None are likely to default within the next 3 years (I mean, I can't look beyond that and if they do outside of that kind of timeframe it won't be for the reasons on the table now). You have to factor the cost of a default versus the cost of keeping the system running. Obviously you could argue about long-term costs and whatever about keeping a broken system running (and I don't really personally have an opinion about that, it could be true but it probably isn't), but since people aren't convinced that everything is FUBAR the perceived cost of keeping the system running (bailing out Greece and any country that needs it and doing so until they get their fiscal house in order even if it means not seeing 50% or more back of the loans) is much lower than facing another Lehman style crisis. Of course, in more than a few years years, we'll be back here if the fiscal are not fixed in the meantime (I hope and pray they will be) and then a real crisis might unfold. Right now there is enough willingness to support and the markets will not lose confidence in Eurozone debt from this situation.
suppose I was holding a credit default swap on one of the piig government bonds is the lengthening of maturity an event deemed to be a default. if the answer is yes I would collect immediately the amount for which I was insured for. If so some banks or insurance or other entity who issued these CDS would take a big hit against capital. http://en.wikipedia.org/wiki/Credit_default_swap
The Euro governments are all excelling at what politicians excel at, ie 1) Talking 2) More talk 3) Scheduling yet more meetings with of course plenty of more talk, and last but not least 2) A load of dithering Guys, there's no real plan to sort this mess out, just more talk and more dithering. If you look closely at what's happening the markets are getting nearer and nearer to forcing the politicians to do something, that's the only time they actually do anything. So expect yet more talk next week with little action. But the markets have turned up the heat on the stove and the pot is starting to really bubble, give the markets another 4 weeks max and they'll have the bot boiling - AND THAT'S WHEN SOMETHING WILL HAPPEN. Of course, the fact the politicians have left the pot bubbling so long means, as every cook/chef knows, that when the pot boils over it makes a real mess of your stove and is somewhat uncontrolable. Or to put it another way - it's going to get messy........
Yes. The euro will skyrocket. Mock my words. Banks will pull out liquidity like crazy, you'll have a euro crisis, no supply, just demand. It will bring non-euro economies in europe to their knees due to the ultra expensive euro. This will create a gold sell-off to get cash from which the imf will collect cheap gold and we"ll probably have another gold standard for a few decades or so. Winners: imf/central banks.
Best bet for the upcoming joke: Long eur Short gold Short all european indexes Long crude I'd start loading on options slowly starting on monday.
Ah, and the next best thing after you have a new gold standard? A single currency for the entire developed world.