The downgrade put Greece on par with Romania and below Kazakhstan, Hungary and Iceland, the last of which rocked global markets when its main banks imploded at the start of the global financial crisis.
S&P also assigned a recovery rating of \’4\’ to Greece\’s debt issues, indicating its expectation of \”average\” (30-50 percent) recovery for debtholders in the event of a debt restructuring or payment default.
50 to 70% haircut?
To be honest I\’m really not sure why the Greek Govt isn\’t just saying \”OK, game\’s up\”. Negotiate the haricut with the bond holders and get it over with.
Yes, they\’ll still have the deflation, still be in the euro, but without the debt spiral.
I agree that Greece is going to have to restructure its debt and quite possibly default on some of it – but I’d rather it happened in five years than today. If Greece restructures/defaults in one or two weeks time, then interest rates on the other PIGS are going to go up – and Portugal easily be pushed into the same crisis.
We’re just pulling ourselves out of the last economic mess – I’d rather we didn’t just jump right back into another one.
“Negotiate the haricut “? Doesn’t even amount to a hill of beans.