Saturday, October 22, 2011

Haircut on Greek Debt

Private investors will be asked to take a 60% haircut on their investments in Greek bonds. This is much higher than the 21% agreed in August. I expect that the final figure will probably be 40% to 50%.

The question is - why are the European banks holding so much Greek bonds? Surely, the jobs of banks should be to provide banking services and give loans to businesses. They should not be an investment fund, using their money (taken from the Central Bank or credit creation) to speculate on this type of investments or to fund foreign governments?

And why is Greece, a country, not able to meet its obligations? Surely, the Government has assets that can be sold - to repay the debts? If Greece is allowed to get away with 60% of its obligations - what about other countries? This will set a bad precedent. Many countries will continue to be bad risks. What about USA? We can expect an uncertain future and more volatility! And the structure of the financial world will be quite different.

The answer to these questions are - there is something seriously wrong with the financial structure of our global system. Our financial system is based on the illusion of market values and is fed by greed, speculation and corruption.


Anonymous said...

What about the US? The US is already in stealth default. The USD has been depreciating against major currencies due to printing of money.

20 years ago, you used S$2 to buy US$1 of T bills. Now you only get back S$1.20 (60% of your capital) when the US$ T bill matures.

Do you understand now why you cant withdraw in lump sum from your cpf when you reach 55?

Anonymous said...

The reason Greece could rake up such a high debt is because the previous administration hide some of the debts.

The US is able to inflate their debt away by printing more US dollars in the near future. Nobody can do anything about it until centre banks around The World have alternative bonds to park their trade surplus

Anonymous said...

until centre banks around The World have alternative bonds to park their trade surplus

hi this i not really understand can help me explain? thank you.

Anonymous said...

If they want the bank to cut botak, the banks will resist and if they refuse and the government can not force them as force will trigger cds and everyone will be in deep shit

Taeyeon said...

Why dont the debt ridden countries learn from the U. S. of A and print money to pay their debts
And after repaying learn their lesson and dont repeat it

Anonymous said...

Spend 1 hr watching this to educate yourself and you will understand why our monetary system is doom to eventually collapse like a deck of cards.

Fiat money is the root of all these problems.

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