Comments on: How the CDS market could help Greece http://blogs.reuters.com/felix-salmon/2010/05/05/how-the-cds-market-could-help-greece/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: HBC http://blogs.reuters.com/felix-salmon/2010/05/05/how-the-cds-market-could-help-greece/comment-page-1/#comment-14512 Thu, 06 May 2010 06:45:57 +0000 http://blogs.reuters.com/felix-salmon/?p=3710#comment-14512 This is like telling a junkie to inject his way out of drug dependency. But funny at the same time.

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By: wolphkaat http://blogs.reuters.com/felix-salmon/2010/05/05/how-the-cds-market-could-help-greece/comment-page-1/#comment-14477 Wed, 05 May 2010 18:39:49 +0000 http://blogs.reuters.com/felix-salmon/?p=3710#comment-14477 So could the greek government buy 300 bil notational CDS to effectively solve their problems by defaulting and then cashing in on those CDS? Stick the bondholders and the CDS counterparties lol. Moral Hazard 2.0

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By: csodak http://blogs.reuters.com/felix-salmon/2010/05/05/how-the-cds-market-could-help-greece/comment-page-1/#comment-14474 Wed, 05 May 2010 18:19:46 +0000 http://blogs.reuters.com/felix-salmon/?p=3710#comment-14474 This is preposterous! Greece’s political is in shambles, the trust of its people lost and will not be regained until a new political and economic order is in place. We all know that many respected market observers/player have stated that the US is heading in the same direction.

Perhaps instead of attempting to speculate on financial instruments to get themselves out of this mess the Greeks, as should the Americans, begin to roll up their sleeves and focusing on creating an economy based on real assets vs financial assets.

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By: Thingumbob http://blogs.reuters.com/felix-salmon/2010/05/05/how-the-cds-market-could-help-greece/comment-page-1/#comment-14471 Wed, 05 May 2010 17:42:49 +0000 http://blogs.reuters.com/felix-salmon/?p=3710#comment-14471 The Ugly Truth About Paul Krugman
So the Nobel laureate opines today thusly:
Consider what Greece would get if it simply stopped paying any interest or principal on its debt. All it would have to do then is run a zero primary deficit — taking in as much in taxes as it spends on things other than interest on its debt. But here’s the thing: Greece is currently running a huge primary deficit — 8.5 percent of GDP in 2009. So even a complete debt default wouldn’t save Greece from the necessity of savage fiscal austerity.
An astute blogger shoots back:

Mr. Krugman your world view is full of debt slavery.

Greece should leave the tyrannical European Union and then if it wishes can devalue their currency but not too much.
I respond:

Precisely correct on Krugman’s worldview. When he utters “the necessity of savage fiscal austerity,” you can almost imagine the fangs emerging from his dracula-like bloodlust. This is the type of mentality which is caused by the ideology of monetarism, i.e. the worship of money as an end unto itself. Thanks for being so forthright as to exhibit your true inner self Mr. Krugman. Bravo.

P.S. The NY Slimes hasn’t seen fit to post my remarks on the venereal pages. I can only take this to understand that I must have violated their abuse policy. Perhaps I was too hard on Count Dracula…

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By: CreditTrader http://blogs.reuters.com/felix-salmon/2010/05/05/how-the-cds-market-could-help-greece/comment-page-1/#comment-14469 Wed, 05 May 2010 17:05:12 +0000 http://blogs.reuters.com/felix-salmon/?p=3710#comment-14469 FYI – check Page 2 of this (it is a week or so old but the story is the same on the basis) and this is the basis between 5Y GGBs and Bunds vs GREECE-GER CDS in 5Y – a little clearer…Neg basis means Bonds cheap to CDS

http://www.scribd.com/doc/30394554/Greec e-Bonds-and-CDS-Update

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By: CreditTrader http://blogs.reuters.com/felix-salmon/2010/05/05/how-the-cds-market-could-help-greece/comment-page-1/#comment-14468 Wed, 05 May 2010 17:02:54 +0000 http://blogs.reuters.com/felix-salmon/?p=3710#comment-14468 Hey Felix, great point on ‘who’s to blame’ and i always wonder why if something goes down in price, they blame shorts rather than just people ‘selling’ lol…more specifically on the basis, be careful as the basis has widened dramatically (basis traders got crushed a la 2007/8) as ‘voluntary’ restructuring possibilities kept CDS rich to bonds – trade makes me nervous here – take a look at ARG/VENZ curve relative to GREECE and the front-end…keep up the great work in CDS land.

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By: drewiepe http://blogs.reuters.com/felix-salmon/2010/05/05/how-the-cds-market-could-help-greece/comment-page-1/#comment-14467 Wed, 05 May 2010 17:00:14 +0000 http://blogs.reuters.com/felix-salmon/?p=3710#comment-14467 Well, it would close the basis between CDS and bonds, but who is Germany going to buy the protection from? Its own banks perhaps? That’s an interesting credit option on a credit option given the likelihood of them being toast if Greece goes down. I’m sure I can’t price that and even if it was done, and the basis between CDS and bonds narrowed to zero, what then? Greece is still in all sorts of trouble. Just doing this can’t drive bond spreads back in to where they were at the turn of the year, it just converges them on the CDS.

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