what does haircut mean?

ive been hearing "haircut" once too often at cnbc, bloomberg when referring to the greece situation.. what does it mean?

does it mean budget cut?

JFGI!

Does it mean to say they will have to devalue their bonds?
If they sold EUR100B bonds with a 5% Rate, how will haircut help Greece?
Does that mean they will devalue that EUR100B to EUR50B (50% haircut)?
so who will buy their EUR100B to be paid EUR50B after 5 years?

Haircut as explained by Investopedia and Wikipedia (until the ending line) is not the one that is what Cnbc etc are talking bout.

Investopedia:- For example , If you want to borrow a 10,000$ from me, i would like have some collateral in case you wont be able to pay back. So naturally you will give me something collateral that has a value of 10,000$.

But i want something that's worth more than 10k cause in the time you would be able to pay back or tell me that you cant (default),... the value of that collateral could have gone down (imagine a car or somthing).

So i would like have some insurance and ask you to provide a collateral that has a value of 12k,... against a loan of 10k.

So in this deal you are providing me with 20% more in value of collateral. That is a 20% haircut for you.

..............

What Cnbc and others are talking about these days is simply the amount of loss that Greek bond holders will have to suffer.

So a 50% haircut means that,... if you have a Greek bond you purchased for 100$, you will than only get 50$ back .
.

Thank you for that simple explanation. Recently I got absolutely confused with all of that collaterals, haircuts etc but now everything is clear.