Message #17522

[Psalm 51:17]

Next Steps For Greece
16 February 2012, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/next-steps-greece

Excerpt:

And so we are back to the same fiscal feudalism that Germany demanded, and the Greece refused weeks ago.

We have been pondering the ECB bond swap 'news-story' and the market's reaction to this with incredulity.

Our earlier discussion of the deal (here and here) pointed to the problems and now Peter Tchir explains how this debt swap is actually a step towards a Greek default (thanks to the removal of the CAC-encumberance within the ECB).

It is also a large step towards colonization as the FT notes that the bailout terms will contain "unprecedented controls" on Athens.

It is our earlier comments on the unintended consequence of this ECB action - that of explicitly subordinating all other sovereign bondholders in Europe, and that this would likely raise the very large specter of legal action by other Greek bondholders arguing the ECB has received unfair treatment - that the FT also brings to investors' attention (which is seemingly being ignored on the eve of OPEX).

Whichever way you look at this - it is not good for Greece and could have significantly negative implications for the rest of the European sovereign bond market just as investors are starting to dip a toe in the cool risk water once again.