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Another Greek Debt “Haircut” of 70-100 Billion Euro On The Way?

Are European policymakers work on a Greek debt “Haircut”? Allegedly they do, according to a Reuters story published on Friday afternoon. Euro zone officials told so to Reuters and added that a new “haircut” of estimated  voluem 70-100 billion euro  would be needed.

Greek Debt Crisis Fix May Cost Central Banks up to 100 Billion Euros

European policymakers are working on “last chance” options to bring Greece’s debts down and keep it in the euro zone, with the ECB and national central banks looking at taking significant losses on the value of their bond holdings, officials said.

Private creditors have already suffered big writedowns on their Greek bonds under a second bailout for Athens sealed in February, but this was not enough to put the country back on the path to solvency and a further restructuring is on the cards.

The latest aim is to reduce Greece’s debts by a further 70 billion to 100 billion euros, several senior euro zone officials familiar with the discussions told Reuters, cutting its debts to a more manageable 100 percent of annual economic output.

This would require the European Central Bank and national central banks to take losses on their holdings of Greek government bonds, and could also involve national governments also accepting losses.

The favoured option is for the ECB and national central banks to carry the cost, but that could mean that some banks and the ECB itself having to be recapitalised, the officials said.

The ECB declined comment on Friday. (further reading REUTERS via  Daily Finance)

PS Second haircut? That could get Greek insurance funds really on their knees, not?

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4 comments

  1. Who is whaircut or not, we are not who they think we are!

    “Russia is not Greece.” (Vladimir Putin, Russian Prime Minister, March 2010).
    “France is not Greece.” (Christian Lagarde, director of the International Monetary Fund, May 2010).
    “Portugal is not Greece, and Spain is not Greece.” (Jean-Claude Trichet, President of the European Central Bank, May 2010).
    “Spain is not Greece. But Greece is where it is thanks to a policy like Zapatero’s policy in Spain.” Mariano Rajoy, leader of the Spanish opposition, May 2010).
    “Hungary is not in the same situation as Greece.” (Olli Rehn, EU Commissioner for Economic and Monetary Affairs, June 2010).
    “Hungary is quite obviously not Greece.” (Gyorgy Matolcsy, Hungarian Finance Minister, June 2010).
    “Spain is neither Ireland nor Portugal.” (Elena Salgado, Spanish Minister of Finance, November 2010).
    “Ireland is neither Spain nor Portugal.” (Angel Gurria, OECD Secretary-General, November 2010).
    “Ireland is not Greece.” (Angela Merkel, German Chancellor, November 2010).
    “Greece is not Ireland.” (Giorgos Papakonstantinou, Greek Minister of Finance, November 2010).
    “Ireland is not in Greek territory.” (Brian Lenihan, Irish Minister of Finance, November 2010).
    “Ireland is not Greece.” (Michael Noonan, Irish Minister of Finance, June 2011).
    “France is not Greece and it’s not Italy either.” (Barry Eichengreen, American economist, August 2011).
    “Italy is not Greece.” (Rainer Bruederle, Germany’s FDP parliamentary party leader, August 2011).
    “Italy is not Greece.” (Silvio Berlusconi, Italian Prime Minister, October 2011).
    “Austria is not Greece.” (Karlheinz Kopf, parliamentary faction leader of Austria’s People’s Party, November 2011).
    “Italy is not Greece.” (Christian Lindner, FDP general secretary, November 2011).
    “Portugal is not Greece, and it will not turn into Greece.” (Antonio Saraiva, head of the Confederation of Portuguese Industry, February 2012).
    “Spain is not Greece.” (Richard Youngs, head of the Madrid-based think tank FRIDE, May 2012).
    “Portugal is not Greece.” (Pedro Passos Coelho, Portuguese Prime Minister, June 2012).
    “Italy is not Spain.” (Ed Parker, senior director of Fitch Ratings Agency, June 2012).
    “Greece is not Argentina.” (Yiannis Stournaras, Greek Minister of Competition, July 2012).
    “Germany is not Zimbabwe.” (Paul Casson, fund manager from Henderson Global Investors, June 2012).
    “Spain is not Uganda.” (Mariano Rajoy, Spanish Prime Minister, June 2012).
    “Uganda does not want to be Spain.” (Asuman Kiyingi, Foreign Minister of Uganda, June 2012).’

    However, others say

    “Spain is not Greece.” Elena Salgado, Spanish finance minister, February 2010.
    “Portugal is not Greece.” The Economist, April 2010.
    “Greece is not Ireland.” George Papaconstantinou, Greek finance minister, November, 2010.
    “Spain is neither Ireland nor Portugal.” Elena Salgado, November 2010.
    “Ireland is not in ‘Greek Territory.’” Brian Lenihan, Irish finance minister, November 2010.
    “Neither Spain nor Portugal is Ireland.” Angel Gurria, OECD secretary-general, November, 2010.
    “Italy is not Spain.” Ed Parker, Fitch director, June 2012.

    So really, who the hell is who, and why do WE pay?

  2. Greeks in Greece should organise a Protest Austerity Day, with all of them Shaving their heads, men and women. To make a point so as to say we have nothing else to cut, except our bread and water.