PSI talks to resume in Athens over the haircut imposed on banks by the EU in October 2011. Back then, Mrs Merkel and MR Sarkozy forced the hand of the IIF’s head, Mr Dallara, to accept the notion of a ‘voluntary’ 50% haircut on the face value of Greek government bonds (except those not owned by the ECB). What they ‘forgot’ to settle on that fateful night was the coupon rate on the new (haircut) bonds and the maturity. Thus the negotiations between Mr Dallara and the Greek government began. Will bond holders and the Greek government reach a deal? I have already argued (see here) that these negotiations will fail even if they… succeed. Yesterday I had a chance to summarise this view on Sky TV. Click here for a snippet of the interview with Jeff Randall. [You can also click here from my previous discussion with Jeff, on similar matters back in September 2011.]
