It has been over an hour since the press release came out, and I think the only thing that is mostly clear is that if 75% don’t agree, the deal is dead in the water. The press release, which tries to clarify things, only made it less clear to me. ZeroHedge had a nice flowchart done by BNP on how the PSI could proceed. That made sense. This document does nothing to clarify the process for me and seems contradictory in many places. The whole concept of “quorum” being 50% seems pointless when it is anticipating 75% or more anyways. Also, it seems unclear to me, whether the percentages are across all issues, or for any particular issue, but I would think it is harder to enforce an already dubious law on a specific bond based on the votes of other bonds?
Anyways, I expect we will get some clarification. In the meantime Plosser seems to beating down expectations of an MBS QE and even the ever dovish Dudley seems to be highlighting that the government has been lucky to have such low rates or the budget would be in even worse shape.