Good morning. Are we starting to see some concrete steps being taken to solve the Greece crisis, albeit affecting the private investor? Well, euro zone officials seem to indicate so. They said that private investors of Greek debt may have to accept a \u2018haircut\u2019 (financial term for losses) of 30-50 per cent, rather than the earlier agreed 21 per cent, before Athens is offered the next tranche of bailout money. Now those of you who bought Greek bonds (including the bankers), stop cursing. Remember \u2018Something is better than nothing?\u2019 Well, it may seem like a cruel joke, but that\u2019s the buzz going around. However, the last word on the crisis is yet to be uttered.<\/p>\n
On the other hand, something interesting is brewing in Finland. The Finns may be the first member to drop the euro. Though it may not have a catastrophic effect on the common currency as say a Germany or France quitting, further cracks may develop with the Slovaks taking serious note. Finland enjoys a current account surplus of \u20ac3.3 billion while its real assets overseas are higher by \u20ac28 billion than the liabilities, says economist Matthew Lynn in his paper Strategy Economics. There are other things going for the Finns as well. The country\u2019s total debt is only 50 per cent of the GDP while the public sector deficit is forecast to be just 0.9 per cent of GDP. It can afford to leave. And if it does, it will save on the never-ending rising cost of supporting the EFSF as well.<\/p>\n
The Finns have already demanded collaterals from Greece before further bailouts. Don\u2019t be surprised if opposition to writing blank checks to Athens rise further in future.<\/p>\n
Euro zone leaders, together with the IMF, had agreed on July 21 to release \u20ac109 billion to Greece through mid-2014. Private creditors were expected to take a 21 per cent \u2018hair cut\u2019 during the period, contributing another \u20ac50 billion.<\/p>\n