Or maybe I should say “In an olive”.

The FT nicely sums up why the ECB doesn’t want to take a haircut on Greek loans in “Uncomfortable days for ECB”

  • The ECB holds €35-40B in Greek debt
  • They are insisting on full repayment, including 15%+ yields
  • The type of haircut the private sector are taking would cost the ECB €20B
  • But taking a loss may violate the ECB treaty on bailouts
  • If they don’t take a loss, private investors could sue
  • The solution might be for the ECB to redeem the bonds of a net zero gain (no interest)