Quote:
Originally Posted by Traduk
There is little isolation in the banking network on either a countrywide basis or internationally. There is still an unknown sized elephant in the room called CDS (credit default swaps) which are highly leveraged traded instruments which are guestimated to insure the potential of sovereign debt failure for trillions. The sweat over the Greece situation is how to stop the triggering of those globally interlinked deals which are what has been described as weapons of mass financial destruction. The banks are into these instruments up to their eyeballs and beyond. They do not even know how big their risks are and would only know when the pass the parcel started with telephone number sized claims swirling around.
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Good grief !!!
I've just started reading up on these things.
http://en.wikipedia.org/wiki/Credit_default_swap
That's seriously scary stuff.
"Credit default swaps have existed since the early 1990s, and increased in use after 2003. By the end of 2007, the outstanding CDS amount was $62.2 trillion, falling to $26.3 trillion by mid-year 2010."