Skip to comments.Greek Default Looms As Voluntary Debt Deal Looks Set To Fail [Thursday is D-Day for Greece]
Posted on 03/03/2012 9:32:42 PM PST by Steelfish
Greek Default Looms As Voluntary Debt Deal Looks Set To Fail European leaders are braced for the eurozones first ever sovereign default this week as Greeces efforts to secure a 206bn (£172bn) voluntary bond swap looks increasingly unlikely.
Credit rating agencies have warned they will declare Athens to be in default if they force bond swap on investors. By Louise Armitstead 03 Mar 2012
Authorities in Athens are ready to enforce the controversial collective action clauses, or CACs, to impose the restructuring deal on all bondholders as the number of voluntary agreements look set to fall short of the required amount.
Credit rating agencies have warned they will declare Athens to be in default if the CACs are triggered which would be a dramatic culmination to a three-year rollercoaster ride for Athens, the eurozone and global markets.
While the markets have been ready for a Greek default for months, the move could leave Greece and its banks barred from funding from the European Central Bank (ECB). On Monday, Standard & Poors declared Greece to be in a state of selective default which led to the ECB announcing it would no longer accept Greek government bonds as security for new loans.
The rating agency said its decision had been prompted by the threat of the CACs and the actual use of them is likely to tip Greece into actual default. The agency said it regarded the process as a distressed debt restructuring.
Raoul Ruparel of Open Europe, the London-based think-tank, said: Greece is likely to struggle to reach the targets for a voluntary agreement so the credit rating agencies are almost certainly going to see this as a default.
"What happens next is unknown territory.
(Excerpt) Read more at telegraph.co.uk ...
The inevitable end of a welfare state
The socialists are going to stop getting their freebies, ever seen someone spazz out, that is what is going to happen when commie pigs stop getting free treats
How many times does this make for a Greek deal to collapse? It’s got to be at least eight or ten. Talk about your lost causes.
What will happen to the 14 months of government paychecks for 11 months of work!
The cesspit of Greece socialism can't collapse fast enough as far as I'm concerned. Yes, I know this affects a lot of people, but I can't consider any of them to be innocent anymore. They all should have known this ponzi scheme would eventually run out of new suckers.
When Greece defaults and no longer has to make payments on its debts, the left will seek to increase spending due to all the “additional” monies now available. Its Leftwing thinking at its best.
Hah, go back to June 2011 for talk of Greek’s imminent, unavoidable default, and that’s just what I can remember immediately.
"For Ireland, this [the Greek deal] means that we will get a deal on bank debt most definitely. It might take time because the last thing the ECB wants is a queue of me too' demands from Ireland and Portugal. But it is clear that our hand has been strengthened, if we decide to play it."
"But just in case you think this is a victory for the citizen, let's examine in a bit more detail how it works. There will be no default. Greece will be given a 130bn loan. With that loan it will pay out 100bn to bondholders, who will have seen their bonds fall 53pc in value. After the penal interest Greece has paid on these bonds already, we still see an insolvent country paying bondholders 50pc of face value when they should be getting nothing."
"So Greece gets 100bn written off, but borrows 130bn in order to achieve this, so it is still borrowing more making its overall debt not better but worse in absolute terms."
"Now it needs to grow to bring these figures down and that is going to be impossible. So we are going to be back to square one in a few years except for one crucial thing."
"After all this is done, private creditors to Greece will have been paid by European public money stumped up by the taxpayers of other European countries. The banks have been bailed out again. Without help they would have got nothing. They now get 50pc of their worthless holdings and the subsidy comes from the taxpayer."
“Democracies usually collapse not too long after the plebes discover that they can vote themselves both bread and circuses ...for a while.” -Robert Heinlein, Expanded Universe, 1980.