Vague_Boy Posted May 12, 2010 Share Posted May 12, 2010 As we pointed out last week, nobody cares about either Greece or the PIIGs any more. The focus among the smartest money out there, in the face of CDS traders, for the third week running, is on the core of Europe, and specifically on the UK. Last week the net notional derisking in UK was a massive $1,063 million in 280 traded contracts, which according to our files is the single biggest one week derisking amount on record. all the Greek "speculators" are now focusing their attention squarely on the UK... and France, which came in second with $384 million in derisking. Incidentally, these two represented the greatest amount of of derisking in all top 1000 CDS reference names (third altogether was not surprisingly Goldman Sachs with $256 million). The bet is now squarely on that the PIIGS contagion will move to the UK, and that France will also not be spared. We wish Mr. Cameron all the best as he attempts to push the $50 billion austerity measure through. We have a feeling his popularity rating in under a year will be even lower than that of president Obama. And if it isn't it will be because the cable and the dollar will be at parity. LINK CDS are insurance policies you can take out to cover a default by a company or country. The price of them is indicative of the risks inherent in lending to said company/country.rising CDS could lead to interest rates rising (both public and private), pound getting dumped, bond auction failures etc. (Interestingly CDS markets flagged the problems in Iceland well ahead of the events.) Of course, all this will be the fault of the new coalition government. As Wednesday1 and Titanic99 will doubtless tell you, all these problems sprang into being literally 5 minutes ago and have nothing at all to do with the wise leadership of the blessed St. Prudence of Brown. Link to comment Share on other sites More sharing options...
Tony Posted May 12, 2010 Share Posted May 12, 2010 This has been the case for a while. The risk of UK PLC defaulting has been priced in for some time even though it hasn't formally shown on the credit rating. The Wall St Journal is running various opinions that Britain is only a short step away from a Greek moment due to the depth of the financial deficit crisis that we have. Cameron and Clegg should seriously consider calling in the IMF to look at the books alongside a pre-agreed strategy for a bailout if the books look as shot as some suggest. It's a terrible situation and one that nobody should take pleasure in. Link to comment Share on other sites More sharing options...
JFKvsNixon Posted May 12, 2010 Share Posted May 12, 2010 You cannot compare the Greek economy with ours. The Greeks have silly spending commitments which are couple with a serious tax collection problem. These problems are transparent and have led to the loss of confidence in the Greek economy. For example various studies have estimated that the government may be losing as much as $30 billion a year to tax evasion, tie this to an average retirement age of 53, and you are always going to have a financial crisis sooner or later. Link to comment Share on other sites More sharing options...
Tony Posted May 12, 2010 Share Posted May 12, 2010 I'm not comparing it, the WSJ is drawing some parallels. We know that pricing is default risk not credit rating. It's worth a browse for a non-UK perspective. http://online.wsj.com/article/BT-CO-20100512-710914.html?mod=WSJ_World_MIDDLEHeadlinesEurope Link to comment Share on other sites More sharing options...
andyofborg Posted May 12, 2010 Share Posted May 12, 2010 Cameron and Clegg should seriously consider calling in the IMF to look at the books alongside a pre-agreed strategy for a bailout if the books look as shot as some suggest. why the obsession with the imf? they are quite capable of looking at the books themselves and when osbourne runs out of fingers and toes, vince will pop over and show him how to use a calculator much of our debt is on a long repayment term and the chances of us defaulting on repayment is slim. there is a short term problem with the budget deficit, some is related to the banks and other economic support during the recession and some is related to the imbalance between receipts and spending. Link to comment Share on other sites More sharing options...
Vague_Boy Posted July 13, 2010 Author Share Posted July 13, 2010 Moody's Lowers Portugal's Rating The euro fell against the yen for a third day after Moody’s Investors Service reduced Portugal’s credit rating, stoking concern that the region’s sovereign-debt crisis will slow the economic recovery. “The euro was really buffeted by the downgrade in Portugal,” said Boris Schlossberg, director of research at the online currency trader GFT Forex in New York. “It brings back all of the worries of sovereign-debt issues that have been haunting it for the past several months.” As predicted by me (and to the surprise of absolutely no one who is paying attention) Portugal becomes the next domino to start to fall. Ireland is likely to be next. All hail the "recoverah!" Link to comment Share on other sites More sharing options...
Vague_Boy Posted July 22, 2010 Author Share Posted July 22, 2010 Well, it looks as if my prediction of a Greece -- Spain --Portugal -- Ireland -- UK domino effect is panning out. Greece downgraded to "junk" status Spain downgraded 28 April Portugal Downgraded March 24 Ireland downgraded 19 July I expect the UK to hold on to its current rating for now, but it's a race between an inevitable stock market crash or the second round of bank failures as to what will finally send us over the edge financially. Link to comment Share on other sites More sharing options...
Wildcat Posted July 22, 2010 Share Posted July 22, 2010 Vague Boy, what are you wearing under your hair shirt? http://www.guardian.co.uk/commentisfree/2010/jul/21/keynes-economic-model-recession Link to comment Share on other sites More sharing options...
Vague_Boy Posted August 24, 2010 Author Share Posted August 24, 2010 As predicted by me (and to the surprise of absolutely no one who is paying attention) Portugal becomes the next domino to start to fall. Ireland is likely to be next. What did I tell you? S&P lowers Irish sovereign credit rating Standard & Poor's, the renowned credit rating agency, has today announced a further downgrade on its rating for Irish sovereign debt amid signs that the government's banking bailout will be more expensive than initially thought. The rating was lowered to AA- which is three notches below the AAA that many governments around the world had enjoyed prior to the credit crunch and the worldwide recession. LINK "Everything is happening exactly as I have foreseen!" Link to comment Share on other sites More sharing options...
Wildcat Posted August 25, 2010 Share Posted August 25, 2010 What did I tell you? LINK "Everything is happening exactly as I have foreseen!" Did you predict the slump in growth because of the austerity measures? I thought you were cheerleading them? and yet they seem to have got their sums very wrong. http://www.bloomberg.com/news/2010-08-23/cameron-economy-set-to-take-a-pounding-as-traders-turn-bearish.html Link to comment Share on other sites More sharing options...
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