The Greek Tragedy: Part 1

In recent blogs I have reported that the ISDA had attempted to redefine the Greek default.  Yesterday afternoon, their tune changed, by necessity.  Moody’s has stepped in and called the event a default.  The ISDA responded that a “credit event” had occurred:

“LONDON, March 9, 2012 – The International Swaps and Derivatives Association, Inc. (ISDA) today announced that its EMEA Credit Derivatives Determinations Committee resolved unanimously that a Restructuring Credit Event has occurred with respect to The Hellenic Republic (Greece).”

“The Committee determined that an auction will be held in respect of outstanding CDS transactions on March 19.”

An auction?  Huh?  I look for the buyers at the auction to receive funds for settlement that would trace back to a Central Bank.  It will be interesting to watch this play out.  The stakes are high and will potentially affect everyone no matter where those losses are absorbed.  The current system is crumbling and the Emperor really has no clothes AND he is standing next to the elephant in the room.

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