Photo: New York TImes Syndicate
We’re back for another day of Greek drama.Just as a reminder, here’s what’s being discussed right now:
– Bondholder losses of 70 per cent ore more, with coupons that would increase from 3.6 per cent as the Greek economy grows in the future.
– ECB involvement in the debt restructuring, something that the bank has appeared to consider only recently and might be in opposition to its mandate. It holds about €50 billion ($65.6 billion) in Greek bonds that it purchased at a discount. Private sector investors are reportedly demanding this official sector involvement (OSI) as a precondition for the haircut deal.
– Austerity measures include a steep reduction in minimum wage and a 25 per cent drop in private sector labour costs. labour unions have unsurprisingly rejected this move, although Greek leaders apparently agree “in principle” on the deal.
– Long-term sustainability of Greek public debt. The current debt restructuring appears unlikely to deliver on this.