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  • Saturday, January 21, 3:23 PM Another snag in Greek writedown talks means that Greece and its private-sector creditors may not wrap up before Monday, when Europe finmins meet about a new bailout. The hangup? An agreement centering on an average coupon of 4% on new bonds, which Germany and the IMF think is still too high to bring Greek debt back to sustainability. (ETF: GREK)
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    The following report from a leading Greek newspaper gives further details on the current state of negotiations.

    http://bit.ly/yreh1J

    The events of the past couple of days evidence the typical pattern of a serious set of negotiations at the final stages. We should expect a flurry of alternating optimistic and cautionary reports over the next couple of days but, arguably, a settlement is close.
    21 Jan, 04:35 PM Reply Like
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    Bob,
    Good link and info. No doubt some type of deal will be reached. But that will only deal with the so-called private sector part being mainly banks.

    What about the hedge funds covered by CDS who may not accept? Will CDS be triggered? What about the IMF, ECB, and other supranationals which hold tens of billions of this debt? What subsidy is being paid (rumored to be about 30 billion euros) and who gets what of this? What about the effect on Greek banks and Greek pension funds which are also large holders of Greek debt and will be hugely affected? What if they become insolvent or cannot meet future obligations?

    Basically, even if a deal can be made with the large EU banks, there are many many other ramifications to any potential deal. One rarely sees much if anything about these and what run-on effects this will have.
    21 Jan, 06:46 PM Reply Like
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    I think you and I would agree, U T, that there are many pieces to this puzzle and no really good answers. My sense is that the EU political and financial leaders want a deal that will not prove to be a problem in subsequent negotiations over Portuguese sovereign debt and that, provided one is now negotiated, the necessary backfilling through legislation and aid packages to Greece and the banks will follow to make the deal stick. Further, I think a deal is close as they all have too much to lose is negotiations fail.

    Time will tell.
    21 Jan, 07:06 PM Reply Like
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    Bob,
    Do agree. There are plenty of complications and moving pieces with the Greek debt. Good point about the precedent and subsequent effects on other potential sovereigns. Almost a certainly that is a key consideration of the EU.

    Just wish that some of the other Greek debt considerations, other than just private banks, were mentioned in the coverage of the negotiations. Oh well, when it is all said and done, somebody will probably take the time, read the documentation, and publish an article outlining the major points. Until then, we can all keep guessing.
    21 Jan, 08:15 PM Reply Like
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    When your citizens skip paying taxes and you have tons too many beaucrats getting fat paychecks the interest rates have to be negative to be sustainable.

    And isn't that exactly what is happening?
    21 Jan, 05:15 PM Reply Like
  •  
    As usual, the loser wins; if you lose big, you win bigger too!
    21 Jan, 05:35 PM Reply Like
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    "average coupon of 4% on new bonds, which Germany and the IMF think is still too high to bring Greek debt back to sustainability"
    Great. Now savers will be paid based on what ever the debtor wants to or can afford to pay. The Caucasians had the Indians, Chinese etc. by their balls with the guns before. Now they get to do that with the banksters. At some point (or is it already happening?), they will be told that it is to their honor that their former bosses are taking money from them! I think the filthy rich in those 3rd world countries deserve that since anyway it is stolen money from the general population (from paying less to the workers to tax evasion and what not).
    21 Jan, 05:40 PM Reply Like
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    Ohrama,

    Please get some perspective. The hair cut is close to 70%. To be ranting about 'banksters' is just more economic populism.
    22 Jan, 03:20 PM Reply Like
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    They can't pay it back anyway, what difference does it make what the interest rate is. Curiously though, I wonder who would be dumb enough to buy those bonds.
    21 Jan, 06:11 PM Reply Like
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    They should start selling assets: islands, Acropolis etc. etc.
    21 Jan, 06:36 PM Reply Like
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    Yes, Trufflepig....let's give the assets cheap to the oligarchs and leave the people with the crumbs. More wealth to the Galtian overlords and beg for some leftovers.....

    Heck, it worked under Reagan, why not in Greece? Right?
    21 Jan, 10:33 PM Reply Like
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    Great Point!
    What should we start selling? ....after the state buildings and public lands that are sited for sale... then we move on to whole states ...military liquidation....and uhh...i guess theres some others.

    So who exactly gonna be they buyer....for either Greek, Italian, Spain, France and US distressed assets?

    Thats my question.

    Oligarchs...?
    22 Jan, 02:10 PM Reply Like
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    The obvious answer is the Fed, ECB, and world central banks. Since they can print unlimited amounts of money, they can pretty much buy whatever they want & whenever they want it. And they have been doing lots of that for 3 years now with likely plenty more to come yet.
    22 Jan, 02:43 PM Reply Like
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    And when the Central Bankers have all the toxic debt as their security, for which they paid nothing, and they come calling for the underlying asset, what will the population do....give up the ownership of rivers, railroads, national parks, ports of entry, airports, and any other city, state or national government owned assets, like the Escalante Grand Staircase Monument in Utah (which just happens to be sitting on the largest deposit of low sulfur coal in the USA)
    22 Jan, 07:40 PM Reply Like
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    I doubt that's the issue in reality. I'm sure it's more that hedge funds and bondholders with CDS want either 100% or 0% so their CDS triggers. I've seen far too many stories of how close things are, but I think we'll see involuntary default.
    21 Jan, 06:41 PM Reply Like
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    SA reader -

    You are probably correct in reference to the hedge funds that have bought Greek sovereign debt recently at knockdown prices but the European private banks have to look at a broader picture (i.e. It will not be a satisfactory outcome for them if they gain on their CDSs but the economy in which they function goes into crisis triggered by a string of sovereign debt defaults..
    21 Jan, 07:11 PM Reply Like
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    I'm sure that may be the case....for Euro banks, but hedge funds in the USA/etc who are most likely shorting the markets along with it would don't care about Europe. The issue is if holders of Greek debt with CDS and protection from Europe (or profit from a EZ collapse) can kill the deal. I think they can and will.
    21 Jan, 09:34 PM Reply Like
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    I have been under the impression that the reason for these meetings / negotiations is to force the haircut in such a way as to avoid triggering CDS for anyone.

    Example: If I as a country sell my debt to a hedgefund and offer CDS protection on it then rather then default on the original obligation I create a new financial instrument to offer in the original debts place I have effectively not defaulted but only changed the terms of the initial agreement ( though the motivation of accepting the new terms revolves around the threat of outright default )
    22 Jan, 12:04 PM Reply Like
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    And that's why no agreement has been made. Those that bought CDS want it to be triggered.
    23 Jan, 02:23 AM Reply Like
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    The Big Fat Greeds or Greeks. I cannot believe we are bailing out a bunch of assholes who spend not only their future $$ but others countries future $$ and yet got the guts to ask for more...Beggars and Robbers. I am Furious.
    21 Jan, 07:18 PM Reply Like
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    Has anyone of you ever encountered the bureaucracy in Greece? Or Spain for that matter? You just need to encounter that and you know why these Nations are broke and won't change.
    21 Jan, 10:28 PM Reply Like
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    Spain and Greece are not in the same boat. Spain had a balanced budget before 2008. Greece never had a balanced budget. Spain had an immense real estate. The same cannot be said for Greece.

    Spaniards appear much more willing to bear austerity than the Greeks.
    25 Jan, 06:52 PM Reply Like
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    Here you go:

    http://fam.ag/wwuBSF

    "Let he without sin, cast the first worthless Euro"
    22 Jan, 04:40 AM Reply Like
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    Default is where this will end up. The sooner it is done, the better it will be in the end. Kicking the can down the road, just won't work.
    22 Jan, 05:00 AM Reply Like
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    This slow motion train wreck gets more boring by the day. We all know what happens in the end, but the central planners think they can pull the wool over our eyes and change the ending with movie magic. Default by any other means is still default.
    22 Jan, 12:08 PM Reply Like
  •  
    No, it called how politics works. Political change is almost invariably incremental.

    A lot of progress has been made and that is reflected in the dramatic declines in bond yields.
    25 Jan, 06:53 PM Reply Like
  •  
    Lets see, borrow, borrow, borrow, lend me more to pay you back, lend me more to pay you back, lend me more to pay you back......

    What idiot would lend someone money to get paid back when they know that they will never get paid back?? A greedy banker or a fool !!

    Oh I forgot, the USA would do it too!!
    22 Jan, 11:24 PM Reply Like
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