A Blessing for the Euro

Blessing. Martin Blessing. CEO of Commerzbank, stated that lenders could swallow a Greek debt restructuring. A plan, currently in the works, includes a significant haircut, and buy back program of Greek bonds, using the bailout fund. EUR/USD is on the rise, ignoring weak data.

When such a senior banker, whose bank is exposed to Greek debt, endorses restructuring, he’s listened to. Spanish bond yields are dropping sharply, back to the previous levels, under 5.70%. Italian bond yields follow, and so is the euro.

EUR/USD is trading at around 1.4070, which is a pivotal line. The next minor resistance appears at 1.4120, followed by 1.4160. Support is at 1.4030, followed by 1.3950.

Blessing says what everybody knows: the bailout programs just don’t work. Plan B is neede. Against the will of the ECB, Greece will enter a state of default or selective default.

Another part of the plan is a bond buy back of Greek bonds by Greece, using a loophole in the EFSF, in a way that doesn’t require parliament approvals.

More details about this scheme, in the article: Transfer Union Taking Shape in Bond Buybacks – A Solution for Greece?

Currently, these serious proposals are gaining ground and they boost the euro. The common currency is ignoring bad economic data coming out from Europe this morning:

The German Wholesales Price Index dropped by 0.6%, double the early expectations.  Industrial Production for the euro-zone rose by only 0.1%, falling short of expectations for a 0.5% rise.

The implications of a Greek default are still to be seen..  The downgrade of Ireland hurt the Euro, and possible downgrades for Italy and Spain are getting close if a Greek default plan is getting closer.