Unless this is a planned setup of some sort, forget about this mad dash by EU officials and the ECB to come up with a “Voluntary Restructuring” plan that will not constitute a default.

For the nth time, the S&P; has reconfirmed Greek debt restructuring likely a default

“Past experiences show that restructuring the debt of a country, whose creditworthiness is rated at CCC like Greece is currently, tend not to be voluntary and investors must sustain losses,” Moritz Kraemer told Die Welt in an article due to be published on Tuesday.

Euro zone officials have told Reuters a second bailout plan for Greece is expected to fund Athens into late 2014 and feature up to 30 billion euros in aid from a voluntary private sector participation on the basis of the so-called “Vienna Initiative.” S&P;’s Kraeemer said whether extending a bond’s maturity voluntarily or not is of lesser importance.

“What’s decisive is how does it compare to what was promised to creditors when they first invested their money,” he said.

From the point of view of default, it may not matter what agreement anyone pulls out of their hat at the last second.

Before a ruling by the S&P; would even matter, Greek Prime minister George Papandreou must first survive a vote of confidence. Second, the Greek parliament must agree to conditions set by the IMF and EU.

However, whether or not Papandreou survives a vote of confidence likely does matter. If Papandreou does not survive, the odds of an very disorderly event in the near-term go way up.

Mike “Mish” Shedlock
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