Apparently the Greek government will repay the €450M bond that is due to creditors who did not sign up to the debt swap deal.

Who are they borrowing the 450m repayment from?

California?

I'm assuming it is being paid out of the bailouts Greece has received. Which are loans, but ones we already know about.

danivon wrote:Apparently the Greek government will repay the €450M bond that is due to creditors who did not sign up to the debt swap deal.

Ok, I will admit that I didn't really follow this but didn't those who did sign up for the debt swap deal accept less then owed are part of the swap deal?

That's got to make all those who took a "voluntary" 70% haircut very happy. I'm sure people will remember when it comes time for Spanish, Portugese and Italian bondholders to take a "voluntary" haircut.

I guess that's going to depend on what happens to the remainder of the 6 billion or so that they haven't repaid. It could still be that those who refused to sign up lose everything (although in that case it's likely that everybody else would also lose).

The bank run that has started in Greece (and that may just spread to the rest of club med) can't be helping, either.

It's not much of a bank run. Pundits are describing it as more of a bank jog. The Spanish bank that is in trouble is so because of it's own problems.

Well, the Spanish bank that's in trouble is in trouble because Spanish bansk ran up billions in bad loans to property speculators during the decade-long artificial bubble of cheap credit brought about by Euro membership. Yes, it was ultimately their own fault, but it would be foolish to discount the enormous market distortions wrought by the Euro in the peripheral countries.

There's more to Bankia than that. The PP helping to 'save' the constituent parts with a merger and IPO led to a bank that became 'too big to fail'. That was all in the last couple of years, so it's not like they can't claim a lesson could not be learned.

But my point was it is not Greece directly - although yes, the possibility of a Greek exit from the Euro would lead to fears of other exits.

However, the Eurozone have far more to lose from a Greek exit than them staying in - at least in the short-medium term.

That may be true, but I'm not sure how much difference it makes. The only way to save Greek membership is going to be by way of massive fiscal transfers from Germany, with the possibility of similar for Spain, Portugal and perhaps even Italy. It's doubtful whether the Germans can afford it, but even if they could theoretically find the money the German people would never accept it without serious, concrete commitment to reform in the recipient countries. In fact they probably wouldn't put up with it even then. As a result we reach a political impasse, because Greece isn't willing to vote for parties that endorse the quid pro quo that Germany demands and Germany isn't willing to vote the cash without it.

I notice that the new French president has now revived the pipedream of a Tobin tax as a way to find the money. I guess you have to admire his chutzpah. If the Germans won't stump up the cash why not see if the British are stupid enough to pay for it ?

The real action is Obama and Cameron trying to get Merkel to move. http://www.guardian.co.uk/world/2012/ma ... rmany-euro

Of course, I think the Tobin Tax is a good idea, it's not the British who pay but all those who use us as a staging post for their money.

Well it certainly isn't any of the Eurozone nations. It would effectively amount to a 60 billion annual raid on London to pay for the bailout of the Euro, and if it serves to drive away financial business from the City then it's going to directly impact on our tax revenues. Screw that.

"we are all in this together"

or not, perhaps.