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Juncker Backs A 'soft' Greek Debt Restructuring

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http://www.telegraph.co.uk/finance/economics/gilts/8571166/Juncker-backs-a-soft-Greek-debt-restructuring.html

Jean-Claude Juncker, head of the euro-zone finance ministers, has backed Germany's proposal for a "soft restructuring" of Greece's debt, but said any contribution from private sector creditors should be "voluntary".

"There must be a participation of private creditors… it must be voluntary," Mr Juncker said in a radio interview in Berlin. "There will be no total restructuring. The governments are agreed on that, ECB support for such an option could not be obtained," he added.

Wolfgang Schaeuble, Germany's finance minister, has called for Greek bondholders to extend the date of their debt maturities by seven years to give Greece the time to reduce its budget deficit and cut debt.

Excellent so how do they think they'll pursuade those in the private sector to "volunteer" losses? If you had shareholders and you wrote off say hundreds of millions of their money, how well is that going to go down?

The private sector lent the money, priced in the risk, got it wrong it's just tough 5h1t.

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http://www.telegraph...tructuring.html

Excellent so how do they think they'll pursuade those in the private sector to "volunteer" losses? If you had shareholders and you wrote off say hundreds of millions of their money, how well is that going to go down?

The private sector lent the money, priced in the risk, got it wrong it's just tough 5h1t.

They're counting on pension funds and banks to do what they are told.

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This must be their solution not to trigger a default event. By making it completely voluntary it is not a default.

Surely this has zero chance of success - unless the European Central Bank holds nearly all the bonds of course!

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The ECB owns most of the greek debt these days, so it's primarily up to the ECB to agree to this.

Edited by wise_eagle

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So it's time for even more dodgy accounting?

If people were using fininancial instruments in the way that they were designed you can see how screwed the whole system has become.

Why on earth would this investor agree to the soft restructuring?

Investor buys 100,000 Euros of greek debt 10 years ago.

4 years ago they decided the risk on the debt was getting a bit high but rather than sell their long term hold they decide to insure it against default with a CDS. In theory they now have no risk and they can hold the bonds.

Now the soft restructuring would result in them losing some of their money without triggering a default event so the insurance won't pay out.

The only reason this soft restructuring will go through is if the ECB (and friends who could be European banks holding more CDS than debt) hold enough of the debt to make it work. No genuine investor would agree to the terms.

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  • 309 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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