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Irish Independent: Bond yields soar as Germany digs in heels over Greek bailout (11 June 2011)
Germany is insisting that bondholders should have to share the cost of a second Greek rescue, defying the views of ECB president Jean-Claude Trichet who is opposed to a policy he believes would damage financial confidence inside the eurozone.

...

[Mr Schaeuble] wants bondholders to extend the repayment date on Greek debt by seven years. [He] is pressing ahead with his policy despite ratings agencies saying it's likely to be classes as a default by Greece.

...

Mr Trichet said he would back a plan that sees bond investors voluntarily agree to buy new Greek bonds when the ones they already hold mature, but nothing more drastic.



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon Jun 13th, 2011 at 12:10:29 PM EST
Oddly, I read last week that Enda Kenny was prescribing that smaller or secondary Irish banks holding the nation's bonds be dealt haircuts. So, here we have governments allowing defaults on entities that presumably have very low exposure to credit default contracts. This literally means that a credit default contract in effect operates as a form of blackmail or racketeering over economies. It's like the mob--you don't want to pay us? See what happens! But if you're small time player, you will be bumped.

Better yet, the big fish will swallow the small banks when the haircut is issued to the guppies.

by Upstate NY on Mon Jun 13th, 2011 at 01:30:34 PM EST
[ Parent ]
Only the biggest investment banks issue CDS. Widows and orphans buy bonds. Do the math.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon Jun 13th, 2011 at 02:31:22 PM EST
[ Parent ]
Oddly, I read last week that Enda Kenny was prescribing that smaller or secondary Irish banks holding the nation's bonds be dealt haircuts.

Are we talking about specific banks or about subordinated debt holders regardless of who they are?

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Mon Jun 13th, 2011 at 04:27:30 PM EST
[ Parent ]
Banks. He specifically mentioned banks.
by Upstate NY on Mon Jun 13th, 2011 at 11:00:00 PM EST
[ Parent ]

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