There is only one solution to this problem as far as I can see: the Eurozone as a whole will have to accept responsibility for the currency that it created and replace the failed Greek debt with new Europe wide debt obligations that would be issued in exchange for the discredited Greek debt at an obvious, and considerable, discount on the latter.
Remember what we did with those American mortgages?
Yup, we bundled together Mrs. Smith\’s with Mr Jones\’ and those of a few other people.
The resulting pool was ever so much safer for of course they weren\’t all going to go tits up at the same time, were they?
So now we\’re to transform Greek (and obviously, Portuguese, Irish and Spanish and, gulp, maybe Italian) debt into a CDO.
For they can\’t all go tits up at the same time now, can they?
Words fail me about this wretched man.
He’s using one turd to polish another – another Ritchie first!
Fuck me, it’s like dealing with a 5 year old.
Who takes the loss on the Greek Sovereign haircuts ? Yes a few nasty finanical institutions, plus those pesky Chinese and other Sovereign wealth funds who have been keeping these countries solvent for the last months by buying up their new debt issuance , but also a large number of European Governments, and European Central banks (Who lest we forget, rely on taxing their populations for their financing).
So in order keep the Greek fantasy going, Ritchie suggests fucking over:
1) The financial institutions who the ECB will partially rely on to distribute and buy the new Federal Debt
2) The existing buyers of last resort, who instead of receiving 18% (or 20 or 30%) on their existing bonds, take a 30% loss on their current holdings, and then willingly accept a more Germanic 3% yield on the new debt (And who Ritchie would have us believe, shouldn’t have the ability to take collateral in exchange for their commitments, becuase of the loss of Greek Sovereignty this would involve)
3) The taxpayers of Northern Europe, who are already bleeding for the Greek, Irish, Portugese etc, as their soon to be voted out politicians continue to indulge their federalist fantasies.
To be fair to the prick, I suppose its no more than some of the European finance ministers are suggesting as a resolution. But hey, as far as Ritchie can see, its the only answer, so maybe, given how influential he is, they are simply stealing his ideas anyway.
Tim,
If this goes ahead how do I short them? I have never shorted something before but I think this would be a good time to start. I have a few thousand in an ISA that I would like to increase.
Tim adds: You really do not want investment advice from me. I was a lousy, lousy, stockbroker.