"Last week the French (banks and government) proposed a roll-over of Greek debt into new
bonds, some with maturities as long as 30 years. By Thursday German lenders, insurers and government agreed to join the plan, which would cover debts falling due from now until the end of 2014. As France and Germany are by far the largest Greek creditors, the world heaved a big sigh of relief as a Greek default was going to be avoided, at least temporarily. Stock markets around the world staged huge rallies. Armageddon had been avoided again.
The IMF welcomed the move to extend the resolution of the Greek debt crisis as a move that would allow for creation of conditions for sustained growth and employment. The default of debt coming due and the imposition of extreme austerity on Greece were feared would create a spiral into severe depression. In addition, the resulting stresses on the Eurozone financial system would have far reaching effects. From the
BBC:
The French plan is designed to make Greece's debtload more manageable in a way that would not be deemed a formal default.
If the deal is classified as a default by ratings agencies or credit derivatives traders, it could force European banks to recognise billions of euros in losses in Greek debts that they currently hold, putting their own solvency at risk..."
at
http://www.creditwritedowns.com/2011/07/sp-says-greek-plan-is-default.html?utm_source=feedblitz&utm_medium=FeedBlitzRss&utm_campaign=creditwritedowns
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