It sounds like a good plan, but here’s the real risk: even after this restructuring, Greece ends up defaulting on those new EFSF-backed bonds. Remember, this is a solvency problem not a liquidity issue.
So the EFSF takes a loss, and maybe even its partner, the IMF. The debt is removed from bank balance sheets and put directly on the taxpayers of Europe and, via Washington’s 17% stake in IMF loans, Americans.
Read it all.
Filed under: * Economics, Politics Economy Credit Markets Currency Markets Euro European Central Bank Taxes The Banking System/Sector The Credit Freeze Crisis of Fall 2008/The Recession of 2007-- The U.S. Government Federal Reserve
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