Posted on 09/15/2011 11:48:03 AM PDT by marshmallow
London (CNN) - Greece is almost certain to default on its debts, but the type of default – and its impact on the markets, Europe and the world – is yet to play out.
A default can come in three different forms:
A “selective default”. Under the terms of the second bail-out, some creditors can roll over their debt and take a “hair-cut”, or losses on the money they are owed. This is done to protect against the possibility of greater losses in the future. It is limited, controlled and understood. Crucially, it is expected.
The greater fear is that Greece defaults on a much greater scale. An “orderly default” would be one that is planned for, so creditors – and the markets - are prepared and have a plan to deal with losses in the value of their investments. While markets will be volatile, there will be soothing statements from eurozone leaders and it will be controlled.
The worst case scenario is that Greece defaults outright and without warning. This is what people are referring to as a "disorderly default,” and that is the big fear. This would be hugely significant because it will almost certainly lead to contagion. It will not necessarily lead to Greece being kicked out of the euro, nor the collapse thereof. It will however pose fundamental questions about the foundations of the euro project. Market reaction could be as bad as when Lehman Brothers collapsed in 2008.
This all comes against a backdrop of serious financial problems in other major eurozone economies – particularly Italy, which is one country regarded as too big to bail out.
Greece was given a second bailout on July 21. The centrepiece of that agreement was the expansion of the bailout fund – known as the European Financial Stability........
(Excerpt) Read more at business.blogs.cnn.com ...
Geesh.. How many flavors of default are there?
If yur bankrupting, ya got a few options.. same difference I guess..
We’ll be in Greece and then Italy in a couple weeks .. hoping the streets&seas are calm and the ruins even more so, I’ll be snagging wifi wherever I can so I’ll give ya a birds’eye report..
One has to remember these “bailouts” are not “gifts”. They are loans accompanied by conditions of austerity to be acted on. If more debt is the solution to all problems then our country is in marvelous shape. We surely have enough of that commodity.
Ben? Izzatyou? (just kiddin)
ain't gonna happen...whole thing is a fraud...because there is NO pain to Greece..
Turn Greece back to the Spartans. They’ll fix it.
The American Taxpayer has had so many “haircuts” that we make Michael Jordan look like Rick James.
I’s like (a) you decide to pay some of your debts, or (b) you offer 50c to the dollar on your debts, or (c) you take off for Mexico and let all your debts go bye-bye
no kidding. Look at the cds for Greek banks!
Http://confoundedinterest.wordpress.com
Something bad is going to happen
europe pretends to bail out greece and greece pretends to collect taxes.
meanwhile her guitner just put the us taxpayer on the hook via the IMF. (for ALL EUROPE!!!!)
That does seem to be the case. U.S voter/taxpayer simply had no say in the matter. I’m sure someone in Congress will scream but to what effect?
Maybe they can default in the same way that FDR defaulted, which is to tell creditors to go suck an egg.
“Turn Greece back to the Spartans. They’ll fix it.”
Who will they enslave to be their helots? It could give the French something to do, I guess.
“Helots?”? Let’s keep religion out of this.
“’Helots?’? Let’s keep religion out of this.”
This may have been sarcasm, but just in case, “helot” is not a religious term. It refers to the slave or quasi-slave (depending on who you listen to) class of ancient Sparta, the ruling class being the ethnic Dorians who conquered Laconia and Messenian. The latter are whom we think of when we think of Sparta, but if you ever wondered who cleaned their houses and farmed their land, it was the helots.
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