"Just about 48 hours after it was duly noted as the greatest threat to the
Eurozone in the post bailout world, Germany finally grasps the enormity of what
global moral hazard truly means. As we said before, the
biggest risk facing Europe, and by that we mean undercapitlized French banks
(all of them) obviously, is not Greece or what haircut is
applied to the meaningless €100 billion in Greek debt when all the exclusions
are accounted for. It is what happens when everyone else
understands they now have a carte blanche to pull a Greece at will. And
while until now we had some glimmer of hope there was a behind the scenes
agreement for this glaringly obvious deterioration to not manifest itself,
Merkel just opened her mouth and proved our worst fears wrong. As Reuters reports,
"Chancellor Angela Merkel said on Friday it was important to prevent others from
seeking debt reductions after European Union leaders struck a deal with private
banks to accept a nominal 50 percent cut on their Greek government debt
holdings. "In Europe it must be prevented that others come seeking a
haircut," she said." Too late, Angie, far, far too late. Because, just
as expected, here comes Ireland and literally a few hours ago, launched the
first warning shot that will imminently lead to what will be demands to pari
passu treatment with Greece. Next up: Portugal, Spain, and, of course,
Italy, which however won't be faking its own economic slow down..."
at http://www.zerohedge.com/news/global-moral-hazard-dawns-merkel-says-it-must-be-prevented-others-come-seeking-haircut-ireland-
at http://www.zerohedge.com/news/global-moral-hazard-dawns-merkel-says-it-must-be-prevented-others-come-seeking-haircut-ireland-
