Simply Put, GREECE IS A MESS, Haircuts and Debt Write Offs Coming

“BRUSSELS (Reuters) – Greece’s debt cannot be cut to 120 percent of GDP by 2020, the level deemed sustainable by the IMF, unless euro zone member states write off a portion of their loans to Greece, a document prepared for euro zone finance ministers shows.

The 15-page document, circulated among ministers, the European Central Bank and the IMF for a meeting that began on Tuesday and is still going on 10 hours later, sets out in black-and-white how far off-track Greece is in reducing its debt to the IMF-imposed target, from a level around 170 percent of GDP now.

The document sets out a variety of ways in which Greece’s debt ratio could be reduced between now and 2020, but concludes they would not be enough without euro zone creditors taking a hit on their own holdings — something Germany and others have declared would be illegal.

The document does say Greek debt could fall to 120 percent of GDP two years later without having to impose any losses on euro zone member states or forcing through a buy-back of Greek debt from private-sector bondholders.”

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