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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: KyrosL who wrote (72395)	2/7/2010 6:39:54 AM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 74559

True - but I am quite confident that the Greek issue will be solved. Greece can issue debt at 6% for 5 years their CB buying most of it and then depositing the notes with the EU and get a 1% loan. UNtil interest matures in 5 years they can issue more debt etc., basic line their economy must recover

To: KyrosL who wrote (72395)	2/7/2010 9:09:35 AM
From: Haim R. Branisteanu	Respond to of 74559

Greece 5-Year Sovereign CDS Widens Dow Jones Newswires LONDON -- The pressure on Greece showed no sign of abating Friday with the cost of insuring the country's sovereign debt against default rising again. According to CMA DataVision, Greece's five-year sovereign credit-default swap spreads--a key measure of credit risk--stood at 446 basis points in early trading Friday, up around 19 basis points from Thursday's close of 427 basis points. The movement means it now costs around EUR446,000 a year to insure a notional EUR10 million of Greek sovereign debt against default for five years. That's up from the EUR427,000 it cost at Thursday's close and the EUR256,000 it cost a month ago. "With sovereign debt and fiscal difficulties remaining a concern, sovereign spread volatility will not disappear soon," said Tim Brunne at UniCredit SpA. Concerns about Greece's debt woes, and fears that other deficit-heavy economies in the region will run into the same problems, continue to weigh on market sentiment across the globe. "The crisis in euro area sovereigns is reaching new proportions and the contagion is getting more serious," said analysts at Royal Bank of Scotland PLC in a note. Portugal's five-year sovereign CDS spreads were quoted at 239 basis points, after closing Thursday at 229 basis points. And Spain's sovereign CDS spreads widened around 12 basis points to 182 basis points, according to CMA. CDS are tradable, over-the-counter derivatives that function like a default insurance contract for debt. If a borrower defaults, the protection buyer is paid compensation by the protection seller. Swap buyers may be protecting investments they own or simply making bearish bets against companies or countries.

To: KyrosL who wrote (72395)	2/7/2010 2:19:16 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 74559

I don't get it with "Sovereign Debt". People who lend money to Greece, New Zealand, Russia, Saddam or Mugabe have only themselves to blame when the sovereign tells them that they won't be getting their money back, sorry. It's not like a mortgage on a house or a loan to a car factory, or bank, where the creditor can go to a court and demand payment enforcement or forfeiture of assets. Countries are not car factories and cannot be foreclosed. The citizens can just vote to repudiate the loans, issue new currency if they wish, and carry on regardless, with a clean balance sheet. There was whining around the world when Saddam's creditors were told they were out of luck. Too bad. It wasn't "the country" or "the electorate" which borrowed the money. It was the rulers. Same everywhere. New Zealand is currently borrowing $1 billion a month to keep the game going. I feel zero obligation to repay those creditors. When the time comes, I'll vote to tell them they made a mistake giving it to those criminal deadbeats who had control of the country. NZ will go from owing $170 billion to owing nothing, overnight. All the assets will still be sitting right where they are. People who think government debt is secure debt are off their rockers. People talk of shares needing a risk premium, but in fact it's currencies, and sovereign debt, with sovereign backing, which should carry a hefty risk premium. Mqurice