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Re: Here Is How The 50% Greek Haircut Is Actually Just 28%

By: Decomposed in ROUND | Recommend this post (0)
Thu, 27 Oct 11 3:55 PM | 59 view(s)
Boardmark this board | De's Test Board 		Msg. 35865 of 45651
(This msg. is a reply to 35862 by capt_nemo)
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"Haircut," of course, is a euphemism for DEFAULT - a term jounalists are being kind enough to avoid. But that's what this is - a default.

So, we're now seeing that the FIRST step the EU takes to solve its debt problem is to default on debt. That's actually smart. It's what we will eventually do with our debt. (Versus the alternative, to print the money and pay it.)

Guess what SHOULD happen to interest rates now in the PIIGS countries? (Portugal, Italy, Ireland, Greece and Spain)

They should jump, doing further damage to home prices and business outlooks throughout the EU. Everyone who bought Greek bonds just got the shaft, so investors should be TRIPLY cautious about buying more from any of these nations. The EU has shown its hand.

Surprisingly, here at home, the pundit predictions for Market Open are that there will be an entry "stampede" - a term usually reserved for panics. Oh well. My 401(k) money exited the markets on Friday. If the Nasdaq climbs 50 points and remains there for two days, then the "strong resistance" I called at 2700 will be breached.

So, let's see if that happens.




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Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months


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The above is a reply to the following message:
Here Is How The 50% Greek Haircut Is Actually Just 28%
By: capt_nemo in ROUND
Thu, 27 Oct 11 7:22 AM 		Msg. 35862 of 45651

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
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Here come the Germans:

http://www.youtube.com/watch?v=f4K6ZxDwi34

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