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Old Sep 18th, 2011, 11:15 AM   #109
trefoil
 
 
Join Date: Mar 2007
Posts: 3,523
Continuing on the whole Greek debt being under Greek rather than foreign law I brought up way back (http://www.elitetrader.com/vb/showth...56#post3276656), another bit from the FT on this subject, which gets into the whole contagion thing and then gets into the interesting effect the legal stuff is having:

Quote:

In fact markets might re-price the periphery in advance of Greece leaving, during the months it would take to negotiate a formal exit via a treaty amendment. Releasing Greece’s FX reserves for defending the Neo-Drachma from the Eurosystem (again, not provided for under current treaties) would deal a further blow to the credibility of original terms of euro monetary union as “permanent” and “irreversible” Community law. ”The permanent currency union would have been revealed to be a snowball on a hot stove,” Buiter says in his Tuesday note...
An English-law bond maturing in 2012 is currently priced at around 80, compared to Greek-law debt also maturing in 2012 priced at around 59, for example. This is mostly because of the way in which the current bond swap (which will also convert Greek-law bonds into English law) has affected the market. Holdouts in Greek-law bonds face considerable risks of a legal change to the terms of their bonds, whereas English-law holders are insulated from this risk. English-law holders receive greater protections against other creditors being secured above them as well.
Foreign-law bonds haven’t really been seen as being additionally attractive for protecting against re-denomination risk. Until now, maybe?
Also, a point I hadn't really thought of is how the domestic banking system is affected because of the lack of sovereignty over one's own currency. Really, the more I think about it the more I think the ceding of sovereignty is behind a large part of this mess:

The Governance of a Fragile Eurozone
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Old Sep 18th, 2011, 11:48 AM   #110
jo0477
 
 
Join Date: Aug 2010
Location: Vancouver, Canada
Posts: 229
Quote:
Quote from Happy Hopping:

thanks for the link. But when I click that link, it says

http://data.cnbc.com/quotes/GRCD5

5286 under Greece 5 yr. CDS

what is 5286? Don't tell me it's $5286 to buy a 5 yr. Greece CDS? That's not possible
You're mis-reading the quote. $5286 is in thousands and the underlying value to insure is 10 million. So right now it would cost roughly 5.3 mil to insure 10 mil of Greek debt for 5 years.
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Old Sep 18th, 2011, 08:39 PM   #111
zdreg
 
 
Join Date: Oct 2003
Posts: 9,001
order to shrink the public sector, the government has announced plans to merge existing agencies, abolish others and put tens of thousands of employees on a "reserve" status at 60 percent of their pay.

why doesn't the greek government furlough workers to a 3 day week instead of putting them on reserve?
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Old Sep 21st, 2011, 04:17 AM   #112
Happy Hopping
 
 
Join Date: Oct 2006
Posts: 254
Quote:
Quote from jo0477:

You're mis-reading the quote. $5286 is in thousands and the underlying value to insure is 10 million. So right now it would cost roughly 5.3 mil to insure 10 mil of Greek debt for 5 years.
thanks for the reply. If greece goes w/ a partial default, would the people who underwrite these CDS still have to honor it? any1 knows what's in the fine print?
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Old Sep 21st, 2011, 04:22 AM   #113
Martinghoul
 
 
Join Date: Jan 2009
Location: London
Posts: 6,310
Quote:
Quote from Happy Hopping:
thanks for the reply. If greece goes w/ a partial default, would the people who underwrite these CDS still have to honor it? any1 knows what's in the fine print?
Nobody knows and that's why sov CDS is such a sh1t product. It's probably not going to trigger. At least those are the indications so far.
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Old Sep 21st, 2011, 08:55 AM   #114
benwm
Registered User
 
Join Date: Mar 2008
Posts: 1,318
Quote:
Quote from Martinghoul:

That they ultimately integrate... With or without Greece, but Greece is a special case. I think it's important to recall that the US has gone through this and managed to make it. Obviously, there are some differences, but still.
Do you think the leaders will bother to let their people vote on the issue before they proceed with the integration?

I don't think the case Greece is so unique. It is just the extreme at one side of a spectrum, just next to Portugal, Ireland, Spain, Italy, Belgium..

I think you need to face reality that your Euro dream is over, and the only way you can sustain it is through force, against the will of the majority. I'm not sure if that's what you're implying?

Maybe I'm wrong and they'll hold new refendums in each of the separate nation states to "integrate", and the people in each nation vote in favour, but I doubt it...
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