When I was a kid, I played this game in the alleys and on the streets of the Southside of Chicago. The Greeks have taken up this game in search of a solution to ameliorate their fiscal woes. They have forced most of their lenders (bond holders) to swap their bonds for new securities worth half the value of the originals. It was imperative that they were able to pull off this confiscatory debt swap so that the ECB (European Central Bank), the EU (European Union), and the IMF (we taxpayers are major participants), would loan them even more money.
To quote Thomas Donlan in Saturday's Barron's: "Greece is defaulting so that it won't have to default. It is reducing debt by borrowing. The Greeks are avoiding solvency by acknowledging that their country is insolvent, and daring the world to call them on it. They can only cover their debts by convincing their lenders not to demand payment". Obviously, this deal fixes nothing!
After Greece, who is next? When it is our turn, will there be cans to kick or will we just swap our greenbacks for say bluebacks? And if we are lucky, we might save half the value. What are we doing? Who are we kidding?
Ray Zimmerman
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