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Wednesday, February 22

22nd Feb - Eurogroup Special II

Here is finally last night's collection on Greek bailout 2, delayed because of my fried computer. The commentary is stunningly negative. For earlier reactions, please see Eurogroup Special from 21-Feb.


Quote of The Day: Rule number one of staying up all night and doing things you regret, is to lie in bed the whole next day and ignore your phone and hope people forget what you did. Rule number 2 is not to go on TV and admit to the obvious mistakes less than 12 hours later – Peter Tchir


Euro-Zone News and Analysisopeneurope
Many questions around the second Greek bailout remain unanswered: again hopelessly optimistic and contains numerous gaps and unanswered questions which could still bring down the whole deal.

PSI Scenarios And Greek Bond Trading ThoughtsTF Market Advisors
Somehow no one in equity land or fx land seems to believe a failure to pay can occur, but I think bond values here, show that the credit markets are far less convinced that the can has been kicked.

The Eurogroup Statement – Some Thoughts And QuestionsTF Market Advisors
We will now see what the market has “priced in” but I think it has priced in too much, and there will be roadblocks to this deal going through, with PSI in particular being a potential problem.

The Greek debt deal: Thumbs downButtonwood’s / The Economist
Markets have duly been unimpressed today, although of course a deal may have been priced in. But the FT story about a confidential paper on Greek finances only illustrates that this is a short-term fix and that further bailouts will be necessary.

In Latest Greek Bailout, Warning Signs for EuropeDealBook / NYT
The worry is that these problems could flare up and undermine recovery efforts in countries like Italy, Spain, Ireland and Portugal.

This Is Really Only The “Second” Greek Bailout?Dealbreaker
So the Troika – IMF, ECB, EC – will keep calling the shots. But they have no explicit upside – no GDP warrants, for instance, and no other adjustment to their paper if Greece’s economy does well. So they look good if they get paid back, and avoid another default in six months; they look bad if the rioting in Greece gets bad enough to … stop Greece paying back its debt. A non-default level of rioting is fine.

Greek Default Risks RemainCredit Writedowns
The official creditors won the battle. Greece will be given the money so that they can service their debts. They will have an EC task force embedded into Greece to push for compliance and the escrow-like account ensures a priority to debt servicing. However, in the long game, it is not so clear. A Greek 3.0 package cannot be ruled out.

Nanny Mcphee runs GreeceAndreas Koutras
This new bailout although it apparently increases the financial help and sustainability of Greece it also increases the political risk of non-compliance and resentment.

No room for errorTo Ethnos / presseurop
Failing a genuine economic development plan, this sum will not be sufficient to put the country back on its feet, warns Greek daily To Ethnos.

Deal "Really" Finalized? Will Greece Survive the Ides of March? Disastrous Piecemeal Breakup of Eurozone Likely in the CardsMish’s
However, I still think there is a very good chance this deal was done only to protect the ECB as a prelude to pulling the plug on Greece funding sometime between now and March 20 when the next bond payment is due.

The eurozone, the ant and the grasshopperChannel 4
Greek economist Yanis Varoufakis writes about why the Euro crisis should not simply be seen through the prism of a famous Aesop fable.
 
Muddling along in EuropeWonkblog / WP
What we all keep waiting for in the euro-zone crisis is a solution. Instead, doomsday just keeps getting delayed. Some would say you can't put off a reckoning like this forever. But perhaps you can. Europe, at any rate, is certainly going to try.

For Greece, "Tomorrow" Has ArrivedMark Grant / ZH
If Greece is actually going to get the next round of the bailout then the other side of the coin is the increased debt being taken on by the other countries in Europe which could cause more downgrades as the new debt to GDP numbers are assessed.

GreeceKrugman / NYT
…nobody is prepared to take the plunge into either of the paths that might eventually lead out of this: sustained aid (not loans) to Greece, or departure from the euro…

Greek PSI – A First Attempt At ValuingTF Market Advisors
We still haven’t seen retroactive CAC clauses implemented, but assuming that they are, I’m not sure why the Troika would accept a 95% rate and not trigger, but it seems worth taking the risk.  The ECB swap may be illegal.  The retroactive CAC may be illegal.

Quick Guide to the Greece Rescue DealWSJ

EU Should Admit Greece is BankruptSpiegel
Greece is bankrupt and will need a 100 percent debt cut to get back on its feet. The bailout package about to be agreed by the euro finance ministers will help Greece's creditors more than the country itself. EU leaders should channel the aid into rebuilding the economy rather than rewarding financial speculators for their high-risk deals.

Greece - the bailout plan for the bailoutSaxo Bank
Steen Jakobsen: The market thinks we are now well into 2013 before things gets worse - I doubt it. The amount of "new money" needed to keep the ever rising balance sheets of central banks expanding is just too big.

Greek deal rests on appetite for more austerityeuobserver.com
Beyond Greece there may be other hurdles too. Both the German and the Dutch parliaments are due to debate and vote on the package next week, with the two countries regularly displaying the harshest rhetoric on Greece's reform efforts.

Experts react to Europe’s bailout package for GreeceWonkblog / WP
Roundup of comments from big names

A Greek agreementFree exchange / The Economist
In practice, signs of Greek slippage will lead to renewed handwringing among euro-area leaders, renewed frustration, and a renewed sense—perhaps on both sides—that Greece might be better off leaving the single currency. No one thinks this is the final chapter of the euro-crisis story.

Greek CDS Trigger Priced InZH

PSI, the Greek detailsalphaville / FT
This has all been called can-kicking. Well, it is. But it also transforms some parts of the bailout irretrievably. Once this
PSI completes, that is it — offering the new bonds under English law would make doing it again difficult, etc — and as for OSI, this really is the moment it all started to look more like a future fiscal transfer than a loan, surely.