What has happening in Greece is the biggest restructuring of government debt in history.
It comes after a nerve-wracking week when it looked like Greece’s private creditors might not agree to the deal.
For a long time the investors who had lent Athens billions had haggled in meetings like this one with the finance minister but eventually accepted that if Greece went bankrupt they’d get nothing.
One hundred and seventy seven billion euros of loans will be exchanged for new ones with much lower face values, lower interest rates and longer maturities.
Nearly 86 percent of the bondholders accepted that and they will lose three quarters of the value of their investments.
Muchalis Massourakis, Chief Economist with Greece’s Alpha Bank was hopeful a turning point had been reached: “We are going to suffer a big haircut because of this debt restructuring, but at the same time, for us, it is very important — not the transaction per se — but the fact that this is the beginning of the restoration of confidence in the economy and this will bring back, let us say, the commercial banking business to the banks.”
Other analysts were not so confident that banks will want to risk lending money to the Athens government even in the long term and some are already predicting that Greece – with its economy in tatters – will start to run out of money again soon perhaps as early as the second half of this year.
Commerzbank economist Joerg Kraemer said: “The crisis is not over yet. The European Union has bought some time for Greece. But when Greece continues not to implement the promised reforms that it’s only a question of time until new problems will pop up. And especially in the second half of the year I see a probability of above 50 percent that the European Union is so frustrated that it stops releasing fresh money to Greece.”