Friday, June 24, 2011

…the Greece situation may be quite good:-)

Greeks' upper hand

Interesting. Greece may be in the situation of unloading their debt onto the rest of the world. Really? CDS' is the answer.

Posted by ant @ 08:46 AM (1733 views)
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11 thoughts on “…the Greece situation may be quite good:-)

  • Doesn’t make sense to me. According to Pytel, Greece should use so-called “bailout” funds to buy CDS, so that counterparties will predictably be left owing billions when Greece defaults. But then who would be stupid enough to be the counterparty? Rogue traders?
    Nick

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  • @nickb: there are plenty of counterparties selling Greek CDS’ as we exchange these comments (whether they are stupid or not is another matter: traders definitely make a lot of money on these sales). So if you want you can go out and by CDS’ linked to Greek debt. Greece can do it too (albeit I do not think it would wise of them to make it too official).

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  • @[email protected] a look at this page:

    http://online.wsj.com/article/SB10001424052702304569504576405063053263344.html?mod=googlenews_wsj

    the markets are dysfunctional beyond wildest imagination. what pytel writes is possible. and if greeks are clever (and they are, especially with with money) they might just be at it.

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  • If that’s right, it’s Kruegerrands in the garden time. Or something. Maybe it is.

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  • @nickb: do not get me wrong. your first comment was reasonable for anyone with a shred of common sense. but the financial system is beyond the most idiotic ideas. but listen to the mainstream economists, financial journalists and politicians. are you surprised? they are, en masse, daft.

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  • So is he saying that Greece will use the bailout money to have a massive bet on itself to default then default on purpose.

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  • i do not think pytel is exactly saying that. but… why not? if greeks are clever with money (and they are) they should do it through banks in cyprus (or wherever). get all that financial lot stuffed.

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  • @mrmickey: greeks could take a massive bet on itself to default. but of course they would not default on purpose. simply by keeping on lending (in order to by CDS betting on their default) their debt would become unsustainable and they would default under transparent financial markets rules. however if the world was happy to keep lending them money so they can keep betting on their default greek should be glad to do it in perpetuity. why not? so no bad faith or dishonesty involved at all.

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  • general congreve says:

    Well they can bet on their own default all they like, the only flaw in the plan, is that when the bailouts are finally over and everything goes pop, they’ll be no counter-parties able to payout of the CDS. But at least they can leverage up and use it as a bigger gun to the heads of the banks to keep bailing them a while longer.

    @4 – Does that means we are now in agreement that a Greek ‘deflationary’ bust will actually be inflationary for the money supply? Please see my last response on the other thread, if you haven’t already done so.

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  • @9 – I think this is the question to lawyers who set up these things. How to ensure that CDS contracts will be considered as good as bonds the Greeks will default on (so they will cancel one another). These would be ensured through structures, effectively underwriting CDS by the bond holders. If Greeks have good legal team they can just pull that.

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  • general congreve says:

    @10 – I see. Money for nothing and the cheques for free!

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