Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Residential Real Estate Post-Crash Index-Moderated -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (27076)	6/26/2011 7:52:50 PM
From: bentway	Read Replies (1) \| Respond to of 119360

"While the country will still be left standing after a debt default, there is one important sector that will not be standing: Wall Street." That ALMOST makes me WANT it to happen..

To: Les H who wrote (27076)	6/26/2011 10:58:14 PM
From: bentway	Respond to of 119360

Great multi-part article on sovereign defaults by CR: calculatedriskblog.com "The underlying causes of default (such as rises in interest rates, wars, commodity price collapses, and simply borrowing too much money) have been diagnosed for many episodes. Proximate to the default, any of the following six financial changes might occur: 1. Government revenues fall far below history or forecast; 2. Expenses aside from debt service rise far above history or forecast; 3. Interest rates rise substantially; due to inflation, credit spreads, illiquidity, or other causes 4. Demand for bonds suddenly drops or disappears (a sudden stop); 5. Exchange rates move, making payments on foreign denominated bonds much more expensive (currency risk), and, 6. A government simply decides not to pay, even though it has the capacity to pay (repudiation). Paolo Manasse and Nouriel Roubini studied sovereign default risk and concluded that many guidelines used for estimating when default was likely did not perform well, primarily because those guidelines looked at separate risks. For example, total government debt exceeding 200% of GDP is often used to indicate stress. However, some other circumstances may make the problems much less severe (like having a growing economy and no foreign denominated debt). Other factors might make it much worse (like high inflation)." It's about time we joined the crowd! We could easily have ALL SIX of the above criteria, with dash of bad luck!