Cast Your Vote on Greece

As a news analyst, it is my job to sort through the news, reports and private connections to find the real story and share that information with you, the reader. It is also my responsibility to analyze this material in a true and meaningful way without prejudice and preconceived notions.

For the past weeks, we have dealt with the EU debt crisis, which has overshadowed the small country of Greece and the news from Greece has been on the back burner, reaching the headlines every now and then, recently we have been more distracted by Italy and Spain. But Greece just kept simmering in the pot.

Well that pot is about to boil over and Greece has moved to the headlines of every news service in the world.

I find my problem very disheartening. Today, like everyone else I was going to write about Greece’s debt negotiations, the new “haircut”, (isn’t amazing how all these new words or definitions keep popping up, today everyone is having a “haircut” and then there is my favorite, austerity, you know it is a very old word, but has been used more in the last year than in the last decade.) Back to Greece.

I tried to come up with an article that presented a true picture of the negotiations between Greece and their debtors. I tried to come up with a possible bailout scenario. I tried to come up with a picture of the future of Greece’s finances. The truth is I could not even sort through all the headlines in the news today to get a clear picture on what was happening in Greece or if there was going to be a deal soon in Greece.

I thought perhaps, I might share with you, just some of the comments and stories that I found today, many contradictory, many more rumor then fact, many just confusing, but the fact was that I could not come and present to you any clear picture.

The Telegraph:                 He has reiterated that he wants any debt swap with private sector bondholders to be voluntary, and will meet the Institute of International Finance (IIF) today to continue talks.

Mr. Venizelos will also meet the “troika” of the EU, ECB and IMF on Friday. AFP is reporting that the IMF has given the green light for talks on new rescue loans for the country.

Reuters:               Turning up the pressure ahead of Thursday’s talks, Finance Minister Evangelos Venizelos told lawmakers that a large chunk of the bond swap must be agreed by noon on Friday and formalized before Monday’s meeting of euro zone finance ministers.

Yahoo:                 Greece warns significant progress needs to be made to reach a debt deal with private investors.

Reuters:               In Washington, an IMF spokeswoman said staff at the Fund had sought executive board approval for talks with Greece that might lead to a deal requiring “exceptional access” to IMF loans.

Greece already has exceptional access to IMF funding that allows it to draw more than 600 percent of its IMF quota and any further negotiations require fresh board approval.

Reuters:               The stakes could not be higher. The two sides must thrash out a deal within days to pave the way for Greece to receive a new infusion of aid and avoid bankruptcy when 14.5 billion euros ($18.5 billion) of bond redemptions fall due in March.

Even if a deal is struck rapidly, the paperwork will take weeks and Greece’s official lenders — the European Union and the International Monetary Fund — say the work must be cleared before funds are doled out from a 130 billion euro rescue plan they drew up in October.

Fox Business News: Greece is getting ready to launch talks Friday with international creditors on a second bailout package needed to help stave off bankruptcy as negotiations on a bond write-down plan continue, Greek Finance Minister Evangelos Venizelos said.

In comments to lawmakers Thursday, Venizelos said many of the details of the bond-swap plan, a crucial part of a EUR130 billion packages agreed by European leaders and the International Monetary Fund in late October, need to be finalized by Monday’s meeting of euro-zone finance ministers.
BusinessWeek: Greece plans to pay lenders 50 cents for each euro the government borrowed under the terms of a bailout plan agreed on Oct. 26. Its 4 percent notes due in August 2013 trade at about 27 cents. Fitch says an agreement would amount to a “default event” once implemented, while the International Swaps and Derivatives Association says it won’t trigger credit-default swaps bought by investors as insurance against the country failing to meet its obligations.

Reuters:               The talks ran into trouble last week over Greek demands for an interest rate below the 4 percent that banks were willing to stomach and a plan to enforce losses on investors.

A lower interest rate would push the actual loss investors take to well above the 50 percent level initially envisaged.

A 3.5 percent coupon demanded by Greece and its lenders, for example, would imply a roughly 70 percent net present value loss for investors, according to the Reuters Breakingviews calculator.

IBTimes:              Nearly a week after talks hit an impasse, the two sides remain bogged down over the coupon, or interest payment, that Greece must offer on its new bonds under the swap.

Athens and its foreign lenders offered a coupon of just over 3.5 percent during a two-hour meeting on Wednesday, but bondholders rejected that as too low, one source said. They were angling for a coupon of at least 4 percent, the source said.

Talking Greece:                PM Lucas Papademos threatened to activate the ‘collective act clause’ and force private creditors to participation, during his 3-hour talks with Charles Dallara.

EuroNews:          Greek Prime Minister Lucas Papademos has promised that a debt swap will be reached in time between his government and its creditor banks.

Papademos has sent senior officials from Athens to Washington to break a deadlock in talks that has prompted new fears of a disorderly default by Greece.

 

Now, can you make out a clear picture of what is happening in Greece, beside the fact that they are in dire straits, have no money, need to reach an agreement with their creditors real soon. My question to you is if Greece gets the bailout money, which surely will not be enough, the way their economy is going, what is the future for Greece, how they will dig themselves out of this mess or are they just buying more time. What will happen in 10 years from now when we go through another down cycle of the economy? What is your vote, will Greece reach agreements with their creditors, or will the IMF and EU fork over more money? Should Greece get bailed out or should they just swallow the medicine now and not push it off to their grandchildren? You tell me, I would love to know your thoughts.