Selling More CDS on Europe Debt Raises Risk for U.S. Banks – Businessweek


The US must be delighted that the rumbling crisis in Europe is deflecting (or merely delaying) calls for closer scrutiny of their own financial "smokescreen".

We are at the stage where I really doubt it matters which gerry-built financial structure collapses first! Conditions are such that these fragile structures will fall one after the other and those, whose personal and collective greed led them to steer a course intended to preserve accumulated power and wealth, will come to realise the futility of the exercise when they lose both…and more.

“Risk isn’t going to evaporate through these trades,” Cannon said.

“The big problem with all these gross exposures is counterparty risk. When the CDS is triggered due to default, will those counterparties be standing? If everybody is buying from each other, who’s ultimately going to pay for the losses?”

via Selling More CDS on Europe Debt Raises Risk for U.S. Banks – Businessweek.

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