Mutually Assured Destruction Works Again

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How did EU leaders manage to convince the banks to take a big 50% haircut on their Greek debt last night?Basically, by threatening that if they didn’t, the whole of Europe (states and banks) would blow up.

From Bloomberg:

It was the fiercely delivered wish by Merkel, Sarkozy, Juncker, that if a voluntary agreement with the banks was not possible, we wouldn’t resist one second to move toward a scenario of the total insolvency of Greece,” Luxembourg Prime Minister Jean-Claude Juncker said.

That “would have cost states a lot of money and would have ruined the banks.”

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