Think about this: Imagine the Greek govt used their current funds to buy back their own bonds for pennies on the dollar. They would have much less debt outstanding, right?
Yes, that's right. This does a huge service to their borrowers, allowing them to have a certain payment rather than a payment at risk. And it helps the Greek government, because they pay out at a reduced rate. It also increases the value of their debt, which benefits their current debt holders (since their bonds are worth more) and the Greek government (because they can borrow more money at reduced interest because of the higher bond values). Everyone wins.
Greek debt and even other riskier debt markets are likely to plummet and initially show virtually non-existent trade in the case of default, as investors back off. The situation is comparable with a drying-up in emerging market liquidity in early 2009, during the global financial crisis.
But the debt could get a boost if the European Financial Stability Facility (EFSF) rescue fund buys it up.
Russia's recapitalisation of its banks in 2009 enabled them to buy their own debt back at 50-60 percent of face value, kickstarting a recovery in emerging market debt.
http://www.reuters.com/article/2011/10/13/uk-greece-debt-emerging-idUSTRE79C4BM20111013This is a breach of their bond contract because as the issuer of a bond you (and only you!) are obligated to pay back bonds at face value, and using funds to buy back at a discount is an improper use of available funds.
I don't agree. The point of a bond is to raise money that you can do whatever the hell you want with. I don't agree that it's an "improper use of available funds". I don't agree that the concept of "available funds" is even coherent in that sense.
Now, if you are saying that if Goat makes a distinction between his personal speculation on GLBSE and Tygrr operations, we run into the whole insider trading debate. Should the CEO of a company be allowed to short the company's shares in his own e-trade account? No. Shareholders should demand that their CEO does not create conflicts of interest via his personal trading/security positions.
As I said, I'm only arguing the case where he has no inside information.