Illustration by Manos Symeonakis
Given that Greece struggled for weeks to find just a few billion euros in savings to convince its eurozone partners to grant a second bailout, you’d have thought the wiping out of some 100 billion euros from the country’s debt pile — the largest restructuring the world has seen — would have been greeted with the world’s largest collective sigh of relief. It wasn’t.
The lack of high-fiving and back-slapping on the streets of Athens does not mean the bond swap should be dismissed. After all, it’s perhaps the first time in this crisis that all parties involved accepted that Greece can’t pay its debts and that they needed to do something practical about it.
Posted in Economy, Greece
Tagged Debt restructuring, Greece, Greek crisis, Greek debt, Greek default, Greek economy, Greek pension funds, Private Sector Involvement, PSI, Recession
- Illustration by Ilias Makris
Some people will think that the haircut of 50 percent or so being proposed for holders of Greek debt is a get-out-of-jail-free card for Athens and unfair punishment for investors. They would be wrong on all counts.
The writedown, set to be finalized at the European Union leaders’ summit on Wednesday, is the result of failures by both parties. The banks and hedge funds made what they hoped would be a risk-free investment in a country that they knew was the most badly placed of all those standing on the shifting sands of the euro. The market should have factored in the structural problems that plagued both the single currency and Greece, but it didn’t. In accordance with the rules of the game, both sides will pay a price.
Posted in Economy, European Union, Greece
Tagged banks, euro, European Central Bank, European Commission, European Union, eurozone, Greece, Greece troika, Greek banks, Greek bonds, Greek debt crisis, Greek haircut, Greek pension funds, International Monetary Fund