October 28th, 2011
Our financial leaders have invented a new buzzword: “soft debt restructuring.” This refers to a debt moratorium. Greece next year could extend the term of its maturing bonds on one side. Because otherwise, would his creditors – especially the banks – from the funds of the EU “bailout” paid at par, although these bonds are currently trading at a fraction of their face value.The repayment would be borne by the taxpayers. The Treasury now fear that this would be difficult to communicate to the citizens.
Life extension is a “soft” form of debt restructuring, because neither the interest payments are still set a “haircut” is agreed. The face value of debt does not change. But from a purely legal one-sided life extension a payment adjustment is just like any other. The demands must be written off in full and also by the banks, the ECB would identify with the Greek government bonds, which she bought on the open market since May 2010, heavy losses. Therefore, defends the Governing Council – represented by its governor Trichet, but also its current German members Stark and Weidmann – vehemently against this and every other form of debt restructuring. The members of the Governing Council, however, lead to a different reason: the ECB could no longer accept the Greek banks located in the possession of the Greek government bonds as collateral. Therefore, the money supply would collapse in Greece. This and the depreciation of the Greek government bonds would drive the Greek banks into bankruptcy.
The horror scenario of the ECB can be avoided. First, it is quite possible that the ECB continues to accept Greek bonds as collateral at market price. The second is for the “bailout” are used alternatively to provide the Greek banks with collateral and to save it from bankruptcy. That would be very much cheaper than to refinance maturing gradually all Greek government bonds by loans from the bailout fund. For the Greek banks hold only a small fraction of these bonds.
Finance Minister Schaeuble said on Sunday, under certain conditions, “we could in doubt think about bonds, which extend to Greece would have to pay back next year … But of course we need – should it at the end of the path are added – for a term extension the approval of loans from the IMF and in particular the ECB. ” Since the approval of the ECB is to get in any case, these are mere lip service.
Schäuble added: “I could make me so easily and push the problems and tell me: Well, in two years, has a different responsibility. No, the problems must be solved now. ” Precisely what it will not come – and Schaeuble knows. A restructuring – whether hard or soft – is not intended. But can lead Schäuble, the German public and its coalition partners, two years so by the nose?