Merkel: 50 pct haircut to cut Greek debt by 100 bln euros
BRUSSELS |
BRUSSELS Oct 27 (Reuters) - Private owners of Greek bonds will accept a 50 percent writedown on their investment, enabling both a 100 billion euro cut in Greece's sovereign debts and allowing a new Greek programme of aid of 100 billion euros, German Chancellor Angela Merkel said on Thursday.
"Our goal is that the debt of Greece by 2020 is 120 percent (of GDP)," Merkel told journalists after a meeting of euro zone leaders.
"A nominal haircut of 50 percent has been agreed. On the basis of this, we will have a new programme for Greece with a value of 100 billion euros."
She said the public sector would make a further 30 billion euro contribution towards private sector participation.
Merkel also said that Greece would be subject to closer supervision in future.
"There will be a reinforced monitoring regime in connection with the fulfilment of the Greek obligations," she said.
"That will be anchored in a memorandum of understanding. There will be a permanent presence there. It will be possible to monitor the measures taken by Greece. I think that this is better than when every three months a 'troika' travels there and back, a permanent system of supervision."
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Well, except for rich morons, that has also wiped out the future sales of bonds.
Unless they get a grip, and reduce spending, which can only be accomplished by putting their bloated government on a strict diet, they have only kicked the can down the road.
A strict, permanent diet, means addressing the retirements, benefits packages of retirees, as well as all government assistance programs.
Let’s not leave the politicians out of this “shared sacrifce”. The government needs to reduce its expenditures, across the board by a fixed percent. Since they are leaving bond holders with only fifty percent of what they are owed, a fifty percent cut in the government is a reasonable goal.
Shafting those who bought bonds, or “invested” in the government sans addressing the problem that brought them to this mess in the first place does nothing to eliminate the problem. They’ve only anesthetized the symptom.
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