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Comment by parallel | Hacker News Reader

As I understand it you default on a loan, you don't default as an entity. So it's doesn't really make sense to talk about Greece defaulting without saying which loans they defaulted on. Hence the "kind of"/"selective" etc.

I read this as Greece defaulted on kind of all it's loans, so defaulted on some and not on others. The others may have been renegotiations, longer terms etc.

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Apparently investors were fond of thinking that Greek debt was as safe as any in EU because it was backed by the Germans.

This seems not unlike the belief that Fannie Mae/Freddie Mac were effectively backed by the US Treasury. In the the US scenario these investor beliefs have been upheld by bailouts.

But in the Greek situation, this bet was just now shown to be wrong. The open question is just how big of a house of cards has been built upon this assumption.

Tomorrow is going to be a busy day for a lot of people.

Typically (for a company at least), debt has 'cross-default' provisions in it. So that failure to pay any particular creditor causes legal triggers to trip on every piece of debt. This is prevent the company persecuting particular sets of holders, and makes it a huge incentive not to miss payments to anyone.

The problem with the arm-twisting idea is that it only requires one hold-out, and everyone gets pulled through the default process.

Right, I didn't realise that mechanism existed, thanks for the heads up. It makes sense, removing the opportunity for slippery dealings with preferential treatment of some debt over the rest.

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