Wall Street Journal
July 22, 2011
Last night’s euro-zone summit produced a big new bailout for Greece. Here’s our piece on it.
It also produced a bevy of numbers. That’s a welcome departure from the vague puffery-packed declarations we usually get. But unfortunately many of the figures aren’t clearly explained. We’ll try to fill that gap as best as we can, with updates during the day as we learn more.
UPDATE: Here’s much more.
Bottom line, we estimate that the private sector’s losses on bond principal will, on its own, reduce Greece’s debt stock by around 7% of its expected 2020 size. The fact that the private sector will be lending to Greece at rates below what it would be expected to get on its own in markets will contribute a reduction of more than 10%.
All in, as a very rough guess, the “PSI” portion of the deal means Greece’s debt will be one-fifth lower in 2020 than it otherwise would have been.
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