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Credit Insurance Defaulted on Greece

Nothing seems to work anymore as it used to do in the past. There was a time, not long ago, when a credit default swap was always issued by a smart bank and had always a counterparty which was not so smart to underwrite it. Usually the counterparty was AIG, or some other big insurer who thought it could manage any imaginable risk. But the International Swaps and Derivatives Association just changed this rule today, by deciding that the CDS was not triggered yet, despite the huge decline of 90% in the last months. The debt of Greece now stands at “only” $3.2 billion and is basically covered by no insurance or other type of derivative. This makes the sellers and the consulting banks to look very smart, since they do not have to pay anything… yet.
Actually the various rounds of debt reductions have made only a couple of winners so far – namely the Greek government and the Goldman Sachs and other intermediaries who have already cashed in their advisory fees long time ago. Imagine this – wouldn’t you like to run a big corporation, borrow $32 billion, do whatever you want with it and then get away with only 10% of it because you “are too big to fail”?
Hmmm, I would like to be a government like this one. And take the population on the streets if somebody tries to corner me and ask for the WHOLE amount of money back…

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