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A few years ago Wall Street banking major Goldman Sachs sold a dud to Greece pulling it into a disastrous debt trap by helping it borrow on a restructured balance sheet while it earned hefty fees for allowing it to hide its true exposure. Now the consortium of Global Banks under the Institute Of International Finance has sold Greece a bigger dud in the fine print of the tripartite agreement with Greece and (EFSF) European Financial Stability Facility the euro zone bail out fund as per Reuters analyst Hugo Dixon.
As per the agreement the IIF plans to contribute 54 billion Euros to Greece funding needs for the next three years and a further 81 billion Euros for the next five years, a total of 135 billion Euros to swap its current day bonds or debt liability. The swapping involves a haircut of 20% on bonds by the investors which is supposed to be the private sector contribution to the cause of Greece debt restructuring. The real trick in this sweet deal is in the fine print which ensures that the Banks will get back Greek to invest heavily in collateral's.
The funding as per the fine print will be conditional to a whopping $30 billion Euro debt default guarantee furnished by Greece of AAA zero coupon bonds as a collateral. An impossibly big deal for a nation that was defaulting on interest payments of less than 10 billion Euros as it had run out of cash. The net outlay for Greece to finance this 30year bonds of 30 billion Euros will be around 42 billion Euros, a money which Greece does not have. So ultimately Greece will have a bigger debt burden and IIF will go laughing all the way to the banks after this costly restructuring exercise financed by tax payers across Europe that has been reduced to a sham by the clever Banks.
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A few years ago Wall Street banking major Goldman Sachs sold a dud to Greece pulling it into a disastrous debt trap by helping it borrow on a restructured balance sheet while it earned hefty fees for allowing it to hide its true exposure. Now the consortium of Global Banks under the Institute Of International Finance has sold Greece a bigger dud in the fine print of the tripartite agreement with Greece and (EFSF) European Financial Stability Facility the euro zone bail out fund as per Reuters analyst Hugo Dixon.
As per the agreement the IIF plans to contribute 54 billion Euros to Greece funding needs for the next three years and a further 81 billion Euros for the next five years, a total of 135 billion Euros to swap its current day bonds or debt liability. The swapping involves a haircut of 20% on bonds by the investors which is supposed to be the private sector contribution to the cause of Greece debt restructuring. The real trick in this sweet deal is in the fine print which ensures that the Banks will get back Greek to invest heavily in collateral's.
The funding as per the fine print will be conditional to a whopping $30 billion Euro debt default guarantee furnished by Greece of AAA zero coupon bonds as a collateral. An impossibly big deal for a nation that was defaulting on interest payments of less than 10 billion Euros as it had run out of cash. The net outlay for Greece to finance this 30year bonds of 30 billion Euros will be around 42 billion Euros, a money which Greece does not have. So ultimately Greece will have a bigger debt burden and IIF will go laughing all the way to the banks after this costly restructuring exercise financed by tax payers across Europe that has been reduced to a sham by the clever Banks.
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