My colleague and a rising star in sovereign debt studies, Anna Gelpern, has a new and important post at the Roubini blog, on the question of where Greece goes with the new announcement of a trillion-dollar fund. The opening:
Leading economists and editorialists say Greece will restructure its debt (here, here, here, here and here are just a few examples). Many say so because they see so much in common between the spiraling European crisis and past crises in the emerging markets. The analogy has merit, and until recently, I too subscribed to it. Now I am not so sure. This is because the benefits of restructuring now are oddly remote, because Greece has the legal leverage to extract a deep debt haircut if and when it can maximize its benefits, because the EU needs time to get its act together and seems willing to pay for it—and because, as a descriptive matter, the global political commitment behind the no-restructuring option is without precedent. And sovereign debt is nothing but political commitment.
The post goes on to offer six reasons why restructuring is not likely for now. Trenchant analysis, highly recommended.