Is the EU Sovereign Debt Problem Really Fixed?

By Greg Hunter’s 

When I first heard of the deal to fix the European debt crisis, I thought, “Is the EU Sovereign Debt Problem Really Fixed?”  This is a complicated solution and mainly addresses sour Greek debt.  Bankers are supposed to take a 50% cut in value of their bonds, which means taxpayers in Europe will subsidize the rest of the losses.  There is also a new agreement on the European Financial Stability Facility (EFSF) or bailout fund that should raise it up to around $1.4 trillion (1trillion euros).  Of course there are really no real details on where that money is coming from.  It has been reported the IMF (read U.S.) will be a contributor to the fund and I supposed there is going to be a fair amount of freshly created currency dumped in to the EFSF bailout fund.  Again, this is mostly dealing with Greek debt, but what about the debt of Spain and Italy?  The combined sour debt of the two countries is 10 times bigger–$3.4 trillion!)  Will the banks accept haircuts of 50%, and where will the money come from?  Do you think the people of Spain and Italy will want the same deal Greece got?  I think the answer to my question: “Is the EU Sovereign Debt Problem Really Fixed?” is NO WAY!  They just kicked the can down the road a little further.  Enjoy the nice bump in stocks today!

Here’s some more on this complicated hair ball of a deal from the Guardian UK:  “Senior EU officials rushed on Thursday to prevent the early morning summit deal to resolve the sovereign debt crisis in the eurozone from unravelling.

 They insisted that the agreement was “uniformly superior” to the one reached in July. However investors and analysts immediately feared a repeat of an early “sugar rush” followed by swift sobriety as details of the deal were unpicked.   

Efforts by the officials to brief reporters on the substance of the accord – especially the “haircuts” on private holdings of Greek debt but also the beefed-up bailout fund, the European Financial Stability Facility – met derisive laughter at times as the lack of detail emerged. 

This was mirrored elsewhere as economists picked holes in the so-called comprehensive settlement. 

The EU officials conceded the package was, in effect, a structure or box and the contents were yet to be clearly defined. They have a few weeks of negotiations to come up with a fully-fledged deal and a swap of Greek bonds early in the new year. 

Private creditors hold around €210bn (£185bn) of a Greek debt that totals €360bn. Under the proposed deal they will voluntarily accept a 50% cut in the face value of their bonds to around €100bn – or 47% of Greek GDP of €232bn. The 21 July deal involved a 21% cut in the “net present value” of the bonds.”  (Click here for the complete UK story.) 

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  1. Art Barnes

    Greg, this is a joke, the people of Europe will be poorer because of it, and if I was a betting person I would bet our old Fed will print some money as well and send it to little old England & Germany; which the American people will pay for in inflation. The insiders on wall street knew this was coming and went long on oil, etc. for a short run of profits. Same old game, no new players, rich getting richer, poor getting poorer, the middle class getting screwed; as usual. Class warfare you might say, I say its simply survival of the people who made the elite.

  2. Bob-bob-bob

    I wouldn’t buy European bonds with my worst enemy’s money . Heck for that matter any bonds . If you want to double your money , FOLD IT and put it back in your pocket !!

    • Greg

      I totally agree!!!

    • sky

      Bank of international settlements basel Switzerland is the most powerful bank in the world it is owned by the corrupt FED,bank of england[rothschilds] bank of italy,bank of canada,swiss national bank,nedelandsch bank,bundes bank,bank of france,The U.S. Federal Reserve took shares in BIS in 1994.The 10 trillion club of isles.funded by the rothschilds,they funded George Soros Quantom fund.Soros was a major shareholder of George W Bush Harken Energy. US needs to withdraw from BIS,WTO,IMF.

  3. MasterLuke

    I think this is a great example of modern countries becoming servants to more powerful countries. I mean look at a country like Greece where the economy is based on tourism. It makes sense for them to have debt problems. Greece is now subject to the more established powers of the EU. They are now a vassal state.

    • Greg

      You are on-target Master luke!!!

  4. Brad

    Bump in stocks today is spot on Greg!

    • Greg

      Thanks Brad.

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