To all those who stayed up until 6 am local time yesterday to hear Europe announce that the Greek deal is done, Europe is fixed, and that a pot of gold was found at the end of the rainbow, our condolences. Sorry, no isn't. Following up on our earlier post about the potential of UK-law bondholders to once again scuttle the deal, here comes none other than the IIF's Charles Dallara who basically says that the fate of Greece, the Euro, and the Eurozone, are in the hands of Greek creditors as we have been cautioning all along. And after all why on earth would hedge funds who just lost over 70% of their recoveries bear a grudge whatsoever...
From the BBC Newsnight interview to air at 10:30 pm tonight:
Jeremy Paxman: What is to stop someone like a hedge fund or someone who has bought Greek debt trying to trigger the insurance involved in a credit default swap?
Charles Dallara: Well there is nothing I am aware of, Jeremy, that will definitively stop someone who wants to take such action and there is no iron clad guarantee...that individual investors may not contemplate counter-productive activity here. They have the rights they have the legal rights they have the market judgements to make.
Jeremy Paxman: If the insurance system worked they could recover perhaps 100% of the money they've lent the Greeks instead of something like 30%
Charles Dallara: Its not inconceivable. If too many go in that direction though, the system breaks down, we will not have the successful conclusion of this deal and then where will they be?
Jeremy Paxman: The whole deal could still be held for ransom?
Charles Dallara: I don't eliminate that possbility.
Oops. Well, so much for that. And where Elliott is involved, Elliott wins.
Full clip after the jump: