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UPD1: Latest Info on Greek Debt Countdown in Brussels

All eyes are focused on the European leaders in Brussels bound to take historical decisions on the Greek debt and the whole of Europe. The meeting is about to start soon. A failure of taking the needed decisions tonight might cause turmoil in the markets on Thursday morning, with Spanish and Italian bonds to be attacked by the speculators. French President Nicholas Sakrozy warned that “Europe is close to collapse.”

German Chancellor Angela Merkel received the support of the German parliament, the Bundestag, to negotiate on a EFSF measures package. At the same time she vehemently demanded a haircut of 60% and a permanent supervision on Greece’s expenditures.

Greke media report that Greek Prime minister George Papandreou accepted the presence of permanent controllers over Greece’s expenditures.

A deadlock occurred  between EU politicians and private investors on the haircut issue. Bankers want a 45% maximum 50% haircut. Thy also ask guarantees that the EU leaders are not keen to give.  

“European Union talks with banks on bondholder losses as part of a second Greek rescue package are deadlocked and have been suspended, an EU official said.

The EU is seeking voluntary participation by banks, though a forced solution can’t be ruled out, the official said in Brussels today on condition of anonymity because the talks are private.

While policy makers and bankers are converging on a 50 percent write-down for Greece’s lenders, the disagreement centered on the specifics of the transaction. The dispute focused on how much of the risk of newly issued Greek bonds should be insured, the official said.” (Bloomberg )

On Tuesday night the banks put forward a new proposal on Greece in an effort to break the deadlock.

“A source told Dow Jones the banks are awaiting reaction from euro-zone governments and Greece. The proposal was put forward by representatives of the Institute of International Finance, the bank lobby group whose chief executive, Charles Dallara, has been in negotiations in Brussels for almost two weeks.

The source said the proposal contained a higher discount rate than the 9% agreed on a July 21 deal for Greece agreed by euro-zone leaders. The increase, which reflects the deterioration in Greek bond prices since July, would reduce the impact of any given headline reduction in net present value (NPV). The July 21 deal called for a 21% NPV cut.

The IIF has been insisting that any deal is voluntary, arguing that if the reduction in the value of private bond holdings resulting from any bond exchange exceeds about 40% that would be impossible.”

However the talks between EU officials and bankers started about an hour ago.

Merkel who has the upper hand on the issue seems to be adamant even to drive Greece into bankruptcy. Will she dare to independently of causing a domino effect to other weak economies within the euro zone? It’s a political decision and it has to be taken tonight.

Late afternoon information from Brussels claimed the possibility that the EU leaders will agree on a frame work of rescue plan. THAT would be a dangerous game, should it leave space for differentiate reading.

UPDATE 1 – 9:30 pm (GR time): Angela Merkel and Nicholas Sarkozy will have face to face talks with the bankers – Allegedly the two leaders will pospose a 50% haircut [ I see that both sides will agree on 45% at the end of the day – Turkish bargain in the heart of Europe?]

The night will be long, so updates will come tomorrow morning.  


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  1. Global debt realignment will solve the problem. It is the only thing that will.

    The global financial system is mired in debts which cannot be repaid. Austerity programs hurt. Bailouts add to the debts. Taxing the jobless and underemployed is negative also. Combined, these will not work because of one basic fact: The numbers (the debts) are too large. A million seconds is 11.5 days. A billion seconds is 32 years. A trillion seconds is 32,000 years. Global debt is $42 trillion plus. Attempts to pay it off, or down, perpetuates the problem

    To solve the problem we must understand the numbers and do something else. We must reboot the world economy. Only one thing can do this and that is Global Debt Realignment.

    “The significant problems we face cannot be solved at the same level of thinking we were at when we created them.” Albert Einstein

    We must look at the essence and reality of the problem. The complex must be made simple to understand it. It is difficult for some because so much is in the way of their thinking.

    “Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.” Steve Jobs

    The simple fact is that unless we implement Global Debt Realignment the world shall suffer for decades with the yoke of debt on people’s and countries’ backs. Period.

  2. The Greek people are angry now, what’ll be the reaction when they know that the EU are sending in a permanent supevisor.

    In her speech to the Bundestag, Mrs Merkel, after warning that “no-one should take another 50 years of peace in Europe for granted” if the euro failed, she went on to talk about Greece:

    “But debt restructuring alone does not solve the problem. Painful structural reforms have to be made, otherwise even after debt restructuring we’re back to where we are today,” Merkel warned.

    That’s why, she said, Greece would have to be “assisted” for quite some time. “It’s not enough that the troika comes and goes every three months. It would be desirable to have a permanent supervision in Greece,” she said, adding that this issue would be brought up at the summit.

    In return for what seems to be an unprecedented sovereignty loss in an old EU member state, Merkel promised German investments and mentioned a meeting of local representatives from Germany and Greece in the coming weeks.

    Like the mafia she has made Greece an offer they can’t refuse…………

    Merkel, also threatened of peace not being taken for granted if the euro fails. Those digusting sub humans and their puppet politicans will see us, our children/grandchildren in the gutter before they see their beloved euro/EU project fail.

    They have to be stopped, the question is how?

    • keeptalkinggreece

      thank you very much for the Merkel quotations. One possible answer I see to your question is: elections tomorrow, sound defeat of the two big political parties. that’s all I can think as early as 8:49 in the morning. I’ll work through the new situation during the day.