"As we write, it appears that more than 75% of the holders of privately held Greek bonds have accepted the deal to exchange old bonds for new, and that the eventual acceptance rate could go over 90%. For the U.S. stock market, this may take the Greek situation off the table temporarily, allowing investors to turn their attention, instead, to the rapidly declining EU economy, continuing sub-par growth in the U.S. and the gathering global slowdown.
The Greek government will announce the final tally at 1:00 AM Eastern Standard Time Friday. At that time it probably will activate the clause that enables them to force all holdouts to accept the deal. Under the terms of the agreement holders will accept a cut of 53.5% in face value of the old bonds as well as a sharply lower interest rate. The goal is to reduce Greek debt from the current 165% of GDP to 120% by 2020.
The action does not mean that we’ve seen an end to the turmoil. The Greek economy has been in recession for five years and the current unemployment rate is over 20%. The required severe austerity measures make it almost certain that the Greek economy will continue to contract and that the budget deficit could get even worse, threatening the nation’s ability to meet payments even on the reduced amount of debt. Already, the new bonds to be issued are selling at huge discounts to face value on the so-called gray market, meaning that the chances of another default are high. We also note that elections are coming up soon that could result in new leadership inclined to pander to an upset public facing higher unemployment, lower wages and cuts in pensions..."
at http://pragcap.com/is-chinas-inverted-yield-curve-sending-a-warning
The Greek government will announce the final tally at 1:00 AM Eastern Standard Time Friday. At that time it probably will activate the clause that enables them to force all holdouts to accept the deal. Under the terms of the agreement holders will accept a cut of 53.5% in face value of the old bonds as well as a sharply lower interest rate. The goal is to reduce Greek debt from the current 165% of GDP to 120% by 2020.
The action does not mean that we’ve seen an end to the turmoil. The Greek economy has been in recession for five years and the current unemployment rate is over 20%. The required severe austerity measures make it almost certain that the Greek economy will continue to contract and that the budget deficit could get even worse, threatening the nation’s ability to meet payments even on the reduced amount of debt. Already, the new bonds to be issued are selling at huge discounts to face value on the so-called gray market, meaning that the chances of another default are high. We also note that elections are coming up soon that could result in new leadership inclined to pander to an upset public facing higher unemployment, lower wages and cuts in pensions..."
at http://pragcap.com/is-chinas-inverted-yield-curve-sending-a-warning
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