well, tomorrow is gonna be fun.
why?
Greece defaults
41–50 of 151 posts
Re: Greece defaults
#42Earlier quoted context omitted.
It just means that instead of having the train quickly derail, they're going to stretch it out like it were a Hollywood movie. Seriously. No one believes that debt is going to be repaid. The politicos are just praying that the train doesn't hit the ground on their watch. If you read the text of this, it just "says" they're going to extend all the terms. But we all know the truth. Shit is going to happen. If for no re…
Wrong. The way it appears now, the debt is going to be repaid over a longer period of time. Your confusion about this indicates that writers are not doing a good job explaining this to people.
I think that the point that baguasquirrel is making is that if Greece cannot pay their debts now, how confident should anyone be that they'll be able to pay the debts years down the road? It would appear that the larger day of reckoning is being postponed.
Re: Greece defaults
#43Re: Greece defaults
#44FYI 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://profess…
The important piece of this is that something has had an 'Event of Default' : That will cause all the Credit Default Swaps (CDS) written against Greek debt to trigger.
Banks (mostly European banks, as I understand it) that held Greek debt, but insured it using CDS (written mostly by US banks, ditto), will be able to hand the problem to their counterparties, in exchange for 100%.
There may be some very interesting consequences about to unfold...
Re: Greece defaults
#45Finally, that took a while. Why didn't they do it earlier?
Politics
Re: Greece defaults
#46As 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.
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.
Re: Greece defaults
#47The raping of Greece's assets will now begin. EVERYTHING will get privatized, just like a third-world country.
Well, sure. Greece is a third-world country. And when you owe more than you can pay you have to cough up some assets.
Greece looks First-world to me: http://en.wikipedia.org/wiki/Third_World
Re: Greece defaults
#48Earlier quoted context omitted.
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.
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 insu…
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.
Re: Greece defaults
#49Earlier quoted context omitted.
It just means that instead of having the train quickly derail, they're going to stretch it out like it were a Hollywood movie. Seriously. No one believes that debt is going to be repaid. The politicos are just praying that the train doesn't hit the ground on their watch. If you read the text of this, it just "says" they're going to extend all the terms. But we all know the truth. Shit is going to happen. If for no re…
Wrong. The way it appears now, the debt is going to be repaid over a longer period of time. Your confusion about this indicates that writers are not doing a good job explaining this to people.
Paying me, but not on the originally agreed upon schedule, is still a default. What's wrong about calling it one?