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Hahahaha, priceless... You got any more advice here, sire?

Indeed, 100% spot on... This is a very sound idea.

I understood you the first time.

Greece, taken by itself, is irrelevant. Just like in the case of Leh, it's the ripple effects that matter.

I think it would be an interesting experiment (and I think someone was talking about that recently in the context of Bruce Berkowitz) to see how a manager's performance is correlated with the amount and sort of publicity they get.

Sure, that could be a flaw, although I imagine that's just a few extra basis points on the realized default rate... As I said, I like the idea enough that I am happy to subsidise. [B] Your art? I would have gone for modesty, amico :). In seriousness, I do enjoy what I do, for sure, but...

Hilarious - yes; disturbing - no. I cannot claim I've had the pleasure of meeting the (wo)man... Does he/she also come from a long and illustrious line of people with a genetic predisposition towards banking?

Agree with your analysis, on the margins, DMTB... To me, there's an enormous amount of value in establishing the model, which is why I am happy to, effectively, subsidise it. So I sort of think about the lending I do on ZOPA as a "hybrid", rather than a pure loan/bond.

That's misleading as you're comparing apples and oranges...

I just realized that DMTB's suggestion (seconded by me) isn't gonna fly. The only index you can short these days is the DAX, which is probably not what you'd wanna do. Everything else would fall under the short-selling ban, if I am not mistaken.

I don't see the OP ever asking a question about why the spread has increased. Methinks you need to read the post more attentively. In general, it's not that simple. It's one of the reasons, but it's not the only one. There's a whole variety of things happening in the mkt.

Well, as morganist says, it's called ZOPA (an unfortunate name, but there you have it). I think it's pretty cool and I am a lender there. They also used to offer the direct peer-to-peer intermediation service, although I am not sure they're still doing it.

Which last part? That we have had a period of leverage accumulation followed by a deleveraging? When have I ever disagreed with such a blindingly obvious assertion?

I am not sure what we agree on and how we managed to arrive at this agreement. As to the rest of what you say, all I can say is "D'OH!". That's leverage accumulation followed by credit crunch/deleveraging for ya, innit? Therefore, I don't really quite see the point.

I lend a bit on a system in the UK that's similar to the Prosper thing, although it's tranched and spread across a bunch of creditors. I want to help take as much of this biz away from the banks as I can. Well, firstly, banks don't invest your deposits in safest instruments. Secondly, the...

Yep, there's a bit of that being priced, but it's hard to price bunds, given the extreme outcomes.

The bank takes risk when it loans the money out at a higher interest rate (duration risk, credit risk, etc). You, on the other hand, don't take a lot of risk, since your deposit is FDIC guaranteed and there's no notice period. So why should you be receiving the same rate as the bank?

Erm, no, this is very wrong...

Short the front Eurodollar (GE) contract is the most obvious way to do what you want to do... However, and this may come as no surprise to you, quite a bit of this blowup is priced in already. As DMTB says, if you wanna be short EUR banks on the back of Greek writedown, why not just be short...

<iframe width="420" height="315" src="http://www.youtube.com/embed/8gciFoEbOA8" frameborder="0" allowfullscreen></iframe> Although, come to think of it, I think this shark was actually rather long.