7 Greek Debt Crisis Questions

[md2000]

@Diceman

That’s what I was arguing in my own thread a little while ago. Greece has defaulted; they’re just not calling it that.

Exactly. If they can’t or won’t pay what they owe when it is due - that’s default. If they negotiate different terms with their debtors, technically that’s not default. If they impose the terms on debtors who do not agree, that default and a benefit of being sovereign.

I wonder what the legal ramifications are. If I take the Greek government to court in Berlin over my Greek T-bill, I bet the German court will say “Take it up in Athens instead”. Thus, debtors are incentivized to compromise. The resulting credit rating and interest costs if the Greeks don’t at least try to accomodate the vast majority of debtors is what incentivizes the Greek government. It’s a big dance… til the music stops.

[dzero]

And thus falls the first domino. Although I do give the ISDA for making the call.

According to the article, **net **exposure to Greek debt is only $3.16B and the figure will probably be lower since it will not be a complete loss.

(Reuters) - Greece triggered the payment on default insurance contracts by using legislation that forces losses on all private creditors, the International Swaps and Derivatives Association said on Friday.
The decision by the EMEA Determinations Committee to declare a so-called credit event was unanimous, ISDA said in a statement.
Markets showed little reaction to the widely expected decision. The euro edged lower against the U.S. dollar while U.S. Treasury prices saw losses pared after the ISDA announcement.