First the "facts" on the second Greek bailout, followed by analysis and comments. This post last updated 21-Feb 12:30 GMT. Updates at the bottom of the post. Also see Eurogroup Special II
NEWS & STATEMENTS
Euro zone finance ministers sealed a 130-billion-euro ($172 billion) bailout for Greece on Tuesday to avert a chaotic default in March after persuading private bondholders to take greater losses and Athens to commit to deep cuts.
Greece said on Tuesday it would pass legislation that would allow it to enforce losses on bondholders who will not take part in a voluntary bond swap plan, also known as PSI, that forms part of its bailout plan.
Greece intends to launch a bond swap with the private sector aimed at reducing its debts by more than 100 billion euros from Wednesday, Finance Minister Evangelos Venizelos said after a meeting of euro zone finance ministers on Tuesday.
Eurogroup maths – alphaville / FT
Together these measures are expected to enable Greece to reach a debt/GDP ratio of 120.5 per cent by 2020. There is also mention of enhanced — and permanent — monitoring.
Together these measures are expected to enable Greece to reach a debt/GDP ratio of 120.5 per cent by 2020. There is also mention of enhanced — and permanent — monitoring.
Also links to some key pages on Greece, plus the IMF and Europe.
Eurogroup Press Statement – EC (pdf)
ANALYSIS & COMMENTS
More Leaked Greece Details: Downside Case Sees Funding Needs Soar From €136 Billion To €245 Billion – ZH
Presenting The Full Greek (Un)Sustainability Analysis – ZH
IMF sustainability report leaked: The debt trajectory is extremely sensitive to program delays, suggesting that the program could be accident prone, and calling into question sustainability
IMF sustainability report leaked: The debt trajectory is extremely sensitive to program delays, suggesting that the program could be accident prone, and calling into question sustainability
My sense is that what the leaders of the euro zone are again hailing as a landmark agreement will, like all of the other landmark agreements of the past two years, seem completely insufficient six months from now.
Europe's finance ministers plan to approve a second bailout for Greece on Monday but Hans-Werner Sinn, the head of Ifo, a top German economic think tank, warns that the money will only help international banks -- not the Greeks. He argues that Greece can only solve its crisis if it quits the euro.
Today Europe’s leaders have the last opportunity to avoid a great crisis. Will they continue to demand increasing austerity of the Greek people, pushing them further on a path devoid of hope and leading to poverty and political collapse? Or will they realize the folly of their actions?
The plan assumes that Greece’s politicians will stick to what they’ve agreed, and start selling off huge chunks of their country’s patrimony while at the same time imposing enormous budget cuts. Needless to say, there is no indication that Greece’s politicians are willing or able to do this, nor that Greece’s population will put up with such a thing.
Eurozone agrees to Greek bail-out, but doubts remain – euobserver.com
a leaked EU-IMF analysis of Greece's debt developments in the coming years questions the feasibility of this programme
Get Greece (out) – alphaville / FT
Brutal, brutal, formal, excruciatingly-timed, leaked confirmation of what we we’ve known for ages – the Greek bailout 2.0 is Souvlaki in the sky…
Brutal, brutal, formal, excruciatingly-timed, leaked confirmation of what we we’ve known for ages – the Greek bailout 2.0 is Souvlaki in the sky…
Meaningless Greek Deal Supposedly Reached; Deal Won't Hold – Mish’s
Post Greek Bailout Melt-Up or Meltdown? – Pension Pulse
ADDED 21-FEB
Morning Briefing 21-Feb – BNY Mellon
First thoughts on the agreement overnight
Daily 21-Feb – Danske Bank (pdf)
Funding gap closed by larger write-down for private investors, lower interest rates on Greece’s loans and contribution from ECB’s profits on its Greek bonds
What the Greek debt crisis is really about – The Daily Reckoning
It's about the subversion of sovereignty and democratic processes by removing decisions from people and giving them to trans-national financial elites. It's about preserving a global system that's based on the accumulation of debt and growing government power because there are two groups of people who benefit tremendously from that system, even if most people don't.
Full Text: Eurogroup statement on Greek debt rescheduling deal – Credit Writedowns
Factbox: Details of Greek debt sustainability report – Reuters
An analysis by the IMF, European Central Bank and European Commission of Greece's debt mountain shows Athens will struggle to cut its debt burden to a target of 120 percent of GDP by 2020, documents obtained exclusively by Reuters show.
Exclusive: Greek debt load may get heavier, euro zone study says – Reuters
Greece will need additional relief if it is to cut its debts to 120 percent of GDP by 2020 and if it doesn't follow through on structural reforms and other measures, its debt could hit 160 percent by 2020, a confidential analysis conducted by the IMF, European Central Bank and European Commission shows.
Euro zone finance ministers sealed a 130-billion-euro ($172 billion) bailout for Greece on Tuesday to avert a chaotic default next month after forcing Athens to commit to unpopular cuts and private bondholders to accept deeper losses.
Draghi Stays Silent on ECB Role in Greek Bailout – BB
The ECB will distribute the profits derived from its purchases of Greek bonds to national central banks, who will give the money to their governments to bolster Greece’s aid package, euro-area finance ministers said in a statement.
Greek Credit Writedowns! Finally… – Credit Writedowns
We wouldn’t exactly call a deal where private creditors reschedule all maturing bond payments for the next ten or so years into a 30-year bullet with a 50+ percent effective haircut a bailout!
The problem with the PSI procedure is that it does not reward these economic agents accordingly. This PSI precedent means that in the future, should a government debt crisis occur, private investors will be less willing to support troubled government debt, and speculators will be rewarded for being short.
Greece is bankrupt and will need a 100 percent debt cut to get back on its feet. The bailout package about to be agreed by the euro finance ministers will help Greece's creditors more than the country itself. EU leaders should channel the aid into rebuilding the economy rather than rewarding financial speculators for their high-risk deals.
Greece had "no other option" than to agree to painful austerity measures in return for a second €130bn (£108bn) bailout, the Chancellor has insisted, and said he hoped the decision would allow Europe to "move on".
Greek youths will be victims for years to come thanks to the austerity being demanded in return for the 130 billion euro bail-out that was hammered out in Brussels overnight.
Lucas Papademos, the Greek prime minister, hailed Tuesday’s bailout package as an “historic day” for the country. But this is a “Horrible History”, not one to celebrate.
I’ve been reading a great summary, prepared by Reuters, of the various steps that the Greeks need to take to implement their part of the deal. Alice in wonderland, cloud cuckoo land etc, away with the fairies, all come to mind.
New measures to bring debt down to 120.5% of GDP in 2020, next step is PSI and CACs, debt sustainability achieved - or not
BizDaily: Greek Rescue 21-Feb – BBC (mp3)
Ministers have finally reached a deal on a second bailout for Greece. But is Greece doomed to stay indebted forever? Lesley Curwen asks Gabriel Sterne from bond specialists, Exotix Limited, who has also worked at the IMF and Bank of England, Michael Arghyrou from Cardiff Business School, and Christian Schultz, a senior economist at the German bank Berenberg, who used to be an economist at the ECB.
Ministers have finally reached a deal on a second bailout for Greece. But is Greece doomed to stay indebted forever? Lesley Curwen asks Gabriel Sterne from bond specialists, Exotix Limited, who has also worked at the IMF and Bank of England, Michael Arghyrou from Cardiff Business School, and Christian Schultz, a senior economist at the German bank Berenberg, who used to be an economist at the ECB.
Satyajit Das: It’s All Greek to Me! – naked capitalism
In the end, Greece may live to default another day. Other embattled European nations will be scrutinising the Athenian sub-plot extremely closely as to clues as to their future as they await the battles that lie ahead.
Just The Facts, Ma’am. – TF Market Advisors
I think the realization that the details aren’t well put together and offer lots of potential difficulties for the banks in their effort to get governments to give Greece money, so that they can get paid, may detract from the “successful” outcome that has been announced.
Goldman's Greek Deal Summary – ZH
GS: Increased likelihood of CDS: Moreover, higher losses inflicted on the private sector, involving the likely activation of CACs and the triggering of CDS, represent sources of near-term volatility.
GS: Increased likelihood of CDS: Moreover, higher losses inflicted on the private sector, involving the likely activation of CACs and the triggering of CDS, represent sources of near-term volatility.
Second Greek Re-Bailout: Terms, Conditions And Next Steps – ZH
Is the usage of CACs in the "bailout" a Material Adverse Change clause, and is thus the loophole for collapsing the deal altogether?
Is the usage of CACs in the "bailout" a Material Adverse Change clause, and is thus the loophole for collapsing the deal altogether?
We don't know what the pool is, yet that is critical. Are the March 20th bonds in the pool or not?
Daily Press Summary – openeurope
Marathon negotiations on second Greek bailout end with agreement in principle; Leaked Troika report reveals Greece’s rescue programme “way off track”