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"These are the best ideas and none of them will happen. Europe’s political classes exist these days in a vise forged by desperate bankers and angry voters, no less in Germany and France than in Greece or Italy. Discourse is sealed off from fresh ideas and political survival depends on kicking cans down roads so that the fact that this is a banking crisis does not have to be faced. The fate of the weak is at best incidental. Thus every meeting of finance ministers and prime ministers yields treacherous half-measures and legal evasions.
"The latest example was the pretzel-logic that declared a 50 percent haircut on Greek debt to be “voluntary” so that it would not trigger default clauses on the CDS to which some American banks, in particular, might be exposed. When Timothy Geithner warned the Europeans of potential “catastrophe” last month one may reasonably infer he had this risk – and not the minor effect on our already disastrous jobs picture – in mind. But of course if the haircut can be declared voluntary, then CDS are not worth the storage space they occupy in bankers’ computers, and another prop to the rapidly failing market in sovereign debts falls to the ground."
Whole column...
http://www.salon.com/2011/11/10/the_...one/singleton/
"The latest example was the pretzel-logic that declared a 50 percent haircut on Greek debt to be “voluntary” so that it would not trigger default clauses on the CDS to which some American banks, in particular, might be exposed. When Timothy Geithner warned the Europeans of potential “catastrophe” last month one may reasonably infer he had this risk – and not the minor effect on our already disastrous jobs picture – in mind. But of course if the haircut can be declared voluntary, then CDS are not worth the storage space they occupy in bankers’ computers, and another prop to the rapidly failing market in sovereign debts falls to the ground."
Whole column...
http://www.salon.com/2011/11/10/the_...one/singleton/