February 28th, 2012
03:49 PM GMT
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(CNN) - The fact that Greece is not officially regarded as defaulting is ridiculous – and how anyone can say the 70% net debt “haircut” for the private sector is truly voluntary simply beggars belief.

But now that Standard and Poor’s has downgraded Greece’s credit to “selective default,” that part of the fig leaf has been stripped away – and the International Swaps and Derivatives Association (ISDA) must declare that a “credit event” has now happened in Greece if the organization is to maintain any shred of credibility.

A “credit event” will enable anybody who’s holding Greek debt to enact a credit default swap (CDS), a form of insurance that investors use to protect against default. For these insurances to pay out, there has to be a “credit event.”

When the Greek parliament decided unilaterally to change the terms of its bond agreements with investors, that was the “credit event,” and now the ISDA must act. FULL POST



February 28th, 2012
05:17 AM GMT
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(CNN) - Greece may be known for its tragedies and Iceland famous for its sagas but recent history tells us these stories may turn out to have very different endings–from an economic point of view at least.

In October 2008, Iceland became one of the earliest victims of a credit crunch whose ugly effects many Europeans are still living with today.

The North Atlantic island was the first entire country to almost go under, sunk by the weight of a banking sector whose debts amounted to more than six times Iceland's entire economy.

However, three years on, Iceland is poised to re-emerge from economic purgatory.
FULL POST



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