New Poll: Greek haircut

Official TSP Center polls.

Moderator: Aitrus

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Will the 50% Greek haircut trigger a "credit event" in CDSs?

Yes
5
33%
No
10
67%
 
Total votes: 15

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Jahbulon
Posts: 3901
Joined: Wed Nov 17, 2010 1:22 pm

New Poll: Greek haircut

Post by Jahbulon »

Will the Greek private debt 50% haircut trigger a "credit event" on credit default swaps, forcing European banks to make big payouts?

Yes
No

DavidTiger
Posts: 135
Joined: Thu Oct 14, 2010 11:43 am

Re: New Poll: Greek haircut

Post by DavidTiger »

Can you explain a little more? I'm not sure what you mean by "pay out".

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Jahbulon
Posts: 3901
Joined: Wed Nov 17, 2010 1:22 pm

Re: New Poll: Greek haircut

Post by Jahbulon »

Many people bought insurance against that debt, so with a 50% haircut someone should be collecting.

DavidTiger
Posts: 135
Joined: Thu Oct 14, 2010 11:43 am

Re: New Poll: Greek haircut

Post by DavidTiger »

Well technically, this wasn't a credit default. I'm betting that the banks will use that as an excuse and not pay out.

User avatar
Jahbulon
Posts: 3901
Joined: Wed Nov 17, 2010 1:22 pm

Re: New Poll: Greek haircut

Post by Jahbulon »

Yea, not sure what will happen, but it is something to watch, because if that is the case, it sets a precedent going forward...........

User avatar
flight23
Posts: 1342
Joined: Mon Jul 26, 2010 10:47 am

Re: New Poll: Greek haircut

Post by flight23 »

It wont trigger because this is a "voluntary" forgiving of debt by the banks, not a true default. It might have greater implications in that it basically makes the whole CDS market worthless if the countries are going to play semantic games like this, which in effect means going forward institutions will not have faith in CDS as hedges/insurance and thus will demand higher rates overall rather than taking on the debt and then getting insurance. Thats how I understand it at least.
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User avatar
Jahbulon
Posts: 3901
Joined: Wed Nov 17, 2010 1:22 pm

Re: New Poll: Greek haircut

Post by Jahbulon »

Makes you wonder why one would play the game?

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