After Greece started implementing the program in May of 2010, bond spreads halved the following months. That is why I was optimistic Greece would continue with the progress. But after the fall of 2010 a kind of reform fatigue set in. And then there was the talk about private sector involvement that eroded investors’ confidence. Was the debt restructuring a mistake?
What is a mistake in this situation? If investors fear to lose their money, confidence is lost. Had Greece followed through with reforms, fully implementing its program, and in the absence of talk about the restructuring of private sector debt, the debt restructuring for the private sector could have been avoided.