...

[Clive]

...

[stone]

The haircut is voluntary. Banks have agreed to it but anyone else can just sit tight and get the full pay out. They are desperate to keep it voluntary so as to not have an "official" default with the CDS activated. Hedge funds have been buying up Greek bonds so as to "free ride" getting the bonds at a price that assumed a 60% haircut but infact possibly getting the full pay out (principle plus >100% interest!).
I find it hard to fathom why Greece doesn't just do the "full Argentina". Abandon the Euro, "repudiate" the debt (as Michael Hudson puts it), start up the Drachma again and say sorry and start again. They would then be like Argentina or Iceland ie much better off than they are now. I also think it is vital that they keep Greek ownership of strategic assets. Just as the USA has the good sense to prohibit foreign ownership of US land (and Canada with Canadian farmland) so Greece needs to prohibit foreign ownership of land utility companies etc. Otherwise they will become peons to foreign "vulture funds". They could perfectly well provide themselves with Drachmas to provide jobs for Greek people producing goods for export to get what they need to import.

Great radio program about the Greek crisis:
http://www.bbc.co.uk/programmes/b016817r
"World leaders preparing for the G20 conference are facing a threat to the global economy from the on-going Eurozone sovereign debt crisis. But as they try to avert further economic catastrophe some investors see opportunities to profit from the mayhem.
Michael Robinson reveals how on-going economic volatility and uncertainty can also present golden investment opportunities - and how, through complex trades, bets and investments, some find cash in the current crisis."

[Jan Van]

Found this image on a Dutch website, 50 procent af van de Griekse schuld? Onmogelijk.

Translation:
50% off Greek debts? Impossible.

Greek Debt, Total 347 billion Euro

IMF                 5%       €17.9b
Euro Countries 14%      €47.7b 
ECB               16% €55b
Greek banks, Insurers, Pension Funds  29% €99.9b
Non-Greek banks, Insurers, Pension Funds  36% €125.9b


The IMF and the Euro Countries don't own Greek bonds. They won't take part in the 50% cut. Neither will the ECB. The Greek banks, insurers and pension funds can't afford to lose any money, and if they do they need to be compensated. So that leaves the non-Greek banks, insurers and pension funds. Practically, those are the only entities that can take a 50% haircut. Some banks like ING already dumped a lot of Greek bonds on the ECB, and marked the rest down by 50%. Some French banks didn't, and would most likely need help from the French government...

[Jan Van]

Also check this out: Making a mockery of sovereign CDS

What happens when you get a default that equates to a 50% loss for most investors without triggering default insurance? Massively negative unintended consequences.

Europe has just made a mockery of the sovereign credit default swap (CDS) market by trying to structure a default via voluntary 50% haircuts in order to avoid triggering CDS claims. It makes absolutely no sense to act as if Greece is not defaulting here.

Bottom line: It’s a sham. And it will lead to either much higher bond yields or massive litigation or both. Choose your poison.

[stone]

Great video that talks about the reason for the voluntary nature of the haircut etc :
http://www.youtube.com/watch?v=7t1WmqOb ... e=youtu.be

[Reub]

Papandreou survived the vote of confidence tonight so it appears that Greece is ready for it's haircut now.