You can see based on the 2 link you gave me above (thanks for the link), that the CDS and the yield are dropping fast in the past days, especially after thurs. when they come up w/ that package for greece. So why the concern?
Well, it's not like they haven't dropped fast and hard before and yet here we are today, no? As to the concern, see my post(s) above...
Good insights Martinghoul. Thanks for sharing. What is interesting is the resilience of the Euro despite the the real possibility of a Euro break up. But Germans collecting Greek taxes just isn't politically feasible IMHO. If the Greeks are rioting over spending cuts, how are they going to feel paying their taxes to the Mr Fritz? I still favour a two speed Eurozone with a second Euro currency (aptly named EPIIG) for the PIIGS. Then you could convert the Euro debts into less valuable EPIIGS. Make the new currency partially convertible into gold to make it worth "something" and set a floor. Let the PIIGS devalue their EPIIG by a steady pre-determined amount each year. Greater flexibility in the system etc to allow for economies faring differently. You could also set a different (lower) interest rate on the EPIIG currency. Create a sub-panel of the ECB board to set EPIIG rates, accountable to the ECB to maintain confidence. Allow promotions-demotions between Euros and EPIIGS. You would only need to create a single new currency just like they did with the Euro rather than having to create Drachmas, Pesos, Liras,etc and you might still have a semi-united Eurozone project. Haven't we long reached the point where the weaknesses in the Euro system have been exposed and modifications need to be discussed? Maybe my idea is wrong one, but the present system is just being slowly eroded and will lead to eventual collapse.
"I still favour a two speed Eurozone with a second Euro currency (aptly named EPIIG) for the PIIGS. Then you could convert the Euro debts into less valuable EPIIGS. Make the new currency partially convertible into gold to make it worth "something" and set a floor. Let the PIIGS devalue their EPIIG by a steady pre-determined amount each year. Greater flexibility in the system etc to allow for economies faring differently. You could also set a different (lower) interest rate on the EPIIG currency. Create a sub-panel of the ECB board to set EPIIG rates, accountable to the ECB to maintain confidence. Allow promotions-demotions between Euros and EPIIGS" and what for the $US?
My pleasure... I think your idea has merit. In fact, there's a whole array of ideas that you can come up with. The problem isn't that there are no solutions. It's all about the rigidity of the current setup and the lack of will to make any systemic changes. And yes, I agree that, as of now, all we have is a slow (but accelerating) trainwreck in progress.
You mean in general, what should the US do to boost the economy? If that is the question, for one I would cut corporate tax rates to 25% and pay for it by eliminating the tax loopholes, even if meant a bigger budget deficit. You want companies to invest in US again. Or how can the US strengthen the $? That is an easier question - allow US companies to repatriate profits earned overseas without onerous taxes. The US$ would get a massive boost, but I think the current administration favours a weaker $.
http://workforall.net/CDS-Credit-default-Swaps.html are there futures on Italian bonds or on other European bonds , except Germany,UK ? French OATs ? http://en.wikipedia.org/wiki/Credit_derivative