07-09-2015, 01:03 AM
Citi’s Willem Buiter-headed team of economists provides an interesting external solution for the Greek debt crisis in an opinion piece late on Monday: bail out Greek banks but not the Greek government. Remember, the problem for eurozone banks is part of their core capital is supposed to be made up of liquid instruments like government bonds, but in the case of Greece these bonds are as toxic as subprime securities and depreciating quickly. Even if the ECB continues accepting Greek bonds as collateral for Emergency Liquidity Assistance, the terms would no doubt involve much larger haircuts, bringing us back to a 2011 capital hole scenario very quickly. So, it actually makes more sense for Greek banks to start swapping government bonds into different types of assets.
A radical idea to bypass the Greek government | FT Alphaville
An internal review in 2013 would conclude that the IMF should have pushed earlier for a restructuring of Greece’s debt, which would have eased austerity and limited the economy’s contraction. As it turned out, Greece plunged into a much deeper recession than anticipated, with unemployment surging to about 25 percent in 2012. The IMF now recognizes that an earlier restructuring of Greece’s debt would have helped the country’s recovery, said a person familiar with the fund’s program in Greece. IMF officials also accept that their assumptions underestimated the extent to which spending cuts would impede growth, according to the person, who asked not to be identified.
Kinder, Gentler IMF Austerity Stance Came Too Late to Aid Greece - Bloomberg Business
Mrs Merkel also stresses that there can be no question of a "debt haircut" for Greece, saying it would be illegal under the EU treaty.
Greece debt crisis: Latest updates - BBC News
RBS puts the direct financial losses for the eurozone from a Greek default at €227bn, compared with €140bn if they bite the bullet on an IMF-style debt restructuring.
Europe is blowing itself apart over Greece - and nobody seems able to stop it - Telegraph