February 21st 2010
"The situation is aggravated by the market in credit default swaps, which is biased in favour of those who speculate on failure. Being long CDS, the risk automatically declines if they are wrong. This is the opposite of selling short stocks, where being wrong the risk automatically increases. Speculation in CDS may drive the risk premium higher."
"So makeshift assistance should be enough for Greece, but that leaves Spain, Italy, Portugal and Ireland. Together they constitute too large a portion of euroland to be helped in this way. The survival of Greece would still leave the future of the euro in question. Even if it handles the current crisis, what about the next one?"
Channeling an old TV commercial:"When Soros speaks, people listen."
Most managers have been positioned on the PIIGS for the past 2 years and simply waiting for events to unfold. Was Europe not listening?
Monday, February 22, 2010
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