This is the problem they get when they allow one bank like RBS to turnover more than the entire GDP of the UK,The problem is no one country can bail it out when it goes bust.
The Greek debt IS small beer,but it is the contagion it causes,the whole banking system is built on nothing more than confidence,once that is gone you have very little left in reality
I have found Felix Salmon does a good job tidying up some figures.
The real negotiations are the ones which are certainly going on behind the scenes, between the troika (the EU, the ECB, and the IMF) and the Greeks. The one thing which Greece needs is for the troika to keep on funding Greece’s deficits. And so it’s the troika — the organizations who are actually providing money, here — which holds all the cards. As in any bankruptcy, if you put up cash, you call the tune.http://blogs.reuters.com/felix-salmon/2 ... game-plan/
So the only thing that needs to happen here is for Greece to quietly find out from the troika what kind of bond-restructuring terms would be acceptable to them. Greece then puts those terms into a formal offer, and makes acceptance of that offer effectively compulsory for bondholders. The troika declares a successful bond exchange — because it happened on exactly the terms that they wanted — and continues to lend Greece the money it needs to function as a viable sovereign. Game over, at least for the time being.
Now politically, the EU would very much like to have a bunch of smiling bankers going around saying that they’re happy with the bond exchange, rather than a group of extremely irate creditors who feel railroaded into a dreadful deal. So everybody’s going to try to be as nice to the bankers and Dallara(head of IIF creditors group] as they possibly can be, to try to get as much good PR for the deal as possible. And maybe, at the margin, the banks can extract some concessions in return for their smiles — perhaps the new bonds will be issued under London law rather than Greek law, for instance.
But the big-picture game plan is clear. Greece is going to default, on March 20, and there’s really nothing the banks can do to stop it. If you’re not willing to accept whatever deal Greece comes up with, you probably shouldn’t be holding Greek bonds at all.
And some more figure play.Shuflling the money about so the banks get the benefit and not much left over for anyone else.One gets the feeling this is just another bank bailout to keep the sytem running.
The ECB has spent about 38 billion euros on Greek government debt with a face value of about 50 billion euros.........http://www.reuters.com/article/2012/02/ ... HI20120221
The vast majority of the funds in the program will be used to finance the bond swap and ensure Greece's banking system remains stable; some 30 billion euros will go to "sweeteners" to get the private sector to sign up to the swap, 23 billion will go to recapitalize Greek banks.
A further 35 billion or so will allow Greece to finance the buying back of the bonds. Next to nothing will go directly to help the Greek economy.