hi doma,
it sounds like polish bondholders will retain the interest on the bonds but lose the value of the principle. different to the cypriot scenario, in which cash was seized outright.
assuming the polish government is not able to issue new debt and build stuff - which sounds to me like a better idea, then ....
awful as it is, i kinda get it.
governments are trying to find a way to reduce the value of debt which the pre-crash environment generated.
because for some countries, the current level of debt is not supportable. so they are making choices in which there are winners and losers.
the questions they might ask.
why should future generations bear the burden to keep existing debtholders happy?
and why not have current bondholders (rather than taxpayers generally) pay part of the price?
an alternative to retaining the (apparently unbearable) obligation at current prices would be to encourage inflation or lower the value of the currency. but european countries seem set against those ideas.
so this kind of manouevre is what is left.
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