Reply to: Greece on verge of breakthrough in deal to cancel 70% of debt

[AtW]

CDS are illegal under the Life Insurance Act 1774. It's just not enforced.

Just like score of other sensible laws

[Freamon]

CDS should have been illegal in the first place - it's like it should not be posible to insure criminal acts or get guarantee of success: if it wasn't for this tulipy thing lots of schemes would not work because risk would have to be born by whoever got into it without any illusion of insurance making it suddenly AAA asset.

Perhaps any insurance related to financial instruments should be banned - plenty of money to be made in ripping off car motorists.

CDS are illegal under the Life Insurance Act 1774. It's just not enforced.

[AtW]

CDS should have been illegal in the first place - it's like it should not be posible to insure criminal acts or get guarantee of success: if it wasn't for this tulipy thing lots of schemes would not work because risk would have to be born by whoever got into it without any illusion of insurance making it suddenly AAA asset.

Perhaps any insurance related to financial instruments should be banned - plenty of money to be made in ripping off car motorists.

[Freamon]

Absolutely - but if they have sold the CDS they are probably not bondholders? Doesn't the greek government negotiate with the bondholders?

They could be both. If you have some greek bonds and you want some more, but can't find any to buy, you could sell CDS instead, in an attempt to get the same risk profile. Obviously it hasn't worked out to be the same, but selling these CDS may have seemed like easy money a few years ago.

[AtW]

Rumour has it that 45% of greek bonds are now owned by hedge funds who are banking on CDS payouts.

[BrilloPad]

CDS are zero sum - a lot of other financial institutions will have sold CDS, so would rather Greece didn't trigger an event of default.

Absolutely - but if they have sold the CDS they are probably not bondholders? Doesn't the greek government negotiate with the bondholders?

[eek]

CDS are zero sum - a lot of other financial institutions will have sold CDS, so would rather Greece didn't trigger an event of default.

Rumour has it that 45% of greek bonds are now owned by hedge funds who are banking on CDS payouts.

[Freamon]

IMO default should be decided by whether or not the CDS pays up. Alot of financial institutions will be hedged with CDS so would rather a default went ahead.

CDS are zero sum - a lot of other financial institutions will have sold CDS, so would rather Greece didn't trigger an event of default.

[BrilloPad]

Greek debt deal hits setback as talks suspended

Crucial talks over a debt deal between lenders and the Greek government were suspended over the weekend as the representative of bondholders flew out of Athens empty handed.

Greek debt deal hits setback as talks suspended - Telegraph

What a suprise....

[BrilloPad]

IMO default should be decided by whether or not the CDS pays up. Alot of financial institutions will be hedged with CDS so would rather a default went ahead.

[AtW]

In Sasguru land, he has quite a reputation as an astute commentator on all matters regarding the global economy.

Who doesn't?

[d000hg]

Reputation?

In Sasguru land, he has quite a reputation as an astute commentator on all matters regarding the global economy.

[scooterscot]

Yes but Sas staked his reputation on it being a default not "practically nearly a default", so wouldn't you rather hang him out to dry?

Reputation?

[scooterscot]

You're just trying to wiggle off the hook you put yourself on by starting a "Greece WILL default" thread.

Agreed.

It just has, you cretin.

I'll not hold my breath if CDS are not paid out on Monday.

[d000hg]

It's practical bankrupcy in any case anyway.

Yes but Sas staked his reputation on it being a default not "practically nearly a default", so wouldn't you rather hang him out to dry?