The investors were searching high yields for new Greek bonds, the pricing on bonds in the post debt swap (default) were 40% lower than expected in parity with the Euro, and the IMF made a statement about the obligation of Greece to meet all requirements on the financing agreement including parliamentary action on reform. The reason for the swap and finance package was to restore Greece’s ability to restore confidence and financial solvency. However, the confidence is faint and financial solvency is doubtful. Is the world’s political leadership so fragile and so unable that deferring a default is wiser than cutting losses now?
The ramifications of pushing the default into the future are grave for Europe, America, and the global economy. The future default of Greece would produce a more cataclysmic event than a default now. The damage of a default would have brought horrible damage to Europe and America, but the chance of a cataclysmic contagion would be less likely now than in the future. The reason is the fringe European countries on the edge of a full blown debt crisis , because Greece insolvency would instill the fear of insolvency among the other countries. Greece was kicked down the road, so what makes Italy,Spain,or Ireland any different? The shoestring is Greece and default is the pull to unravel the system and spread a rampant debt contagion.
America will not be impervious to the crisis, but a future Greek fault would be a a future in America of vodka and bullets…
- Now Greece brings default instead of debt swap (donny-wise.com)
- America’s Europe Problem: FDIC reports improvement as Moody’s rebukes Greece. (donny-wise.com)
- Fitch gives Greece benefit of a doubt (rt.com)
- Greece secures deal to lower debt, avoid default (latimes.com)
- John Ward – Exclusive – German Bankers Give Merkel Ultimatum – Either Greece Leaves The Eurozone, Or Germany Must – 19 March 2012 (lucas2012infos.wordpress.com)
- Investors squeamish on Greece’s future (business.financialpost.com)