Haircut on Greek Debt

Private investors will be asked to take a 60% haircut on their investments in Greek bonds. This is much higher than the 21% agreed in August. I expect that the final figure will probably be 40% to 50%.

http://www.cnbc.com//id/44992798

The question is - why are the European banks holding so much Greek bonds? Surely, the jobs of banks should be to provide banking services and give loans to businesses. They should not be an investment fund, using their money (taken from the Central Bank or credit creation) to speculate on this type of investments or to fund foreign governments?

And why is Greece, a country, not able to meet its obligations? Surely, the Government has assets that can be sold - to repay the debts? If Greece is allowed to get away with 60% of its obligations - what about other countries? This will set a bad precedent. Many countries will continue to be bad risks. What about USA? We can expect an uncertain future and more volatility! And the structure of the financial world will be quite different.

The answer to these questions are - there is something seriously wrong with the financial structure of our global system. Our financial system is based on the illusion of market values and is fed by greed, speculation and corruption.