Euro Area

[gaelic cowboy]

Unilaterally erasing your banks' debt is quite illegal per EU law. As the effects of that, or a default on sovereign debt for that matter, will dramatically affect financial institutions and pension funds in other countries it's not surprising that those other countries won't look kindly on such a move.

Bad investment strategies? Maybe. "We're defaulting on our debt. Don't like it? Then you shouldn't have invested in us in the first place. What were you thinking, lolz."

It's not just an abstract matter of "reduced confidence" but also a direct matter of reduced money supply when (other) banks have to write off a huge amount of assets. You could make the case that there should be a EU wide restructuring of debt, but that will disproportionately reward those countries who either made a mess out of it themselves or countries who enjoyed the benefits of large financial sectors for many years.



Fair enough. A sovereign default is not necessarily an armageddon, and restructuring/defaulting will actually make it easier to repay the remainder of the debt. But if a country defaults at a time when there's still actually hope that it could repay debt it sets a poor precedent.

You still don't get it even after all this time yer all still worried what others will think of the default. The high bond prices for Spain and Ireland are there as a result of a belief among lenders that sovereigns will deflate there economy because of the terms of the bailout. Ireland's bonds should be lower as we don't have to borrow money cos we have a bailout that means anyone with short term paper is guaranteed there money back, so why do they soar they go up because we require more and more to service an ever larger debt because of the bailout.

Spain is Ireland on steroids if ye all try the same trick again as ye did here the Euro will suffer it's biggest crisis yet and it wont have anything to do with Greece.


And honestly what financial institution would hold such paper when Merkels 2013 deadline for haircuts is coming up, this stuff has all been marked down or sold at a loss ages ago.

If you dont restructure the debt you will end up down here in the mud with us I suggest you mark it down and at least get something for it.