Is the Euro well and truly buggered?

All this puts a new light on the rather strange slow dance of the EU powers around the question of a Greek "rescue fund". I have long since come to the obvious conclusion that it is really a stabilization fund for French and German banks with significant exposure to Greek bonds.

" Once the Eurogroup and the IMF’s Executive Board have approved the conclusions of the fifth review, the next tranche of EUR 8 billion (EUR 5.8 billion by the euro area Member States, and EUR 2.2 billion by the IMF) will become available, most likely, in early November."
---------------------------------------------------------------------------------

Translation: We still can’t confirm when or actually if (do note the strategic use of commas around “most likely” – Ed.) Greece will get more cash. Maybe early next month if no one throws their toys out of the pram. Tune in next time — , same place, same failure, same old jargon covering it up!

Slovakia's government lost a confidence vote Tuesday called on a plan to bolster the euro zone's EFSF rescue fund, but the package was expected to go through in a later re-vote because the outgoing prime minister planned to ask for help from the opposition.

The result had been anticipated after a junior party in the coalition said it would abstain. All of the 16 other eurozone countries have already ratified the plan to give more powers to the European Financial Stability Facility.

Slovakia's main opposition party, the leftist Smer, has said it would be willing to discuss supporting the EFSF deal after the government fell. Source

I wonder why under Adjusting PSI parameters, the Euro taxpayer will show no loss?

...... When we did NATO air combat exercises with them off the carriers in the Eastern Mediterranean, we always had to rig the rules so it appeared they won- otherwise they would get in a snit and go home.

PSI is code for "banks, pension funds, other private sector holders of Greek bonds" are going to take a major hit (about 60% haircut) leaving the ECB, EU, IMF (aka the taxpayers) who also hold Greek bonds able to claim that their own Greek bonds really are worth 100% of face value and will pay interest.

My advice, Minister, is that you:

• Disregard any debt sustainability analysis that assigns a greater than 50%
probability to the occurrence of the Second Coming of Christ before the next
bond maturity.

• While avoiding unrealistic optimism, do not careen to the other extreme of
soul-destroying despair. A request for financial assistance addressed to the
Executive Board of the IMF should not begin with the sentence, “The last
camel died at noon”. Panic is as infectious as yawning. So, however, is a sense
of composure and control.

• Once it becomes clear that the debt stock must be addressed, get on with it.
Creditors may not like the prospect of having to write off a portion of their
claims or defer repayment dates, but they positively loathe prolonged periods of
indecision and dithering. Efficiency, discipline and fairness, even in carrying out
a disagreeable task, will be remembered by markets long after the financial pain
of a sovereign debt restructuring has been forgotten.

“Some of the usual confusion coming out of Europe about the International Monetary Fund ‘demanding’ a particular haircut, i.e. percentage writedown, of private sector holdings of Greek sovereign debt. Leaving aside the fact that calculations of net present value reductions are an art more than a science, what I suspect is actually going on is this.

From the outset, the IMF hasn’t specified a level of private debt writedown – it has just said that the lower the writedown, the higher the level of official finance needed to fill the gap. And since IMF resources are limited, most of the official cash will have to come from Europe. This is illustrated by the table on page 7 of the troika debt sustainability report.

Mind you, is it just me that spotted some eerily familiar numbers there? The estimate for the official finance needed under the current scenario (with limited writedown), if the Greek economy does particularly badly, is €444.1bn, or just over the headline value of the European Financial Stability Facility. Meanwhile the official financing required with a 60 per cent writedown is €109.3bn – almost exactly the same as the original estimate under the current scenario, made back in July before things got worse.

In other words, eurozone people, if you want to keep the bailout size where it is, you need a 60 per cent writedown; if you want to keep the writedown where it is, you will spend the entire EFSF (which in any case in practice probably can’t raise €440bn) on it. In this case, you literally pays your money and you takes your choice.”