Full Greek default - Implications?

[benwm]

The proposed Greek referendum on last weeks "agreed" $1TR+ bailout raises the possibility of a full Greek default.
None of this "haircut" BS...

So what are the implications?

According to one blogger http://economistonline.muogao.com/2011/10/who-owns-greek-debt.html#comments, Greece has total debts of €346.4bn. About a third of this debt is in public hands (34.8% is attributable to the IMF, ECB and European governments), roughly another third is in Greek hands (28.8%, essentially for banks) with the remainder (36.4%) held by non-Greek private investors.

(Market €125.9 BN, Greek & Cypriot banks €74BN, ECB €55BN, ..)

ECB holdings are probably bigger than €55BN now I guess due to bond buying operations? Can they just write off the loss in the event of a full default?

And the CDS holders in Greek debt - now they get paid?

 

[m22au]

ECB:

Will either ask other Euro area nations for contributions to make up for the loss. Either that or print the money to cover the loss.

Greek banks:

Insolvent, in need of capital. Subject to bank run (have been gradually losing deposits since 2009).
www.elitetrader.com/vb/showthread.php?s=&threadid=198211

CDS:

Even if a "proper" default, it's still subject to the whims of the people who decide whether or not a credit event has occurred. Martinghoul has posted about this previously and I agree with his view that there is no guarantee that sovereign CDS pays out.

other investors:

look at SocGen, Commerzbank, Credit Agricole, BNP Paribas who have Greek debt

 

[ASusilovic]

Quote from m22au:

ECB:

Will either ask other Euro area nations for contributions to make up for the loss. Either that or print the money to cover the loss.

Greek banks:

Insolvent, in need of capital. Subject to bank run (have been gradually losing deposits since 2009).
www.elitetrader.com/vb/showthread.php?s=&threadid=198211

CDS:

Even if a "proper" default, it's still subject to the whims of the people who decide whether or not a credit event has occurred. Martinghoul has posted about this previously and I agree with his view that there is no guarantee that sovereign CDS pays out.

other investors:

look at SocGen, Commerzbank, Credit Agricole, BNP Paribas who have Greek debt

Actually, it´s not to believe that after 2 1/2 years of rescue talks this braniac of Papandreou is opting for a referendum. Why didn´t he think about this option months ago?

I am SPEECHLESS. UNbelievable.

 

[ASusilovic]

Quote from m22au:

Insolvent, in need of capital. Subject to bank run (have been gradually losing deposits since 2009).

About time to move EUROS into safe haven currencies. I can´t stand anymore Greek/EU politician´s BULLSH!T!

 

[m22au]

Quote from ASusilovic:

About time to move EUROS into safe haven currencies. I can´t stand anymore Greek/EU politician´s BULLSH!T!

If you're a Greek resident, the sensible thing to do is to get your Euros out of Greek banks and put them into a bank outside your country. Probably in a safer country like Germany, and probably in Deutsche Bank (Commerzbank too risky due to Greece exposure).

As posted above, Greeks have been gradually draining the banks since 2009.

The Euro could actually soar above 1.40 and 1.50 if the PIIGS leave the Euro, which would mean that the currency is made up of mainly strong countries.

 

[benwm]

Quote from m22au:


The Euro could actually soar above 1.40 and 1.50 if the PIIGS leave the Euro, which would mean that the currency is made up of mainly strong countries.

The mechanics of how Greece would leave the Euro are intriguing. Surely the Eurozone has a formal procedure in place for this type of situation...

 

[SouthAmerica]

Administrators - How about moving this thread to the Chit Chat section?

 

[benwm]

Quote from m22au:

[B
The Euro could actually soar above 1.40 and 1.50 if the PIIGS leave the Euro, which would mean that the currency is made up of mainly strong countries. [/B]

I agree that this could happen medium term - it makes sense right? - but in the short term I expect it will be more primal...risk aversion due to the uncertainty, ECB easing etc.

I'm interested to know ECB will respond if Italian bond yields continue climbing despite their bond buying operations.

6% isn't high a yield for BTPs when you factor in the possibility of other PIIGs following Greece along the full default road map.

Do we know who holds Italian debt? According to this FT article from July, "a little more than half of Italy’s outstanding government debt (about €1,800bn) is owned by non-residents". Domestically, Italian households hold about 15% of the debt stock, while Banca d’Italia holds another 5% or so. The remaining debt is held by Italian banks and other financial institutions (each holds about 15%).
http://ftalphaville.ft.com/blog/2011/07/18/625136/goldman-answers-10-questions-on-italy/

 

[benwm]

Quote from SouthAmerica:

Administrators - How about moving this thread to the Chit Chat section?

Don't be an asshole. Please get out of the thread if you're not going to contribute. Thanks.

 

[SouthAmerica]

Quote from benwm:

Don't be an asshole. Please get out of the thread if you're not going to contribute. Thanks.

Why do you have a monopoly in being an asshole?

By the way, I just cut and pasted from one of your postings - I am giving you the same treatment that you give to other members of this forum.

Do you recognize your writing style?

Administrators - How about moving this thread to the Chit Chat section?



But this is a good advice: Please get out of the thread if you're not going to contribute. Thanks.



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