Like other Europe-focused strategists, William Porter at Credit Suisse has had some fun scrolling through the IMF’s mea culpa on Greece.
He notes that the IMF now admits that its actions were affected by a fear of market contagion, a misunderstanding of how to do a restructuring within a currency union and, most importantly perhaps, a dysfunctional dynamic within the Troika itself. Read more
Click for the IMF’s “ex post evaluation” of its role in the Greek bailout. Its mea culpa.
And if you thought we were being harsh here, parts of the real thing are excoriating.
This is even though the report decides Greece’s exceptional access to IMF lending was justified (generally), and it still says much fiscal adjustment could not be avoided. Policies were “broadly correct”. But it does strongly suggest that debt restructuring should have come sooner.
So, the International Monetary Fund (effectively) wishes to apologise to all concerned for that little thing where it turned into Dominique Strauss-Kahn’s presidential election campaign a few years back.
Sorry if a country got broken along the way: Read more
Just when we thought we’d dreamed Monday’s news of this.
The mysterious folks at Japonica Partners have come out with their full “tender offer” to buy up almost 10 per cent (€2.9bn) of Greece’s restructured bonds: Read more
Spotted on Tuesday… the pari passu saga that started in the US courts crosses another border. Belgium:
Well, the apparent uselessness of Finland’s Greek ‘collateral’ is all very embarrassing, and it’s also terribly public by this point. But surely there can’t be that much backlash over this rather arcane derivatives transaction.
Ah, hold on. Read more
We are not quite sure what is going on here.
Japonica Partners, a self-styled “entrepreneurial co-investment firm” based in Providence, Rhode Island, has launched a tender offer for almost 10 per cent of all Greek government bonds in circulation.
It’s ready to buy paper worth €2.9bn at par, paying a minimum of 45 per cent of face value. Read more
Somehow — was it the ludicrous secrecy, maybe? — you could tell this was coming.
On Wednesday, Jan Hurri at Taloussanomat took advantage of the Finnish government’s recent doc dump in order to reach a conclusion about its deal for ‘collateral’ on Greek bailout loans: Read more
Carmen Reinhart and Ken Rogoff wrote a letter to Paul Krugman.
He responded, and so did some others. (DeLong for Krugman; Hamilton for R&R.)
On it goes.
And why not? Austerity is an important subject, the empirical data or lack of it deserves a great deal of attention. Economists calling each other names, probably less so. But it’s so entertaining… Read more
UPDATE (Friday) – Judge Griesa said he won’t comment on Citibank’s request, at least until the Second Circuit’s final ruling on objections to the form of his order:
Citibank asserts that it needs clarification as to its obligations in the event that the Court of Appeals affirms the District Court’s November 21,2012 rulings. The District Court declines to make any further comment on matters now before the Court of Appeals. What further ruling or action is required from the District Court will obviously depend on the holding from the Court of Appeals. No more can be said at this time.
Now back to Thursday’s original post for the stakes involved…
Hat-tip to Bloomberg — it looks like we have a new entrant in the pari passu saga.
Technically it’s Citibank’s Argentine branch. They’ve made a slightly curious request for ‘clarification’ of Judge Griesa’s order last November for Argentina to pay bond holdouts alongside other, restructured creditors. (Payments just to the latter could be seized, and ultimately launch Argentina into a sovereign default… just to catch you up.) Read more
From historical chart specialists Global Financial Data — the yield on perpetual Consols versus the stock of UK sovereign debt…all the way back to 1742. Click to view… Read more
Quite a lot to ponder really. Members of the IMF’s executive board were set to meet on Wednesday to discuss whether to approve lending to Cyprus, more or less behind closed doors.
But maybe not so much this time. It looks like Stockwatch in Cyprus has obtained a copy of the members’ comments on the Cypriot bailout — a rather high-level internal document to find its way to the public… and it makes for fascinating reading. Read more
Abuse of official secrecy. It’s been one of the more corrosive but — by definition — shadier aspects of the eurozone crisis.
It can take the form of a report on money-laundering in Cyprus. Or the opaque process by which Troika debt sustainability analyses are drawn up. Emergency liquidity assistance to banks, even. Read more
Alternatively, what price to taxpayers for political pride.
Spotted in HM Treasury’s collection of responses to the idea of letting Scotland issue its own bonds later this decade — a… wide range of guesses about how they might be priced: Read more
Well, this was fun while it lasted. Now what did it mean?
Click to enlarge the document capping a weird week in the pari passu saga:
It’s an order from the Second Circuit on Thursday, denying an unusual request filed on Monday by the Italian retail investors who count themselves among Argentina’s holdouts.
Although looking back at it, was the unusual or just ahead of the curve? Read more
Nothing like taking the long view – such as this snapshot of Spanish, Portuguese and Italian 10 year paper, over 150 years. Click to enlarge
In the euro area the government debt to GDP ratio increased from 87.3% at the end of 2011 to 90.6% at the end of 2012, and in the EU27 from 82.5% to 85.3%.
Full eurostat stats here. Read more
With its latest submission in this Court, the Republic of Argentina continues its long and consistent pattern of defaulting on its contractual obligations, defying the laws of the United States (which its contracts expressly invoked), and showing contempt for the courts to whose jurisdiction it unreservedly submitted. The government of Argentina plainly believes the rule of law does not apply to it…
Guess that’s a no, then. Read more
File under: Argentina’s battle with its holdouts and the effects thereof on pari passu clauses in sovereign bond contracts elsewhere in the world — with a special crossover to the changing legal status of official lenders in the eurozone crisis.
Spot the difference edition. Read more
Fresh off the US Supreme Court’s order list on Monday:
Please note the question-mark.
Our colleagues at FT Brussels Blog got their hands on the draft debt sustainability analysis for the Cyprus bailout and bail-in — click for the full doc: Read more
In continental Europe, we are witnessing the rather extreme outcome that results from having the provision of liquidity divorced from an ability to regulate banks…
– UBS analysts John Paul Crutchley and Alastair Ryan, 2009 Read more
As the pari passu saga in New York rattles towards its end… (or is it?)
The contest of wills and/or highly-paid lawyers between Elliott and Argentina goes on elsewhere, of course. Read more
Update (4 April) – The Second Circuit has ordered NML to respond to the Argentine proposal by April 22. Which is as expected but more time on the clock for the Republic.
______________________ Read more
In theory, there was no offer. “This is a proposal to judges, not an offer to vultures,” Argentina’s finance minister tweeted at the weekend.
For their part, the three judges of the US Second Circuit had ordered Argentina to tell them “how and when it proposes to make current those debt obligations on the original bonds that have gone unpaid over the last 11 years” (emphasis ours). It’s a last act in the battle that Argentina has been losing to stop restructured debt payments being linked to its defaulted bonds under the pari passu clause.
In practice, the 22-page letter that the government sent to the Second Circuit on Friday — containing “options” for holdouts to take payments “equitably and ratably” with bondholders who swallowed its 2010 debt restructuring, by getting restructured bonds in place of the original debt — pretty much was an offer.
And — it looks like — not one the judges can accept. Meanwhile, the market has panicked like wildebeest. Read more
Dromeus Capital. The name might ring a bell. It’s the fund which did its homework on underpriced Greek assets last year, making a killing.
Pretty striking, then, that they’ve now gone cautious on Greece. Read more
Guess it pretty much comes down to the alternative ‘formula’ for paying its holdouts which Argentina will be making to the Second Circuit at the end of this week, then.
The court on Thursday denied the government’s separate request to have its pari passu case reheard ‘en banc‘ — that being when a full court hears your case, instead of a panel of judges (which is usual): Read more
Monday morning’s Eurogroup statement on Cyprus. You’ll want the details in the Annex.
Famous last words and all, but it is hard to see the fear flowing from Cyprus to the average depositor in a Spanish or Italian bank. Not in the short term. As for Lehman II, well, come off it.
After all, that’s probably partly why this inequitable tax on small depositors across Cypriot banks could be put on the Eurogroup negotiating table on Friday. The systemic danger is absent. Read more
A couple of years back, when Carmen Reinhart and Belen Sbrancia updated the concept whereby governments might deal with a problematic mountain of debt by confiscating the savings of their subjects, the discussion was all about the subtle, sleight of hand solutions that might be employed.
Artificially cheap rates of interest might be forced on the embattled sovereign’s debt, local banks might be obliged to buy mis-priced government paper, exchange controls may be erected, and so on. Ordinary people, it seemed, could be financially repressed without realising they were in fact the victims.
There was no discussion back then of outright expropriation or a “tax”, as insured (and uninsured) depositors at Cypriot banks are now being forced to bear. Read more