as they did on mortgage backed securities and their derivatives in the subprime mortgage sector.

It now seems that because major reforms to the global banking system have largely failed to materialise, allowing banks and other financial entities to continue with business as usual, it is likely that another global recession, one potentially even more devastating then the first, may be about to hit the world's economy.

Hydra Bookshop - opening Saturday 26th November

http://www.hydrabooks.org/

The Hydra Bookshop will open on

Saturday 26th November 2011.

'The Hydra' is a bookshop and coffee shop by day; event space and meeting place by night situated at 34, Old Market Street (BS2 0EZ). We have a warm inviting event space suitable for groups of up to 25. As a community bookshop we aim to support local groups by creating a space were your publications can be sold, with a percentage going to maintaining the bookshop. Run by local people as a workers' co-operative, the shop grew out of the Bristol Radical History Group and similar networks across the city.
 
There will be an opening week of events organised by Bristol Radical History Group. The details will appear in the Events Calendar on the website  shortly

Trojan Horses

Last Wednesday (2nd November) I watched the early evening news on the BBC which described how the Greeks were being difficult about accepting a deal that will “halve their debt”. The BBC made it very clear how unreasonable the Greeks were being for looking this apparent gift horse in the mouth. A similar theme continued in the Guardian the following Monday (7th November);

“Greece received a €110bn bailout in May 2010 with the latest aid package writing off half of the country's €360bn debt load.” describing the latest aid deal as “a €130bn bailout package.”

Sounds like an offer you couldn't refuse doesn't it? (And we all know the unpleasant horse experience linked to that phrase).

The Greek people, having themselves been the provider of a dubious gift horse in the past, are perhaps more able than most to perceive the need to be weary of such apparent largesse.

Which is why our friendly neighbourhood Franco-German “kingmakers” made it clear to the Greek Prime Minister that any attempt to ask the Greek people for their opinion should be abandoned – politicians tend to only support referenda when they think they will get the answer they want.

Greek sovereign debt is in the region of 350-360 billion Euros (£300-310 billion). If there really was a 50% write-off (or “haircut”) on all Greek debt then we should see 175-180 billion Euros wiped off the Greek debt mountain. This would bring the Greek debt to GDP ratio down from a unsustainable 157%, to a more manageable 79% - a level of debt lower than that of the UK, Germany or France (but not below the level of Spain, another “troubled” country, with sovereign debt levels at only 68% of GDP).

Yet, according to the Debt Sustainability Analysis leaked to the press during the recent Euro summit, IF the “ungrateful” Greeks accept the terms of the new “bailout” deal, AND assuming there are no other shocks to the economic system, AND if other proposals go according to plan including even more austerity measures, privatisations, and reductions in Greek sovereignty, they might, just might, be able to get their debt down to 130% of GDP by 2030. A level of debt greater than that carried by Italy at 120%, which the same BBC programme described as very worrying and an indication that Italy might be the next sovereign state in the firing line.

Obviously, something doesn't add up. The most obvious questions that might spring to mind are:
1) How come a deal to “halve Greek debt” doesn't?
2) Why, if Greece has now had two debt “bailouts” totalling 240 billion Euros, is Greek debt actually getting higher rather than lower?

As we will see, those behind the new bailout know that it only provides, at best, enough funding for a E26bn reduction in Greek debt - a 7% reduction not 50% - and even this depends on the level of take-up of a haircut that is only voluntary because of fears regarding the stability of the financial derivatives market.

Unfortunately, there is no simple way to explain why the bailouts don't do what they say on the tin, so I have split my attempt at an explanation into six hopefully more digestible chunks.
 
Part 1 Where we learn that not all debt is created equal.
 

 

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A closer look at the components of Greek sovereign debt allows us to roughly calculate that the Greek sovereign debt includes somewhere in the region of 150-160 billion Euros worth of debt in the form of bonds and loans owed to official agencies including the EU (E47bn), IMF (E18bn), the ECB (at least E45bn), other European central banks (about E13bn), legacy loans from the Bank of Greece (E6bn) and other bilateral/special loans. None of this “official sector” debt, it appears, will be subject to the 50% haircut.
 
That leaves about 200 billion Euros worth of privately held sovereign debt, including debt held by Greek and Cypriot commercial banks (E60bn), foreign commercial banks (E30bn), sovereign wealth funds (E25bn), public sector workers' pension funds (E30bn) and other private sector institutions.
 
A 50% reduction on this would see the overall Greek debt reduced by about E100 billion (30%) and, indeed, E100 billion was the figure used by the (now ex-) Greek prime minister in a speech to his party group last Thursday (3rd November) as he tried to convince his audience that the decision as to whether the Greek government would hold a referendum was one for the Greeks alone despite the fact that everybody knew that Merkel and Sarkosy had already said Nein/Non!
 
In fact, the final reduction is likely to be considerably lower than the E100 billion referred to by Mr Papendreou.
 
Part 2 Where we learn it's not just what you owe but how much you have to pay for it.

Despite all the headlines about the overall level of Greek sovereign debt, the immediate problem for Greece is the rising cost of servicing their debt, coupled with the fact that too much of the borrowing is over a short term period.

(click on picture for larger image)

Some of Greece's current problems have been forced upon Greece by a market that has become more risk aware (as recently as 2009, the level of Greek debt as a percentage of GDP was still lower than it had been some 7 years previously), other problems are self-inflicted - such as the largest shadow economy in “western” Europe (at some 28% of GDP) with high levels of tax avoidance and evasion badly impacting upon the level of tax revenues collected.

As with politicians in almost every developed country, Greek politicians have promised to deliver the public services the electorate demands, whilst being unwilling to collect the tax revenues needed to pay for them.

The net result is that Greece has borrowed from the market and as the level of Greek debt has risen, so the cost to the Greek government of paying for that debt has increased which means the Greek government has increasingly been forced to borrow on shorter terms from the market because the cost of borrowing short-term is (usually) cheaper (because the investors are only committing their funding for a shorter, and thus, theoretically, less riskier, period of time).

This has a consequence in an increase in the frequency that the Greek government has to go to the market looking for “new” borrowers in order to “rollover” (ie. re-borrow) significant portions of its debt.

Because markets have (belatedly) become more risk conscious, increasing concerns about the ability of Greece to repay its debts have caused the price of Greek bonds to fall in order to sell thus forcing up the cost of borrowing for the Greek government even more.
 
This, in turn, forces the Greeks to borrow on even shorter terms (forcing them to “rollover” their debt ever more frequently) and at ever higher rates of interest (increasing debt interest payments and reducing the ability of the Greek government to reduce its deficit) - in other words, the Greeks are stuck in a Catch 22 situation, with their debt levels and interest payments spiralling out of control.
 
Therefore, part of the plan to “rescue” Greece is not just to reduce the overall level of debt via a 50% “haircut”, but also to encourage bondholders to agree to swap their short-term bonds for longer bonds with maturities of, if possible, 30 years at lower market rates than those available via the bond markets. This would reduce the frequency of Greek sovereign debt “rollovers”, relieving pressure on Greek government finances (and reducing the impact of a negative or “bear” market).
 
Overall, the deal will have the effect of reducing the impact of a negative market on Greek government finances by removing the need for the Greeks to repeatedly go to the market to rollover their existing debt, which in turn may help to stabilise the cost of Greek borrowing.

Part 3 Where we learn that insurance is not always worth the paper it's written on

However, the proposed 50% “haircut” and bond swap programme referred to above is intended to be voluntary which has major implications in terms of reducing the debt burden.

(click on picture for larger image)

The reasons for the Eurozone deal-makers wanting the debt holders to agree to a voluntary haircut rather than a forced haircut is to avoid triggering Credit Default Swaps (CDS). CDS are essentially a form of insurance against the very thing that is happening here – the potential for the seller of a bond to experience a credit event and default on all or some of their payment obligations. Therefore it would seem the most obvious course of action would be to force a 50% partial default, triggering the ability for the bond holder to claim on the CDS to recover their investment. After all, isn't that what insurance is for?

The problem is that there are major concerns about the ability of the CDS market to cope with a sovereign default, even a partial one by a relatively small country, an economy that only accounts for a tiny percentage of Europe's GDP – many senior figures in the finance industry recall how, after the Lehman Brothers collapse in September 2008, it became clear that the insurance giant AIG was exposed to tens of billions of dollars of payments for CDS due within weeks without the ability to pay them. Having allowed Lehman Brothers to fail, the officials concerned were so panicked by the potential knock-on effect of a failure in the CDS market, that they reversed their policy of not using taxpayers funds to bail-out private companies, and bailed out AIG.

As of November 4th, 2011, the Depository Trust and Clearing Corporation (DTCC) held details of over 4,400 live single-name CDS contracts directly referencing Greek government debt with a Gross Notional of $74 billion. Many CDS experts have insisted that the headline figure worth noting is the much smaller Net Notional ($3.7bn) and that the problem with AIG was because it had a high Net Notional unlike Greek CDS, but, in the end, it all comes down to levels of trust. In a largely unregulated market nobody really knows what sort of chain reaction might be sparked by the triggering of the insurance supposedly provided by CDS.

The simple fact is that many in the financial industry and in the political realm are scared stiff of the very insurance system meant to guard investors against credit events like a Greek default.

So, rather than trigger the CDS, the deal will look for a voluntary haircut from the private sector even if that means that the potential reduction in Greek debt will be considerably lower than might otherwise have been the case.

Part 4, Where we learn that you can only have the haircut you're willing to pay for.

(click picture for larger image)

Back in May 2010, the European Union and the International Monetary Fund funded a E110 billion package to “rescue” Greece, by providing it with the funds to meet its obligations for 2010-2012.. The IMF pledged E30 billion, with the EU offering E80 billion provided by the other Eurozone countries.

Of the E110 billion, approximately E10 billion was allocated to recapitalise (“bailout”) those Greek banks most affected by the debt crisis.

So far E65 billion of the funding has been disbursed in 5 payouts between May 2010 and July 2011 – E18 billion from the IMF, and E47 billion from the EU supplied by the Eurozone taxpayers including Germany (13.5bn), France (10bn), as well as the Italians (E9bn) and Spanish (E6bn) who might be considered to have enough problems of their own. Included in this total is E3.5 billion that has gone directly to recapitalise the banks.

Of the other E61.5bn disbursed, most of this has gone to meet the E43bn Greek deficit for 2010 and 2011 which included E27.5bn in debt interest payments to the holders of Greek debt (including payments on the loans provided as part of the bailout package itself).

The next EU/IMF payout of E8bn is due to go to Greece as soon as it accepts the terms of the latest bailout package. This left E37 billion still in the pot (including E6.5bn earmarked for bank recapitalisations) however this has been reduced to E34bn after Slovakia declined to take any further part, and Portugal and Ireland also themselves became recipients of bailouts.

However, by July 2011, it had become clear that the first “bailout” had failed to reassure the market about Greece's problems, leading to a second proposed E109bn “bailout”, subsequently increased to E130 billion on October 26th..

Of this new funding pot of E130 billion, some E30 billion will be made available for more Greek bank recapitalisations. Added to the E6.5bn left over from the recapitalisation pot for the first bailout, this means that E36.5 billion is available to prop up the banks directly.

Another E30 billion will be made available as “sweeteners” to encourage existing private sector bondholders (including banks) to swap their existing short-term bonds at a 50% haircut for longer term bonds maturing in up to 30 years.

That leaves E70 billion, along with the remaining E27.8 billion from the first bailout for a total of E97.8 billion to keep the Greek government solvent over 2012-2014.

Over that time period, the EU/IMF/ECB “Troika” who are now effectively governing Greece, predict that the Greek government will actually run a primary balance surplus of E14bn.

However, after allowing for the Greek debt interest payments which total E49bn over the same period, the surplus turns back into a deficit of E32.7bn, to which must be added another E2.3bn due from the failure to meet the deficit target for 2011 When this deficit is added to the E6.5bn of arrears that the Greek government owes to hospitals, local government, state bodies, social security funds etc, that leaves roughly E56bn available for the 50% “haircut” that was supposedly going to halve Greek sovereign debt.

Part 5, Where we learn that the 50% haircut....isn't

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The Institute of International Finance, the organisation negotiating of behalf of many of the banks as to how the new bailout should work, estimates that there is some E150bn of the E200bn private sector owned Greek sovereign debt due to be rolled over in the 2012-2014 time period. It is this debt that will be eligible for a voluntary haircut and bond swap.

Back in July, the IIF estimated that the offer of a 21% haircut and swap to longer-term bonds would be taken up by some 90% of private sector bondholders, holding E135bn of Greek debt. The IIF proposal provided four options for bondholders, only two of which included the haircut, with a result that the overall reduction of Greek debt would actually have been just 10% of the E135bn at E13.5bn.

However, the value of the bond held by the institutions who actually signed up to the original deal would appear to have been closer to E112bn – meaning that the plan would only have seen Greek debt reduced by about E11-12bn. It is easy to see why the EU and IMF were less than impressed by this proposal and instead insisted on a bigger haircut of 50%.

If the same number of private sector bondholders are willing to accept the 50% haircut (with the added incentive of the E30bn of sweeteners referred to earlier) the cost of the haircut will be the E56bn identified earlier. Given, however, that the E30bn of “sweeteners” to encourage private sector involvement will subsequently be added to the Greek debt, the net change will, in fact, be E26bn or 7% of Greek Debt.

This assumes of course that all of the private sector bondholders who were willing to take up the July deal with a 21% haircut that became 10%, will sign up for the October deal with its larger 50% haircut that is really a 23% haircut.

In other words, it would appear that of the E240bn of taxpayers' money that have gone to “reduce” the Greek sovereign debt, only E56bn at most will actually be available to buy bonds at the haircut price of 50%, leading to a gross reduction in Greek debt not of 50% but of 7%. 

However, financial industry scuttlebutt is that only 60% of the private sector bondholders are supportive of the latest "50%  haircut" deal and thus the likely outcome due to the “voluntary” nature of the haircut is a debt reduction of just E15bn or just over 4% of Greek sovereign debt.

 Part 6 Where we emphasise that Greece has not been bailed out

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This is not a bailout of Greece.

A real bailout of Greece might be looking at a moratorium on debt interest payments (which will see the Greek government pay out over E76bn over 2010-2014), it might look at underwriting longer term Greek private sector bonds encouraging holders of short-term bonds to swap into them to reduce the rollover effect.

In return the Greek government might have been tasked to agree binding targets to collect the taxes avoided and evaded, often by many of its wealthiest citizens, and then investing the additional revenues thus collected (in the region of E25bn/yr) into modernising and “greening” Greek public infrastructure and services, creating jobs rather than imposing austerity measures that destroy jobs often by abandoning infrastructure investment and reducing key services.

As in the UK, austerity has served to stifle the Greek economy forcing it into recession, killing off revenue generation, and creating social conflict.

This isn't a bailout of the Greek economy, it is a bailout of banks and other financial institutions - a Trojan Horse in which at least E190bn of the E240bn “bailouts” will go to compensate banks and other financial institutions in order to prevent them from forcing Greece to default on the loans that those same institutions willingly lent to Greece.

If banks continue to be compensated by the taxpayer for making “bad loans”, bad loans are what they will continue to make.

As a result it seems increasingly likely that this Greek tragedy will now be played out again in a much larger Roman arena – with the implication that Greece could merely have been playing the Bear Stearns role to Italy's Lehman Brothers.

The financial sector has become an end in itself and whole economies are being devastated to serve it (and pay for its mistakes), rather than the financial sector serving those economies in order to improve the general condition of the populace as a whole.

The road to serfdom, indeed.

TRANSPORT IN BRISTOL :

THE ART OF THE POSSIBLE

A Presentation and Debate : Open and free to all

Bristol Civic Society presents

The aim of this event is to debate a transport policy for Bristol that strives to balance the wide range of interests in the city that is deliverable within the legal and financial constraints imposed largely by Central Government. The event will contribute to the Council’s Central Area Action Plan consultation.

Councillor Tim Kent, Cabinet Member for Transport

Bristol City Council

will open the meeting.

Speakers

Peter Mann, Director of Transport Bristol City Council

Robert Sinclair, Chief Executive of Bristol Airport

James Smith, Civic Society Transport Group member

Will give an overview of the current plans for transport in Bristol including the legislative and financial constraints within which transport proposals have to be developed and implemented.

The concerns of local business about the current transport situation - the importance of transport to delivering local economic growth.

A Bristol resident’s perspective - the delivery of the third Joint Local Transport Plan - what the Council should do to limit the impact of traffic growth in the city’s central area.

Following the speakers there will an hour of questions and debate.

Monday 7th November Colston Hall No 2

7.00pm (doors open 6.30pm)

We expect a high attendance, so to ensure entry please arrive in good time.

Bristol High Street survey

The Council’s Sustainable Development and Transport Scrutiny Commission scrutinises Council performance and influences its policy and decision-making. It’s holding an inquiry in November to examine best practice in supporting local high streets and making them vibrant and diverse places to visit.

The Commission is keen to hear from people about their local high streets as evidence for the inquiry.

The Commission’s chair, Councillor Mark Bradshaw says:

“I’d welcome people’s views on the high streets they use, what they like about them and what can be done to improve them. The information you give will be invaluable to develop the Council’s action plan on retail for the city”.

There has already been a business survey recently carried out in Stokes Croft, Old Market, Christmas Steps/Colston Street, Old City, Park Street and East Street - information from these surveys, which include some of the same questions, will be taken into account.

Residents can give their views at:

http://www.surveymonkey.com/s/highstreetsurvey

There’s also a business survey at:

http://www.surveymonkey.com/s/highstreetbusiness

RESPOND BEFORE 11 NOVEMBER