Source: Greek deal sees 70 pct loss for investors

[xchrom]

http://hosted.ap.org/dynamic/stories/E/EU_GREECE_FINANCIAL_CRISIS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-01-30-12-27-44

BRUSSELS (AP) -- A person familiar with the negotiations to slash Greece's massive debt says private creditors participating in the deal would face an overall loss on their bondholdings of around 70 percent.

Athens and representatives of banks and other investment funds holding Greek government bonds over the weekend came close to a final deal designed to make Greece's debt sustainable. That is a precondition for further bailout money for Greece from the eurozone and the International Monetary Fund.

The person said Monday that the 70 percent loss was produced by cutting the bonds' face value in half, reducing the average interest rate to less than 4 percent and pushing repayment of the bonds decades into the future.

The person spoke on condition of anonymity because the talks are confidential.

[Rex]

1. I will believe it when I read about it actually happening.

nt

[renate]

2. isn't that how investing works?

You make a profit when your investments do well because you also take the risk that they won't. I guess bonds are different from stocks, but presumably even bonds from the Greek government didn't come with a guarantee of profit--did they?

[mike_c]

3. that's part of the problem with our economy, IMO....

Profits for investors and huge compensation for executives have become expected, rather than risky. This has required savaging the middle class to keep the money pump flowing.

[exboyfil]

4. Typically you are allowed one bite at the default apple

So long as you don't plan to borrow any more money - so what.

On the other hand that level of right down should be viewed by investors as a default. How many will still be willing to loan Greece money in the future. Unless the other Euro countries will do out of the goodness of their hearts.

Those that refuse to participate?

[JDPriestly]

5. Those that refuse to participate?

No more Euro.

A much smaller Eurozone.

The end of a dream for many Europeans.

Economic chaos in the world.