Haircuts on repos will jeopardise recovery

Germany's Finance Minister Wolfgang Schaeuble has changed the meaning of the word sustainable to "six months". While "sustainable" never had a definitive time-frame, when it comes to economic recoveries I am quite certain the term has never before been used to mean anything as short as "six months". For a look at revised definitions, please consider German finance minister rules out Greek debt "haircut"

Article written by Prieur du Plessis, editor of the Investment Postcards from Cape Town blog.One day a florist went to a barber for a haircut …After the cut, he asked about his bill, and the barber replied, ‘I cannot accept money from you, I’m doing community service this week.’ The florist was pleased and left the shop.

When was the last time the Fed postponed a US treasury sale due to market condition? I cannot find one although it is possible it happened at some point in a debt ceiling issue.Today Bloomberg reports the EFSF Delays 3 Billion-Euro Bond Sale simply because it does not like market conditions.

Former ECB president Jean Claude Trichet said there would be no haircuts. There were. The first Greek haircut was 21% and it was insufficient. The second Greek haircut deal was 50% and that too was insufficient. On each failed attempt, the ECB and EMU poured more money into Greece. There is now about €200bn of Greek debt held by banks, hedge funds and other investors up from about €50bn a couple years ago.

Ambrose Evans-Pritchard at The Telegraph says Legal skull-duggery in Greece may doom Portugal. I suggest that Portugal is doomed whether or not there is "Legal Skull-Duggery". However, it's perfectly fair to suggest that LSD will indeed make matters worse. From Pritchard ...

ATHENS — Ratings agency Fitch upgraded its sovereign credit rating for Greece by one notch on Tuesday, citing the country’s progress in cutting its budget deficit and the receding risk of its eurozone exit. After nearly crashing out of the euro last year and coming under attack for stalled reforms, Greece has won praise in recent months from its international lenders for getting back on track and pushing through unpopular austerity measures.

The Cyprus bailout deal has a lot of people scratching their heads over what EU leaders were thinking when they came up with it.