Dutch Fin Minister- Force Private Sector Haircuts in Greece

Tora Bora

Seems, a few more influential people in Europe willing to say the thinkable but "unsayable".

Dutch finance minister, says Greek bondholder need to be forced to take a write down. Perhaps, Michael Noonan, feels the straws in the wind, and was not really going on a solo run in USA, when he said bondholders need to suffer.
http://www.ft.com/intl/cms/s/0/8c78d8b0-a873-11e0-8a97-00144feabdc0.html

Voluntary Greek debt plan ‘unrealistic’

Jan Kees de Jager, the Dutch finance minister, has called for private-sector holders of Greek government debt to be forced to participate in a second debt-relief support package.
Mr de Jager said it was “unrealistic” to expect significant voluntary participation in such a plan, and said mandatory participation should be considered even if it led to rating agencies downgrading Greece’s credit rating.
“I think we have to accept that a voluntary contribution is unrealistic,” Mr de Jager told the Dutch newspaper Financieele Dagblad after a meeting on Wednesday in London with George Osborne, the British chancellor. “If a mandatory contribution from the banks leads to a short-term and isolated rating event, that is not so bad, because Greece cannot go to the credit markets anyway now or in the near future.”
The comments represent a significant change in position from Mr de Jager, who had been insisting since last month that voluntary participation by banks and other holders of Greek obligations could raise a significant portion of the €85bn sought for a new debt support package.
Mr de Jager’s comments also put the Netherlands at the forefront of the country’s European partners on the issue, as France, Germany, and others are still casting about for ways to involve voluntary private-sector participation without causing rating agencies to declare Greece in default.
A source at the Dutch finance ministry indicated that the announcement by Standard & Poor’s, the rating agency, on Sunday that voluntary private-sector participation in a rollover of Greek debt, such as that outlined in last week’s abortive French plan, would trigger a ratings downgrade had shifted the thinking at the ministry. If even voluntary participation would trigger a ratings event, the government might as well push for mandatory participation and gain a larger private-sector share of the package, the source said.
That suggested the Dutch shift was part of a high-stakes game of chicken being played between European finance ministries and the major rating agencies over debt support to the peripheral countries of the eurozone. On Wednesday European officials attacked rating agency Moody’s after it downgraded Portuguese debt to junk status.
Mr de Jager said he was “not afraid of a downgrade of Greece’s credit rating,” which he thought likely to be a short-term event. He drew a distinction between such a ratings event and a credit event, such as a declaration of default, which could cause a banking crisis in Greece
Mr de Jager’s shift to support for mandatory private-sector participation is dictated in part by strong political opposition in the Netherlands to further support for Greece. The far-right politician Geert Wilders has called such support “throwing money over the dykes,” and his party’s opposition means the government needs co-operation from opposition leftwing parties to pass any support package.
Mr de Jager told sceptical Dutch parliamentarians last month that private-sector participation would supply at least 20 to 30 per cent of any Greek support package, and has phrased the government’s stance as “No, unless” conditions such as private-sector involvement are met. He said he believed no support package without private-sector involvement could pass in the Dutch parliament.
Public opposition to further support for Greece has fallen as the crisis becomes more urgent. On June 10, pollster Maurice de Hond found 67 per cent opposed and just 24 per cent supported further EU support for Greece. As of July 1, that had fallen to 46 per cent opposed and 43 per cent in support.

Scofflaw

Nearly every politician is on board with the idea of private sector involvement - come to that, so are the EU and the IMF. The ECB isn't, though, and it seems to be calling the shots - which means, in turn, that the central banks of the eurozone are opposed.

Central banks free of political interference - that is, not having to do what the politicians want - are regarded as a "good thing", because what politicians want is often not sensible. The flip-side, though, is that even when everyone else seems to agree that something is desirable - private sector involvement - the central banks can simply refuse.

cordially,
Scofflaw

hmmm

The most interesting thing today was a report in the FT that the EU is studying buybacks of Greek debt, mostly financed by foreign sovereign wealth funds. This would be a superb way of lowering the burden on over-indebted countries, and has frequently been suggested, but this is the first time I've seen it floated "officially".

As people like myself are sick to the teeth of saying, instead of throwing ourselves off the cliff with an immediate solo run default, we need to grit our teeth and wait for the European wide solution which will be supported by our large neighbours.

Scofflaw

hmmm wrote: »

The most interesting thing today was a report in the FT that the EU is studying buybacks of Greek debt, mostly financed by foreign sovereign wealth funds. This would be a superb way of lowering the burden on over-indebted countries, and has frequently been suggested, but this is the first time I've seen it floated "officially".

As people like myself are sick to the teeth of saying, instead of throwing ourselves off the cliff with an immediate solo run default, we need to grit our teeth and wait for the European wide solution which will be supported by our large neighbours.

Sure - even on the Titanic, the best option wasn't throwing yourself overboard and attempting to swim to Iceland alone.

cordially,
Scofflaw

beeftotheheels

hmmm wrote: »

The most interesting thing today was a report in the FT that the EU is studying buybacks of Greek debt, mostly financed by foreign sovereign wealth funds. This would be a superb way of lowering the burden on over-indebted countries, and has frequently been suggested, but this is the first time I've seen it floated "officially".

As people like myself are sick to the teeth of saying, instead of throwing ourselves off the cliff with an immediate solo run default, we need to grit our teeth and wait for the European wide solution which will be supported by our large neighbours.

The bit that is truly amusing me at the moment is that we're actually almost at the point of being the poster boy of the ECB strategy working.

Look at the reaction of the markets to AIB being in default. Practically nada. Why? Because by "kicking the can down the road" the investors got the opportunity to get their houses in order, those who needed to get out of AIB debt did so for the most part, those who remain are hedgies. An unfortunate side effect of the can kicking is that we repaid some investors in full, but we can burn the rest at our leisure, and to my mind this logic should extend to the Anglo and INBS senior as well, and I expect the ECB to agree in the Autumn once they are convinced that that debt is not held by insurers/ banks and pension funds. If hedgies are holding senior in zombie banks then burning them won't cause contagion.

But hey, rather than engage in can kicking which might yield results in terms of mitigating the fallout, lets just burn the whole place down, because we need decisive action!

beeftotheheels

Scofflaw wrote: »

Sure - even on the Titanic, the best option wasn't throwing yourself overboard and attempting to swim to Iceland alone.

cordially,
Scofflaw

Why did ya have to bring up Iceland??? Newfoundland/ Canada/ anywhere but Iceland!

Scofflaw

beeftotheheels wrote: »

But hey, rather than engage in can kicking which might yield results in terms of mitigating the fallout, lets just burn the whole place down, because we need decisive action!

We must do something. This is something. We must do it. Also, everything's lovely in Iceland.

amused,
Scofflaw

beeftotheheels

Scofflaw wrote: »

We must do something. This is something. We must do it. Also, everything's lovely in Iceland.

amused,
Scofflaw

The blue lagoon is certainly lovely, as are the northern lights when viewed from the blue lagoon with your head freezing and the rest of you nice and toasty in the run off from a geothermal power plant. So you're right, I don't know what my problem is with Iceland. Sorry Iceland.

Debtocracy

Scofflaw wrote: »

Central banks free of political interference - that is, not having to do what the politicians want - are regarded as a "good thing", because what politicians want is often not sensible.
cordially,
Scofflaw

Yes, no one wants a situation where the officials in charge are accountable to the idiotic masses. Leave it to those smart chaps working in the financial sector. See, the more money they make, the richer everyone becomes. That’s how capitalism works. Anyone who suggests otherwise is a conspiracy theorist.

Without public accountability, central banks can keep stealing wealth from the populations through both money printing (providing banks with interest free money), and ensuring that the people stay debt slaves while the banks get bailed out. Let’s not forget that the ECB has to think in its own self interest. I’m sure that European banks have offloaded much of their toxic sovereign debt onto the ECB.

In the dictionary, I don’t think Trichet or Benanke’s face will ever be placed next to the work ‘sensible’.

beeftotheheels

Debtocracy wrote: »

Yes, no one wants a situation where the officials in charge are accountable to the idiotic masses. Leave it to those smart chaps working in the financial sector. See, the more money they make, the richer everyone becomes. That’s how capitalism works. Anyone who suggests otherwise is a conspiracy theorist.

Without public accountability, central banks can keep stealing wealth from the populations through both money printing (providing banks with interest free money), and ensuring that the people stay debt slaves while the banks get bailed out. Let’s not forget that the ECB has to think in its own self interest. I’m sure that European banks have offloaded much of their toxic sovereign debt onto the ECB.

In the dictionary, I don’t think Trichet or Benanke’s face will ever be placed next to the work ‘sensible’.

Because every one would be better off right now agreeing with the German electorate?

Scofflaw

beeftotheheels wrote: »

Because every one would be better off right now agreeing with the German electorate?

It wouldn't even be the German electorate, specifically - they'd only be a quarter of the ECB's electorate, if there were such a thing? I'm not sure you can come to a useful analysis of the situation by starting from the premise that central bankers are in it to "steal wealth from the populations".

I'm not sure one can even usefully assume that the ECB does these things to protect banks (as opposed to naked theft on their behalf, which I'll assume to be CT stuff for the moment) - I'd say, rather, that the ECB is being honest but perhaps over-cautious when it says it fears contagion and a Lehmans' style meltdown.

cordially,
Scofflaw

beeftotheheels

And the games continue
http://www.reuters.com/article/2011/07/07/us-ecb-greece-idUSTRE7663J420110707

Trichet told a news conference after the ECB raised interest rates for the second time this year, despite the euro zone's debt crisis.

"What is ... not at all in the global doctrine, is the idea that you are asking as soon as, on top of the IMF loan, there is a loan ... supplied by a neighboring country ..., that you ask for restructuring ... That is not the international doctrine."

karlth

beeftotheheels wrote: »

The blue lagoon is certainly lovely, as are the northern lights when viewed from the blue lagoon with your head freezing and the rest of you nice and toasty in the run off from a geothermal power plant. So you're right, I don't know what my problem is with Iceland. Sorry Iceland.

No problem, Icelanders are half Irish anyway.

We love the Irish.