• 24 Oct 2011 at 2:41 PM

A Conundrum

By

The EU authorities propose to entice investors to return to buying peripheral sovereign bonds by offering tradeable first-loss protection on those bonds. This protection is described as functioning like credit default swaps. At the same time, the EU authorities assert that the solution to Greece’s sovereign debt overhang is for private holders of Greek debt to “voluntarily” agree to take losses on their GGBs. The holders of these bonds will be strong-armed into taking these losses in such a way that CDS will not trigger and therefore provide no cover on those losses. That’s sort of like trying to woo your girlfriend with promises of everlasting fidelity, as demonstrated by how quickly you’ll leave your wife for her.

Will the market fall for it?

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Comments (24)

  1. 1
    Posted by PMCO_sucks | October 24, 2011 at 2:49 PM

    it already has.

  2. 2
    Posted by PMCO_sucks_sucks | October 24, 2011 at 2:51 PM

    Really?

  3. 3
    Posted by PMCO_suckssuckssucks | October 24, 2011 at 2:53 PM

    Yes

  4. 4
    Posted by Guest | October 24, 2011 at 2:57 PM

    Strong arming your girlfriend is the OKI.
    -Alabama Resident lot 223 & 224 (doublewide ballin'), and sleeveless shirt aficionado

  5. 5
    Posted by CoveredLong | October 24, 2011 at 2:58 PM

    "Will the market fall for it?"

    The hell he will. Mr. Market's got a two day head start, which is more than he needs. Mr. Market's got friends in every town and village from here to the Sudan, he speaks a dozen languages, knows every local custom, he'll blend in, disappear, you'll never see him again. With any luck, he's got the situation figured out already.

  6. 6
    Posted by PMCO_sucks_sucks | October 24, 2011 at 2:59 PM

    I laughed

  7. 7
    Posted by PMCO_suckssuckssucks | October 24, 2011 at 3:01 PM

    :)

  8. 8
    Posted by Texashedge | October 24, 2011 at 3:07 PM

    Probably

    -Larry King

  9. 9
    Posted by Guest | October 24, 2011 at 3:08 PM

    "Does anyone here speak English? Or even Ancient Greek?"

    - Mr. Market

  10. 10
    Posted by Guest | October 24, 2011 at 3:09 PM

    This little handle battle, while cute, is somewhat annoying.

    If you must continue, please do so in exponential format (i.e. "PMCO_sucks" "PMCS_(sucks)^2" ect.)

    Thanks

  11. 11
    Posted by EU Authorities | October 24, 2011 at 3:11 PM

    Λυγίστε πάνω από

  12. 12
    Posted by PMCO_(sucks)^(∞+1) | October 24, 2011 at 3:12 PM

    I fixed it

  13. 13
    Posted by pseudomath pedant | October 24, 2011 at 3:14 PM

    PMCO_sucks^x x–>∞ = Hakuna Matata guy

  14. 14
    Posted by PMCO/1+(1-Tc)x(D/E) | October 24, 2011 at 3:15 PM

    Thanks!!

  15. 15
    Posted by PMCO_(sucks)^(∞+1) | October 24, 2011 at 3:23 PM

    Oh yeah?

    x ∈ Z

    or

    x ∈ R

  16. 16
    Posted by Not Impressed | October 24, 2011 at 3:34 PM

    What else is Charlie Brown going to do? Take his ball and go home?

    Charlie hangs around with Lucy because there are no other games in town. And just like all the other dip buyers out there, he thinks that if he stays around for long enough, he will get to bump uglies and achieve his happy ending.

  17. 17
    Posted by trojan_ | October 24, 2011 at 3:34 PM

    No ticket!

  18. 18
    Posted by Texashedge | October 24, 2011 at 3:43 PM

    I like the Austrian school better

  19. 19
    Posted by Kweme | October 24, 2011 at 3:54 PM

    but i wanted to use an imaginary number as an x value : (

  20. 20
    Posted by SEC | October 24, 2011 at 3:59 PM

    go back to your own continent.

  21. 21
    Posted by PermaGuestII | October 24, 2011 at 4:09 PM

    But the Ancient Greeks… like… discovered America, dude!

    -OWS History Quant

  22. 22
    Posted by ahahah | October 24, 2011 at 5:35 PM

    x ∈ R — when has anyone ever counted anything on here?

  23. 23
    Posted by Sil B. | October 24, 2011 at 5:46 PM

    Ancient Greeks invented sex, it took the Italians to introduce it to women!

  24. 24
    Posted by Free Runescape Bots | May 10, 2012 at 9:20 AM

    Its like you read my mind! You appear to know so much about this, like you wrote the book in it or something. I think that you could do with some pics to drive the message home a bit, but instead of that, this is excellent blog. A great read. I’ll certainly be back.

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