Otherwise, all you are doing is, in effect, moving default objects around.
FORBES: Adobe's Creative Cloud And The Expansive Future Of The Digital Workplace
Moving derivatives trades to clearing-houses mitigates the effect of a default of a clearing member (Lehman Brothers' cleared trades were handled smoothly in 2008, for example).
But certainly the level of the local government, local municipalities, local agencies and so on, you could see a significant increase in those default rates will have a negative effect on muni bonds and on spreads on them, as well.
FORBES: Muni Talks: Roubini And Lehmann Say Get Out Of Municipal Bonds
Defaults can also generate a ripple effect on other countries near default, leading to a global recession.
There are rumours that Greek banks have also been keen sellers of credit-default swaps on sovereign Greek debt, in effect doubling up on their exposure to a debt crisis.
In effect, it will be forced to default on its obligations to society.
There are the glimmers of a plan: strengthen the banks to withstand the shock of default and then build a massive firewall around Greece to avoid a domino effect.
Given the currently very low short term interest rates (and assuming that the effect would be the same) that would mean that a default on Aug 2 could double short term interest rates.
FORBES: The Last Time the United States Defaulted on Treasuries
While a sovereign default in any one of these European countries would not have a lasting or consequential impact on the capital markets as a whole, the real risk here, in my opinion, is the contagion effect that could spread to other larger European economies should the default not be contained to any one or two of the smaller economies.
FORBES: Raising The Debt Ceiling Is Just Kicking The Can Further Down The Road
With that promise in hand, the bank would make the purchase and immediately sell it onto the buyer at a mark-up, agreeing the buyer could pay, say, three months after goods are delivered--in effect, trade finance at a fixed rate with legal protection against default on the one side and loan sharking on the other.
The euro bail-out for Greece (if it goes ahead) in effect invalidates the CDS market by claiming that somehow, magically, Greece is not in default and therefore CDS contracts should not pay out to those insured by them.
应用推荐