The Greek Clusterfuck Negotiations

Despite the hype form some sections of the ill informed media and from the EU, that the Greek deal on haircuts was almost in the bag, reality has hit the fan.

Eurozone finance ministers have rejected the current offer from bondholders, and have "demanded" that negotiations between the Greek government and Institute of International Finance (IIF) reach agreement on a lower average coupon.

Lovely!

The EU seems to be under the impression that it has some control over this and that, like Canute, it can somehow control elemental forces (in this particular case, the markets and economic reality).

The EU ministers want a lower rate than the 4% currently being demanded by the bondholders.

Ain't going to happen without enforcement (ie a default).

Negotiations are turning into a clusterfuck!

There will be no deal.

Advice To Greek Politicians - Read The Small Print!

ekathimerini.com reports that a Greek cabinet minister didn't read the loan agreement with the EU in 2010.

"Development Minister Michalis Chrysochoidis, who has declared he intends to challenge for the PASOK leadership, said on Tuesday that when he was part of the Cabinet in 2010 he did not read the terms of Greece's loan agreement with the European Union and the International Monetary Fund."

Does it really matter if you don't read these agreements?

Well, the bondholders seem to think so.

Reuters reports:

"Hedge funds are combingthrough the small print of Greece's planned rescue deal withprivate creditors, readying a wave of potential litigation tosqueeze a better payout from the country."

Well then, you sow what you reap!

Greece To Be In "Selective Default"

Reuters reports that Standard & Poor's will likely downgrade Greece's ratings to "selective default" when (substitute "if" for "when") Greece concludes its debt restructuring.

Hedge Funds Have The Edge

Bill Gross, who runs the world sbiggest bond fund at Pacific Investment Management Co (Pimco), has tweeted that hedge funds appear to be controlling the fate of Greece and beyond.

Quote:

"PIMCO PIMCO
Gross: Hedge funds appear to control the fate of #Greece endash by extension Euroland endash by extensionö85??"

George Soros Speaks

George Soros is making an opening speech at the Davos summit.

Faisal Islam s him:

"outlook is truly dismal. EU.. is undemocratic to the point where the electorate is disaffected and ungovernable."

That dear readers is why, in a nutshell, the Euro will fail!

Rats Leaving The Sinking Ship

Unsurprisingly, given the failure to reach a deal on the Greek haircut, and the abrogation by the Greek government of responsibility for talking with bondholders (the Greeks have passed the buck to the Troika), hedge funds are now scrambling of offload Greek debt.

The New York Times reports:

"Hedge funds that in the past month or so have purchased an estimated 4 billion euros, or $5.2 billion, of beaten down Greek bonds that mature on March 20 are now trying to unload their positions, according to brokers and traders.

That is because it is becoming clear to one and all that Greece emdash under pressure from its financial backers emdash is preparing to impose a broad-based haircut that would hit all investors with a loss of 50 percent or more, whether they agree to the deal or not."

Meanwhile, private boindholders are meeting in Paris to determine their next course of action.

The ship is sinking fast, and not all the rats will escape in time!