With the
stakes so high for all concerned, a compromise may well be reached. Germany and the IMF may realize that if the private sector is pushed too hard,
the deal will collapse and they will then have to pay even more money to
keep Greece afloat in the coming years.
By the same
token, however, private-sector creditors eager to put the issue behind them may
accept a larger loss, and exchange their nearly worthless Greek bonds for more
valuable securities, even if those new bonds are half the nominal value of the
originals. That would at least offer
protection if Greece has to restructure yet again, in the future.
As for the
holdouts, they could run up millions of dollars in legal bills chasing after
Greece in European courts, and they know that, so they may very well not go
ahead with such lawsuits.
The question
is whether there is enough debt relief for Greece -- and there may not be,
because the fiscal and growth situation in Greece is dire and getting worse by
the day.
Les Leopold
puts it this way:
In a Game of Financial Brinksmanship,
Vampire Hedge Funds Are Trying to Suck Greece Dry
Leopold continues: When it comes to institutionalized greed and
corruption, nothing tops the too-big-to-fail banks like JP Morgan Chase, Bank
of America and Goldman Sachs. But these
financial giants form only one part of the financial oligarchy. Lurking in the shadows are aggressive hedge
funds that are just as lethal to our economic wellbeing. If Goldman Sachs is a vampire squid, as Matt
Taibbi so aptly described it, then hedge funds are like schools of piranhas or
sharks, eager to strip the financial carcass to the bone. And at this very moment the sharks are
circling Greece, waiting to devour that nation's resources once it keels over.
As Leopold explains, our vampire squid banks played a critical
role in exacerbating the Greek debt problem.
When Greece hit the debt limits set by the EU, large US banks profited
mightily by structuring loans to Greece that would skirt those debt limit rules.
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