Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
I wonder if the net impact of what we're seeing here is that Greek debt--held by German and French banks--is rolling over to Greek banks with every new issue. And the Greek bank is allowed to keep buying because its Greek bonds are cleared as assets through the ECB. In the end, the Greek banks will own a much heftier amount of Greek debt--rather than banks in the eurozone--and that this will be the cutoff point for Greece, the point at which they can conceivably be lead to restructure without other euro countries taking the hit. This would mean the collapse of Greek banks, because it would be absurd to transfer the debt back to the country after this whole fiasco.

But then again, Greece did have a TARP program last year, and from Frank S.'s posts, I'm shocked to discover that Ireland is taking on the equivalent of 60% debt to GDP in toxic paper from its own banks.

Am I reading this wrong? After the Greek banks take on the bulk of Greek debt, they will then transfer that debt back to the nation?

Is this a little like those people who transfer balances from one credit-card to another in endless circles?

I have a relative who does mortgages in NYC and he tells me he has clients who constantly roll-over interest-only mortgages to new ones, and by so doing, managing to cut their living expenses by more than half. You can buy a 800 sq. foot Manhattan apartment for $400k, but that same apartment can cost $2400 to rent. The interest on $400k at current rates is so much lower than rent, even when you add closing costs of $5k for each new loan you take on (interest only is locked in for 5 to 10 years).

Is this what the bankers have cooking for Greece?

by Upstate NY on Tue Apr 13th, 2010 at 12:19:15 PM EST
[ Parent ]

Others have rated this comment as follows:


Top Diaries

Occasional Series