Analysis: European Union debt deal

Morris Segall     

The agreement between the EU and the International Banking Association regarding the Greek bailout will result in a substantial reduction in the value of private debt holdings. The parties also agreed to beef up the emergency European bailout facility and recapitalize the European banks for the hits they are going to take on sovereign debt. Still, questions remain: Who will buy the bonds to be issued? How much can EU members really contribute? And how will Italy be dealt with? There has to be a real cash infusion into the European banking system to bring capital ratios up and make them whole for the write down they will experience. As a result, this agreement will be severely tested over the next six months.

Morris R. Segall, President of SPG/Trend Advisors, discusses the debt deal reached by members of the European Union on October 27, 2011 to bail out Greece.