23-Feb-12 World View: Backlash Builds on Greece Bailout as Default Looms

23-Feb-12 World View: Backlash Builds on Greece Bailout as Default Looms

This morning’s key headlines from

  • Anti-American protests in Afghanistan follow Koran burning
  • Fitch downgrades Greece, says that default is ‘highly likely’ soon
  • Backlash builds on Greek bailout agreement
  • Analyst Art Cashin changes his mind twice
  • International pressure grows as journalists are killed in Syria
  • The Syrian Crisis: A View from Damascus
  • Thailand asks Malaysia to hand over Iranian bomb suspect


Anti-American protests in Afghanistan follow Koran burning

Anti-American protests have spread across the eastern provinces of Afghanistan, even though the United States has quickly apologized for burning copies of the Koran and other religious materials that had been pulled from shelves of the Parwan Detention Facility, adjoining Bagram Air Field, because they were apparently used by prisoners to pass extremist messages to one another. In Kabul, thousands of protesters chanted “Death to America,” and hurled rocks and set tires alight outside a complex that is home to foreign contractors, police and some coalition military forces. CBS News


Fitch downgrades Greece, says that default is ‘highly likely’ soon

Fitch Ratings service has analyzed the Eurogroup bailout statement, ” including ‘private sector involvement’ (PSI) and a subsequent announcement from the Greek authorities outlining the terms of the proposed exchange of Greek Government Bonds (GGBs).” The subsequent statement “confirms the Greek government’s intention to introduce collective action clauses (CACs) into those GGBs governed by Greek law.”

“In Fitch’s opinion, the exchange, if completed, would constitute a ‘distressed debt exchange’ (DDE) in line with its criteria and consequently yesterday’s announcements set in motion the agency’s process for reviewing Greece’s issuer and debt securities ratings. The sovereign [Issuer Default Rating] (IDR) has accordingly been lowered to ‘C’ from ‘CCC’ indicating that default is highly likely in the near term. …

Fitch considers that the proposal to reduce Greece’s public debt burden via a debt exchange with private creditors will, if completed, constitute a rating default, and result in the country’s IDR being lowered to ‘Restricted Default’ (‘RD’) upon completion. …

Fitch regards the imposition of retrospective CACs as a material adverse change in the terms and conditions of GGBs in the context of an imminent debt exchange and confirms its assessment that the exchange will be distressed and de facto coercive on private holders of Greek bonds.”

Fitch Ratings


Backlash builds on Greek bailout agreement

Anders Borg, Sweden’s finance minister, says:

“Of course the Greeks remain stuck in their tragedy; this is a new act in a long drama. I don’t think we should consider that they are cleared of any problems, but I do think we’ve reduced the Greek problem to just a Greek problem.”

Poland’s former deputy finance minister Gregorz Kolodko said:

“After the latest meeting of eurozone finance ministers, resulting in the decision to grant Greece a second €130bn bail-out, one might keep saying that things are on the right track. But they are not. They are heading for a catastrophe that is already unfolding, albeit in slow motion. Cheating the public and miscalculating and misleading the market is neither a strategy, nor a policy. It is sheer stupidity.”

Vassilis Korkidis, head of the Greek Commerce Confederation, said:

“We sowed the wind, now we reap the whirlwind… The new bailout is selling us time and hope at a very high price, while it doggedly continues to impose harsh austerity measures that keep us in a long and deep recession.”

What has become clear to many analysts is that the bailout agreement is a cynical exercise that nobody believes in. Its purpose is not to save Greece, but to save the rest of Europe from Greece. EuroIntelligence


Analyst Art Cashin changes his mind twice

Art Cashin, a UBS trader who is considered by many to be the wisest of the wise men on the floor of the NY Stock Exchange, said last week that an incorrectly done bailout of Greece that triggered the payment of credit default swaps (CDSs) could send us back to the “Middle Ages,” because the CDS market was so opaque. Then, on Monday, he retracted his comments after many people pointed out to him that the CDS market was not quite as opaque as he thought. Then, on Wednesday, he flip-flopped again, after comments from readers indicate that many financial crisis risks still remain, and that much of the CDS market really is opaque. I think it’s pretty safe to say that nobody knows for sure what a Greek default will mean. The only purpose of the bailout was to prevent the Greek crisis from spreading to Portugal and other European countries, and now that purpose will be tested. Business Insider


International pressure grows as journalists are killed in Syria

Marie Colvin. She lost her left eye while reporting on the Sri Lanka civil war in 2001

Marie Colvin. She lost her left eye while reporting on the Sri Lanka civil war in 2001

Some 10,000 mortar shells have landed in the small Baba Amr neighborhood of Homs, Syria, in the last few days, killing and wounding perhaps thousands of innocent civilians. But international outrage has particularly increased because a shell killed two well-respected journalists who had sneaked into Baba Amr and were reporting on the daily massacre — Marie Colvin of the Sunday Times, and Remi Ochlik, an award-winning French photographer. In one of her last reports, Colvin said,

“I watched a little baby die today, absolutely horrific, a two year old – found the shrapnel had gone into the left chest and the doctor said: ‘I can’t do anything,’ and his little tummy just kept heaving until he died. That is happening over and over and over. There are 28,000 people in Baba Amr. The Syrians will not let them out and are shelling all the civilian areas. We live in fear of a massacre.”

It is suspected, but not proven, that the Bashar al-Assad regime had determined her location and targeted her and other reporters. BBC


The Syrian Crisis: A View from Damascus

Most world media portray the Syrian regime as increasingly isolated in the international community, with little to hope for but continued support from Russia (which in turn, that narrative goes, is driven exclusively by commercial interests). However, Syrian officials foresee a loose confederation consisting of Syria, Iran and Iraq. They see Turkey, Qatar and Israel among the main instigators of international pressure on Syria, along with the United States standing behind them, with the main purpose being to counter Iran’s influence. Syria has been surprised by the military defections to the opposition, and the length of time that the demonstrations have continued. Their only regret is that they didn’t take all the necessary measures to neutralize the opposition more quickly. Ria Novosti (Moscow)


Thailand asks Malaysia to hand over Iranian bomb suspect

Suspect Masoud Sedaghatzadeh

Suspect Masoud Sedaghatzadeh

Israeli officials are praising Thai authorities for conducting a thorough investigation into three recent explosions in Bangkok, and determining that they were targeting Israeli diplomats. Thailand has asked Malaysia to hand over Masoud Sedaghatzadeh, an Iranian man suspected of being part of a terror cell involved in the explosions. Another suspect, Saeid Moradi, has been hospitalized after losing both his legs in the botched terrorist attack. The Nation (Thailand)


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