Greek Sovereign Debt "Solution" Melting Down
The Greek sovereign debt "solution" is in trouble. Here's a quick re-cap of what's happened over the last few weeks that supposedly solved the problem and why it really didn't solve the problem.
This won't be too complicated. I'm going to state facts first, then, by simply following my reasoning, you should be able to use your own powers of reason to figure out what's really happening.
The EU authorities created a bond swap: the old Greek bonds would be swapped for new bonds. The new bonds would include a "haircut," i.e., the principle of the old Greek bonds would be reduced and the new bonds they would be swapped for would reflect that. This would stabilize the situation because the Greeks would pay the interest due on the new bonds, which would be based on a lesser principle amount from the original bonds.
The Greeks would pay less. The creditors would accept a cut in the value of their bonds but the interest due on the bonds would be paid. Everyone would be satisfied by this. That's what we were all told.
Now that the new bonds are trading, it turns out that the value of the new bonds are already trading down in the market, as much as 20% to 30% down. So now the creditors are losing even more of the principle value, i.e., that which they originally lent to the Greek government. Combine this with the fact that there still seems to be no way for the Greek government to be able to pay the interest on the new bonds in the long run.
So what was gained by all of this?
Anyone heard of kicking the can down the road? I'm sounding like a broken record talking about "can-kicking" but how else do you describe this?
You'd have to guess that the thinking on the part of the EU officials pushing all this as some sort of "solution" is that most people won't pay too much attention and will be convinced that all is fine.
But if you just look at the facts, use your reasoning, and see that, while the chairs on the Titanic have certainly be re-arranged, the ship is still on its way under, you can see that all the propaganda being served up only serves those who are serving it.
The officials who patch all this together are relying on us thinking they're really on top of things, they really have solutions for all this, they're really smart people, we really need them to keep tinkering with things to make sure that our economy and financial system doesn't fail. They are, in a word, indispensable.
I really hope you don't buy any of this. They're not indispensable. They are protecting their own little fiefdoms, their own personal power. What other possible interpretation could you have for these goings-on?
How could they possibly think that people wouldn't see what's really happening? They know that most of us, sadly, simply don't bother to think; we don't really use our reason to sift through the facts. We don't do this either because we think the subject is too complex to understand: they're the experts, after all. We're not.
Either that, or too many of us are just too plain lazy.
Next stop: Portugal, Spain, maybe even Ireland. It'll be interesting to see what they cook up when all that hits the fan soon. Meanwhile, Greek sovereign debt melts in front of our eyes.
This won't be too complicated. I'm going to state facts first, then, by simply following my reasoning, you should be able to use your own powers of reason to figure out what's really happening.
The EU authorities created a bond swap: the old Greek bonds would be swapped for new bonds. The new bonds would include a "haircut," i.e., the principle of the old Greek bonds would be reduced and the new bonds they would be swapped for would reflect that. This would stabilize the situation because the Greeks would pay the interest due on the new bonds, which would be based on a lesser principle amount from the original bonds.
The Greeks would pay less. The creditors would accept a cut in the value of their bonds but the interest due on the bonds would be paid. Everyone would be satisfied by this. That's what we were all told.
Now that the new bonds are trading, it turns out that the value of the new bonds are already trading down in the market, as much as 20% to 30% down. So now the creditors are losing even more of the principle value, i.e., that which they originally lent to the Greek government. Combine this with the fact that there still seems to be no way for the Greek government to be able to pay the interest on the new bonds in the long run.
So what was gained by all of this?
Anyone heard of kicking the can down the road? I'm sounding like a broken record talking about "can-kicking" but how else do you describe this?
You'd have to guess that the thinking on the part of the EU officials pushing all this as some sort of "solution" is that most people won't pay too much attention and will be convinced that all is fine.
But if you just look at the facts, use your reasoning, and see that, while the chairs on the Titanic have certainly be re-arranged, the ship is still on its way under, you can see that all the propaganda being served up only serves those who are serving it.
The officials who patch all this together are relying on us thinking they're really on top of things, they really have solutions for all this, they're really smart people, we really need them to keep tinkering with things to make sure that our economy and financial system doesn't fail. They are, in a word, indispensable.
I really hope you don't buy any of this. They're not indispensable. They are protecting their own little fiefdoms, their own personal power. What other possible interpretation could you have for these goings-on?
How could they possibly think that people wouldn't see what's really happening? They know that most of us, sadly, simply don't bother to think; we don't really use our reason to sift through the facts. We don't do this either because we think the subject is too complex to understand: they're the experts, after all. We're not.
Either that, or too many of us are just too plain lazy.
Next stop: Portugal, Spain, maybe even Ireland. It'll be interesting to see what they cook up when all that hits the fan soon. Meanwhile, Greek sovereign debt melts in front of our eyes.
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