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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How can “entrepreneurial spirit” and "creative destruction" flourish without nourishment?

Joseph Schumpeter reinterpreted (from Marx economic theory) and popularised the expression “creative destruction” to describe the process by which established ways of doing things are destroyed from within (by new thinking, tools and processes) – at this point the scientific community may draw attention to the 2nd Law of Thermodynamics: that a system tends toward entropy (chaos or disorganisation) and consider the state of our global economy.

Hugely expensive and experimental life support for “clinically dead” institutions, markets, currencies and flawed philosophies equates to – at best – stagnation and at worst starves innovators of the means to accelerate a new evolutionary phase: instead of “creative destruction” we have “destructive creation” in the form of more regulation! Read more of this post

More Trouble for Greece?

For a more dynamic view of such analyses you may wish to explore our, recently developed, tool MapView. It is free to download as is the operating Manual (but it isn’t really so complicated as that may suggest).

If you decide to do this please drop me an email and I shall forward a zip file containing reports for US and European countries:

Here are some Complexity Facts based upon our work.

The complexity of the Greece’s economic system is in free fall. In the previous Ontonix blog on the evolution of the complexity of the structure of European Union’s economy we have seen that it was possible to predict, in advance, the effects of the sub-prime crisis and that the economic recovery is much stronger for the founding member countries (EU 15) than that of the countries that have joined after May 1, 2004 (EU12).

Read more of this post

Eurozone Structural “stability” @ 18:15, 26/11/10

At Ontonix we track in real-time the twelve major EU stock markets and compute the Ontix meta-index (which is also displayed in real-time on the home page of our main site). Yesterday (Friday) was a bad day for the EU markets – see the corresponding plot and Complexity Map below, taken at 18:15:


See the ONE-STAR rating, reflecting a state of huge collective turbulence:


Available NOW is our, unique, updated analysis for Eurozone (27) Structural Fragility Quarter 2 2010.

Our ebooks are available on


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Paul Mason: Alien 2010 – will this toxic spillage burn through the Euro?

He always delivers value and this is no exception!

(c) Paul Mason 2010

In the original Alien movie (1979) there is a scene that illustrates the problem we’ve been facing since September 2008, and which is coming to a head now (I’ve produced a handy graphic opposite).

Somebody stabs the alien: but its blood is acid. It burns through the floor of one deck and one character realises: "that cr*p’s gonna burn through the hull!"

They run to the next floor, but it’s already burning through to the next deck. Finally it stops: the acidic properties neutralised through interaction with the metal decks, the air, the demands of Hollywood storytelling.In the global financial crisis the acid is toxic debt.

The first thing it hits is the real economy: output, trade and the stock markets, which tank in the last two months of 2008 at the same rate as during the post-1929 crash. The acid quickly burns through here.

via BBC – Newsnight: Paul Mason: Alien 2010: will this toxic spillage burn through the Euro?.