Of most interest this weekend was the FT's reportage of the Greek bailout negotiations. Apparently it is the position of the EU that Greece will effectively become a ward of the state, with the international community involvement in tax collections, the privatisation of state assets, and negotiations with bond holders. Call me old fashioned, but when the Greeks can't even agree on modest austerity measures and take to the streets with Molotov cocktails, I doubt they will accept wide-scale meddling in their sovereign affairs.
What is emerging, despite the ongoing rhetoric of restructuring, is that the bailout will come in the form of new loans. This from Calculated Risk:
Lorenzo Bini Smaghi, an ECB executive board member told the Financial Times in an interview that a Greek "soft" restructuring is a "fairy tale". Here is quote:I think that the EU is finally beginning to lose the PR battle on sovereign debt.
LBS: There is no such thing as an “orderly” debt restructuring in the current circumstances. It would be a mess. And I haven’t mentioned contagion – which would come on top.
If you look at financial markets, every time there is mention of word like restructuring or “soft restructuring,” they go crazy ... “soft restructurings” “re-profilings” do not exist. They are catchwords that politicians have tried to use, but without any content.