>>>>Playing semantics a bit here, but providing a loan where nothing of the sort previously existed is technically giving something.
>>>
>>>Sure. It's giving a loan.
>>>If you believe the difference between a gift and a loan is one of semantics then I wish you good luck in explaining to your bank why you've decided not to repay your mortgage :-}
>>
>>How about calling it giving them a chance to not default? My semantics point is that while calling the $39 billion going to Greece a loan, does not preclude it from being a gift. Standard lending is backed by something tangible. Even the woefully under backed sub-prime lending had some tangible assets (houses) behind them. What's the tangible asset behind the "loan" to Greece?
>
>What's the tangible asset behind the U.S's $7trillion national debt? If you default do I get a bit of Colorado ?

There's a difference between bonds and a bailout. The US issues bonds which investors purchase based upon the risk(US default) v. reward(interest). Greece was issuing bonds but the risk of default was so high that investors were demanding a premium interest rate which Greece was never going to be able to pay off. There was a very real threat of default and the systemic risk to the Euro was so great that the Eurozone needed to step in to avoid a currency catastrophe. The bailout provides further financial backing for Greece by lending it money at ~5% which is far below the market price, that's the bailout (gift). Further issuance of Greek bonds can now take place with the knowledge that Greece has a bailout fund in addition to their own treasury behind them. Not to mention the new €750 billion fund which was established for future debt problems amongst the zone. Thus the risk is lowered and the interest on those bonds drops, short term. If the fund was directly buying Greek bonds than I would agree that they'd be just like any other entity which buys treasuries, that is not what is occurring.

>>This is a bailout. A monetary sum provided by countries whose own economic futures are directly tied to Greece through a common currency. There is no guarantee of repayment of a single dime, only promises. There is nothing for the lenders to take posession of in case of default. That's a gift.
>
>Apart from the perceived risk, AFAICS, you could substitute the U.S.A. for Greece in the above statement.

As I mentioned above this is not a bond purchase by the fund this is a bailout to shore up the risk to those purchasing Greek bonds. The US has provided a perfect model in the last couple years with the "too big to fail" precedent. I think of Greece today as Fannie/Freddie pre-2008. They were technically private entities with the implied backing of the US treasury. The danger to Greece and the EU is the same. That implied backing allowed private reward at public risk.

>>When bondholders assess risk like this they demand higher interest, which is exactly what brought the Eurozone to this situation. The interest that was being demanded by those who would hold the bonds for Greek debt was so high that there was no chance of sustainable funding. That was leading to interest hikes on other Euro countries' bonds as well. Europe was forced to step in to prevent zone-wide catastrophe.
>
>Did you by chance read the link I posted to Marcia?

This one? http://dealbook.blogs.nytimes.com/2010/02/25/banks-bet-greece-defaults-on-debt-they-helped-hide/
I did, but I'm not seeing the relevance. The swaps are not driving the problem. It's the same populist jargon which claims speculators drove oil prices up in 2008. Market forces were in the driver's seat then as now, the speculators, traders, CDS investors are along for the ride. Savvy investors are always re-evaluating their holdings and must be ready and willing to ditch or switch when their strategy proves false.

That is because those countries are the most exposed. French banks hold $75.4 billion worth of Greek debt, followed by Swiss institutions, at $64 billion, according to the Bank for International Settlements. German banks’ exposure stands at $43.2 billion.

It seems very savvy to hedge one's position in Greek debt. In fact, if I was a stockholder in those banks and they didn't pick up insurance on increasingly risky bonds I would look to invest elsewhere.

>>>I'm neither agreeing or disagreeing with what was written in the link but it is obviously an opinion piece and the writer is bending language to suit his views - something I always find questionable.
>>>
>>>>Let's not forget, this is the first IMF loan ever for a Eurozone state.
>>>
>>>A more balanced view (but no more enthusiastic) :http://www.investors.com/NewsAndAnalysis/Article.aspx?id=533865
>>>(off topic but interesting that no African nation appears on the bar chart but richer S. American countries figure prominently)
>>
>>I think you mis-linked. ;)
>>
>>>
>>>>
>>>>>Snip:Now American taxpayers also own a little bit of a small nation. They provide the U.S. contribution of 17% of the assets of the International Monetary Fund, which is giving Greece $39 billion (the IMF also is contributing $321 billion to a "stabilization" fund for other euro zone nations with debt problems).
>>>>>
>>>>>Factually incorrect - no one has given Greece anything. It's a loan.
>>>>>
>>>>>>http://www.investors.com/NewsAndAnalysis/Article.aspx?id=533865
>>>>>>
>>>>>>To understand the pertinence to America of events in Greece, notice General Motors' most recent misbehavior.
>>>>>>
>>>>>>A television commercial featuring CEO Ed Whitacre demonstrates the institutional murkiness and intellectual dishonesty that result when the line between public and private sectors disappears.
>>>>>>
>>>>>>In the commercial, Whitacre says GM has "repaid our government loan in full." Rep. Paul Ryan, R-Wis., noted that GM used government funds to pay back the government: It "simply transferred $6.7 billion from one taxpayer-funded TARP account to another."
>>>>>>
>>>>>>Government Motors
>>>>>>
>>>>>>The government still owns 60.8% of GM's common equity, and the Congressional Budget Office projects that the government will lose about $34 billion of the $82 billion of TARP funds dispersed to the automotive industry.
>>>>>>
>>>>>>When Ryan and two colleagues asked the Treasury Department for clarification, they got this careful reply: "Treasury has never suggested that the loan repayment represented a full return of all government assistance."
>>>>>>
>>>>>>A Treasury press release did say "GM Repays Treasury Loan in Full." The loan is, however, a small part of taxpayer exposure. Under crony capitalism, when government and corporate America merge, both dissemble.
>>>>>>
>>>>>>Now American taxpayers also own a little bit of a small nation. They provide the U.S. contribution of 17% of the assets of the International Monetary Fund, which is giving Greece $39 billion (the IMF also is contributing $321 billion to a "stabilization" fund for other euro zone nations with debt problems).
>>>>>>
>>>>>>So the U.S. government, which would borrow 42 cents of every dollar it spends under the president's 2011 budget, is borrowing to rescue Greece and others from the consequences of their borrowing.
>>>>>>
>>>>>>That nation, whose GDP is below that of the Dallas-Fort Worth metropolitan area, is "too big to fail," meaning too inconveniently connected to too many big banks. Bailing out Greece really rescues European banks that improvidently bought Greek bonds.
>>>>>>
>>>>>>At the Parthenon last week, the Greek Communist Party, which got 8% of the vote in the last national election, draped banners emblazoned with the hammer and sickle: "Peoples of Europe Rise Up." Of course. "Arise ye prisoners of starvation," exhorts "The Internationale," the left's ancient anthem. But who is to arise against whom?
>>>>>>
>>>>>>Time was, the European left said it spoke for horny-handed sons of toil oppressed in dark Satanic mills. But Athens' "anti-government mobs" have been composed mostly of government employees going berserk about threats to their entitlements.
>>>>>>
>>>>>>Even Greek air force pilots went on strike. The government, unable to say how many employees it has, promises to count them. It cannot fire many because article 103, paragraph 4 of the Greek constitution says: "Civil servants holding posts provided by law shall be permanent so long as these posts exist."
>>>>>>
>>>>>>America's projected $9.7 trillion in budget deficits in this decade will drive the nation's debt to 90% of GDP (Greece's is 124%).
>>>>>>
>>>>>>So some people say that to avoid a Greek-style crisis, America should adopt a value-added tax.
>>>>>>
>>>>>>But Europe's most troubled nations — the PIIGS: Portugal, Ireland, Italy, Greece and Spain — have VATs of 20%, 21%, 20%, 21% and 16%, respectively. As part of its austerity penance, the Greek government is going to give itself more money by raising its VAT to 23%.
>>>>>>
>>>>>>Germany Turned Off
>>>>>>
>>>>>>Germans are furious about being the biggest bailers in this bailout of a nation where tax evasion is pandemic. They've not been assuaged by being told by their chancellor, Angela Merkel, that the stakes are stupendous: Their money will save "Europe."
>>>>>>
>>>>>>Hearing that, Greeks bearing banners proclaiming "Out with the IMF" might think:
>>>>>>
>>>>>>Why accept "austerity" (as that is understood in Greece — no more annual bonuses of two months' salary, no more retirement at 53)? Suppose, after pocketing some of the bailout, we threaten to collapse and make a mess of "Europe"?
>>>>>>
>>>>>>Greece now knows the terrific strength of weakness. Beware of Greeks — or any other people — receiving gifts.
>>>>>>