Sudden Debt

Fifi’s World, A Monetary Allegory – Part II

2010/05/10
By Hellasious
Fifi’s World, A Monetary Allegory – Part II

As Fifi's father listened, the stranger told him to chuck everything he was told about his daughter's illness by the so-called experts.  It was obvious that Fifi was not suffering from a simple cold, but that she had a bad case of walking pneumonia and, therefore, no matter how much aspirin she took the...
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Fifi Fiat, A Monetary Allegory – Part I

2010/05/10
By Hellasious
Fifi Fiat, A Monetary Allegory – Part I

Some weeks ago Mr. and Mrs. Fiat's young daughter Fifi fell ill.  She sneezed and she caughed and she ran a slight temperature, but her parents were not overly concerned.  After all, it was normal for children her age to catch colds and other mild viruses at school.  It will go away soon on...
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Gorillas In The Drawing Room

2010/05/06
By Hellasious
Gorillas In The Drawing Room

One of these days the entire world is going to wake up and realize that its debt problems are one heck of a lot bigger and more serious than Greece, which is just the first Debtopia to unravel.  That it's not the debts of Portugal, Ireland, or even Spain that may cause the entire...
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Pizza Delivery, Anyone?

2010/05/03
By Hellasious
Pizza Delivery, Anyone?

The following anonymous email is making the rounds (It's in FT Alphaville).

“We are Wall Street. It’s our job to make money. Whether it’s a commodity, stock, bond, or some hypothetical piece of fake paper, it doesn’t matter. We would trade baseball cards if it were profitable....
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On Greek CDS

2010/04/30
By Hellasious
On Greek CDS

Under the efficient market theory the following trade should not be possible, yet you can put it on right now:

  • Buy 5-year Greek Government bonds (rated BB+) to yield 11.2% and,
  • Buy a 5-year CDS on the same Greek Government bonds at 620 bp (6.2% per year) from, say, Deutsche Bank (rated A+).
The net...
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Petunias In The Park

2010/04/28
By Hellasious
Petunias In The Park

“In many local communities, fountains are not switched on and flowers are not planted in the public parks because of a lack of money,” said  Andreas Blätte, a political science professor at the University of Duisburg-Essen in the state of North Rhine-Westphalia, explaining why so many Germans oppose lending money to...
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Is A Greek Default Inevitable?

2010/04/27
By Hellasious
Is A Greek Default Inevitable?

No, it isn't.  But it may very well be desirable for all concerned, up to a point.

There are two extreme possibilities in resolving the Greek debt crisis:

  • Plan A:  Massive default with near zero recovery for creditors and exit from the eurozone. 
  • Plan C:  Massive Greek fiscal adjustment with murderous wage,...
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The Lineup

2010/04/27
By Hellasious
The Lineup

I don't know why, but the following picture from Reuters strikes me as hilarious.  It must be the fact that these guys are all being sworn to tell the truth. Uh-huh..


 From The Goldman Sachs Congressional Testimony

Oh, and notice the IDENTICAL 6-inch thick binders...
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The End Of Debtopia

2010/04/23
By Hellasious
The End Of Debtopia

April 26, Monday morning update: Greek 5-year CDS reaches 700 pts. (see chart below).  Assuming a 67% recovery, this works out to a cumulative probability of default (CPD) of 67%.  At 80% recovery, CPD rises to 82%.  These are daunting odds, indeed, and mean that Greece will not likely avoid some sort of "credit...
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Most Likely Scenario For Greek Debt Crisis

2010/04/20
By Hellasious
Most Likely Scenario For Greek Debt Crisis

I will hazard a prediction:  The most likely resolution of the Greek debt crisis is a combination of debt restructuring (haircut plus maturity extensions) and IMF/EU funding for the next 2-3 years.Before I get accused of becoming a prophet in my o...
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