I was quite disappointed on Friday when I read German Chancellor Andrea Merkel was capitulating on her stance essentially that for any deal with Greece to go through, bondholders i.e. investors had to agree to take some losses. I thought it especially sad to see Germany give in to France and the ECB so embarrassingly when it was German taxpayers who would be paying among the brunt of the Greek bailout.
The soulless American investors were happy at Merkel's weakness- stocks went up about 50 points on Friday.
Then I read something today, that hopefully if true will be a game changer... Always hard to tell how important this story will be, but one can always 'hope'
From AFP: Germany 'dismisses Greek debt compromise plan' -- "A German compromise plan to resolve a dispute with the European Central Bank over the Greek rescue... is no longer on the table, a government source said Sunday.
German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed Friday to a plan through which private bondholders could volunteer to buy new government bonds to replace ones that matured. This "rollover" option was favored by the ECB and France, since it avoids the risk of rating agencies declaring Athens in default. Germany had previously called for full-scale debt restructuring but Merkel appeared to back down after the meeting with Sarkozy."
The reason France and the ECB wanted the 'rollover' to be voluntary so that it did not trigger what would technically amount to default which would rattle the markets and force many European and US banks to openly admit they were as insolvent today as they were in late 2008.
Who knows if this little news story will develop into something important or just end up being another teaser news 'blip'. I do know it is sad to see Greece trapped by its corrupt leadership. It desperately needs to fight back i.e. default and break free from the euro so it can eventually repair its economy independently.
And the banks must eventually take losses-- they can not escape their destiny forever. They made terrible deals- they got burnt badly via derivatives, speculation and every other form of financial greed that corporations engage in-- There must come a time they take their punishment. No such thing as 'too big to fail'
And investors Must get hurt financially.. Can't state it any blunter. Can't keep this casino economy going on forever where if Investors profit, keep the money but if they lose their shirts, then the House gives all your losses back so they can invest some more. Has to stop at some point.
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