Friday, March 09, 2012

Please adjust your spellcheckers

There are few certainties in life and one of them – as far as Greece is concerned – is not taxes. On the other hand, one thing that was certain was that the life-and-death bond swap was going to pan out.

The investors will run it to the edge and then cave in, we said. Up to press, that is precisely what it looks to be. According to the Financial Times late yesterday evening, investors holding more than three-quarters of Greece's [qualifying] private debt had agreed to participate in the swap, in what The Age calls a "success".

Then, according to the WSJ, a Greek TV station cited sources claiming more than 90 percent participation. That report has yet to be verified and Bloomberg reports a swap level of 85 percent. It currently says that "preliminary indications" showed "as much as €155 billion ($205 billion) of the 177 billion euros of Greek-law bonds were offered". Reuters now says Greece has averted the "immediate risk" of default (below).

In this, there is another certainty. This deal has been rigged. Ambrose cites said Marc Ostwald from Monument Securities. He says, "The rule of law has been treated with contempt," adding: "This will lead to litigation for the next ten years. It has become a massive impediment for long-term investors, and people will now be very wary about Portugal".

Guessing (or even discovering) how is going to provide hours of harmless entertainment for those who have the wit and understanding to fiddle about under the bonnet, and examine the inner workings of the machine. It will also provide lucrative employment for innumerable lawyers.

To have predicted the outcome though, all we needed to do was listen and watch very carefully. Had we been so doing, we would have seen that the script had been written last July. The fact of the matter is that is not Greece's time yet.

It will come in good time, but today the crisis will be parked. Tomorrow, of course, is another day – but we don't have crises on Saturdays if we can help it. Monday, a new word can enter the lexicon - "redefault". Adjust your spellcheckers now.