Greece - Banks who helped disguise their bankruptcy

Groucho



Joined: 26/04/2008
Posts: 7993

Message Posted:
01/03/2010 13:20

Banks Bet Greece Defaults on Debt They Helped Hide.



Bets by some of the same banks that helped Greece shroud its mounting debts may actually now be pushing the nation closer to the brink of financial ruin.



Echoing the kind of trades that nearly toppled the American International Group, the increasingly popular insurance against the risk of a Greek default is making it harder for Athens to raise the money it needs to pay its bills, according to traders and money managers.



These contracts, known as credit-default swaps, effectively let banks and hedge funds wager on the financial equivalent of a four-alarm fire: a default by a company or, in the case of Greece, an entire country. If Greece reneges on its debts, traders who own these swaps stand to profit.



“It’s like buying fire insurance on your neighbor’s house — you create an incentive to burn down the house,” said Philip Gisdakis, head of credit strategy at UniCredit in Munich.

kibsolar


Joined: 14/09/2008
Posts: 552

Message Posted:
02/03/2010 14:39

you are right , groucho,

the american Exchange Supervisory Authority SEC already opened investigations against, i believe, goldman sachs and deutsche bank and others....

also it is believed that (again) the rating agencies playing a role in this game..... nothing changed....