Economic crisis: Some questions & thoughts


G

gpadu99

I would like to ask some questions on the latest developments about
the debt crisis in Greece. We hear that Greece "may default". What
does exactly "default" means? Is it failure to pay, is it bankruptcy?
And what are the real implications if a country goes "bankrupt"?

Furthermore, the who are the CDS protection sellers? What will happen
to them?
 
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I

Igor Chudov

I would like to ask some questions on the latest developments about
the debt crisis in Greece. We hear that Greece "may default". What
does exactly "default" means? Is it failure to pay, is it bankruptcy?
And what are the real implications if a country goes "bankrupt"?
I do not see how a sovereign state can go through bankruptcy. It could,
however, default (stop paying debts) and even try to renegotiate debt.
Furthermore, the who are the CDS protection sellers? What will
happen to them?
They would be required to pay the difference between expected and
actual payments.

I do not see what is the hoopla about CDS sellers in this
instance. Greece was fraudulently concealing its budget deficit and
was a profligate spender of money. Now it has to face the music. I
cannot see how one could blame credit default swap sellers for this
unfortunately bad policy.

i
 
B

Bill

gpadu99 said:
What
does exactly "default" means? Is it failure to pay, is it bankruptcy?
And what are the real implications if a country goes "bankrupt"?
Default means to stop making the scheduled payments on the country's
dept.
Furthermore, the who are the CDS protection sellers? What will happen
to them?
What is a "CDS prtection seller"?
 
P

PeterL

Default means to stop making the scheduled payments on the country's
dept.




What is a "CDS prtection seller"?

CDS = Credit Default Swaps.
 
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A

Avrum Lapin

PeterL said:
CDS = Credit Default Swaps.
Think of the CDS s a side bet. If the bond issuer defaults the original
CDS seller has to make good on the debt. If the CDS seller can't then he
becomes like AIG.
 

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