13 ms·

Greece defaults

500 points by MaysonL 15y ago

eegilbert 15y ago
Greece ^kinda defaults. More context in NYT, of course: http://nyti.ms/pyJ9Ho http://nyti.ms/pyJ9Ho
- chailatte 15y ago
  Ah, yes. Cover your ears. Don't wanna scare the kids. More mass media brainwashing euphemisms. Default -> Temporary/Kind of/Selective Default Great Depression -> Great Recession Worthless Mortgages -> Troubled Assets Make dollar worthless -> Increase Liquidity
  - jackpirate 15y ago
    Are you serious!? You've got it exactly backwards: media hyperinflates things to sell and get people to watch. Our "great depression" as you call it right now is nothing like what happened in the 30s. Comparisons just serve to fear monger.
    - david927 15y ago
      But Chailatte is right, the hyperbole goes in the direction it's needed. Greece has defaulted. It's either principal with interest, or it's a default. The reason for the wishy-washy phrasing is to avoid insurance claims. Also, we're in a Depression (although not the Great Depression) and the media never uses that term (and then happily declares the "recession" to be over) to avoid self-fulfilling prophesy behavior. But make no mistake, we're in a depression and the media swings its hyperbole in the direction it's needed.
antimora 15y ago
is Greece in default or "kind of default"? I don't see in other headlines news.
- Caligula 15y ago
  It mentions that they are sort of forcing bond holders to accept a lesser payment. That seems like a kind of default.
  - narrator 15y ago
    Whether they defaulted or not is actually quite key. You see, all the CDS (Credit default swap) holders get to demand the full face value of the Greek debt they hold from the CDS seller if Greece has defaulted. The CDS writers are going to take a huge bath if this happens. This is what took down AIG, except in that case it was subprime MBS (Mortgage backed securities) CDSs that did it.
    - achompas 15y ago
      This is an excellent question--I'm also curious to see how CDSes are affected. Logic dictates the EU would structure this bailout so that, no, CDSes cannot be redeemed, lest we see a bunch of insurers go under as well.
      - marshray 15y ago
        You can bet there are a lot of people making phone calls right now trying to figure this out. My guess is that nobody knows at this point. If this so-called "selective default" does end up being "structured" such that markets are surprised when CDSs cannot actually be invoked, then that erosion of confidence in the system itself might end up fueling a cascade failure even worse than simple direct failure of some insurers.
        mdda 15y ago
        If I were worried about this point (and a holder of a lot on CDS 'insured' bonds), I'd get a friend that was immune to 'arm twisting' to buy 1MM of a particular issue, and play extremely hardball with the ECB. Eventually, a payment would not occur, and there would be a solid 'Credit Event' to trigger all the CDS.
afiler 15y ago
Seeing the title "Greece defaults" made me things had taken a turn for the worse compared to news I'd heard earlier in the day, but no, this is just the title of an opinion piece. Other news articles are more nuanced, and in particular, the Wall Street Journal asks "What Constitutes a Greek Default? And Who Decides?": http://online.wsj.com/article/SB10001424053111903461104576459972311740468.html http://online.wsj.com/article/SB1000142405311190346110457645...
deleted 15y ago
[deleted]
melvinng 15y ago
Finally, that took a while. Why didn't they do it earlier?
- dataminer 15y ago
  Politics
lefstathiou 15y ago
FYI there is no such thing as a "kind of" or "selective" default. It's binary. You either pay back creditors what they are owed or you dont. It's rare that a company or country defaults on ALL obligations all at once. As a member of Wall Street, I appreciate the WSJ's noble attempt to sugar coat this (article below) but that doesnt change the facts. Ditto watchandwait below.., glad it finally happened. http://professional.wsj.com/article/SB10001424053111903554904576459310597648944.html?mod=WSJPRO_hpp_LEFTTopStories http://professional.wsj.com/article/SB1000142405311190355490...
- jeffreymcmanus 15y ago
  So you're making a semantic argument, which is, you know, great, but surely there's a difference between the relatively modest haircut that's going on here and the kind of classical default in which little or none of the debt gets repaid? The author of the piece writes as if Greece is getting off scot-free here. Is not aware of the manner in which mobs have been rioting there for the past month? This is not a pleasant situation for anybody.
  - frossie 15y ago
    As far as I can see in other reporting, it's something of the order of a 20% write down (at least for the German Banks) with the EU buying up some of the bonds and the terms being extended to 15 and 30 years. In other words, it is not clear that how this is a default. In fact The Guardian says: German government sources said they had received assurances from the international ratings agencies that they would not rush to judgment in declaring a Greek default but would take their time in studying the deal. http://www.guardian.co.uk/business/2011/jul/22/bailed-out-eurozone-greece http://www.guardian.co.uk/business/2011/jul/22/bailed-out-eu... Which implies to me that "default" is in the eye of the beholder. Finance is not my kink, but my understanding is the nature of the "write down" is generally that as a bank you cannot borrow against the money that is owed to you, rather than actually giving up on collecting it entirely. In other words, the OP headline sees a bit dramatic.
    - latch 15y ago
flocial 15y ago
The EU sort of rescued Greece, now Greece sort of defaults. Portugal, Spain, and Italy are not that far behind. The biggest problem, aside from Greece's fiscal mess, is that Germany can't muster up enough political support to clean up after their mess more decisively despite the fact that they are now in the same monetary union. The catch 22 of these financial crises is that inaction will result in financial meltdown, decisive rescues political suicide.
- chailatte 15y ago
  82 Million Soon To Be Very Angry Germans, Or How Euro Bailout #2 Could Cost Up To 56% Of German GDP http://www.zerohedge.com/article/fatal-flaw-europes-second-bazooka-bailout-82-million-soon-be-very-angry-germans http://www.zerohedge.com/article/fatal-flaw-europes-second-b...
  - j_baker 15y ago
    If only it were that simple. It probably won't only be the Germans who end up footing the bill for this. As I understand it, German banks bought Credit Default Swaps on these loans, so there's no telling who will ultimately end up footing the bill.
    - marshray 15y ago
      US taxpayers, citizens, and any others who slave away under US federal debt: http://en.wikipedia.org/wiki/American_International_Group#Federal_Reserve_bailout http://en.wikipedia.org/wiki/American_International_Group#Fe...
  - forgottenpaswrd 15y ago
    Not that simple, do you know where much of the money from Greece has gone all this years? Weapons developed by Germany, and German industrial products bought with loans by Greeks, like cars, cranes and bulldozers. Do you know witch country benefits from a weak euro so the can export a lot?
    - 15y ago
TheAlan 15y ago
The raping of Greece's assets will now begin. EVERYTHING will get privatized, just like a third-world country.
- tsotha 15y ago
  Well, sure. Greece is a third-world country. And when you owe more than you can pay you have to cough up some assets.
  - jodrellblank 15y ago
    Greece looks First-world to me: http://en.wikipedia.org/wiki/Third_World http://en.wikipedia.org/wiki/Third_World
    - tsotha 15y ago
      Meh. Outdated definition.
      - marshray 15y ago
        I was in Greece a few months ago. It's definitely not a third-world country, but it 'aint no Switzerland either.
  - stayjin 15y ago
    I do not agree with you. As far as I know, the loans did not involve collateral ( at least not until now ), so investors are just entitled profits from interest and have no claim on assets. I don't know if Greece is a third-world country, but definitely the Greek government managed this crisis are such, so it looks like Greece is going to share their fate.
  - krakensden 15y ago
    Privatizing too much too quickly to pay off loans is analogous to chopping off limbs when you can't pay the mob. It makes the people owed money feel better, but means that they will never really get paid back, because the debtor can no longer function.
ww520 15y ago
I've gone through the News channel in topchan.tv, which has multiple sources. Out of 180 of news clips for today, only four are related to the Greek bailout. AlJazeera has more details and it mentioned partial default, in the sense that the lenders would take a loss. france24: Fresh multi-billion euro bailout expected for Greece http://www.topchan.tv/show/public1/1/News/2011-07-21.06.h/58 http://www.topchan.tv/show/public1/1/News/2011-07-21.06.h/58 france24: Sarkozy and Merkel strike deal ahead of Greece talks http://www.topchan.tv/show/public1/1/News/2011-07-21.06.h/59 http://www.topchan.tv/show/public1/1/News/2011-07-21.06.h/59 Euronews: Nervous Greeks await their economic fate http://www.topchan.tv/show/public1/1/News/2011-07-21.18.h/7 http://www.topchan.tv/show/public1/1/News/2011-07-21.18.h/7 AlJazeeraEnglish: Greece's second bailout http://www.topchan.tv/show/public1/1/News/2011-07-21.18.h/11 http://www.topchan.tv/show/public1/1/News/2011-07-21.18.h/11
joshu 15y ago
well, tomorrow is gonna be fun.
- Zakuzaa 15y ago
  why?
  - achompas 15y ago
    Markets will respond upon opening.
    - jeffreymcmanus 15y ago
      They'll respond positively because fixing a problem, even if some people lose out, is always better than uncertainty.
      - nostrademons 15y ago
        That's how a rational person would respond. History has shown that markets are anything but rational. Usually, when something like this happens, people wonder how deep the iceberg goes and who'll be next. Widespread panic usually follows.
        ebaysucks 15y ago
        There's nothing irrational about wondering how deep the iceberg goes. I'm always amused when people blaim the market for pointing out failed assets, as if the process of price discovery itself is more responsible for intrinsic value than the nature of the asset itself.
        achompas 15y ago
        Totally agreed. Markets moved up, but a decline of the various indices would be justified: Greece will need another bailout, as this "partial default" only deals with a little over half of Greece's outstanding debt. They still have 140 million Euros to go.
parallel 15y ago
As I understand it you default on a loan, you don't default as an entity. So it's doesn't really make sense to talk about Greece defaulting without saying which loans they defaulted on. Hence the "kind of"/"selective" etc. I read this as Greece defaulted on kind of all it's loans, so defaulted on some and not on others. The others may have been renegotiations, longer terms etc.
- marshray 15y ago
  Apparently investors were fond of thinking that Greek debt was as safe as any in EU because it was backed by the Germans. This seems not unlike the belief that Fannie Mae/Freddie Mac were effectively backed by the US Treasury. In the the US scenario these investor beliefs have been upheld by bailouts. But in the Greek situation, this bet was just now shown to be wrong. The open question is just how big of a house of cards has been built upon this assumption. Tomorrow is going to be a busy day for a lot of people.
- mdda 15y ago
  Typically (for a company at least), debt has 'cross-default' provisions in it. So that failure to pay any particular creditor causes legal triggers to trip on every piece of debt. This is prevent the company persecuting particular sets of holders, and makes it a huge incentive not to miss payments to anyone. The problem with the arm-twisting idea is that it only requires one hold-out, and everyone gets pulled through the default process.
  - parallel 15y ago
    Right, I didn't realise that mechanism existed, thanks for the heads up. It makes sense, removing the opportunity for slippery dealings with preferential treatment of some debt over the rest.
rajpaul 15y ago
"kind of default" doesn't mean "Greece sort of defaulted", it means "Greece defaulted in a specific way".
marshray 15y ago
The WSJ's article is like all "I have a friend who thinks she might be a teensey weeensey little bit pregnant...". Tomorrow, the markets make an example out of Greece in order to send a message to the US. But they'd better watch out, it could backfire. Congress now has a taste of the thrill of writing a (raise pinky) one trillion dollar check. If another AIG starts to look shaky...
shareme 15y ago
Translation...Greece gets a bailout for itself, bondholders offered bailout if they commit to increase time-periods of loans, Greece bond rating gets clobbered to default rating....
- anonymoushn 15y ago
  I wouldn't call a 20% haircut a bailout. I would call it a default.
teyc 15y ago
Greece has been in fiscal deficit for so long, a loan which stays on the books but never gets paid off reminds me of CPS where functions never return.
paulocal 15y ago
Does this mean gold and silver prices will go up? I HOPE SO!
senthilnayagam 15y ago
start of a chain reaction :( but who would be next
pandaassembly 15y ago
Finally the only right move to do. If you look at greece's huge debt, it was clear that - even in booming economic times - they could have never managed to pay it all back. Yes the greece default rating, will bring some pressure to the (mostly europrean) banks, but I'm sure the world will not stop moving, it might actually be the first step out of the euro crisis.
adulau 15y ago
"The total official financing will amount to an estimated 109 billion euro. This programme will be designed, notably through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of Greece." Markets and especially the financial sector like banks (especially French banks) owning debt from Greece (or CDO) have positively reacted to the announce for a different reason that the one shown in the press IMHO. The major risk for the banks is the inability from a customer to pay their debt. With the current proposal the risk is again moved to the public sector where they will take the part of the debt that Greece cannot pay or pay with difficulties. So for the banks, it's a great move as their current contribution is just a small part from their revenue removed of the interest rate on the debt while lowering down the risks of unpaid debt. Without forgetting that the ECB is feeding the banks with a preferential rate (around 1%) for credit given to other countries by the banks with a higher rate (around 3-4%). So the winner is clearly the financial sector. We removed the risks for you and States will cover by public financing. It's just like the "refinancing" for CDO in 2008...
- dreww 15y ago
  i think this is the real story here, agreed.
  - tankenmate 15y ago
    The real story is that this problem has been kicked into the weeds. Greece is still fundamentally over spending; it has been spared some momentary pain, but there is far more to come. My gut feel is that it will take the larger part of 30 years for Greece to right itself unless Germany and France find some way to "pay" Greece its "dues" for keeping the Euro "artificially" low and bolstering Northern European exports to the rest of the world.
    - thirdusername 15y ago
      Germany and France is part of western Europe. In Northern Europe only Finland and Estonia (as of very recently) has the Euro.
kahawe 15y ago
What I can still not understand: how could this have happened at all and how come just like with the financial crisis following the housing bubble, it is nobody's fault really, nobody gets the blame and has to answer and step down and get locked up for it... and ultimately banks or the countries just get their bail-out and that's it. Few months from now life will just continue as usual as if nothing ever happened, just like it did on Wall Street. They went right back at it. The funniest thing, a few weeks ago it was a very popular opinion in the media in Greece (even in respectable papers) that Germany should absolutely have to pay since they got allegedly SOOO rich and happy on all those imports Greece bought from Germany. Which in reality were an absolutely ridiculous amount of like 1 or 2% of all of Greece's imports but it shows how quickly a scape goat was conjured up in the media to direct people's attention and hate away from their own politicians. Seriously, how can you not blame the politicians in that country and blame whoever was responsible for accepting Greece into the monetary union in the first place when they downright faked their economic statistics and obviously noone did any due-diligence? There is a constant decline in voters and a general sense of "disenchantment with politics" here; people just care less and less and I can really see why... it doesn't really matter who you vote for anyway, they all get away with whatever they want and the biggest crises of the last 10, 20, 30 years just get brushed off like nothing happened. Insane amounts of bailouts are paid out on the backs of the working citizens and then that's it. It is never anybody's fault so certainly this does not scare off ANYONE to refrain from careless, negligent conduct. I am not trying to troll, I just really honestly do not understand it... in my own understanding by all that is right, a few people who were actually responsible or in charge and did not do anything to prevent it should be hanging from trees or burning on stakes by now, figuratively speaking (but I would not mind having it literally). In any company a CEO conducting business like these countries are doing on a daily basis would have been locked up a hundred times over looong time ago for a multitude of very grave misconducts, evasion, falsification of accounts etc etc etc. When you rob a bank for petty cash, you get locked up; when you "steal a movie" you get locked up even longer. When you frakk over the whole world or the whole EU, then most everyone was joining in anyway so "shit happens", "tough luck", let's write a check and shake hands for the media. Can someone with more political understanding than I have put all this clusterfuck-shitstorm into perspective for me, please?
- 15y ago
hootmon 15y ago
Funny how the banks a while back that were to big to fail and got their massive bailout, many times greater in magnitude than this, never once was the word austerity uttered in their direction.
tybris 15y ago
This is called debt restructuring, not defaulting.
orenmazor 15y ago
everybody is concentrating about the loans, but there was nothing being said on the lack of social contract in Greece. sure, they get some more loans/time, but the fact remains that the greek dont seem to want to pay their taxes.
mbateman 15y ago
From the info box on this story in the print edition of the WSJ article this morning: --- Q:There has been concern about a "credit event" that could trigger payouts on credit default swaps, a type of insurance against default. Will this happen? A: Probably not. The deal for private-sector contributions is voluntary. If a deal doesn't bind all bondholders, it's unlikely to be considered a credit event. Q:What use is default insurance if there's a default and no payouts? A: Good question. It may lead to some soul-searching in the CDS market. --- So the financial instruments designed to insure against default are being bypassed by deliberately circuitous arrangements and language, to the point that people are wondering what they are even for anymore? That sure seems like strong evidence in favor of the OP's position.
- deleted 15y ago
  [deleted]
Loic 15y ago
Nearly off topic, but all these debt issues make me think that this is why "world level" currency like bitcoin can be interesting. If it starts to spread enough to reach a critical mass over several economies, this kind of electronic currency can be the only currency disconnected from a single economy. The value of such currency would be function of the volume shared in each economy using it, where economy would be the US, EU, Japan, China etc. You could say, a bit like gold, but easier to pay with. Note that I am not saying I endorse bitcoin or any kind of crypto currency and recommend you to exchange your Euros/Dollars for some. For me, it is too speculative at the moment. This is just the concept which I find interesting.
- jarek 15y ago
  Saying the entity "EU" is a single economy but the entity "US and China" isn't seems rather arbitrary to me. At the very least, euro is already a currency disconnected from a single economy, being currently connected to at least two: the relatively sane part of eurozone, and PI(B)IGS.
naeem 15y ago
This is terrifying. The possibilities of a double-dip recession turn depression are growing by the day. Excuse me while I start working out, learn how to use a shot-gun and develop a taste for cider while deepening my voice.
Maven911 15y ago
Does anyone know where I can get more in-depth analysis of the debt soverign crisis ? I am quite interested in the topic but most articles are just fluff in terms of deep economic analysis

Greece defaults

500 points by MaysonL 15y ago

eegilbert 15y ago

Greece ^kinda defaults. More context in NYT, of course: http://nyti.ms/pyJ9Ho http://nyti.ms/pyJ9Ho

chailatte 15y ago
Ah, yes. Cover your ears. Don't wanna scare the kids. More mass media brainwashing euphemisms. Default -> Temporary/Kind of/Selective Default Great Depression -> Great Recession Worthless Mortgages -> Troubled Assets Make dollar worthless -> Increase Liquidity
- jackpirate 15y ago
  Are you serious!? You've got it exactly backwards: media hyperinflates things to sell and get people to watch. Our "great depression" as you call it right now is nothing like what happened in the 30s. Comparisons just serve to fear monger.
  - david927 15y ago
    But Chailatte is right, the hyperbole goes in the direction it's needed. Greece has defaulted. It's either principal with interest, or it's a default. The reason for the wishy-washy phrasing is to avoid insurance claims. Also, we're in a Depression (although not the Great Depression) and the media never uses that term (and then happily declares the "recession" to be over) to avoid self-fulfilling prophesy behavior. But make no mistake, we're in a depression and the media swings its hyperbole in the direction it's needed.

antimora 15y ago

is Greece in default or "kind of default"? I don't see in other headlines news.

Caligula 15y ago
It mentions that they are sort of forcing bond holders to accept a lesser payment. That seems like a kind of default.
- narrator 15y ago
  Whether they defaulted or not is actually quite key. You see, all the CDS (Credit default swap) holders get to demand the full face value of the Greek debt they hold from the CDS seller if Greece has defaulted. The CDS writers are going to take a huge bath if this happens. This is what took down AIG, except in that case it was subprime MBS (Mortgage backed securities) CDSs that did it.
  - achompas 15y ago
    This is an excellent question--I'm also curious to see how CDSes are affected. Logic dictates the EU would structure this bailout so that, no, CDSes cannot be redeemed, lest we see a bunch of insurers go under as well.
    - marshray 15y ago
      You can bet there are a lot of people making phone calls right now trying to figure this out. My guess is that nobody knows at this point. If this so-called "selective default" does end up being "structured" such that markets are surprised when CDSs cannot actually be invoked, then that erosion of confidence in the system itself might end up fueling a cascade failure even worse than simple direct failure of some insurers.
      - mdda 15y ago
        If I were worried about this point (and a holder of a lot on CDS 'insured' bonds), I'd get a friend that was immune to 'arm twisting' to buy 1MM of a particular issue, and play extremely hardball with the ECB. Eventually, a payment would not occur, and there would be a solid 'Credit Event' to trigger all the CDS.

afiler 15y ago

Seeing the title "Greece defaults" made me things had taken a turn for the worse compared to news I'd heard earlier in the day, but no, this is just the title of an opinion piece. Other news articles are more nuanced, and in particular, the Wall Street Journal asks "What Constitutes a Greek Default? And Who Decides?": http://online.wsj.com/article/SB10001424053111903461104576459972311740468.html http://online.wsj.com/article/SB1000142405311190346110457645...

deleted 15y ago

[deleted]

melvinng 15y ago

Finally, that took a while. Why didn't they do it earlier?

dataminer 15y ago
Politics

lefstathiou 15y ago

FYI there is no such thing as a "kind of" or "selective" default. It's binary. You either pay back creditors what they are owed or you dont. It's rare that a company or country defaults on ALL obligations all at once. As a member of Wall Street, I appreciate the WSJ's noble attempt to sugar coat this (article below) but that doesnt change the facts. Ditto watchandwait below.., glad it finally happened. http://professional.wsj.com/article/SB10001424053111903554904576459310597648944.html?mod=WSJPRO_hpp_LEFTTopStories http://professional.wsj.com/article/SB1000142405311190355490...

jeffreymcmanus 15y ago
So you're making a semantic argument, which is, you know, great, but surely there's a difference between the relatively modest haircut that's going on here and the kind of classical default in which little or none of the debt gets repaid? The author of the piece writes as if Greece is getting off scot-free here. Is not aware of the manner in which mobs have been rioting there for the past month? This is not a pleasant situation for anybody.
- frossie 15y ago
  As far as I can see in other reporting, it's something of the order of a 20% write down (at least for the German Banks) with the EU buying up some of the bonds and the terms being extended to 15 and 30 years. In other words, it is not clear that how this is a default. In fact The Guardian says: German government sources said they had received assurances from the international ratings agencies that they would not rush to judgment in declaring a Greek default but would take their time in studying the deal. http://www.guardian.co.uk/business/2011/jul/22/bailed-out-eurozone-greece http://www.guardian.co.uk/business/2011/jul/22/bailed-out-eu... Which implies to me that "default" is in the eye of the beholder. Finance is not my kink, but my understanding is the nature of the "write down" is generally that as a bank you cannot borrow against the money that is owed to you, rather than actually giving up on collecting it entirely. In other words, the OP headline sees a bit dramatic.
  - latch 15y ago

flocial 15y ago

The EU sort of rescued Greece, now Greece sort of defaults. Portugal, Spain, and Italy are not that far behind. The biggest problem, aside from Greece's fiscal mess, is that Germany can't muster up enough political support to clean up after their mess more decisively despite the fact that they are now in the same monetary union. The catch 22 of these financial crises is that inaction will result in financial meltdown, decisive rescues political suicide.

chailatte 15y ago
82 Million Soon To Be Very Angry Germans, Or How Euro Bailout #2 Could Cost Up To 56% Of German GDP http://www.zerohedge.com/article/fatal-flaw-europes-second-bazooka-bailout-82-million-soon-be-very-angry-germans http://www.zerohedge.com/article/fatal-flaw-europes-second-b...
- j_baker 15y ago
  If only it were that simple. It probably won't only be the Germans who end up footing the bill for this. As I understand it, German banks bought Credit Default Swaps on these loans, so there's no telling who will ultimately end up footing the bill.
  - marshray 15y ago
    US taxpayers, citizens, and any others who slave away under US federal debt: http://en.wikipedia.org/wiki/American_International_Group#Federal_Reserve_bailout http://en.wikipedia.org/wiki/American_International_Group#Fe...
- forgottenpaswrd 15y ago
  Not that simple, do you know where much of the money from Greece has gone all this years? Weapons developed by Germany, and German industrial products bought with loans by Greeks, like cars, cranes and bulldozers. Do you know witch country benefits from a weak euro so the can export a lot?
  - 15y ago

TheAlan 15y ago

The raping of Greece's assets will now begin. EVERYTHING will get privatized, just like a third-world country.

tsotha 15y ago
Well, sure. Greece is a third-world country. And when you owe more than you can pay you have to cough up some assets.
- jodrellblank 15y ago
  Greece looks First-world to me: http://en.wikipedia.org/wiki/Third_World http://en.wikipedia.org/wiki/Third_World
  - tsotha 15y ago
    Meh. Outdated definition.
    - marshray 15y ago
      I was in Greece a few months ago. It's definitely not a third-world country, but it 'aint no Switzerland either.
- stayjin 15y ago
  I do not agree with you. As far as I know, the loans did not involve collateral ( at least not until now ), so investors are just entitled profits from interest and have no claim on assets. I don't know if Greece is a third-world country, but definitely the Greek government managed this crisis are such, so it looks like Greece is going to share their fate.
- krakensden 15y ago
  Privatizing too much too quickly to pay off loans is analogous to chopping off limbs when you can't pay the mob. It makes the people owed money feel better, but means that they will never really get paid back, because the debtor can no longer function.

ww520 15y ago

I've gone through the News channel in topchan.tv, which has multiple sources. Out of 180 of news clips for today, only four are related to the Greek bailout. AlJazeera has more details and it mentioned partial default, in the sense that the lenders would take a loss. france24: Fresh multi-billion euro bailout expected for Greece http://www.topchan.tv/show/public1/1/News/2011-07-21.06.h/58 http://www.topchan.tv/show/public1/1/News/2011-07-21.06.h/58 france24: Sarkozy and Merkel strike deal ahead of Greece talks http://www.topchan.tv/show/public1/1/News/2011-07-21.06.h/59 http://www.topchan.tv/show/public1/1/News/2011-07-21.06.h/59 Euronews: Nervous Greeks await their economic fate http://www.topchan.tv/show/public1/1/News/2011-07-21.18.h/7 http://www.topchan.tv/show/public1/1/News/2011-07-21.18.h/7 AlJazeeraEnglish: Greece's second bailout http://www.topchan.tv/show/public1/1/News/2011-07-21.18.h/11 http://www.topchan.tv/show/public1/1/News/2011-07-21.18.h/11

joshu 15y ago

well, tomorrow is gonna be fun.

Zakuzaa 15y ago
why?
- achompas 15y ago
  Markets will respond upon opening.
  - jeffreymcmanus 15y ago
    They'll respond positively because fixing a problem, even if some people lose out, is always better than uncertainty.
    - nostrademons 15y ago
      That's how a rational person would respond. History has shown that markets are anything but rational. Usually, when something like this happens, people wonder how deep the iceberg goes and who'll be next. Widespread panic usually follows.
      - ebaysucks 15y ago
        There's nothing irrational about wondering how deep the iceberg goes. I'm always amused when people blaim the market for pointing out failed assets, as if the process of price discovery itself is more responsible for intrinsic value than the nature of the asset itself.
        achompas 15y ago
        Totally agreed. Markets moved up, but a decline of the various indices would be justified: Greece will need another bailout, as this "partial default" only deals with a little over half of Greece's outstanding debt. They still have 140 million Euros to go.

parallel 15y ago

As I understand it you default on a loan, you don't default as an entity. So it's doesn't really make sense to talk about Greece defaulting without saying which loans they defaulted on. Hence the "kind of"/"selective" etc. I read this as Greece defaulted on kind of all it's loans, so defaulted on some and not on others. The others may have been renegotiations, longer terms etc.

marshray 15y ago
Apparently investors were fond of thinking that Greek debt was as safe as any in EU because it was backed by the Germans. This seems not unlike the belief that Fannie Mae/Freddie Mac were effectively backed by the US Treasury. In the the US scenario these investor beliefs have been upheld by bailouts. But in the Greek situation, this bet was just now shown to be wrong. The open question is just how big of a house of cards has been built upon this assumption. Tomorrow is going to be a busy day for a lot of people.
mdda 15y ago
Typically (for a company at least), debt has 'cross-default' provisions in it. So that failure to pay any particular creditor causes legal triggers to trip on every piece of debt. This is prevent the company persecuting particular sets of holders, and makes it a huge incentive not to miss payments to anyone. The problem with the arm-twisting idea is that it only requires one hold-out, and everyone gets pulled through the default process.
- parallel 15y ago
  Right, I didn't realise that mechanism existed, thanks for the heads up. It makes sense, removing the opportunity for slippery dealings with preferential treatment of some debt over the rest.

rajpaul 15y ago

"kind of default" doesn't mean "Greece sort of defaulted", it means "Greece defaulted in a specific way".

marshray 15y ago

The WSJ's article is like all "I have a friend who thinks she might be a teensey weeensey little bit pregnant...". Tomorrow, the markets make an example out of Greece in order to send a message to the US. But they'd better watch out, it could backfire. Congress now has a taste of the thrill of writing a (raise pinky) one trillion dollar check. If another AIG starts to look shaky...

shareme 15y ago

Translation...Greece gets a bailout for itself, bondholders offered bailout if they commit to increase time-periods of loans, Greece bond rating gets clobbered to default rating....

anonymoushn 15y ago
I wouldn't call a 20% haircut a bailout. I would call it a default.

teyc 15y ago

Greece has been in fiscal deficit for so long, a loan which stays on the books but never gets paid off reminds me of CPS where functions never return.

paulocal 15y ago

Does this mean gold and silver prices will go up? I HOPE SO!

senthilnayagam 15y ago

start of a chain reaction :( but who would be next

pandaassembly 15y ago

Finally the only right move to do. If you look at greece's huge debt, it was clear that - even in booming economic times - they could have never managed to pay it all back. Yes the greece default rating, will bring some pressure to the (mostly europrean) banks, but I'm sure the world will not stop moving, it might actually be the first step out of the euro crisis.

adulau 15y ago

"The total official financing will amount to an estimated 109 billion euro. This programme will be designed, notably through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of Greece." Markets and especially the financial sector like banks (especially French banks) owning debt from Greece (or CDO) have positively reacted to the announce for a different reason that the one shown in the press IMHO. The major risk for the banks is the inability from a customer to pay their debt. With the current proposal the risk is again moved to the public sector where they will take the part of the debt that Greece cannot pay or pay with difficulties. So for the banks, it's a great move as their current contribution is just a small part from their revenue removed of the interest rate on the debt while lowering down the risks of unpaid debt. Without forgetting that the ECB is feeding the banks with a preferential rate (around 1%) for credit given to other countries by the banks with a higher rate (around 3-4%). So the winner is clearly the financial sector. We removed the risks for you and States will cover by public financing. It's just like the "refinancing" for CDO in 2008...

dreww 15y ago
i think this is the real story here, agreed.
- tankenmate 15y ago
  The real story is that this problem has been kicked into the weeds. Greece is still fundamentally over spending; it has been spared some momentary pain, but there is far more to come. My gut feel is that it will take the larger part of 30 years for Greece to right itself unless Germany and France find some way to "pay" Greece its "dues" for keeping the Euro "artificially" low and bolstering Northern European exports to the rest of the world.
  - thirdusername 15y ago
    Germany and France is part of western Europe. In Northern Europe only Finland and Estonia (as of very recently) has the Euro.

kahawe 15y ago

What I can still not understand: how could this have happened at all and how come just like with the financial crisis following the housing bubble, it is nobody's fault really, nobody gets the blame and has to answer and step down and get locked up for it... and ultimately banks or the countries just get their bail-out and that's it. Few months from now life will just continue as usual as if nothing ever happened, just like it did on Wall Street. They went right back at it. The funniest thing, a few weeks ago it was a very popular opinion in the media in Greece (even in respectable papers) that Germany should absolutely have to pay since they got allegedly SOOO rich and happy on all those imports Greece bought from Germany. Which in reality were an absolutely ridiculous amount of like 1 or 2% of all of Greece's imports but it shows how quickly a scape goat was conjured up in the media to direct people's attention and hate away from their own politicians. Seriously, how can you not blame the politicians in that country and blame whoever was responsible for accepting Greece into the monetary union in the first place when they downright faked their economic statistics and obviously noone did any due-diligence? There is a constant decline in voters and a general sense of "disenchantment with politics" here; people just care less and less and I can really see why... it doesn't really matter who you vote for anyway, they all get away with whatever they want and the biggest crises of the last 10, 20, 30 years just get brushed off like nothing happened. Insane amounts of bailouts are paid out on the backs of the working citizens and then that's it. It is never anybody's fault so certainly this does not scare off ANYONE to refrain from careless, negligent conduct. I am not trying to troll, I just really honestly do not understand it... in my own understanding by all that is right, a few people who were actually responsible or in charge and did not do anything to prevent it should be hanging from trees or burning on stakes by now, figuratively speaking (but I would not mind having it literally). In any company a CEO conducting business like these countries are doing on a daily basis would have been locked up a hundred times over looong time ago for a multitude of very grave misconducts, evasion, falsification of accounts etc etc etc. When you rob a bank for petty cash, you get locked up; when you "steal a movie" you get locked up even longer. When you frakk over the whole world or the whole EU, then most everyone was joining in anyway so "shit happens", "tough luck", let's write a check and shake hands for the media. Can someone with more political understanding than I have put all this clusterfuck-shitstorm into perspective for me, please?

15y ago

hootmon 15y ago

Funny how the banks a while back that were to big to fail and got their massive bailout, many times greater in magnitude than this, never once was the word austerity uttered in their direction.

tybris 15y ago

This is called debt restructuring, not defaulting.

orenmazor 15y ago

everybody is concentrating about the loans, but there was nothing being said on the lack of social contract in Greece. sure, they get some more loans/time, but the fact remains that the greek dont seem to want to pay their taxes.

mbateman 15y ago

From the info box on this story in the print edition of the WSJ article this morning: --- Q:There has been concern about a "credit event" that could trigger payouts on credit default swaps, a type of insurance against default. Will this happen? A: Probably not. The deal for private-sector contributions is voluntary. If a deal doesn't bind all bondholders, it's unlikely to be considered a credit event. Q:What use is default insurance if there's a default and no payouts? A: Good question. It may lead to some soul-searching in the CDS market. --- So the financial instruments designed to insure against default are being bypassed by deliberately circuitous arrangements and language, to the point that people are wondering what they are even for anymore? That sure seems like strong evidence in favor of the OP's position.

deleted 15y ago
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Loic 15y ago

Nearly off topic, but all these debt issues make me think that this is why "world level" currency like bitcoin can be interesting. If it starts to spread enough to reach a critical mass over several economies, this kind of electronic currency can be the only currency disconnected from a single economy. The value of such currency would be function of the volume shared in each economy using it, where economy would be the US, EU, Japan, China etc. You could say, a bit like gold, but easier to pay with. Note that I am not saying I endorse bitcoin or any kind of crypto currency and recommend you to exchange your Euros/Dollars for some. For me, it is too speculative at the moment. This is just the concept which I find interesting.

jarek 15y ago
Saying the entity "EU" is a single economy but the entity "US and China" isn't seems rather arbitrary to me. At the very least, euro is already a currency disconnected from a single economy, being currently connected to at least two: the relatively sane part of eurozone, and PI(B)IGS.

naeem 15y ago

This is terrifying. The possibilities of a double-dip recession turn depression are growing by the day. Excuse me while I start working out, learn how to use a shot-gun and develop a taste for cider while deepening my voice.

Maven911 15y ago

Does anyone know where I can get more in-depth analysis of the debt soverign crisis ? I am quite interested in the topic but most articles are just fluff in terms of deep economic analysis