Reading German newspapers theses days, one of the most prominent headline reads “50% debt cut for Greece settled.” The headline refers to the latest meeting of the EU member head of states, who supposedly settled for a 50% debt relief for Greece and most notably with “substantial participation” of the private banking sector holding Greek government bonds. Why then did stock prices of these institutions surge upwards shortly after the 50% cut publication? Here’s why: What was settled for is by no means a real 50% debt cut and was even less settled with the “substantial participation of the private banking sector.”…
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