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Wednesday, January 19, 2011

Europe Update

by Calculated Risk on 1/19/2011 10:27:00 PM

There was a rumor that Greece might buy back their own debt using loans from the EFSF:

• From Jack Ewing at the NY Times: For Greece, Buyback Of Bonds Is Floated

The latest speculation about a Greek restructuring was prompted by a report in the national weekly Die Zeit on Wednesday, as well as statements by two ministers of the Greek government who said Tuesday that extending debt repayments would be a good idea.
And of course Greek officials denied the story:

• From Bloomberg: Greece Says No Debt Restructuring Amid `Complicated' EU Talks
“At the moment an extremely difficult and complicated discussion is taking place on how there will be a collective solution to the problem we have,” [Greek Finance Minister George] Papaconstantinou said in an interview on Mega Television in Athens. “In this discussion there are many opinions. I want to say that the government isn’t thinking along the lines of debt restructuring.”
A German has a different view:

• From Bloomberg: EU's Leaders Must End Debt Restructuring `Taboo,' German CDU's Lauk Says
European leaders should drop their “taboo’ against debt restructuring, the head of the business caucus of German Chancellor Angela Merkel’s party said ... “I would recommend looking at it very closely, stop declaring it taboo and do the appropriate analysis to see where that would lead,” Kurt Lauk, president of the Christian Democratic Union’s Economic Council
Meanwhile Spain is preparing to bail out the cajas (local banks):

• From the WSJ: Spain to Ramp Up Bailout of Banks
Spain plans to pour billions more euros into its troubled savings banks ... In a first step, Spain is preparing to issue €3 billion ($4 billion) in debt in coming days, the people familiar with the matter said. Government officials are putting plans in place to eventually raise as much as €30 billion ...
Just another fun day in Europe. Here are the Ten Year yields for Spain, Portugal, Ireland and Greece (no huge changes).