Laugh of the Day: "Greece Bond Swap Progressing Well"

Eurozone news reporting is increasingly humorous. Take for instance this line of thought from Papandreou says to save Greece, stay in euro

I will stop at the punchline. See If you can figure it out.

Finance Minister Evangelos Venizelos said earlier Greece may even take additional fiscal measures in 2011 to make up for budget deficit slippage that threatens the disbursement of an 8 billion euro EU/IMF loan tranche.

Venizelos pledged to further cut the civil service payroll, push privatizations and deepen labor market reforms.

A G7 source said the troika (EU/IMF/ECB), which suspended talks with Athens last week in frustration at Greece's struggle to stick to its deficit reduction plan, would probably come up with a form of words in its next report to allow the next tranche of bailout funds to be paid.

But the working assumption is that Greece will not avoid default indefinitely.

However, a bond swap plan for private bondholders, which is part of the second bailout plan and is supposed to ease Greece's debt payments was progressing well, Venizelos said.

"The private sector is responding very well to the PSI (private sector involvement)," he said, without elaborating, one day after an initial deadline for banks to express interest in the scheme expired.

Did You Catch It?

I suspect most did not catch the humor given it was extremely subtle.

Of course the PSI proposal is going well. The PSI stipulates a 21% haircut on bonds. Meanwhile, more reasonable haircut estimates range from 50 to 90%.

Anyone not willing to take a "voluntary" haircut of 21% is out of their mind. That the offering is going well is a sign of weakness, not strength.

Papandreou said he would cancel the deal unless there was 90% participation. What a joke.

Any bondholder turning down the offer should be fired for stupidity. Then again, they should have been fired long ago for buying Greek bonds in the first place.

I am pleased mainstream media cannot figure these things out because it presents an endless stream of things to write about.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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