More international finance drivel

[Jeff Maginty]

..

[doodab]

I was just reading this.

BBC News - Eurozone woes are US woes

For example, it shows that the potential exposure of US banks to Greece is $34bn (£20.7bn, 23.2bn euro) - which is as much as the actual exposure of German banks to Greece.

If you add together these actual and potential exposures, French banks have most at risk in Greece, with $65bn of exposure. Then - to my amazement - comes the US, with $41bn of actual and potential exposure, or $1bn more than the exposure of German banks.

Actual and potential exposure of UK banks is "just' $19bn.

So what are these "potential" exposures? In the case of American banks' $34bn exposure to Greece, $33bn is described as "guarantees".

Which doesn't tell us a great deal. The talk is that most of these guarantees are for credit derivatives, or insurance against Greece not paying its debts - but I can't be sure that's so.

and I'm thinking, surely the "potential exposure" due to credit default swaps is just a shifting of the risk and needs to be netted off against the exposure to the actual debt to arrive at meaningful numbers for total exposure. I mean, isn't that the whole point of the CDS?

It sounds to me like the Germans and the French have stitched the Septics up a treat.