Euro zone deal II

The Financial Times looks a little closer at the deal struck yesterday on Greek debt and funding the euro bailout mechanism, the EFSF. They, too, as I did yesterday, discover that the "devil is in the details:" The details are critical. Depending on how the programme is set up, bondholders could end up with something significantly less onerous than leaders touted on Thursday morning. "While this approach has a better structure and bigger haircuts than the terrible July deal, it does not go far enough and may yet be undermined as most details remain to be agreed," said Sony Kapoor, head of Re-Define, the economic consultancy. The centre of the next, critical phase of negotiations - expected to resume within the coming days - will be over a bond swap programme, which must be completed by January. Officials said that at its most basic the Greek haircuts will work like this:someone owning a €100 bond will trade it for a bond with a face value of €50. But the real value of the new...(Read Full Post)

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