Courtesy of Mish.
Proposal to Screw European Taxpayers
You never know who’s reading your blog, until you receive emails. I received a pair of them this week from Father Joseph Fessio, S.J., Founder and Editor of Ignatius Press.
While I am quite certain we disagree on many issues, Father Fessio is dead on accurate in his analysis of the New York Times DealBook article A Bold Proposal to Offer Greece Some Financial Relief.
The DealBook article was written by written by Landon Thomas Jr.
Thomas trumps up a plan written by Mitu Gulati and Lee C. Buchheit, two debt lawyers who played a central role in the restructuring of Greece’s debt in 2012.
The Proposal
A few snips from DealBook shows the master plan to be nothing but a gift to hedge funds and vultures at the expense of eurozone taxpayers and Greece.
European governments do not want to lend Greece any more money, nor do they want to have their debts written down, Mr. Gulati said. So the trick, he argued, is devising a mechanism that can persuade private sector investors to pick up the slack.
They say, private-sector bond investors should be granted a powerful incentive to load up on risky Greek debt by being awarded seniority over public sector debt holders.
That means these nongovernment lenders would jump to the head of the line of creditors in terms of who gets paid first if, in the future, Greece does not have enough money to pay all of its lenders.
“This is not a substitute for debt relief,” Mr. Buchheit said. Nor, he added, should it be seen as a way for Greece to escape the tough reforms it needs to put in place to make the economy more functional and efficient.
Father Fessio Analysis
Father Fessio writes …. …
