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Since none of this Greek debt was initially sold for more than 5.9% or 6.2%, I suspect the payout to creditors will not be much beyond that.
So, the idea is to prevent a Greek default by making the creditors whole, as long as by whole it means the creditors don't lose money. The idea that people will be paid at market rates from IMF funds is perhaps fantastical.
The current >10% yields simply mean that holders of past bonds sold them for much less than their face value, thus providing the new buyers with a higher yield. That means that past buyers of the bond have already taken losses by selling at less than their official value.
Are we really talking about bailing out an indirect bet?
I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact.
Buying the debt in the secondary market is what the ECB should have quietly been doing since February.
The brainless should not be in banking -- Willem Buiter
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