Kai Ryssdal: This is Columbus Day, when we give the bond markets a day off to celebrate a European who -- the history books tell us -- discovered America. I'd bet a lot of people in the bond markets wish they'd never heard of Europe right about now. Especially a country down in the southeast corner that's all but certain to default on its debts.
Greece is -- at best -- unlikely to be able to pay the bonds it owes. So amid all the back and forth over there now about how to maybe save Athens, the real negotiating is about how to let Greece default without creating a panic.
There's an idea being talked about that the experts like to call "ringfencing." Antiseptic-sounding, but Europe's got high hopes for it. Our New York bureau chief Heidi Moore explains how it's supposed to work.
Heidi Moore: The last thing European leaders want is for Greece to suddenly shrug one day and say that it can't pay the interest on its bonds. They worry that all hell would break loose in financial markets.
So the solution is an orderly default. Kathy Jones, a fixed-income strategist at Schwab, explained to me how this works. It's basically paying less money over more time to allow Greece to catch up with its bills.
Kathy Jones: I think the orderly default for Greece would look like this: If you're holding a two-year bond, then you might have to take 50 cents on the dollar; and instead of being a two-year bond, it's now a 10-year bond.
Once Europe singles out Greece for an orderly default, they'll put it behind a ringfence: it's just a kind of scaffolding -- an announcement that Greece's bailout is now under construction.
And what happens behind the scaffolding? Imagine a little crew of financial handymen. Instead of sculpting friezes on the Parthenon, they're carving up Greek bonds into a more manageable size.
But there's only one problem. Anyone who owns the bonds of Italy and Spain is close enough to look over the Greek scaffolding and see the mess -- and start worrying.
Thomas Schmuhl heads the international practice for the law firm Duane Morris.
Thomas Schmuhl: The concept of debt has implicit in it the possibility that it might not get paid. If you hear that a Greek sovereign debt is not getting paid, then you have to worry about the sovereign debt you hold from another country.
In other words, while a ringfence and orderly default are the best chances Europe has of preventing a panic, they're not foolproof. The 17 eurozone countries also need to agree on a big bailout fund to be ready to back up its countries and their banks.
In New York, I'm Heidi Moore for Marketplace.