At which point, presumably, the rest of the eurozone would have to accept a Greek default and a much more significant reduction in the value of what the country has to repay than the implied 21% that has been allowed so far.
Meanwhile their shares, which would normally be the most worthless securities in a default, suggest that the firms still have substantial value.
Unless the ECB were to do something stupid, a debt default by Greece would have no impact upon the value of the euro, so the Greek economy would still have a viable currency.
His worst-case scenario assumes that 90% of the CMO's mortgages default and it recoups only half their value, resulting in a net 45% loss.
Some go so far as to say that if a bond is insured and bondholders receive back the par value, no default has taken place, just an unscheduled call.
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This downward spiral may have been exacerbated by Europe's efforts to cut the value of Greek sovereign debt without triggering a payout on credit-default-swap contracts.
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Canadians who take out mortgages worth more than 80% of the value of the property must also take out insurance against default from a federal agency, the Canada Mortgage and Housing Corporation.
Markit, for example, gathers information from a large collection of financial services companies to provide an independent view on the value of credit default swaps.
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In benchmarking that price point as the default value for nearly all books in the Kindle Store, Amazon was discounting to a loss, presumably to build adoption of the Kindle platform.
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Some loan pools already have seen default rates exceeding 40%, a big reason many subprime bonds trade at a fraction of their face value, and their holders won't recover their full principal balance, despite the recent rally.
They will default, their currency will lose value, and high inflation will result, causing higher unemployment and a further erosion of their economy.
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