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Since the opportunity cost for Greece of “pledging” to achieve unattainable targets while doing kittle, is zero, then the real question becomes enforcement. Next comes the Eurozone’s willingness and ability to enforce [see actionable Germany's Coo-Coo Times]. Implementation is a different animal from agreeing. That said my comment here assumes Greece gets the next tranche of $145 billion and counting.
The Greece “solution” has all the worst elements of debt structuring and leaving the afflicted country totally in the hands of creditors and global banksters, and with all the attendant privatizations, etc. Now Greece will spiral into a deep, long lasting Depression caused by extreme austerity (if that is even the correct word here). The bad news for banksters is that other insolvent countries will be able to observe the outcome of the “Greek solution” and plan (rebel?) accordingly. As a prelude 100,000 hit the streets in Lisbon to protest austerity. Portugal has been discreetly sounding out advisers on options to restructure its debt.
The most important aspect of the restructure is that private debt holders have been largely wiped out and subordinated to official creditors. This serves notice on private bondholders in other weak European credits, and will weaken those markets making them total wards of the Troika. In Greece all the considerable remaining too large debt is almost exclusive held by official sources, i.e the Troika. Since the IMF is senior in the call on the money structure, this means the Eurozone (primarily Germany, France, Spain and Italy) will bear the next layer of loses. That will come soon enough when Greece’s economy spirals into a deep hole.
There are comments today at Actionables on LTRO and the mortgage settlement.
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