eurozone defaults

There were rumours on Thursday that Ireland was going to choose to default, t'anks to an article in the Irish press that suggested there really was no other option for Ireland.

1. What is being suggested is a selective default we'd imagine, so only foreign creditors take losses. Not cool, retrospective legislation to allow this modification of creditor seniority makes us feel very queazy. Spineless Stigtits will tell you that creditors will forget about it soon enough, however to rational investor, its a huge stain.
2. Politically this has got to be easier than writing cheques to profligate nations that cheated their way into the euro? easier to bail out the Landesbank than a Greek citizen retired years before Klaus can even dream of taking a break.
3. It is not a given that a country defaulting would have to leave the euro, although one would imagine that it could actually be better for all parties involved if that was the result. A country like Greece can devalue back to competitiveness and set its own interest rates. Sure this will leave JCT red faced sitting on some chunky ECB losses, but he's going to have a red face no matter what happens.
4. Ultimately all the debt above 60-90% (60 being the Maastrich debt ceiling, no really...) of GDP for the piigs is going to end up on the NAG's books.