Greece has finally secured a new bailout plan and debt restructuring agreement, although it is uncertain whether they will be able to meet the terms of the deal.
Details of the deal:
*130 B Euro bailout
-The Greeks wish to receive a 130B Euro bailout to keep themselves afloat until they can implement austerity measures to begin reducing their debt burden.
*120.5% Greek debt target as % of GDP (by 2020)
-The "target" for 2020. Currently, the debt as % of GDP is north of 140. The deal seeks to cut debt as % of GDP to the 120 level.
*53.5% write down on private creditors' bonds
-Private creditors to Greece will have to accept a 53.5% write down on the money they lent to Greece. This may seem harsh, but in a real "laissez faire" free market, the losses would be 100%. Wouldn't it be nice if you went to Vegas, put $1000 on black, it turned up red, and you got $465 back? I like my odds.
That's it for the details of the deal, for now. Look for Greece to meet the demands of the deal. If they can, it should provide for a good market environment going forward. If they can't, expect the European and U.S. markets to correct.
Cheers,
EZ
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