FT´s commentator finds of course a fly in the ointment of Europe´s deal

[justrading]

They lied when they said Greece would not default, why should we believe this fairy tale happily ever after BS?

 

[Random.Capital]

This is a default.

If they do an end run on CDS payout, that will reduce the value of the insurance and deleverage the rest of the debt market.

 

[wartrace]

What I want to know is why a bank with a credit default swap would willingly forfeit that by "voluntarily" accepting a 50% reduction? Wouldn't they be better off being forced to take the reduction and trigger the default obligation?

 

[Tsing Tao]

Quote from wartrace:

What I want to know is why a bank with a credit default swap would willingly forfeit that by "voluntarily" accepting a 50% reduction? Wouldn't they be better off being forced to take the reduction and trigger the default obligation?

That is an excellent question, and a question no one has been able to answer thus far.

 

[ASusilovic]

Quote from wartrace:

What I want to know is why a bank with a credit default swap would willingly forfeit that by "voluntarily" accepting a 50% reduction? Wouldn't they be better off being forced to take the reduction and trigger the default obligation?

I think there is and was enormous political pressure on banks to NOT do so. Merkel and Sarkozy were actually walking across the street in Brussels "to persuade" the bank(st)ers....

 

[Eight]

so the Greeks stole from Mommy's purse continually, when confronted they threw a temper tantrum. Then Mommy and Daddy got together and pretended to fix the problem so the neighbors wouldn't think they were incompetent...

 

[ammo]

Quote from wartrace:

What I want to know is why a bank with a credit default swap would willingly forfeit that by "voluntarily" accepting a 50% reduction? Wouldn't they be better off being forced to take the reduction and trigger the default obligation?

trigger the default on zero,they get 0,this way they still have 1/2 of the imaginary number above zero,an option that wasn't around for lehman

 

[wartrace]

Quote from ASusilovic:

I think there is and was enormous political pressure on banks to NOT do so. Merkel and Sarkozy were actually walking across the street in Brussels "to persuade" the bank(st)ers....

Then THAT brings up the question WHY are the politicians concerned about triggering CDS? Could it be that they know there not enough assets to back them?

 

[rew]

Quote from wartrace:

Then THAT brings up the question WHY are the politicians concerned about triggering CDS? Could it be that they know there not enough assets to back them?

Everybody knows there aren't enough assets to back them.