Notice how Greece's default didn't trigger a wave of CDSs?

Earthjade

Earthjade

Member
I think sometimes doomsayers will overexaggerate situations.
Will we be able to see what causes the collapse from a long way out?
I doubt it.
 
It did trigger CDS contracts later confirmed by the ISDA but i believe the total was only around 3.3 billion of CDS's triggered during the credit event. Far less than what was expected this it seems has been a huge relief for the markets and i believe has caused the dow/s&p to have quite a big rally.
 
When the slimy bankers are in actual fact ISDA (International Swap and Derivatives Association), the odds against a CDS activation ever transpiring are relatively low. That's because it is in essence these "slimy bankers" who solely determine what a "credit event" is.

Consider this: all the outstanding Credit Default Swaps throughout the finanical world could not ever come close to being financially recoverable. It is in the range of $600 trillion and counting. So it is patently not in the interest of bankers to call a "credit event." Nor is it in the interests of corrupt governments.

The cost of litigation alone would probably cripple distressed hedge funds. Because banks can rely on counterfeit money, courtesy of equally corrupt central banks.

The game is rigged - always has been, and probably always will be.
 
Barbarian At The Gate said:
When the slimy bankers are in actual fact ISDA (International Swap and Derivatives Association), the odds against a CDS activation ever transpiring are relatively low. That's because it is in essence these "slimy bankers" who solely determine what a "credit event" is.

Consider this: all the outstanding Credit Default Swaps throughout the finanical world could not ever come close to being financially recoverable. It is in the range of $600 trillion and counting. So it is patently not in the interest of bankers to call a "credit event." Nor is it in the interests of corrupt governments.

The cost of litigation alone would probably cripple distressed hedge funds. Because banks can rely on counterfeit money, courtesy of equally corrupt central banks.

The game is rigged - always has been, and probably always will be.
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Wikipedia states there are $25.5 trillion CDS in 2012 (source).

I think the $600 trillion number is talking about Currency Swaps which are different to CDS.
 
Isn't it because the Greek default wasn't considered a 'default'?

http://www.nationnews.com/articles/view/editorial-greece-debt-crisis-not-a-default/

This plan is not really about debt reduction. It is about preventing a technical default, even though Greece has already defaulted in a real sense. So why is avoiding a technical default so important to the European Central Bank (ECB) and the IMF?

That honour belongs to the International Swaps Derivatives Association (ISDA), a trade group made up of banks and financial firms that have the most to lose if Greek bonds default. It's in the interest of ISDA members that a non-voluntary credit event in Greece not be called a default so as not to compromise their insurance.
 
I think Rbaggio bagged it there .. that was my understanding too.


... far cheaper to get people to take a 70% cut on their bond value .. than pay out insurance



We should be asking how much further down can the Greek economy go ... before they are forced to call it that D-word
 
That might be the case, fishball. But whether it be $29 trillion or $600 trillion, it's all unrecoverable.

It cannot be paid and never will be paid. Whilst simultaneously the counterfeiting presses run 24/7.

These are all off-balance sheet transactions which are conveniently hidden but they cannot go away.

If they were ever brought to account, the banks would be instantly insolvent - technically insolvent now.

Which is why precious metals is the only place to be.
 
notice the s&p being pumped up ready for the next smackdown, the leopard aint changing it's spots
 
The issue is how do the other PIIGS nations get bidders for their bonds when the buyers can no longer get insurance for their gambles.

I've seen a number of commentator's purporting to be highly placed bankers, warning 'clients' that a Euro collapse will leave about 3 weeks to exit the USD and all paper before it 'becomes worthless'.

Which echoes Lindsey Williams warnings of several months ago, so it is still worth keeping an eye on Europe, but until Germany and Switzerland's gold is back on their soil, I expect the Euro to hold together - either way the current POG is a gift.
 
JulieW said:
The issue is how do the other PIIGS nations get bidders for their bonds when the buyers can no longer get insurance for their gambles.
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This. It's more can kicking. Which will result in ever more serious consequences down the road as the market finally exerts itself.

There has been a feeling for a long time in govt's that they are above the markets, just as they think they are above the law. They get away with it, for awhile...

After observing all this for a few years now it's weird how inexorable the whole thing feels. Like one event just leads to the next, which leads to the next and nobody either can or wants to pull back. Or those that do probably get shouted down. Crazy world.

But means I have more faith in PM's than ever. After all, if govt's are going to destroy faith in bonds...
 
I just want to point out that the ISDA did actually rule the Greek default to be a credit event that triggered the CDSs.
However, at least up until this point, those CDSs that have been triggered have had no negative effects.
It may be that everybody knew Greece was going to default (who wouldn't?) and so the financial institutions had months in advance to prepare their cash or abandon their positions.
That's why when the true crisis comes, it will probably be something no one was expecting and hence prepared for.

http://www.smh.com.au/business/worl...-didnt-go-off-over-greece-20120313-1uxaq.html
 
FFS - default and let the creditors sell off the assets at market value.

In the future people may do their due diligence before loaning money
 
The bond holders basically agreed to take a ~ 70% haircut instead of losing 100%, so thats counted as voluntary so not a "real" default

Its such a load of BS its laughable lol

Eventually Greece will have a "real" default and the contagion will spread rapidly to other countries, then it will finally get interesting
 
There seems to be abit of confusion my understanding was if the ISDA confirmed it as being a credit event than it's a official default as they are the ones who say if CDS's should be triggered or not.

I may be wrong though.
 
ISDA does have the final say. But as Wout said, up until now it has been voluntary - though it does seem as if a select few bondholders are holding out. Meaning, in essence, further obfuscation and tinkering will be created so as to appease them. At the end of the day, however, nothing will save Greece et al because it's just one gigantic Ponzi scheme. And Ponzi schemes never end well.
 
If it only takes 2-3 billion to placate the holdouts to the Greek deal, you can be sure they will give the money to them.
The EU and the world wants to get this issue behind them so bad that the payout is all but assured.
So in the end it probably pays not to accept "voluntary" haircuts if you're holding the EU to ransom.
 
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