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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