Someone does. I am sure there's some BIS data on it somewhere.
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The weekly: Greece to default/restructure THIS weekend? thread
- Thread starter TGregg
- Start date
Quote from Martinghoul:
1) Yes
2) Yes, but it wasn't MFG's problem
3) No, there isn't really a move that discontinuous. CDS had value before the referndum news because the mkt was pricing some uncertainty. So yes, Greek CDS does move, but it doesn't move from 0 to 100pts upfront in a day.
4) I don't know. I don't know who does either.
Thanks for the replies.
For me, the fact that you have these potentially sizeable CDS hedges in place but not knowing if they will really be paid out in the event of a bond default is problematic, to put it mildly. Like having a spread between two products that are barely correlated but telling your back/middle office the risk is less (because of the related hedge), enabling you to increase position size in both--> greater risk
I think a Greek default on its the own the system could handle - it's not as if a sovereign hasn't defaulted before - but the CDS additional whammy is something we haven't seen before.
We have seen it a few times before. Most prominent case is Argentina in 2001 and the Eternity Global vs Morgan Guaranty/JPM, 2nd District Court.Quote from benwm:
Thanks for the replies.
For me, the fact that you have these potentially sizeable CDS hedges in place but not knowing if they will really be paid out in the event of a bond default is problematic, to put it mildly. Like having a spread between two products that are barely correlated but telling your back office the risk is less (because of the related hedge) when the risk is in reality greater.
I think a Greek default on its the own the system could handle - it's not as if a sovereign hasn't defaulted before - but the CDS additional whammy is something we haven't seen before.
Point of all this is that sov CDS mkt should have never been allowed to exist the way it does now.
M
morganist
Quote from benwm:
Thanks for the replies.
For me, the fact that you have these potentially sizeable CDS hedges in place but not knowing if they will really be paid out in the event of a bond default is problematic, to put it mildly. Like having a spread between two products that are barely correlated but telling your back/middle office the risk is less (because of the related hedge), enabling you to increase position size in both--> greater risk
I think a Greek default on its the own the system could handle - it's not as if a sovereign hasn't defaulted before - but the CDS additional whammy is something we haven't seen before.
I would like to say that this is partly what I have been saying will happen all a long. The CDS is a type of insurance and I said that pension and insurance functions will not be able to operate due to the retraction in the money supply. This is based the fundamental flaw of the banking system.
M
morganist
Quote from Martinghoul:
We have seen it a few times before. Most prominent case is Argentina in 2001 and the Eternity Global vs Morgan Guaranty/JPM, 2nd District Court.
Point of all this is that sov CDS mkt should have never been allowed to exist the way it does now.
I hate derivatives. I really don't think they should have gone further than forwards, futures and basic options. There is a point were it is not worth having insurance.
There's nothing wrong with derivatives if they're adequately margined and traded on the exchange.Quote from morganist:
I hate derivatives. I really don't think they should have gone further than forwards, futures and basic options. There is a point were it is not worth having insurance.
Now you're being funny again...Quote from morganist:
I would like to say that this is partly what I have been saying will happen all a long. The CDS is a type of insurance and I said that pension and insurance functions will not be able to operate due to the retraction in the money supply. This is based the fundamental flaw of the banking system.
M
morganist
Quote from Martinghoul:
There's nothing wrong with derivatives if they're adequately margined and traded on the exchange.
Now you're being funny again...
No just pushing the boundaries of accepted thought. That is much needed.
It is not that I am being funny. I am just looking at it at a way that does not conform to the current understanding that you follow.
I think you are a clever guy. But I find you have difficulty understanding anything outside the accepted understanding in text books, which are wrong.
Even if derivatives can work, under your regulations, the real world use is not working. There is too much room to abuse them.
Simple derivatives, easy to understand, less room to make problems, lower risk in use. Simple.