Greece default.

tartanterra

ILW wrote: »

So what happens if only some of the banks agree to the haircut. Will the others get paid in full?

I imagine that all the banks that are now effectively under state control will "agree" to it. All the rest won't.

Mrs_Bones

MacMickster wrote: »

Quite right. This is only the first stage of a Greek default. Their remaining debt is still unmanageable. All they have done is to build a bit of extra road down which the can can be kicked, whilst plans are made for what will become a federal Europe.

But I just can not see any way they will be able to get national parliaments such as Greece, Italy or Spain to agree to becoming part of a federal Europe superstate with their finances controlled by Germany. Any politician who did agree would be kicked out by their national electorate as soon as any elections were held, if not lynched before. A Europe superstate is a French, Belgium and possibly a German dream but all 17 countries of the Eurozone agreeing to hand over control of their finances?????

gailey_2

whats to stop ireland, spain, portugal and italy asking for same treatment.
fed up of hearing about flipping haircuts
dont get the eurodeal
they still seem in **** to me and not adressing route cause.

the complicated leveraging fund wish i knew how to increase money that much.

still least italians be entertained by their governement

greece seems frightening on the streets feel sorry for ordinary greeks noit sure how much austere they can get.

Mr_Mumble

ILW wrote: »

So what happens if only some of the banks agree to the haircut. Will the others get paid in full?

Theoretically, yes. The agreement has set aside 30 billion Euros for this. From the euro summit statement (pg.4, point 12):

The Private Sector Involvement (PSI) has a vital role in establishing the sustainability of the Greek debt. Therefore we welcome the current discussion between Greece and its private investors to find a solution for a deeper PSI. Together with an ambitious reform programme for the Greek economy, the PSI should secure the decline of the Greek debt to GDP ratio with an objective of reaching 120% by 2020. To this end we invite Greece, private investors and all parties concerned to develop a voluntary bond exchange with a nominal discount of 50% on notional Greek debt held by private investors. The Euro zone Member States would contribute to the PSI package up to 30 bn euro. On that basis, the official sector stands ready to provide additional programme financing of up to 100 bn euro until 2014, including the required recapitalisation of Greek banks. The new programme should be agreed by the end of 2011 and the exchange of bonds should be implemented at the beginning of 2012. We call on the IMF to continue to contribute to the financing of the new Greek programme.

The_White_Horse

if i were ireland, spain, portugal or italy, following this summit, i would have zero intention of paying any debt back. the fools in germany and france will just give you billions. easy. what's the downside? er, nothing by the looks of it.

Generali

michaels wrote: »

I can't understand how come if Greece only pays back 50c on the Euro its debt only falls from 160% of GDP to 120%. Especially as anything over 100% would appear to be unsustainable?

Because it's only defaulting to normal banks. Central banks (esp the ECB) get all their money. Also the budget isn't balanced so the debt will continue to rise. 120% is a projection for 2021 IIRC.

michaels

But surely with a projected debt level of 120% of GDP their remains a non-negligable chance of further default and therefore a risk rated interest rate will be payable which will require a primary surplus not consistent with growth which will imply that the reduced debt levels remain unsustainable or am I missing something?

sheffield_lad

the 50% hair cut is the joke Greek bonds were only valued at 40% there value before today the banks have already wrote it off, the default is not a default if its a voluntary agreement so no triggering of insurance claims worth billions or pass the parcel (debt bomb)

pineapple

Don't think for one moment that any of this has gone away.
I would pay off as many debts as posible, get stocked up and get any essential property jobs done while money is still worth something.

ILW

pineapple wrote: »

Don't think for one moment that any of this has gone away.
I would pay off as many debts as posible, get stocked up and get any essential property jobs done while money is still worth something.

No point paying off debts if money is going to become worthless.