On 2012-03-10, at 11:26 PM, Doug Henwood wrote:
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> On Mar 10, 2012, at 11:14 PM, 123hop at comcast.net wrote:
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>> I couldn't quite follow Roubini.
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> Can't say I did either.
Same for another widely-read financial blogger:
http://blogs.reuters.com/felix-salmon/2012/03/08/how-lucky-are-greeces-bondholders/
I think Roubini was just trying to provide some perspective in the wake of the crocodile tears which have been shed by and on behalf of the banks and other large private holders of Greek debt who have taken haircuts of between 50%-75%. His point was that it could have been much worse had they not been bailed out repeatedly by the troika over the past three years, enabling them to exit most of their previous positions. The worthless Greek bonds are now owned the central banks and other official bodies. Roubini's point is that the haircut was "too little, too late...The reality is that private creditors got a very sweet deal while most actual and future losses have been transferred to the official creditors." By contrast, the new bonds the private investors received in the swap, though of longer maturity and with a much lower coupon, are to be repaid in euros should Greece leave the eurozone and revert to the drachma. The shorter-dated ones are guaranteed by European Financial Stability Facility and its successor agency, and the longer ones have detachable warrants which could conceivably result in gains down the road if Greece's fiscal situation improves. That's a better deal for the Greek and other insolvent European banks who should have been nationalized and restructured and their bondholders wiped out some time ago.