Greece primed for 2nd bailout package, financing gaps remain

Reuters ^ | 2/20/2012 | Luke Baker

[Signalman]

BRUSSELS (Reuters) - Euro zone finance ministers are expected to approve a second rescue package for Greece at a meeting on Monday, a move officials hope will draw a line under four months of social unrest and financial market turmoil that has shaken Athens.

Diplomats and economists do not expect the package to resolve Greece's economic problems: that could take up to a decade or more.

But they hope agreement on Monday will help restructure the country's vast debts, put it on a more stable financial footing and keep it inside the single currency zone.

Senior officials from euro zone finance ministries and the European Central Bank held a conference call on Sunday to go over the final details of the 130-billion-euro program, including a debt sustainability analysis critical to the IMF.

While there is still skepticism in some countries that Greece will be able to live up to its commitments - including implementing 3.3 billion euros of spending cuts and tax increases - officials said momentum was behind approving the deal and that that line was likely to prevail on Monday.

"At the moment it appears it will go exactly this way," Austria's finance minister, Maria Fekter, said on Sunday when asked in a TV interview if the package would be approved.

[Signalman]

“Under the deal, Greece will have around 100 billion euros of its obligations written off via a debt restructuring involving private-sector holders of Greek government bonds.

The private sector - mostly banks and insurance companies - will swap bonds they hold for longer-dated Greek securities that pay a lower coupon, resulting in a real 70 percent reduction in the value of the assets.”

[Capt. Tom]

Under the deal, Greece will have around 100 billion euros of its obligations written off via a debt restructuring involving private-sector holders of Greek government bonds. The private sector - mostly banks and insurance companies - will swap bonds they hold for longer-dated Greek securities that pay a lower coupon, resulting in a real 70 percent reduction in the value of the assets.

That's a default right there.
I guess it could be said to be a slow motion default- or a controlled default. Like dropping a building down so as not to ruin the surrounding buildings. In this situation, surrounding countries. - tom

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[Lurker]

I love the way only banks and insurance companies are “private sector” as if there are no individual investors involved.

[Capt. Tom]

I love the way only banks and insurance companies are “private sector” as if there are no individual investors involved.

I have a gut feeling some of the peoples money in MFGlobal and possibly other companies was illegally loaned to some of these deadbeat European countries,thinking there would be a good return in interest which would be pocketed, and the illegally used money put back into the victims accounts. -Tom

[RetiredTexasVet]

From what I’ve been reading around the net, I doubt that the package will fly in reality. From what I read, Germany is forcing the Greeks to let the ECB or its reps run a fund and they decide who will and will not get paid. Past and current debt payments take precedent over current government operations! I’m sure that will fly providing enough pixie dust is spread!