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They are not the suckers. They are collecting CDS premia (16% annual rate on Greek CDS right now) without being capitalised for paying out and everyone is doing their best that there isn't a default so they don't have to pay.

If you sell insurance with no intention of paying out, is that not fraudulent?

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Jun 16th, 2011 at 07:09:54 AM EST
[ Parent ]
so if they have any overt or covert influence to exercise over events in my ficticious world, it will be working against the interests of my hypothetical speculator/credit rater. They would NOT want "voluntary" bond rollover to trigger a credit event.

This is all a matter of parasitical side-bets on the main events of Euro liquidity/solvency matters, but the stakes are high.

It could all get quite violent.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Thu Jun 16th, 2011 at 09:08:56 AM EST
[ Parent ]
I keep forgetting you're not trying to figure out what's going on but you're actually actively looking for a pulp fiction villain so you can write a crime novel.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Jun 16th, 2011 at 09:21:39 AM EST
[ Parent ]
would be nice, but way beyond my intellectual capacity.

Writing a crime novel is easy, comparatively speaking. But I would prefer that it were plausible and didactic in nature.

It's a variation on the old "insure and burn" scam. No, it's actually more like match-fixing : placing bets on outcomes, and reducing the uncertainties.

I would prefer if I could identify actors who stand to gain from the Euro crisis itself, rather than CDS side-bets, and who might therefore wish to influence outcomes. But I haven't identified anyone yet : it looks like a lose-lose-lose situation, a seriously negative-sum game.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Thu Jun 16th, 2011 at 11:59:24 AM EST
[ Parent ]
The you need to up your stakes and, instead of writing a pulp crime novel, writing a Twilight of Civilization epic tragedy.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Jun 16th, 2011 at 12:40:04 PM EST
[ Parent ]
Playing to my strengths.

Götterdammerüng, and lots of humping among the ruins.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Thu Jun 16th, 2011 at 01:12:27 PM EST
[ Parent ]
Götterdämmerung :-)

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu Jun 16th, 2011 at 01:21:25 PM EST
[ Parent ]
I like the way Dammerüng sounds :D

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Jun 16th, 2011 at 03:42:35 PM EST
[ Parent ]
I would prefer if I could identify actors who stand to gain from the Euro crisis itself, rather than CDS side-bets, and who might therefore wish to influence outcomes. But I haven't identified anyone yet : it looks like a lose-lose-lose situation, a seriously negative-sum game.

In terms of money? Certainly.

In terms of goods and resources? Absolutely.

In terms of power? No. Power over others is a zero-sum game.

But of course this is a case where reality is unrealistic. It is hard to make a character in a book motivated by power over other people without having him become a caricature sociopath.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jun 16th, 2011 at 03:24:49 PM EST
[ Parent ]
Migeru:

If you sell insurance with no intention of paying out, is that not fraudulent?

That is the advantage for the buyer of having insurance regulated. But since this is not insurance, I guess pretending to insure would be the correct name of the service.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES!

by A swedish kind of death on Thu Jun 16th, 2011 at 11:24:23 AM EST
[ Parent ]
Well, the CDS buyers are also only pretending to buy insurance since
the whole point of CDS swaps was to enable you to treat risky junk as though they were AAA investments and relieve you of the obnoxious reserve requirements


Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Jun 16th, 2011 at 11:49:58 AM EST
[ Parent ]
Communism: The workers pretend to work and the state pretends to pay them.

Capitalism: CDS buyers pretend to buy insurance and CDS sellers pretend to sell it.

Hm, not as catchy.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES!

by A swedish kind of death on Thu Jun 16th, 2011 at 04:16:06 PM EST
[ Parent ]

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