Greece has defaulted.

[milkmiku]

Well folks, it is official.


A group representing dealers in credit default swaps decided Friday that Greek's bond swap constitutes a "credit event" that entitles holders of Greek credit default swaps to compensation. The "yes" vote by the International Swaps and Derivatives Association triggers roughly $3.2 billion in CDS, which are insurance policies that pay out if a bond issuer defaults. That amount is actually much smaller than many had feared.

The decision was widely expected, and stocks were slightly down after the announcement.

Greece pushed through a bond swap deal on Friday, forcing bond holders to take a significant "haircut" on the return of their money. The swap was approved by about 84 percent of the holders, and Greece is moving to activate a rule forcing the rest of the bondholders to go along with the deal.

The triggering of that rule, known as the Collective Action Clause, is what prompted the ISDA to decide that Greece has created a "credit event."

“There’s three types of credit events as defined by ISDA,” said Gavan Nolan, Credit Analyst at Markit. “There’s a bankruptcy, a failure to pay and a restructuring.”

“What we’re talking about here with Greece is a restructuring," he told CNBC. "A request is made to the ISDA Determinations Committee—which is the arbiter of whether a credit event has occurred—and they have to agree whether or not it is a credit event.”

Out of the 15 members of the ISDA committee, 80 percent had to agree.

The net volume of CDS on Greece now stands at $3.2 billion, according to the Depository Trust & Clearing Corporation, which holds data on credit default swap contracts.

“It’s peanuts really compared to the government bond market," said Nolan. "So I think it’s sometimes overplayed as to how important it is.”


From the cnbc website, I am unable to post the link.

[Blake's Baby]

BBC is reporting that Greece has 'met the bailout conditions'. So it's both 'defaulted' and met its bailout conditions, which seems a bit strange.

[Veovis]

And it starts...

[ComradeOm]

BBC is reporting that Greece has 'met the bailout conditions'. So it's both 'defaulted' and met its bailout conditions, which seems a bit strange.It's an argument over the definition of 'default'. Greece has not deliberately or formally defaulted and the EU does not consider Greece to have defaulted. Conversely, Moodys, and other US agencies, are insistent that any attempt to impose a haircut of creditors is tantamount to a default

[Q]

BBC is reporting that Greece has 'met the bailout conditions'. So it's both 'defaulted' and met its bailout conditions, which seems a bit strange.

Which is an indicator in what type of grey area we've been in for some time now. Now we can only imagine what type of chain reaction is to follow.

[milkmiku]

Which is an indicator in what type of grey area we've been in for some time now. Now we can only imagine what type of chain reaction is to follow.


I cannot wait for the opening bell Monday, been a good while since an event like this, the market will be in chaos for a while. Spanish and Italian investor reactions will be comedy gold.

[Yefim Zverev]

Well it s alright... If a company defaults; it is over, it is deleted. But what consequences does it have for a state to default in the capitalist system ? Since it can not be deleted.

[Blake's Baby]

A chain reaction of both positive and negative, or a chain reaction of confusion?

'Large areas of doubt and uncertainty, eminating from Greece, were observed drifting through the world economy this morning. Professor Schrodinger of the London Institute of Quantum Economics, explains:

"We really don't know what's happening, you know?"

The Greek Doubt Crisis, which began at some point but no-one's really sure, is affecting something that we're not certain about. What is clear is that no-one has much of a clue.

Markets in New York are expected to remain in confusion as a lack of information causes everyone to admit that no-one has any idea how the economy works and what should be done to fix it. However, Mr Peter Pan of the economic think-tank Hocus-Pocus-Focus thinks that the solution is simple:

"If everyone in the world holds hands and thinks 'I do believe in balanced budgets' over and over again, Tinkerbell will come back to life. I mean, the economy will start to grow again."

Now, over to our economics correspondent, who may or may not be a small lemon...'

[robbo203]

Well it s alright... If a company defaults; it is over, it is deleted. But what consequences does it have for a state to default in the capitalist system ? Since it can not be deleted.

Maybe it could be "copied and pasted" in which case we would have a real global crisis on our hands;)

[PhoenixAsh]

Well yesterday we were first swamped with stories Greece was saved and met the bailout conditions...and everything was going to be fine. There was even talk of a 28 billion IMF loan. Then EU president Rompuy said the worse of the EU credit crisis was over. Then we got a message Greece debt gap rose to 7.5% of GDP....which was higher than expected...but already reported a month earlier. And later that afternoon credit rating agency Finch lowered the status of Greece to partial default. And then things went dark...news wise. So this is not a good sign. But so far I have read no news of Greece actually defaulting.

What I think is that Greece met the credit agreements with 80% of its commercial debtors. And I think some of them want to trigger insurance reimbursement. I do not know if it actuallyn means anything in offical terms when a group of 15 members agrees on something. So far I have seen no official news Greek is actually defaulting other than the new agreements.

[ckaihatsu]

But so far I have read no news of Greece actually defaulting.


http://wsws.org/articles/2012/mar2012/pers-m10.shtml


The Greek agony


10 March 2012

In his novel 1984, George Orwell coined the term “Newspeak” for an ideologically charged language that stands reality on its head. The word “haircut” as applied to the write-down of Greek government debt should be added to the vocabulary of Newspeak.

What is publicly presented as the financial markets’ “sacrifice,” a “waiver” by private creditors, giving up over half of the value of their Greek bonds, is in fact a financial gift to the banks.

The debt swap agreed Thursday night by nearly 86 percent of the creditors will not prevent the bankruptcy of the Greek state. It merely postpones it by shifting the cost of such a bankruptcy from the private to the public sector, on which about three-quarters of the Greek debt will fall.

Indeed, the International Swaps & Derivatives Association ruled Friday that because some private bondholders were forced into the debt swap, the restructuring constituted a “credit event,” triggering payouts of $3 billion in credit default swaps on Greek bonds. This underscores the fact that the deal has not resolved the European and global financial crisis, but set the stage for its intensification, beginning with a new speculative assault on the debt of Portugal, Spain, Italy and even France.

The haircut reduces Greek government debt to private creditors by a maximum of €107 billion. At the same time, the Greek debt to public creditors rises by €130 billion. This is the size of the second Greek financial package from the European Union and the International Monetary Fund. Although it is often called a “rescue fund,” it is not a cash gift, but new loans that Greece must repay with interest.

[...]

[ckaihatsu]

The announcement by the ISDA was followed by statements from the rating agencies Standard & Poor’s and Fitch concurring that the Greek debt swap represented a default.

http://wsws.org/articles/2012/mar2012/gree-m12.shtml

[l'Enfermé]

Yeah, what they're doing is basically shifting the costs of a default that will come in the future from the private sector to the public.

[ckaihatsu]

Yeah, what they're doing is basically shifting the costs of a default that will come in the future from the private sector to the public.


Yeah, regardless of the *financial* machinations, the *constant* is continuous class warfare against the workers of Europe (etc.) who are *always* denied the full value of what their labor is worth.

If economics is "how we keep score" it's unconscionable that such a large proportion of the money (wealth and means of production) is *not in the hands* of those who worked to create that value in the first place.


[11] Labor & Capital, Wages & Dividends

http://postimage.org/image/1bygthl38/