Friday, 24 June 2011

Never let it be said - by Richard...


... that our news values are anything other than spot on: "Sovereign and banking strains are the most material and immediate threat," says the Financial Policy Committee, chaired by the Bank of England governor, in its inaugural report.

This is why we've been "banging on" over the past weeks. We are faced, truly, with a threat so serious that it should rarely be off the front pages, for which the government should have set up an emergency committee, and on which parliament should be getting daily reports and holding debates.

Instead, what passes for a government is obsessed with its "grid", the newspapers insist on treating this as a "business" issue and the MPs are in the land of the fairies. Yet, as this latest newsindicates, we are past the point of no return.

Come what may, we are in for a shit-storm. I, for one, would like to know what our idiots-in-power intend to do about it ... whether indeed they are sufficiently in the land of the living to realise what is going on.


Economics

Greek debt holders 'face 70pc haircut'

Private investors will need to accept losses of as much as 70pc on their holdings of Greek sovereign debt to put the stricken country back on a sustainable path, according to economists.

Greek debt holders 'face 70pc haircut'
Once the IMF and EU loans are excluded, and the holdings of domestic banks taken out of the equation, foreign creditors would need to take a 70pc 'haircut' in Greece, said BarCap. Photo: ALAMY
Philiip Aldrick

By Philip Aldrick, Economics Editor

5:45AM BST 24 Jun 2011

Comments

Barclays Capital and Fathom Consulting staff yesterday joined the growing chorus of voices warning a restructuring is inevitable for Greece and that an immediate solution would require a massive default on the country's €347bn (£307bn) of debt.

"To achieve 'solvency', Greece needs to write off about 60pc of its debts," said Piero Ghezzi, BarCap's head of economics research.

Once the International Monetary Fund (IMF) and European Union (EU) loans are excluded, and the holdings of domestic banks taken out of the equation, foreign creditors would need to take a 70pc "haircut".

Greek, EU and IMF officials are negotiating with the private sector about a voluntary involvement as part of a second bail-out, expected to be as much as €120bn on top of the €110bn already committed.

Yesterday, Institute of International Finance (IIF) managing director Charles Dallara met Greek Prime Minister George Papandreou and Finance Minister Evangelos Venizelos "to discuss how private sector creditors can assist Greece's reform program", the IIF said.

Fathom has also estimated that the country's private sector creditors need to take a 70pc haircut. Some of the risk, it added, has been taken by UK and US banks through credit default swaps – insurance against a Greek default. US banks have provided €25bn of insurance and the UK banks €3.7bn.

BarCap also argued the crisis could be contained in Greece as both Ireland and Portugal may be able to get their public finances in order without defaulting. Antonio Garcia Pascual, BarCap's chief southern European economist, said: "For Ireland and Portugal, we do think that the IMF and EU programme could work without a debt restructuring."


IN FINANCE

People protest in front of the Greek Parliament

Protest camp in Athens

Riot police use tear gas as protesters throw petrol bombs in Athens

Tear gas and petrol bombs

IMF Global Financial Stability Report: the key points

IMF Stability Report: key points

Indebtedness and Leverage in Selected Advanced Economies (as a percent of 2010 GDP)

Threats to world economy: in charts

Monetary Policy Committee members: the hawks, the doves and the in-betweeners

Interest rate split: how they voted

    Posted by Britannia Radio at 21:02