Authorities in Athens are ready to enforce the controversial collective action clauses, or CACs, to impose the restructuring deal on all bondholders as the number of voluntary agreements look set to fall short of the required amount.
Credit rating agencies have warned they will declare Athens to be in default if the CACs are triggered which would be a dramatic culmination to a three-year rollercoaster ride for Athens, the eurozone and global markets.
While the markets have been ready for a Greek default for months, the move could leave Greece and its banks barred from funding from the European Central Bank (ECB). On Monday, Standard & Poor’s declared Greece to be in a state of “selective default” which led to the ECB announcing it would no longer accept Greek government bonds as security for new loans.
The rating agency said its decision had been prompted by the threat of the CACs and the actual use of them is likely to tip Greece into actual default. The agency said it regarded the process as a “distressed debt restructuring”.
Raoul Ruparel of Open Europe, the London-based think-tank, said: “Greece is likely to struggle to reach the targets for a voluntary agreement so the credit rating agencies are almost certainly going to see this as a default. Read the rest of the article AT THIS LINK
My original post is below and here is an update from the respected British Daily Telegraph financial pages. Of course the trillion+ Euro printed money ECB loans to European banks may prevent the Greek led collapse, which has been widely expected. Further Greece may limit the damage by calling on the ECB's "Emergency Liquidity Assistance Fund" but how long can that shell game be kept going-piling debt upon debt.-We shall see if the great Ponzi scheme has legs in a week or so.
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In a post entitled AT THIS LINK "The Greek Bailout, the CDS Market, and the End of the World" at my favorite doom and gloom site AT THIS LINK "The Market Oracle" Shah Gilani advises that March 20th may be the tipping point.
The core of his article explains that Greece has to come up with the goods on March 20th and it doesn't have them. A white knight could of course come in and toss Greece more money (the ECB? China?) but surely a time must come, if it is not this time, that even the bottomless pit of printed money, which is just piling debt upon debt for Greece, must come to an end. perhaps the 20th is the end game.
In another post "DeepCaster" AT THIS LINK discusses the ramifications for the USA's economy from all this money printing in suitable Market Oracle end of the world analysis with a suitable headline "Gaining from Gargantua Until it Collapses. Basically "buy gold" is his answer.
Certainly it has been the right answer over the last two years and, whilst one can poke fun at the doomsters one has to ask the question-how long can Bernanke keep churning out endless credit and creating endless debt. DeepCaster asks some interest in questions and displays some frightening facts.
Here is Shah Gilani's main comment-lets hope he is wrong.
"Here's the long and short of it.
Greece needs to make a 14 billion euro ($19 billion) payment on its huge outstanding debt on March 20, 2012.
The problem is Greece doesn't have the money, even after the previous 100 billion plus euro bailout.
If it doesn't make the payment it will be in default and all hell will break loose.
That means banks that hold Greek bonds won't get all their money back and they will have to write down Greek debts to zero.
That will trigger contagion as other countries in Europe will be seen as vulnerable to default too, and as panic in Europe grows from depositors trying to get their money out of insolvent banks, the spillover will infect world markets.
That's the case for contagion."
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