46 Days to Avoid Greek Default

By Matina Stevis
January 16, 2012, 5:22 AM

While the market was moving on news that Standard & Poor’s had downgraded nine euro-area countries, including triple-A France, news from Athens that the debt-restructuring talks there have been suspended should really be of bigger concern to market participants and policy makers.

Greece has very little time left to complete the restructuring of its debt and avoid a “hard” default.

The latest from the Greek capital Monday was that talks would resume with a view to having a deal in place by Feb. 23, when euro-zone finance ministers will be meeting.
Here’s why it’s crucial that the deal is done as soon as possible, and why the schedule of 46 working days –including today- that Greece, the private sector, the euro zone and the International Monetary Fund have to complete it is very tight indeed.

Greece has a €14.4 billion bond maturing on March 20 that it can’t afford to pay in full, but the steps to be taken between now and then are many, technical, difficult and large.

We’ll go through those steps one by one, but before we do, it should be clear that if Greece doesn’t manage to complete the restructuring by March 20, it will go into a hard default. While the market has largely priced in this eventuality, the fulfillment of the scenario is ultimately unpredictable.

It first has to come to an agreement with its private-sector creditors. These talks have just been suspended and are said to resume next Wednesday.

If it doesn’t get high enough participation, Greece will likely force the rest of the creditors into the deal–making it an involuntary restructuring that most likely will trigger credit-default swap contracts.

In order to have the involuntary path available to it, Greece also needs to pass a law through parliament that will retrofit its bonds with collective-action clauses.
Greece must also publish a term sheet detailing the characteristics of the bonds it will offer (yield, maturity, etc.) and invite its bondholders to tender their bonds and receive the new ones.

Then the bondholders have to reflect on the deal for a while before formally accepting it–or indeed rejecting it.
In the eventuality of a forced restructuring, the country would have to physically hold a vote among creditors to ensure that a majority is on board, thus making use of the CACs to bind in the minority opposing the deal.

This is the stage where some creditors are likely to begin litigation processes against the country on various grounds.
Assuming all has gone smoothly thus far–or even that the CACs have been used and the minority bondholders have been forced in–the deal has to be consummated, i.e., bondholders must give Greece their old bonds and get new ones.

For the deal to be consummated, Greece’s not-too-happy euro-zone peers have to sign off on sending some €60 billion its way. Why? Because it will need €30 billion to recapitalize its own banks that will face collapse after they take the losses in their holdings of Greek debt and another €30 billion to give to the wounded bondholders as an upfront cash sweetener.

We are told the euro-zone countries will discuss these rather large disbursements at their Jan. 30 summit.
So after the euro-zone countries have signed off on the funds and Greece has actually received them, the bond exchange can go forward.

It’s difficult to estimate how long each of the above steps will take but it’s clear that there are several things that could go wrong between today and March 19.

It should be noted that the completion of the Greek debt restructuring within the next 46 working days by no means implies that Greece is rescued, or that its debt is on a trajectory towards becoming sustainable. It merely means that the imminent threat of hard default is averted.

A final note: because Greece’s bonds don’t have so-called cross-default clauses written in them, if Greece were unable to repay its March 20 maturity, it would go into a form of a “mini-default”–at least technically speaking.

The event, however, would still trigger CDS contracts on some chunks of debt. It would illustrate the almost untenable position Greece is in and would spook the market as a preview of what a Greek disaster might look like. It would also likely make the rest of the vulnerable euro-zone bond markets jittery and could cost a Greek bank or two its viability.

fucking Greeks destroying Europe

those bastards

Sounds like the Greeks need some more austerity. Maybe they could euthanize a few thousand elderly to get their pension system back in the black.

If it hasn't dawned on the Germans and French yet it sure as hell is now.

Especially since they'll be paying serious interest on these faux EFSB bonds.

Greece will be told to rollover and default. It'll be quick - before their banks collaspe under a run.

It's coming soon

Want more proof that those greace felchers have not cut jack shit?

They claim that they have squeezed as much as they can from retirees and that only now they are going to go after public employee wages and christmas bonus pay, the 13th month for non-existent work.

Greece has managed to reduce its 2011 budget deficit to 9.6 percent of its gross domestic product (GDP). According to Greek Economics Minister Michalis Chryssochoidis, that's below the psychologically important 10 percent mark.

Reducing the budget deficit to below 10 percent can be seen as a success given all the doom and gloom surrounding Greece's debt crisis. But one should also point out that 9.6 percent is at least half a percentage point off the mark from the deficit goal for 2011.

Sounds like when our fake unemployment number reached a the majic 8%.

As a consequence, Greece has to find a way to save an additional 1.5 billion euros ($1.9 billion), which may give the so-called Troika – comprised of the European Union, the European Central Bank (ECB) and the International Monetary Fund (IMF) - cause to take issue with the Greek government.

Yet even the Troika has come to the conclusion that no more money can be squeezed out of retirees and small earners. Instead, financial experts are pushing for reform in the labor market in order to reduce costs and stimulate the competitiveness of the Greek economy.

Labor market reform

For the first time, the statutory minimum wage and guaranteed Christmas and vacation money are on the table, according to Jannis Lixouriotis, a lawyer and professor of labor law at the University of Athens. But Lixouriotis does not believe that these measures go far enough given the current state of the Greek economy.

"The freezing of wages and reduction of Christmas money alone are not enough. Iinstead it's much more important that the bargaining powers sit at the same table and negotiate deep structural reforms in the labor market," Lixouriotis told Deutsche Welle. Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Austerity has caused social unrest in Greece

And of course

"The government uses the Troika as an alibi for its own inaction," Lixouriotis said, adding that he believes that Greece's problem is above all a Greek problem, not the European one it is often portrayed as.- The politicians, however, refuse to see that reality, he said.

The Troika's experts act as the boogey men of austerity who gloss over the challenges of the Greek economy. In that way, money can always be found to plug financial holes but the structural reforms just don't go far enough, Lixouriotis said.

This must be wrong, all is well and fine in the eurozone,... as any of these euro-weenies on FF.

They'll tell ya.

BurnParis wrote:

This must be wrong, all is well and fine in the eurozone,... as any of these euro-weenies on FF.

They'll tell ya.

What bothers me is that the financial media is helping them paper over this crap.

Somehow, greece, with a declining GDP managed to cut its budget deficit to below the magic 10% so that it can qualify for another $100,000,0000,000 tranche of cash, even though it has cut nothing.

NOZZLE wrote:

BurnParis wrote:

This must be wrong, all is well and fine in the eurozone,... as any of these euro-weenies on FF.

They'll tell ya.

What bothers me is that the financial media is helping them paper over this crap.

Somehow, greece, with a declining GDP managed to cut its budget deficit to below the magic 10% so that it can qualify for another $100,000,0000,000 tranche of cash, even though it has cut nothing.

Yeah, that bugs the shit out of me as well. I fired off a letter to the Wall Street Journal inquiring why they posted on the front page utter bullshit unemployment stats provided by the Ministry of Propaganda.... err....the Labor Department. Among other issues.

Also editorials by Cass Sunstein, various econ prof flaks for OboZO that were lies from top to bottom.

Orwell would be amazed.

SevenSeventeen wrote:

NOZZLE wrote:

BurnParis wrote:

This must be wrong, all is well and fine in the eurozone,... as any of these euro-weenies on FF.

They'll tell ya.

What bothers me is that the financial media is helping them paper over this crap.

Somehow, greece, with a declining GDP managed to cut its budget deficit to below the magic 10% so that it can qualify for another $100,000,0000,000 tranche of cash, even though it has cut nothing.

Yeah, that bugs the shit out of me as well. I fired off a letter to the Wall Street Journal inquiring why they posted on the front page utter bullshit unemployment stats provided by the Ministry of Propaganda.... err....the Labor Department. Among other issues.

Also editorials by Cass Sunstein, various econ prof flaks for OboZO that were lies from top to bottom.

Orwell would be amazed.

Not really, when you find more insight about foriegn finances on linked articles on a site called FF than you find in the wall street joynal the content of their editorial page becomes not suprising.

They can only keep the media blocking for so long,.... the dam is starting to break,..

Jan 16 (Reuters) - Germany, the only major euro zone member to retain a top-notch credit rating, refused on Monday to consider boosting the bloc's rescue fund, while Greece was under pressure to urgently break a deadlock in debt swap talks if it is to avoid an unruly default.

meh government unemployment

you'll get "real" unemployment from analyst anywhere from 12 to 20%

the true number is probably somewhere in between


as for you guys and the news or even what comes out government

any government that is.... Ff it isn't a lie, half truth ,finagled .... especially with this admin and numbers
errrr i dunno hooray ?

few numbers are the exceptions these day for various reasons
depends what your talking about/ gageing

where you guys been ?

SevenSeventeen wrote:



Yeah, that bugs the shit out of me as well. I fired off a letter to the Wall Street Journal inquiring why they posted on the front page utter bullshit unemployment stats provided by the Ministry of Propaganda.... err....the Labor Department. Among other issues.

Also editorials by Cass Sunstein, various econ prof flaks for OboZO that were lies from top to bottom.

Orwell would be amazed.

The BLS made a million workers disappear:

At this rate, the completely politicized Bureau of Labor Statistics should just remove several million more workers from the labor force, so they can get the unemployment rate down to, say, 4.8%. Like it was during those nightmarish Bush years.

hotair.com . . .

The master plan is to keep shrinking the actual work force to get it down around 8% by election day.

This is most politiziced government I have ever seen.