Stealing Internal Creditors to Pay External Creditors (ECB, IMF)?The ECB & the IMF won't participate in the Loss Agreement with Greece so they will receive 100% while other creditors - including Greek resident creditors - will take a 60% loss? wow! I wonder how will Greek Creditors remain still watching such a steal on their property. This is where UBS theory about civil war after Sovereign default should come into place. We'll see if it's somewhere down the road. The colonial power of France & Germany have dominated the Government and People of Greece! Greek Creditors are being Sheeps of Merkel and Sarkozy.

The Greeks are a bunch of "Pussies" by imposing losses on their own citizens so they can repay in full Merkel & Sarkozy.

Frankly, I don't understand why resident creditors should be favoured at all. They are the ones that most likely benefited from government spending created by the loans in the first place.Moreover, the IMF and ECB stepped in to save Greece. If a troubled debtor cannot offer senior terms to new creditors (which subordinate old creditors), it will never get any more credit at all.Imagine what would happen if the government of Greece could not borrow any more Euros (and had to repay each pre-existing debt as it came due with cash).

QuoteOriginally posted by: Traden4AlphaFrankly, I don't understand why resident creditors should be favoured at all. They are the ones that most likely benefited from government spending created by the loans in the first place.Moreover, the IMF and ECB stepped in to save Greece. If a troubled debtor cannot offer senior terms to new creditors (which subordinate old creditors), it will never get any more credit at all.Imagine what would happen if the government of Greece could not borrow any more Euros (and had to repay each pre-existing debt as it came due with cash).You cannot subordinate an existent senior creditor. Imagine what would happen if laws and contracts don't matter any more. It's a declaration of civil war to people who are being oppressed by the Government. Existent Creditors never want preferred creditors to step in so they are much better with immediate default. Otherwise they have to accept the steal or go to court. Civil war is another choice if they get enough supporters do it.Why were foreigners buying sovereign debt of a country where they don't pay taxes? It's a financial investment. If you buy Sovereign bonds on your country, and if it defaults on you then my friend that's pure Oppression of a medieval-type of Government! Imagine the US Government defaulting in your Treasury note but still charging you Taxes! .!.

QuoteOriginally posted by: Traden4AlphaFrankly, I don't understand why resident creditors should be favoured at all. They are the ones that most likely benefited from government spending created by the loans in the first place.You are partially right, partially wrong. Most of the resident creditors are institutional investors, banks, insurance firms, pension funds etc. Individuals and companies should have more than 1 million in cash to access directly this market, but most of them used to invest from a foreign entity, in order to avoid a 10% interest tax. With various rules and regulations they were sort of obliged to acquire GGB. Local banks have already got 100 billion bailout pack, which adds up on public debt. More to come after haircut. People's pensions are "guaranteed by government". A haircut now means regular cash injections, that is government deficits, in the future. I guess there are similar rules for other EU pension funds. Consequently, an indiscriminate haircut may create more problems than it solves. Of course shit happens, and is quite predictable, when former communists who discovered capitalism in their 40s rule major EU economies.

QuoteOriginally posted by: BullBearImagine the US Government defaulting in your Treasury note but still charging you Taxes! .!.As long as the President is tall with thick hair - as long he has great "energy" and a nice smile - the female 50% of the voters will be ecstatic.

QuoteOriginally posted by: AnthisQuoteOriginally posted by: Traden4AlphaFrankly, I don't understand why resident creditors should be favoured at all. They are the ones that most likely benefited from government spending created by the loans in the first place.You are partially right, partially wrong. Most of the resident creditors are institutional investors, banks, insurance firms, pension funds etc. Individuals and companies should have more than 1 million in cash to access directly this market, but most of them used to invest from a foreign entity, in order to avoid a 10% interest tax. With various rules and regulations they were sort of obliged to acquire GGB. Local banks have already got 100 billion bailout pack, which adds up on public debt. More to come after haircut. People's pensions are "guaranteed by government". A haircut now means regular cash injections, that is government deficits, in the future. I guess there are similar rules for other EU pension funds. Consequently, an indiscriminate haircut may create more problems than it solves. Of course shit happens, and is quite predictable, when former communists who discovered capitalism in their 40s rule major EU economies.Interesting. It sounds like many of the most socially-important domestic holders of GGB (pensioners and depositors) will have their haircuts covered for them by future government bailouts or spending.You are right, though, that the promises made by the Greek government (to citizens, employees, and creditors) exceeds what the Greek economy can produce. Personally, I fear that too few people see the broader systems connections -- they think banks and governments have money when, in fact, they have balanced sets of assets-and-liabilities, revenues-and-expenditures.

QuoteOriginally posted by: BullBearQuoteOriginally posted by: Traden4AlphaFrankly, I don't understand why resident creditors should be favoured at all. They are the ones that most likely benefited from government spending created by the loans in the first place.Moreover, the IMF and ECB stepped in to save Greece. If a troubled debtor cannot offer senior terms to new creditors (which subordinate old creditors), it will never get any more credit at all.Imagine what would happen if the government of Greece could not borrow any more Euros (and had to repay each pre-existing debt as it came due with cash).You cannot subordinate an existent senior creditor. Imagine what would happen if laws and contracts don't matter any more. It's a declaration of civil war to people who are being oppressed by the Government. Existent Creditors never want preferred creditors to step in so they are much better with immediate default. Otherwise they have to accept the steal or go to court. Civil war is another choice if they get enough supporters do it.There are at least two cases in which one can legally subordinate senior debt: 1) if the debtors voluntarily agree to a restructuring (this is what Greece is doing) or 2) if a bankruptcy judge agrees to debtor-in-possession financing (this is what Greece wants to avoid).QuoteOriginally posted by: BullBearWhy were foreigners buying sovereign debt of a country where they don't pay taxes? It's a financial investment. If you buy Sovereign bonds on your country, and if it defaults on you then my friend that's pure Oppression of a medieval-type of Government! Imagine the US Government defaulting in your Treasury note but still charging you Taxes! .!.Domestic holders of sovereign debt have a choice: A) lose some money on default on their sovereign bonds + pay some taxes; or B) have full repayment of their sovereign bonds + pay crushing increases in taxes to repay everyone's sovereign bonds. Depending on one's exposure to sovereign debt and one's tax bracket, a domestic debt holder might lose far less money under scenario A. Foreign holders of sovereign debt will always pick B because they don't personally bear the costs of repayment.