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Q: IT looks like the Greek problem has been sorted out. Can I stop paying attention and go back to reading the sport?

A: Of course not. Leaving aside the fact that business is always important, not even a Pollyanna-type optimist would believe that the Greek problem is sorted.

Q: But surely yesterday's deal is good news?

A: It is great news; failure to reach agreement would have triggered a crash in the financial markets, more banks going bust and a world economy in recession.

Q: So why the long face?

A: Because it is by no means clear that this won't still happen. Greece is not saved. Greek banks are the biggest losers in this deal and the country's debts remain much too high. There is every indication that Greece will still be unable to repay its remaining debts which still account for 145pc of gross domestic product.

Q: You always say that -- you're just a pessimist.

A: The German finance minister, who has every reason to talk up this deal, told the Germans yesterday that it would be a "big mistake" to think the Greek crisis is over.

Q: Still, debts of around €130bn will be vapourised. Who will end up losing out?

A: The banks, pension funds, insurance companies and hedge funds who owned Greek government bonds are all going to lose about three quarters of what they own. The question now is whether the people who insured the banks, pension funds, insurance companies and hedge funds will have to pay up. In an important test case last night, the New York body ruled it was a default.

Q: But it is as clear as day that this is a default. How could anybody argue otherwise?

A: We all know this is a default but there must still be a ruling. It is a little like a court case where everybody knows somebody is guilty but the courts might still let them off on a technicality.

Q; But I understand the Greeks will use collective action clauses to impose the deal on the investors who were holding out for better terms.

A: They will and that will trigger payouts on credit default swaps which are the insurance policies investors take out to protect themselves against default.

Q: How does it affect us?

A: The whole world now knows that a default can happen inside the eurozone. This is bad news for Ireland because we are linked with Greece in most traders' minds.

Q: But Olli Rehn and the other European commissioners keep saying this is a once-off event.

A: They are the same men who said 12 months ago that Greece could not be allowed to default. The markets are seriously worried that Portugal might go the same way. Some commentators fear that Ireland would follow Portugal if all credit dries up.

Irish Independent