tag:blogger.com,1999:blog-36227136.post2051466809291032399..comments2024-01-16T08:40:53.682+00:00Comments on <a href="http://www.openeurope.org.uk">Open Europe</a>: Surprisingly little collateral damage as Spain and Finland reach a dealOEhttp://www.blogger.com/profile/00556463374230498875noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-36227136.post-11375783528859645342012-07-18T14:22:44.326+01:002012-07-18T14:22:44.326+01:00HIstorical recovery rates are often much lower tha...HIstorical recovery rates are often much lower than 60%. Probably 30% is a better guess.<br /><br />If it comes to a recovery-situation imho we will either have a soft one:<br />-only termstructure is changed so there is no direct cash-flow problem anymore for roll overs. Possibly also as a starter, to avoid AAAs and Co having to take bookkeeping losses/budget expenditures. The latter would mean real cuts in the North and the support that is left under even greater pressure.<br />Another sort of haircut means also transferring a lot of the problem to the European banking sector. As these would have to account for losses as well in the latter situation. Lower capital etc.<br /><br />-optimalisation solution. Enough to make the consideration worthwhile but as low as possible for local reasons. (Heavily depending on the financial situation of that moment(primary surplus or not basically, in which case EZ support would be needed or better hoped for)). <br />In which case 30% recovery sounds like a good guess.<br /><br />But this is no financial problem, this is purely an internal Finnish political one. So it is basically whatever the Fins can live with.<br /><br />Problem is that Spain and Italy look different financially at the moment. Italy iso its much higher debt looks much better under control. However they will likely play at more or less the same time. Simply forced by markets. <br />So if say Italy has a primary surplus and it would go for Iexit. Basically forcing Spain into it as well, although it is not ready at all or a huge and direct EZ intervention.Riknoreply@blogger.com