Tag Archives: Greek bonds

How Greece inadvertently ducked under the rollover bullet

Ilustration by Manos Symeonakis

When French President Nicolas Sarkozy announced two weeks ago that French banks had agreed to participate in a rollover of Greek debt, it seemed a rare moment of relief in the country’s strained efforts to tackle its fiscal crisis. “The idea is that we won’t let down Greece and that we’ll defend the euro, which is in the interest of us all,” said Sarkozy, reflecting a sense of purpose and unity that the European Union has often lacked over the last 18 months.

However, the French proposal — which we will come to — soared briefly on the wings of hope before crashing into the immovable obstacle of reality. Two days of talks between bankers and insurers last week led to the Paris blueprint largely being discarded. However, the rejection of the French scheme appears to have helped Greece dodge a debt bullet. The more experts scrutinized the French plan, the more they realized it was a seriously flawed proposal that would worsen Greece’s debt problems.

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Et tu, Obama?

Illustration by Manos Symeonakis

Having seen the caliber of some of the Republican Party’s presidential candidates, it’s hard not to want with every fiber in your body for Barack Obama to succeed during his first term in the White House. But this week, thanks to the comments he made aboutGreeceafter meeting German Chancellor Angela Merkel, it was difficult not to feel respect for the American leader slipping away.

The headlines after the two politicians held their news conference inWashingtonrevolved around Obama and Merkel’s warning that the Greek debt crisis could bring the world economy to its knees if it’s not tackled properly. “America’s economic growth depends on a sensible resolution of this issue,” said Obama. “It would be disastrous for us to see an uncontrolled spiral and default inEuropebecause that could trigger a whole range of other events.”

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Restructuring? It’s child’s play

Graffiti by Absent

Anyone who is a parent or has looked after a small child will be familiar with the dreaded moment when a toddler tells you, “I didn’t do anything.” Once you hear these words, it’s a sure bet that you will find food on the floor, toys smashed to pieces or crayon scrawls on the wall. But it’s not just kids that employ these naively transparent methods, politicians are pretty adept at using them too.

It was, therefore, pretty easy to see through the government’s spin doctors this week as they insisted that the issue of debt restructuring did not come up at all during a meeting in Athens between Prime Minister George Papandreou and renowned financier George Soros. Visiting George did not mention the subject even once, government sources told journalists.

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Rating the rating agencies

Illustration by Manos Symeonakis

“If we really want to rub their faces in it, then the only way is to increase revenues and for every Greek to pay the taxes they are supposed to. If that happens, then we won’t need Moody’s or anybody else.” In his own inimitable style, Deputy Prime Minister Theodoros Pangalos’s blew open in Parliament on Friday an issue of public debate while displaying all the subtlety of a bulldozer trying to open a safe.

Although he was more forthright than others, the veteran PASOK politician was expressing an opinion that reflected the mood of many voters and MPs. His comments came just a few days after Moody’s, one of the three credit rating agencies that have been observing the Greek economy with the intensity a menacing stalker, downgraded Greece’s debt — already at junk status — by three notches, to B1 from Ba1 and suggested Athens would not be able to repay its debt without some form of restructuring. Moody’s also downgraded six Greek banks in the same week.

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Independence Day

Illustration by Manos Symeonakis

Every year, Greece celebrates its independence on March 25. It marks the date when the revolution against Ottoman rule began in 1821. This March 25, though, the proposition of Greece standing on its own will not seem so attractive. Should the European Union leaders’ summit on March 24-25 end in disappointment — as many expect it to — debt-stricken Greece will be left dangerously isolated.

Prime Minister George Papandreou has spent the last few weeks furiously trying to cultivate contacts with his European counterparts — including German Chancellor Angela Merkel, French President Nicolas Sarkozy and European Council President Herman Van Rompuy — in the hope they might be able to sway opinions ahead of the March 25 summit and a meeting of leaders from eurozone countries on Friday, March 11.

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