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Skyrockets In Flight? No, Just Greek CDS Longs' Delight. Greek Default Risk Surges To Another All Time High
Greek CDS hits another all time record at 342.50 bps. Greece is now trading nearly 5 times as risky as the entire universe of investment grade US corporates. In other news, Greek Prime Minister Papanderou repeats for the third time (and fourth, and fifth) that the country will not, repeat not, repeat not, repeat not, repeat not, need a bail out from the EU, and will not (etc) drop the euro or leave the eurozone. If only anyone believed the man.
Anyway, where is that damn ESH0 ramp job when you need one? The best way to send a signal that all is good in the world is for Liberty 33 to trade a quadrillion e-mini's with itself.
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meanwhile 5-year sovereign yields 5.3%. 62 bp of risk free arbitrage?
Greece to 2010 is as USA to 2022.
On that note, Q1 fiscal 2010 is off to a roaring start with 16% larger deficit than Q1 fiscal 2009. And that's without a TARP launch in fiscal 2010!
http://www.fundmymutualfund.com/2010/01/first-quarter-fiscal-2010-us-deficit-16.html
Not to worry - Timmy is committed to getting us to deficit at 3% of GDP. Just ask him!
I haven't read through this, but one of the big worries is that much of the deficit has been minimized in its impact on the US credit rating by declaring its made up of one off events. If the deficit numbers look like being structural and permanent, then that's something that should impact bond markets.
We'll see whether the administration is correct in its assessment of its ability to bring down spending and, if they don't, how long the Fed can keep up the bond market and the dollar simultaneously
2022? Did you mean 2012?
surely that depends on your funding spread and any residual credit risk to the CDS seller?
doesn't that depend upon your cds counterparty as to whether it is "risk free"?
i think the spike has as much to do with short gamma positions from Greece being a lazy line item in vintage CSO's
Hence the question mark. Still, given that guv has said that GS et. al. are tbtf, 62 bp seems awfully rich for counterparty risk. (I'm sure they would take some of that on the spread, but that's a separate issue.)
Your short gamma idea is interesting. Can you elaborate?
Things that are unsustainable tend not to be sustained
Lets just deal with reality NOW and end this farce.
However, cans that can be kicked down the road, tend to be continually kicked down the road.
Sure, there is some end-game, but that will be postponed as long as possible. Those that profit from and cling to power will NEVER willingly face reality; even when they are absolutely forced to do so, they will continue to try to extend and pretend...
+++
http://www.youtube.com/watch?v=_br0ZnqnhVY&feature=PlayList&p=9922D0270B...
I wrote about this before. Greece has Drachmas already printed since 2007. The only solution to get out of the EU clutches. Default, Default, Default.
On my last visit, a hotel room in a trendy village in Cephalonia was 400 Euro/night. A plate of gyro was close to 10 euro. No way to live like that. Why, just to bring pricing alignment with France and Germany? No way. Roll in the Drachma, devaluate and cash in on tourism and agri-products.
Meanwhile, Greeks are not as upside down on their homes as in the US. Actually, most middle class owns two homes. Greeks can sustain themeselves as long as they give up their ipods.
No way however, to drop cappucino and cigarettes.
Wow.
The 10 euro gyro. Wow indeed.
i think you imply that they printed drachmas in 2007 in anticipation of exiting eurozone? but the reality could be that they printed them in 2007 because it is the year they entered euro-zone so they printed their own currency one last time just before switching to euro. Thats how i look at it anyway...
I think you fail to see the reality of a national default - it's always messy, and it always hits the middle class hardest.
400 a night?! You must be talking about Fiskardo.
My Greek Divorce
My *Huge Messy* Greek Divorce
What does the spread signify?
I don't fully understand CDS, but I guess this means investors feel that Greece is at a higher risk of default.
Sorry for not getting this.
greeks don't like to work oracle--a move back to the drachma also implies that they will have to start to work--and I really don't see that.
"Greece has Drachmas already printed since 2007."
Maybe - but that is the easy part. How are they going to get the public to exchange their hard-earned euro savings for new drachmas which will fall... like the niagara falls.
One sniff of the ND coming and there will be an avalanche of deposits fleeing to other euro countries. Greece will have to default on euro loans as it will no longer have euro revenues - except what the tourists and olive-oil exporters bring in. The ND bonds will trade at least 342bps higher than the old euro bonds (assuming this disaster is fully priced in).
I can almost hear the ND printing presses ramping up to pay the interest on the new ND loans for current account deficit funding..
Greece is locked into the euro like a binary star with its partner. (just not as pretty!)
"The mountain is high, the valley is low
And you're confused 'bout which way to go
So I flew here to give you a hand
And lead you into the promised land
So, come on and take a free ride (free ride)
Come on and take it by my side
Come on and take a free ride"
-Edgar Winter Group
The song feels like it belongs here.
Afternoon Delight - a classic. Good to hear about once a year.
Where do you get the price quotes for CDS, etc.? Can anyone buy them through a regular broker?
What website can you use to get CDS prices? Where can you buy CDS? THanks.
Hell the US Treasury should use the incoming money from bonds to purchase the CDS of PIGS, Latvia, Ukraine, etc
Jan. 13 (Bloomberg) -- The cost of insuring against default by the Greek government surged to a record after Moody’s Investors Service said the country’s economy faces a “slow death” from deteriorating finances.
(.....)
While the risk of “sudden death” in the form of a balance-of-payments crisis was “negligible,” Greece and Portugal face “downward ratings pressure now that they must implement politically difficult fiscal retrenchment, if they are to avoid an inexorable decline in their debt metrics,” Moody’s said in its statement.
Tyler, I am warning you, lay off the Greeks or else I am taking you on in the Octagon!
Disclaimer: Above message to TD was a joke and not a physical threat. I will not be held responsible for any phychological damage my statements cause to any members of the fight club.
I just got a 500 euro Greek Government stimulus check, with another 500 coming soon. The frigin country is ready to default and they are sending us and every single Albanian immigrant simulus checks? As soon as he got elected Papandreou said "we found the money for the stimulus" From where!. Go ahead fuck us, we deserve it, all we have are clowns running this country and idiots who vote for them
Santorini, Greece
The surge came after the ECBs president Trichet made clear that there will be no bail-out by the ECB. He said the markets should work this out, what they did.
Nobody is talking about the fact that a Greek default could cause havoc IN ALL GOVERNMENT DEBT MARKETS(EX. US AND GERMANY)
Israel for example:
Greek government bond continue to tumble as interest rate investors are demanding for the 10 year government bond rises to 5.9%. The Europeans are in big trouble since Germany, the only functioning economy in the euro zone can't bail all the PIIGS(Portugal, Greece, Ireland, Italy and Spain) out. The European union has to choose between four bad options...
... ) let Greece go bankrupt. In that case, much like what happened after Lehman brothers was left to under, the implicit grantee of the rest of the PIIGS will be questions and their bond will probably tumble causing a full blown physical crisis across the euro area. My guess is that under that scenario government bonds across the world will tumble, excluding the U.S, Germany and other relatively stable countries with possible serious problems in the European banking system. In that case with Israeli government bonds falling sharply the stock market will be no exception with major sell offs across the board...
http://israelfinancialexpert.blogspot.com/2009/12/possible-implactions-of-greek-defauly.html
Israel still has a housing bubble? Good grief.
Good analysis.
Thing is, yo, the Greeks know full well that they are in a position to dictate policy to the ECB, by virtue of having a gun to their own heads.
Much the way the financial circuses industry was able to blackmail Congress and the President.
http://en.wikipedia.org/wiki/Gold_reserve#Officially_reported_gold_holdings
Look at the officially reported gold holdings for Greece, their gold holding as a percentage of forex reserves is unusually high, 71.5%. Could it be that Greece is dumping gold oon the open markets to pay off their debts? Could it be that's the reason gold is alittle weak atm?
http://en.wikipedia.org/wiki/Gold_reserve#Officially_reported_gold_holdings
look at Greece's gold holdings as a percentage of forex reserves, unusually high 71.5%. Could it be that Greece is dumping gold on the open markets to service their debts? Is that what has been weighing on gold lately
Interesting...
bingo gecko