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Greek 5 Year CDS Over 10,000 bps (100%)
For anyone wondering why CDS pricing shifts to a points upfront methodology from running spread once said spread passes 1000 or so bps, look no further than the Greek 5 year today, where the 5 Year CDS is shown with a mid-price of 10,115 bps, being offered at 10,418. Now if there was a one to one equivalency on the CDS and bond curve, this would imply a bond price in cash terms that is negative. And since this would be quite impossible to be achieved, even for Greece, this is a perfect example of why spread in CDS terms becomes promptly irrelevant due to the shapeshift in the default curve past the 16% or so discount from par threshold. And while in practice this means that CDS could in theory go up without an upside limit, for all intents and purposes this is irrelevant as the DV01 in the 100% range approaches zero.
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Greece? I remember Greece... [sigh]
Investors are getting it Greek Style, good and hard.
Um, who are these investors you speak of?
European and US taxpayers, of course :-). The banks will transfer all losse to the citizenry, and privatize all profits. Hardly an original observation on my part
Double your money, bitchez!!
can anybody tell us what happened end of october on that chart?
some sort of futile intervention?
pulled dick out bc of the pain,
but then right back into!!!!!!!!!!!
ECB intervention if I recall.
ISDA stated Greek default won't be a credit event.
Unfortunately for ISDA, they forgot those CDS thingy's are basically private contracts between 2 parties, and if one deems a credit event occured, and the other one doesn't, its off to the lawyer team we go.
The final result?
War.
Do you actually think Greece, Italy, Spain, Portugal, and Ireland are going to sit by peacefully while Germany calls the shots.
I think not.
But what do I know?
http://fucklloydblankfein.blogspot.com
yeah, i want to see any of those attacking....
yea h u got ur ass kicked 2 times - same will happen again.... biggest mistake ever done was re unification of Germany - people will never learn......
clear wolfe wave in SnP in 30 min charts ....giving a target of atleast 1230....hold on to the shorts
That can be achieved in one day with today's volatility. How do you see December play out - many are convinced Santa is coming.
I see a BIG FAT SANTA coming ...LOAD UP on ur calls by this weekend....
Those bonds are good money I thought....
Greek CDS's are SO 2011
CDS do nothing, but get more and more expensive-did I get that right?
So, you have to pay 10.1 million so you can get insured for 10 million in the future? I don't get it! What's the point?
Notice how when they raid gold, devaluing Greek reserves, the Greek Bonds begin to die. Coincidence?
Only 100% ?
They should thank their lucky stars they don't have to go the Pay-Day Loan route - try 3,000% APR on for size!
But Greece was saved. Those guys and Angela, who saved the Eurozone last week said so.
Also confused about how CDS can go above 10,000 BPS or 100%... :s
I think the reason for CDS's going above 100 is that they are being scooped up so that the holders don't call for a default. Apparantely hedge funds have bought into certain bond issues so as to have more than 25% of these. Greece in such an instance, could not argue that a qualified majority (75%) is in favor of restructuring. So they are having to unwind the trades of the hedge-funds by buying-up the CDS's and the bonds. Apparantely there are no sellers of new CDS on Greece (while there are plenty of sellers of bonds) so the CDS have pushed past the par limit.
Take a good look. Greece is in full and total credit collapse. There stock market is down..what....90+%. It would remind us of the 30's if we were alive and/or aware then.
If I knew of a good Greek stock, I would consider buying it.
Ooh ... first installment is almost complete on the new multi part Hope and Crosby flick, On The Road to Serfdom
I can recommend a book: "Zero: The Biography of a Danger Idea" by Charles Seife. Seife details the history of the concept of zero, and the reluctance in cultures to accept the implications. Infinity is a major supporting character. I understand the math concepts discussed in the book, but even at that, I still have trouble with 10,000+ bps.
I might invest in such high yields if I didn't know that Greece is in the middle of an economic collapse right now. I'm not sure if that country is going to survive as a member of the Eurozone.
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