Will the Grand European Plan actually work?

Well, Mr. Market obviously thinks the whole thing is super, but after checking out some of the releases, I’m really puzzled how they’ll actually achieve it.


First of all let’s talk about the haircut. To say that the 50% cut is huge is a spectacular understatement. While the bankers may have given them the green light for it, if you think they’ll just write off several billion dollars off their books with a smile on their face while Sarkozy is asking them to cut dividends then you have another thing coming. This in turn brings up a whole lot of questions for the CDS market; since they banned CDS trading awhile ago there’s been a real danger that this whole thing could blow up spectacularly when the holders, now holding worthless paper, would cause a freeze in the CDS market and thus, thoroughly fuck interest rates for the bondholders. Now, with all the skepticism over how voluntary the haircut is going to be, it seems that they’re trying to pressure the ISDA not to declare it a default. How different is that?

If its voluntariness (is that a word?) comes out to be a non-issue and we still find ourselves with a fully-functioning market, there’s still the small matter of Greece actually being able to pay their debts, which, I dunno man, still sounds pretty unlikely if you ask me – even at their 120% post haircut debt-to-GDP target.

Then there’s still the question of who’ll underwrite the EFSF, how much participation the BRICs will have, or if the ECB will get off their inflation fixation and actually step in, the list goes on.

What do you think monkeys? I’m I totally wrong on this one? Is this NOT just another kick the can down the road type deal? Or should we fade Mr. Market right here and now?

Have a good one monkeys.

Agree with funzone...the only way to really get this over with is to let them default and start over. So bondholders get screwed, big f-in deal. Investments are inherently risky. If bondholders haven't hedged their bets, then f them. It's their problem. If they want a safety net on their investments, get an FDIC guaranteed account. Chumps.

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