Comments on: Greece’s game plan http://blogs.reuters.com/felix-salmon/2012/01/18/greeces-game-plan/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: chris9059 http://blogs.reuters.com/felix-salmon/2012/01/18/greeces-game-plan/comment-page-1/#comment-35182 Fri, 20 Jan 2012 04:26:21 +0000 http://blogs.reuters.com/felix-salmon/?p=11914#comment-35182 Your assertion that Rachel Donadio is wrong about the potential consequences of CDS triggerring fails to address the issue. Your counterpoints, that those who sold CDS insurance will and should have to pay on it, and those who bought CDS inurance deserve to get what they paid for, may well be true. However, they have nothing to do with what might be the CONSEQUENCES of CDS coverage being triggerred. This is the issue raised by Donadio, which you seem determined to avoid in all your recent postings on the Greek debt issue.

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By: nixonfan http://blogs.reuters.com/felix-salmon/2012/01/18/greeces-game-plan/comment-page-1/#comment-35171 Thu, 19 Jan 2012 20:35:31 +0000 http://blogs.reuters.com/felix-salmon/?p=11914#comment-35171 Another point: Given the irreconcilable factions involved here, the process must eventually become disorderly, probably before March 20th. In the end, those who bought protection will get paid, and those who sold it will pay.

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By: nixonfan http://blogs.reuters.com/felix-salmon/2012/01/18/greeces-game-plan/comment-page-1/#comment-35170 Thu, 19 Jan 2012 20:30:59 +0000 http://blogs.reuters.com/felix-salmon/?p=11914#comment-35170 Can we assume that the contingent liability contained in writing protection on Greece has not been factored into the EBA’s capital stress teats for EU banks?

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By: RichardWatson http://blogs.reuters.com/felix-salmon/2012/01/18/greeces-game-plan/comment-page-1/#comment-35161 Thu, 19 Jan 2012 09:04:45 +0000 http://blogs.reuters.com/felix-salmon/?p=11914#comment-35161 And my comment is really linked to the final sentence “If you’re not willing to accept whatever deal Greece comes up with, you probably shouldn’t be holding Greek bonds at all.”

If you do want a CDS trigger then holding bonds means you can’t have a naked CDS taken away from you. So holding the bonds becomes insurance that you can keep your insurance. I think.

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By: RichardWatson http://blogs.reuters.com/felix-salmon/2012/01/18/greeces-game-plan/comment-page-1/#comment-35160 Thu, 19 Jan 2012 08:57:14 +0000 http://blogs.reuters.com/felix-salmon/?p=11914#comment-35160 Are CDS prices relatively cheap, or not? I imagine smarter hedge funds would be looking to force a CDS trigger, after buying CDS’ when the price had a greater profit than the bond loss. But then I’m not a smart hedge fund, so opinions welcome :)

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By: klauskastner http://blogs.reuters.com/felix-salmon/2012/01/18/greeces-game-plan/comment-page-1/#comment-35159 Thu, 19 Jan 2012 08:38:51 +0000 http://blogs.reuters.com/felix-salmon/?p=11914#comment-35159 A very good article, indeed! This is probably the first sovereign rescheduling in history where there is no official Steering Committee appointed by all creditors. Hopefully, March will see happen what should have happened 2 years ago: the existing debt has to be separated from the Fresh Money requirements. The latter should come from EU/IMF (for budget deficit) and from the ECB (for current account deficit). And the holders of existing debt are invited to form a Steering Committee which has the mandate of all creditors to negotiate with Greece a rescheduling of maturities. No haircut; new evergreen bonds instead!

Obviously, at this point Greece has to start being serious about serious things. No more games about promises which are not kept, etc. Much more pain will have to come of Greece’s public sector and public administration. But there should be a carrot for all of this.

That carrot should be a giant investment program for the Greek economy financed by foreign investors, EIB, EU Structural Funds, etc. (but not the Greek tax payers).

The above Fresh Money for budget and current account deficits will be about 3 BN EUR per month. After hearing about 3-digit BN EUR figures for so long, European tax payers will find that amount to be quite reasonable, particularly since it would now serve a positive purpose (instead of throwing good money after bad). For once, there would be light at the end of the tunnel.

http://klauskastner.blogspot.com/2012/01  /default-seems-to-be-approaching-if.htm l
http://klauskastner.blogspot.com/2012/01  /according-to-s-eu-leaders-have.html

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By: Lloydie http://blogs.reuters.com/felix-salmon/2012/01/18/greeces-game-plan/comment-page-1/#comment-35152 Thu, 19 Jan 2012 03:52:01 +0000 http://blogs.reuters.com/felix-salmon/?p=11914#comment-35152 Two small points. One, collective action clauses don’t only bind private bondholders but all bondholders including the IMF and ECB. Will these esteemed organisations agree to take a hit to their balance sheets?

Two, the Troika wants 2% interest due to the Greek economy deteriorating, while bondholders want at least 5% on the new bonds. I can’t see much smiling going around at the banking table, which implies unintended consequences. Bankers will likely treat European sovereign debt very differently, post Greek default.

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