Losses for private investors on Greek debt in the second financing package for Athens are likely to be between 30 and 50 percent, rather than the earlier agreed 21 percent, euro zone officials said Wednesday.
Now this is all well and good, but as most of our clients already know, it is not the banks that hold most of the debt. It is taxpayers along with our life insurance and pension funds.
According o the latest data we could find from Barclays in July of this year, Greece owed around E270,000 million. Of this about E50,000 million is owed to Greek banks, and another E50,000 owed to other eurozone banks; a few German and a lot of French.
Another E90,000 million is owed to pension funds, mutual funds and insurance companies.
The balance mostly by taxpayers via the ECB/ IMF.
So when you hear calls for Greece to default, please do not forget, as much as two thirds of the losses will be booked to you or your pension.
PS:
It is also interesting to note that last year the Norwegian Sovereign Wealth Fund upped the ante, and doubled down on its PIIGS debt.According to Bloomberg in September 2010:
The Nordic nation's $450 billion Government Pension Fund Global has stocked up on Greek debt, as well as bonds of Spain, Italy and Portugal. Finance Minister Sigbjoern Johnsen says he backs the strategy..................which contributed to a 3.4 percent loss on European fixed income in the second quarter, compared with gains on bonds in Asia and the Americas.
That 3.4% excludes the 6% exchange rate loss on the Krone to Euro holdings, and has not accounted for the estimated 50% loss as discussed above.
I have to ask the question, when will Norway join the euro?
