EU Leaders Drop Demands for Investor Write-Offs in Bailouts

[dipsydoodle]

Source: Bloomberg News

European Union leaders dropped their demand that investors share the cost of bailouts as Germany abandoned a campaign that helped deepen the two-year-old financial crisis.

Limiting so-called private-sector involvement to the terms accepted in International Monetary Fund bailouts was part of a package agreed upon in Brussels early today as leaders met to forge tighter economic bonds to stem the crisis.

“As regards private-sector involvement, we have made a major change in our doctrine: from now on we will strictly adhere to the IMF principles and doctrines,” EU President Herman Van Rompuy told reporters at a briefing. “Or, to put it more bluntly, our first approach to PSI, which had a very negative effect on debt markets is now officially over.”

That marks a defeat for German Chancellor Angela Merkel who wanted to expose bondholders to losses in debt restructurings as her electorate resented writing the biggest bailout checks. Her push, which began last year, drew criticism from a European Central Bank concerned it would fan contagion and was blamed for some investors for driving up bond yields and forcing Ireland and Portugal to seek aid packages.

Read more: http://www.bloomberg.com/news/2011-12-09/eu-leaders-drop-demands-for-investors-to-take-writeoffs-in-future-bailouts.html

[FreakinDJ]

1. Because now the US Banks are buying EU's Credit Default Swaps

and burdoning the US Banking system with them so the US Tax Payer can pick up the cost through FDIC

[Laelth]

2. "Protect the rich at all costs." This is depressing. k&r n/t

-Laelth

[Citizen Worker]

3. Will this be enough to put German citizens in the streets? Sure hope so!

[Owlet]

4. Save the Banks!

Screw everyone else.

[Roy Rolling]

5. Same ol' same ol'

Socialize the losses, privatize the profits.

[FarCenter]

6. This is probably the quid pro quo for the UK and US going away quietly

No defaults means that the credit default part of the $600 trillion pile of derivatives in London and New York don't get triggered and detonate the whole financial system.

Now they are defused and just expire in due course after being paid off in newly-printed Euros.