Greece's creditors leave Athens

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http://uk.reuters.com/article/2012/01/21/uk-greece-idUKL6E8CL02J20120121

(Reuters) - The representatives of Greece's private creditors left Athens unexpectedly on Saturday without a deal on a debt swap plan that is vital to avert a disorderly default, sources close to the negotiations told Reuters.

Negotiations will continue over the phone during the weekend but it is unlikely that an agreement can be clinched before next week, the sources said, as Athens races against the clock to strike a deal.

A lot of progress has been made on the details of the plan during talks between Athens and Institute of International Finance chief Charles Dallara, sources say, but any deal needs the approval of the IMF and euro zone countries, who insist on a substantial cut in the debt load.

The IMF and EU countries, and in particular the bloc's paymaster Germany, want to make sure the deal puts Greece's derailed finances back on a sustainable track before they agree to a new, 130-billion euro bailout, which is also crucial to avoid a messy default.

[KansDem]

1. Wall Street is sweating this...

Wall Street was issuing bonds for Greek debt and offering "insurance" when Eurpopean bankers declined. European bankers knew Greece could not repay its debt.

But Wall Street stepped in with "bond insurance" and now if Greece goes under, so does Wall Street.

From DemocracyNow! (November 2011)

MICHAEL HUDSON: Well, you’ve asked about three questions there now. Obama is here to represent the interests of the American banks. And the Europeans are very angry that a few weeks ago Tim Geithner, the bank lobbyist, came over and insisted that Europe not forgive Greece’s bank loans, not let Greece write down the loans, and indeed that it not even claim that Greece should do what Argentina is and write down the loans as a premise, because Mr. Geithner explained to the Europeans that the largest insurers of the Greek debt are American money market funds and hedge funds. And he said American hedge funds and banks would lose money and actually would crash the U.S. economy, if Europe made a concession to Greece to bring debts down to the ability to pay. So, instead of a debt write-down or a haircut, the banks said, "OK, we will agree with what the Americans are insisting on, and we will ask for a voluntary write-down by the banks on the Greek debt they hold." Obviously, European banks who are not part of the credit default swaps have disagreed with this. So the Americans are putting immense pressure on Europe, saying, "We will wreck your economy, if you don’t wreck Greece’s economy."

http://www.democracynow.org/seo/2011/11/3/wall_street_v_greece_g20_opens

Time for TARP2.

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2. I remember that piece well.

We live in interesting times.