09:36 – S&P downgraded the sovereign debt of France, Italy, and Spain yesterday, but that may turn out to be yesterday’s second most important eurozone development. Of course, everyone is focused on upcoming debt auctions by those countries over the next two or three weeks, at which they can expect very high yields and very low bid/cover ratios, but the really significant euro news yesterday was the collapse of negotiations on Greek debt.
The “troika” insists on PSI (private-sector involvement), which means there won’t be any more bailout money for Greece unless private investors “voluntarily” agree to a “haircut” (write-down) on the Greek debt they already hold. Yesterday, hopes of that pretty much disappeared. The group representing private investors basically told the troika to get screwed. Why should they take any loss at all? If Greece formally defaults, the credit-default swaps that the private investors hold become payable, and those investors walk away with 100% instead of 50% or less. Of course, there’s also a very high probability that a formal default by Greece causes the collapse of the euro and the eurozone, with Italy, Spain, and the rest toppling like dominoes. As of now, there’s no more bailout money in prospect for Greece, which has debt coming due in a few weeks and no way to finance it. A so-called disorderly default looks almost certain, after which everything quickly unravels.
Yesterday, I decided to do a complete reorganization and rewrite of the final lab session. I had intended to focus that session on vertebrate organs and organ systems, but I finally realized I was trying to cram an entire anatomy book into a single lab session. So instead I’ve repurposed that lab session around an exploration of tissue types, which will of course also touch on numerous organs and organ systems. So, rather than finishing the session today as planned, it looks like it’ll take me a couple more days.