They'll probably take away our coffee and cigarettes too.
It turns out that the great Euro plan to leave Greece with
more debt than it had in 2009, is called a 50% haircut.
Except it's a 16% haircut, because the Greek government pension
money (the deferred taxes of the Greeks) are not 'private', and
neither is all the money that the Europeans leant, under English law.
That means that the Greek government will tell the people that the
pension money is gone and they will pocket that money. Then, they'll
act like the saviours of the Greek people by going into more English
debt so that granny can stop working for 2 days before she dies.
checkitout: 2 stories from hmmmmmm, one from zerohedge
hmmmmm
Q. When is a 50% haircut NOT a 50% haircut? A. When it is trumpeted as such by the leaders of Europe
The mathematics behind the much vaunted 50% reducon in Greece’s debt is far more curious than the headlines would have us believe and, the ultimate writedown on the total amount actually turns out to be a far less conclusive 16%. How so, I hear you ask? Well, let’s take a look at the numbers:
Greece’s debt is roughly €350 billion. Of that, approximately €150 billion is held by the ‘Troika’ (including the €75 billion held by the European Central Bank) and this €150 billion is NOT subject to the haircut imposed on private holders of the debt. So that leaves us with roughly €200 billion. Greek banks and pension funds account for (give or take a billion or two) another €85 billion and, though many number-crunchers apply the haircut to this slice of the debt pie, my own feeling is that it is untouchable as, if they are NOT ring-fenced these holders will be bust [DOESN’T MEAN THE GREEK GOVERNMENT WON’T LIE TO ITS PEOPLE AND CUT PENSIONS FURTHER] should they be forced to take the proposed haircut. By my calculations, that leaves €115 billion needing to be ‘forgiven’. Apply the haircut to that number and you are left with a reduction in Greek debt of €57.5 billion - or 16% Suddenly, that 50% haircut and the subsequent reduced debt burden doesn’t seem quite so drastic after all, does it?
--hhmmmm
Things That Make You Go Hmmm.... Such As An Empty Box Filled With Promises Of Money, And Europe's Soup Nazi
Submitted by Tyler Durden on 10/29/2011 23:53 -0400
Some amusing weekend observations from TTMYGH's Grant Williams: "The EFSF is basically an empty box filled with promises of money - many of them from the very people who are most likely to need to borrow that same money. Should they need to borrow the money, they won’t be able to make good on their promises so there will be less money for them to borrow. Now the brain trust running Europe have decided, in their collective wisdom, to apply leverage to the non-existent money in the empty box that they have yet to actually borrow, so it can backstop even more of the hundreds of billions of Euros of sovereign debt issued by countries whose finances are in such dire straits that they either require the kind of robust growth that is hardly likely to materialize any time soon or the forgiveness by the holders of that debt of a large part of it.... Of course, granting Greece the package they did this past week, the Eurocrats have rather incredibly found yet another corner into which to back themselves. You can hardly champion the ‘One Europe’ manifesto on the one hand but then, as the next country lines up at the counter, declare “No soup for you!” - but that seems to be the ‘plan’ at this stage."
2
Here Is How The 50% Greek Haircut Is Actually Just 28%
Submitted by Tyler Durden on 10/26/2011 22:50 -0400
Just the math, something Europe is unable to do:
* Greece has €350 billion in total debt including about €70 billion in Troika "post-petition" loans; these are untouched.
* Of the €280 billion, roughly €75 billion is held by the ECB: this, like the Troika loans, will be untouched.
* This leaves just ~€200 billion in actual debt to undergo a haircut.
* Apply a 50% haircut to this debt (ignoring the fact that of this about €35 billion is held by Greek pension funds, and once the realization that Greek pensions have been cut in half dawns upon the population, the result will be the biggest riots ever seen in Athens yet).
* Total debt to be cut: just about €100 billion.
* Hence, of the total €350 billion, just €100 billion is eliminated, most of it used to backstop and service Greek pension and retirement obligations
* €250, or the residual, of €350, the original, means 72%, or a 28% haircut.
* Greek GDP was €230 billion on December 31, 2010 and declining fast.
* And that is how a 50% haircut is "cut" almost in half
