Real Estate Investor · Worcester, MA · Member since 2010 · 39 posts · 5 votes
If you've been watching the recent economic events in Europe, you'll have heard of the Greece debt crisis.
Apparently, the crisis was somehow averted because the Banks decided to take a "haircut" on the debt owed to them, a 50% Haircut!
Once I heard that, It just hit me that Countries are now using Real Estate Strategies to deal with their Economic issues. i.e. It seems to me Greece did a short sale on it debt, and it's Lenders accepted a Short sale.
The Lenders accepted LESS than what was owed to them as satisfaction of the debt.Someone must have negotiated that short sale on behalf of Greece. I'm just wondering if he had to go through some form of Loss Mitigation , but on a larger scale.
So I guess the Lesson is you never know where the strategies learned in Real Estate will come in handy!
Happy Investing
Discounting notes isn't exactly new. Government, corporate, private... all kinds of debt has been discounted at various times since before our counrty was created. Greece is just the latest example.
Discounting notes isn't exactly new. Government, corporate, private... all kinds of debt has been discounted at various times since before our counrty was created. Greece is just the latest example.
It's a "haircut" because a "default" (as it would be considered at any other point in history or for a corporation) would have triggered the Credit Default Swaps (insurance on bonds) which would have been bad. Very, very bad.
@ Bob- I love the way a 50% write down was not a "credit event" that triggers a CDS settlemennt.And there are those amoung us that say the "markets" aren't rigged....