Greece is falling off the cliff

You didn't really believe all that talk a few weeks ago about how the EU had "saved" Greece from default, did you? The facts are a little more prosaic. The deal to bail out Greece with $170 billion always depended on getting the country's current bond holders to agree to take a better than 50% cut in their holdings and accept new bonds with a lower premium. Not surpisingly, there haven't been enough takers among the creditors. This will lead to automatic cuts in the bond values rather than negotiated cuts. This will put Greece in a state of technical default and deny the government the EU cash that would save it from a messy default in two weeks when a large payment is due to current bondholders. Greece won't have the money to pay their debts and that's the ballgame. Telegraph: Authorities in Athens are ready to enforce the controversial collective action clauses, or CACs, to impose the restructuring deal on all bondholders as the number of voluntary agreements look set to fall short...(Read Full Post)