Investorstoday

Friday, February 24, 2012

Greece decides it Needs More Abuse




So a deal appears to be struck between Greece, the public and private creditors with the ECB contributing its holdings into the swap in a way that does not violate the EU constitution. 

Unfortunately, the Greeks appear ready to direct more punishment their way.

The Greek government appears ready to submit a Collective Action Clause law for consideration.  The law would allow the Greek government to impose terms in the event not enough bondholders tender their securities into the swap.

Regular readers know how I feel about the Greek debt swap and that this endgame will eventually lead to Greece being kicked out of the EU.  Depending on how the CAC is structured this may end up being a major blunder on the part of the EU and Greece.  If the CAC can be applied to any Greek debt then questions will rise as to the viability of any New Greek debt. 

We already know that the current debt will be subordinate to any new debt issued by Greece.  This means that if Greece was to restructure in the future the current debt load will get preferential treatment over new debt.  Further complicating matters will be a CAC which may or may not affect the new debt potentially allowing the Greeks to change the interest rate and terms on the new debt without notice.

More information is definitely needed before I can make a call or recommendation but as of this moment the risk for a European debt strike as we saw last year has risen significantly.  The implementation of a CAC sends the risk premium for New Greek bonds through the roof leaving the IMF, ECB, and EU as the buyers of last resort.

Apparently, for those who thought the bailout would remove an overhang from the market they were sorely mistaken.





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Two weeks ago I did an interview with investortoday.ca on 2012.  For those regular readers I am more bullish there than my general commentary for good reason.  Please feel free to check it out and as a reminder the 2012 Investment Forecast is now available.


The 2012 Investment Forecast is now available!!!!
Thank you for your patience. 
The 2012 Investment Forecast is finally finished and ready for sale.  My apologies for the final week’s delay as my original outlet caused some unnecessary consternation forcing me to seek a different outlet.
I am pleased to say that the 2012 Investment Forecast is available through smartwords.com, the world’s largest independent ebook distributor, by clicking here.
Smartwords distributes to Apple, Barnes & Noble, Sony, Kobo, Diesel, and others along with instructions on downloading to your Kindle meaning that this and future work will be available in multiple formats from mobi to ebook to pdf. 
As a sign of forgiveness for being so late I am dropping the price from $20 to $15.  Quarterly commentaries will be priced at $5 while next year the yearly forecast will return to $20. 
If you wish to place a banner ad and help distribute the 2012 Investment Forecast and future works I am offering a 25% commission on all sales.  You can find more information here:  http://www.smashwords.com/about/affiliate


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