When the facts change, I change my mind. What do you do? -- John Maynard Keynes

Saturday, March 10, 2012

In Greece Nothing Succeeds Like Failure

OK, Greece had an "orderly default." Problem solved? Hardly--

Greece succeeds in bond deal but not in solving debts - Telegraph: "Experts warned the deal had failed to address Greece's crippling debt problem. Instead, by imposing heavy losses on Greek banks and pension funds, it may have destablised the country even more. Raoul Ruparel of Open Europe said: "The debt relief for Greece is far too small which means another default could be around the corner, while the austerity targets are . . . unrealistic and will kill off growth prospects." The eurogroup of 17 finance ministers held a conference call but said they would not decide whether to release Greece's €130bn bail-out until a meeting on Monday. The restructuring will write down Greece's debt by €105.4bn, is €2bn short of the target set by its international paymasters. . . ."

Next Time, Greece May Need New Tactics By Landon Thomas Jr. London--NYTimes.com: "The Greek government was able to legally strong-arm most of its private bondholders into accepting the debt reduction deal it completed Friday. But next time — and experts predict there will almost certainly be a next time — Greece might have much less leverage. That’s because as a result of Friday’s deal, the bulk of Athens’s 260.2 billion euros ($341 billion) in remaining government debt will now be held by the International Monetary Fund, the European Central Bank and the individual European nations that have lent Greece money and contributed to the region’s bailout fund. Politically, Greece would be hard-pressed to force debt losses on such a formidable international group, the way it did with the private banks and hedge funds that have just been forced to accept a 75 percent loss on their Greek bond holdings. . . .“From now on, whatever happens in Greece, it will be a matter between Greece and the taxpayers of the rest of the euro area,” said Jacob F. Kirkegaard, an analyst at the Peterson Institute for International Economics in Washington. . . . Greece, in essence, has become a financial ward of Europe. . .  even after the new relief, Greece is still expected to be saddled with a ratio of debt to gross domestic product of 151 percent in 2012, and 149 percent in 2013. These debt levels remain the highest in Europe. The Greek economy remains in a wretched state — it shrank by 7.5 percent in the fourth quarter. And youth unemployment, at 51 percent, is now officially the highest in Europe. . . . for Greece, the drawback of owing so much money to Europe and the I.M.F., even at lower interest rates and longer maturities, is that the obligation will always be there. “Greece is staring at decades of interest payments to the official sector,” said Adam Lerrick, a sovereign debt expert at the American Enterprise Institute. “They traded their ability to write down debt to private sector creditors for low-interest-rate official sector loans that cannot be reduced.”"

The Big Picture

Financial Crisis - The Telegraph

JohnTheCrowd.com | The Sailing Website

Craig Newmark - craigconnects