[Anykeylo]

From a Bix Weir email:

As we absorb all the "happy talk" about the Greek bailouts the much more important issue lies in waiting...the determination on Credit Default Swaps by the ISDA.

On Greece, Defaults, And The Future Of Derivatives

http://www.forbes.com/sites/afonteve...f-derivatives/

Will the ISDA declare a default as of Monday when the bonds are swapped? That's the big question but the ANSWER will be irrelevant.

The "derivative goose" is cooked!

Here's why:

If they declare a default then the payoff will be enormous for those who sold those derivatives (ie big banks and insurance companies). The Forbes article says it's only $3.2B in play but that is the biggest crock of BS ever uttered! Germany alone bought $7B in CDS's to cover their $8B in Greek bonds! And that's just ONE player in the gigantic Ponzi Scheme invented by our own Blythe Masters!

And most of these banks who sold CDS's would buy CDS's to cover their asses. Round and round she goes! But the biggest problem is that EVERYONE MUST PERFORM! It's called COUNTER-PARTY RISK!

Just read this article in the WSJ explaining how the German Banks have NO RISK from the Greek CDS Market...

German Banks: Small Impact Seen From Greek Credit Event, CDS Trigger

http://online.wsj.com/article/BT-CO-...09-710761.html

What's that saying..."a chain is only as strong as it's weakest link"?!

Many people are saying there is no way the ISDA will declare a default because they are a committee of Banksters.

Ok...then what?

If no default is called you can kiss the entire CDS market goodbye on Monday too! It will have proven to be not a viable way to hedge credit risk and every CDS holder in the world will dump their CDS's. That would instantly change every reported position that used CDS's to hedge risk. Companies around the world would have to report their REAL EXPOSURE and not their NET EXPOSURE.

It truly is a "Damned if you do - Damned if you don't" scenario.

Ultimately, I think the ISDA will declare that Greece defaulted and let the chips fall where they may.

Less liability on their part for running the shell game.

*PS - The ISDA has been in their meeting over 5 hours now and may be waiting for the US Markets to close for the weekend before breaking the news.

Back to the bunker for me!

May the Road you choose be the Right Road.

Bix Weir

www.RoadtoRoota.com