Opinion: The Greek Debt Swap: Is it a Default, or isn’t it?

Negotiation is taking place over what should be the credit rating of Greece as a bond issuer when Greece issues its bonds with reasonable interest rate.

French and German banks are trying to negotiate and accept Greece’s debt maturing over the next three years, in the form of 30-year Greek bonds backed by their strong collateral. For them to finalize the deal they need the ECB to guarantee and accept the Greek debt as their collateral. But ECB won’t guarantee it unless ECB makes sure that the debt swap does not constitute a default.

Is Obama On The Brink Of Cutting Social Security? The Dangerous Game Over The Debt Ceiling

The administration floated the idea of cutting Social Security, then denied it just as quickly. What's really going on with all this debt ceiling brinksmanship?

Moody’s downgraded Portugal’s debt to junk status, leading the Dow and the Standard & Poor’s 500 lower as concern about Europe’s debt problems continued.

By Barry Malone

KAMPALA, July 6 (Reuters) - When South Sudanese president Salva Kiir joins Africa's not so exclusive rebels-turned-leaders club on Saturday, he will find his new state dependent on similar men for trade, investment -- and survival.

Oil-producing South Sudan is due to declare independence on July 9 -- a split approved in a referendum promised in a 2005 north-south peace deal to end two decades of conflict.

For former rebels in neighbouring countries such as Ugandan President Yoweri Museveni and Ethiopian Prime Minister Meles Zenawi, the equation is simple. A prosperous and peaceful South Sudan will mean billions of dollars in trade and investment for those two countries and also for east Africa's Kenya, Tanzania, Rwanda and Burundi.

A return to war, or significant violence, with the north, will be a disaster for the revenues of every country in the region and could mean an influx of refugees.

Meles told Reuters in an interview the latter option was a "ghastly" prospect, and analysts say east and Horn of Africa nations are doing all they can behind the scenes to prevent it -- knowing that the new state will not be viable without their backing.

"South Sudan will, for the foreseeable future, need its neighbours in east Africa more than they need it," said J. Peter Pham, an analyst with U.S. think-tank the Atlantic Council.

"In addition to relying on Uganda and Kenya for outlets to the outside world, South Sudan will also depend on Ethiopia, for security and likely for electrical power."

WAR WILL COST

South Sudan is Uganda's main export market, importing goods worth $184.6 million in 2009, according to the Uganda Exports Promotions Board. Kenyan exports to South Sudan were worth $157.7 million the same year.

A return to war could cost South Sudan's neighbours as much as 34 percent of their combined annual GDP over a 10-year period and could cost Kenya and Ethiopia $1 billion a year, according to a report by Frontier Economics.

"Meles has brokered negotiations in Addis for obvious reasons," an Ethiopian foreign ministry official told Reuters. "None of us can afford that sort of loss but, more than that, we're going forward with power exports and South Sudan will be a customer."

Though three-quarters of Sudan's 500,000 barrels a day of oil are produced in the south, its only way of exporting it is through the north's pipelines.

"This requires cooperating with Khartoum and this probably also means paying a premium for the privilege," Pham said. "The only alternative would be to build a pipeline which would link to the one that will likely be constructed in Uganda."

South Sudan said on Wednesday it planned to build a link to a pipeline in Kenya. In the short term, the south will depend on both East Africa and the north, but moves such as building a pipeline link to Kenya or newly oil-producing Uganda are the sort of swings away from the north that analysts expect in the longer term.

DIPLOMATIC ALLIANCES

"South Sudan now looks like the most likely candidate if the East African Community is enlarged to include countries beyond the five current member states," said Joseph Lake, an analyst with the Economist Intelligence Unit.

The East African Community (EAC) numbers Kenya, Uganda, Burundi, Tanzania and Rwanda and is moving forward with plans for closer integration and a single currency.

Analysts say EAC membership would give South Sudan immediate clout against its former masters in Khartoum and would improve its security.

Stronger security is vital, as the north and south have yet to demarcate their border and agree how to share oil revenues. The north's army and fighters linked to the south have clashed in Southern Kordofan, the north's main oil state.

Most analysts don't see a return to all-out war as likely, and say the new state's survival will be threatened more by corruption in its ruling Sudan People's Liberation Movement (SPLM) and by ethnic divisions within its own borders.

"How the SPLM manages to deliver internal security and meet some of the expectations that come with independence are crucial," said Angelo Izama, a regional security analyst with the Uganda-based think-tank Kwote. But if conflict were to reignite, analysts say Ethiopia -- the main military power in the Horn and a key Washington ally - would, with backing from East Africa, support the south as it has done in the past.

"Together with the United States and other Western countries, the states of east Africa are most responsible for the birth of South Sudan as a nation," Pham said. "In fact, long before Western countries became involved, Ethiopia, Kenya and Uganda provided safe haven and support for the SPLM," he said.

It has also not been lost on the countries upstream of the Nile that Khartoum's traditional backers, Egypt and Libya, are now floundering.

"Everybody's playing nice diplomatically right now," a western diplomat in Kampala told Reuters. "But there's no mistaking east Africa's loyalty -- it's with Salva."

Which States Do the Worst (and Best) Job of Educating Kids Regardless of Class? The Results May Surprise You

Economic differences are reflected in the classroom, with students in wealthy schools taking many more advanced courses. But some states have begun to bridge these disparities.

Obama's Original Sin: How the President's Failure to Hold Wall Street Accountable Could Cost Him In 2012

What haunts the Obama administration is what still haunts the country: the stunning lack of accountability for the greed that brought on America's catastrophic financial crisis.

Pakistani Military Still Cultivates Militant Groups, a Former Fighter Says

Officials in Pakistan back militant groups as tools in the dispute with India over Kashmir and in Afghanistan to drive out foreign forces, a former militant leader says.

$4.4 Trillion, 225,000 Dead: Forget the Spin, This Is What War Really Costs

US wars launched since the attacks of September 11, 2001 have left 225,000 dead and cost up to $4.4 trillion, according to a new study by university researchers.

A judge contended that the boat, The Audacity of Hope, was not carrying proper safety equipment and charged the captain with “disturbing sea traffic and endangering passengers.”

What Greece Really Needs From Us Right Now

By Gabriel Kazakias 7/2/2011

Based on an article written by Gregory C. Pappas

Enough is enough let’s stop entertaining ourselves and others with the stereotype story about Greeks being lazy and sitting in coffee shops all day drinking frappe and ouzakia. This is not a fair description of the vast majority of Greeks. In fact, the Organization for Economic Cooperation and Development (OECD) ranks the Greeks second in the world -- as the second hardest working people after the South Koreans. If you need proof check it in Forbes.

We've heard over and over again that the coffee shops are full and the bouzoukia are jammed. Yet, I am told that today you're lucky to find open bouzoukia even on a Friday night, making the few clubs that are still operating full and "jamming". Finally, the jokes about Greeks not paying taxes, let's see what happens when the role of the IRS is diminished in this country. Watch -- just watch -- how law-abiding American taxpayers quickly become tax-evading lawbreakers.

One more thing about Greeks breaking the law, Greeks are breaking the law because they can. They are evading taxes, and driving like madmen, and parking on sidewalks, and smoking in no-smoking areas -- because they can. And yes -- the public sector is out of control. The entitlements, pensions, retirement age requirements are insane, to the point that an entire generation of people have been brainwashed into believing that it is normal for the government to take care of its citizens from cradle to grave. I don't blame the average citizen but I blame the corrupt politician.  

What Greece really needs right now from us, as eloquently suggested by Gregory C. Pappas, is a series of serious initiatives that are both possible and realistic. Below I summarize the suggested programs.

1. A trust fund for our cultural heritage.
   Let's gather the wealthiest Greeks in America and the world and the financial whiz kids that populate Wall Street and engage their expertise to create a revenue-generating fund to serve both as collateral for the Parthenon, the Palace of Knossos and other sites critical to Greece's cultural heritage. A $100 million fund (owned and managed by the donors) per site could generate $5 million annually at 5% interest -- enough to preserve the sites and keep them open with experienced, private staff.
2. A venture capital fund to support Greek entrepreneurs.
   Israel does it. India does it. Let's gather some of the nation's top Greek American venture capitalists to create a fund called Greece Future. This fund could seek out the great Greek innovators and encourage them to stay and build their businesses in Greece and not be forced to re-locate to Silicon Valley or London.
3. A real Diaspora Bond mechanism for low and high level investors to support the future of Greece
   Again, other communities of nations like Israel and India have a bond mechanism that allows average citizens to support their homelands with shares as low as $1,000. Why can't we do this? Something like Israel Bonds. Supported primarily from U.S.-based Jews, the Development Corporation for Israel/State of Israel Bonds is one of the world's most dependable economic financial vehicles with 60 years of success. Worldwide sales have exceeded $30 billion and proceeds have played a vital role in transforming Israel into a regional superpower with unparalleled infrastructure.

What Greece faces today is child's play compared to the trials and tribulations of the events of 1922 when the humanitarian crisis in Asia Minor spilled into the Greek islands and mainland and millions of deprived Greeks who fled war were sleeping amidst the ruins of the Parthenon and housed temporarily in theaters and other public buildings.

Furthermore, Greece was again tested a few decades later during the German occupation and ensuing Civil War during which time one eighth of the entire population perished and over 3000 towns and villages were burned to the ground.

This might be a difficult period for Greece, difficult enough to make any country grumble but not for the Greek people, Greece will prevail.