Vive l'extension et la prétention!

Who said that the US had a monopoly on extend and pretend?  The French are showing that they know that move and that they can do it with panache.  The French have graciously announced that their banks have agreed to reinvest about 50% (~.7*.67) of their holdings in Greek debt that is maturing soon in new, long term Greek debt. Quelle générosité! The alternative, of course, would have been to demand that the Greeks pay on maturity for all of the debt--which they can't/won't--and that default would have forced the French banks to write down the debt. Instead, the French banks can continue carrying this performing debt.  A gamble on resurrection.

Notice also, that this is pitched as protecting the French banks (or the rest of Europe) from a Portugese default. How so? By signaling that they won't insist on timely repayment in full--this says "we'll cut a deal, thank you very much."  And this deal sends a strong signal that the French will cave in a game of chicken in the next round.  I think dinner in Athens, Lisbon, and Dublin tonight is coq sportif au vin.