The eurozone continues to supply endless entertainment, if you have the stomach for it. I received these three articles by email and thought would post them here:
To explain the first one; a CDS is the acronym for Credit Default Swap. Something dreamed up in the 90’s by a team of bankers at JP Morgan, as related in the Gillian Tett, nonfiction, “thriller” Fools Gold.
For want of a better description, a CDS is a form of insurance that protects the holder of an IOU from default. (kind of like the highly credible Payment Protection Insurance (PPI) that the banks have admitted mis-selling and are now paying back).
CDS were also one of the toxic vehicles that broke the World economy when it was realised the AIG could never, never, ever pay on the hundreds of billions of contracts they had written.
Just like the PPI scandal, I for one could never understand why one would need a CDS. If you think somebody is not going to pay back your money, surely you should not lend it?
So now, according to Reuters, it costs’ round 16% of face value to insure Greek ten year debt.
Pimco’s Bill Gross: US in Worse Financial Shape Than Greece
Dennis Gartman: Gold To Replace Euro
European Probability of Default
