The International Swaps and Derivatives Association, a private organization which is the world’s supreme authority on a multi-trillion dollar market, has ruled that the Greek debt agreement was not a “credit event.” This ruling means that all the investors who purchased credit default swaps (insurance policies) on their Greek bonds will not be paid for their losses (up to 70%) on their Greek bonds. Many banks are breathing sighs of relief because it means that they will not have to pay for the losses the investors have experienced. Other banks are gnashing their teeth because they bought the swaps precisely to cover their possible losses from such a default. Theoretically, the gains and losses should equal zero (assuming that the premiums paid for the insurance were accurately determined to equal the possible losses–a very implausible assumption–someone always makes a mistake assessing the real risks). It is safe to say that there will some losers. Who they are and how much they lost is a very important question. We won’t know for a few months (unless someone leaks the information sooner). If you want to know more about the ISDA, here’s the link to their homepage. Barry Ritholz, one of the most prominent and insightful of all the Wall street bloggers, has a right-on post about the ISDA.
How impatient are you when you surf the web? The world has the attention span of a gerbil. (Not a quiz link)
The public relations campaign on the possible bombing of Iran continues. We’ll see if the New York Times publishes an opposing view any time soon.
How bad is it in Greece? Check out this graph. (not a quiz link)
The Institute for Economics and Peace has published an extraordinary study entitled “ECONOMIC CONSEQUENCES of WAR on the U.S. ECONOMY.” This is one of the very few studies I have ever seen that has gone beyond the usual framework of simply adding up standard military costs and standard defense revenues. I recommend it highly. (not a quiz link)
World Politics News 
Leave a comment