Thursday, June 23, 2011

Does Greece Have a Hidden AIG?

If Greece is the new 'Lehman', then who is Greece's AIG?  The reason Lehman almost took the entire system down in 2008 was because of interconnected credit default swaps (Lehman Brothers default insurance policies) were triggered on the event.  Think Greece doesn't have just as many, if not more CDS written on it?  The question is who has to pay up on the CDS bets were Greece to officially go belly up.
The answer to that question, is banksters.
Now you understand why hopeless austerity measures and endless bailouts are being shoved down the throats of the Greeks.
Next comes Portugal. Then Spain. Then Italy. Then California. Then Illinois. Then New York. Then Michigan...etc.  Then Federal US debt.

Still think you won't see QE to Infinity...AND BEYOND?

From the NY Times:
It’s the $616 billion question: Does the euro crisis have a hidden A.I.G.?
No one seems to be sure, in large part because the world of derivatives is so murky, but the possibility that some company out there may have insured billions of dollars of European debt has added a new wrinkle to the sovereign default debate.

In years past, when financial crises in Argentina and Russia left those countries unable to make good on their government debts, they simply defaulted. But this time around, swaps and other sorts of contracts have become so common and so intertwined in the financial markets that there are fears among regulators and financial players about how a Greek default would play out among derivatives holders.
The looming question is whether these contracts — which insure against possibilities like a Greek default — are concentrated in the hands of a few companies, and if these companies will be able to pay out billions of dollars to cover losses during a default. If there were a single company standing behind many of these contracts, that company would be akin to the American International Group of the euro crisis. The American insurer needed a $182 billion federal bailout during the financial crisis because it had insured the performance of mortgage bonds through derivatives and couldn’t pay on all of them.
Even regulators seem unsure of whether a Greek default would reveal such concentrated risk in the hands of just a few companies. Spokeswomen for the central banks of both Europe and the United States would not say whether their researchers had studied holdings of such contracts among nonbank entities like insurance companies and hedge funds — and they would not say what would occur among large players if Greece or another European country defaulted.
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