Sunday, November 11, 2012

Words of the Weasel, Part 31

From The Economist.  "Earlier this year private sector bond holders reduced their nominal claims by more than 50%".
How nice and cooperative that sounds.  In actual fact the Greeks gave lenders a 75% haircut.
The Economist went on to urge canceling more Greek debt and lending them more money.  After all ,  the poor things cannot improve their economy with out lots of foreign investment.   Wouldn't we all like to lend them more money?


Evan said...

I have no clue why the Greeks don't just quit the Eurozone and go back to printing their own currency.

Anyone stupid enough to loan them money deserves to get burnt for not doing their due diligence and all the loans that are being thrown their way is breaking the words of wisdom, "Don't throw good money after bad."

The greeks recently sold 4 billion Euros of short term (1 month and 3 month) bonds to pay back the bonds they took out 3 months ago, which in turn was to pay bonds taken out 3 months ago...

Dstarr said...

A lot of Greeks have Euros in the bank. Grexit would turn those Euro's into Drachma. And it will take 5 Drachma to buy 1 Euro. So Grexit means every Greek looses 80% of their savings. That's why the Greeks don't want to do a grexit.
As long as the Germans are willing to give free money to the Greeks, they will keep spending it. There are signs that the German taxpayers are tired of sending free money to Greece.
The Greeks are rolling over their debt. They borrow to pay off loans coming due. Sooner or later they won't be able to borrow, and all the previous lenders get a haircut. One of the reasons the Germans keep doling out money to Greece is that German banks will take a haircut when the money stops. The Germans haven't figured out that it would be cheaper to reimburse their own banks after a Greek haircut than to keep feeding money to the Greeks. Germans are not as wily as Greeks.