(BN) *DRAGHI SAYS EXIT OF ANY NATION FROM EURO `NOT IN THE TREATY’
But didn’t Merkozy say that Greece was in or out? I’m hearing from a lot of traders (myself included) that this has all just become too confusing to figure out. Liquidity is abysmal. Can Greece default, wipe out the debt, and stay in the Euro? The IIF has taken the time to say that the […]
I’m Not Sure What This Means, But The Euro Basis Swap Just Hit
I’m not sure what this means, but the Euro basis swap just hit a new low for this crisis. Maybe it will just take time to catch up, maybe it is a sign that the rate cut isn’t transferring through the system (yet). We have moved 40 points on the SPX from the overnight lows to the […]
ECB Rate Cut
The ECB finally came through with a rate cut. We have been expecting one as it is the last chance to keep yields down on sovereign debt in Europe. I wouldn’t be surprised if the failed EFSF auction yesterday influenced the timing. Maybe cutting the ECB rates will cause a shift in the curve, making […]
Greece – Eurozone Or Not? Slavery Or Freedom?
At this moment, the headlines coming out of Greece are confusing and contradictory. It isn’t clear whether or not there will be a referendum or a vote of no confidence. There may be a new leader, there may not be. All we can do is wait for the next headline. In the end I think […]
(BN) *S&P: ‘ALMOST CERTAIN’ EFSF’S AAA GOVS TO PROVIDE NEEDED SUPPORT
So the details boil down to this – the AAA guarantors cap the size of exposure the EFSF can take. So the EFSF can borrow, insure, guarantee, or otherwise take on risk up to about 452 billion. So now we know the size has been constrained by the AAA guarantors. It seems like some of […]
Grade 3 Math Assignment
Tom has 1 apple. Tom has promised to give Robbie, Jim, Anne and Mary, half an apple each. How does Tom get 4 half apples from 1 apple? Bonus Question: While Robbie, Jim, Anne, and Mary are waiting for their half apple, Tom gets hungry and takes a couple bites out of the apple. How […]
Default, Credit Event, And Too Big to Fail
It looks like Fitch would declare a 50% write-down a default. And yes, it is a default. No matter how anyone wants to spin it – restructuring, PSI, etc., it is definitely a default. It is NOT a Credit Event. Maybe the name should be changed from Credit Default Swaps to Credit Event Swaps because […]
Italy – Weak; But How Would A First Loss Insured Auction Have Worked?
Well, we are now into the second day of the new Era. We continue to wait for details on the exact IIF plan. We wait for details on what the EFSF will look like, particularly the leveraged guarantee portion. We are also waiting to fully understand who will be doing the secondary market activity – […]
EFSF As A First Loss Insurance Provider (reposted from Oct 21)
Based on the fast and furious headlines, it is hard to tell whether EFSF providing first loss “wraps” is still one of the myriad of possible outcomes, but it is worth looking at just in case. The flying headlines obscure an important issue. While the different proposals sound like completely different solutions, they in fact […]
Believe It Or Not, Restructuring Is Acting As Designed
There seems to be a lot of chatter still over whether this should be a Credit Event or not. As strange as it may seem, it shouldn’t be, because it is very difficult to determine why someone may agree to an exchange that they are not contractually forced into. If the banks announced that they […]
