World economy talk

**Ry_Tower** · July 12th, 2011 10:20 AM

BTW, which is better or none pa rin? "Current options, diplomats said, include a buyback of Greek debt or a debt swap."

Read more: Euro debt contagion threatening Italy, Spain

**uls** · July 12th, 2011 10:26 AM

if you follow EURCHF, you know that fall is BIG

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US 10 yr yield

major risk off

**uls** · July 12th, 2011 11:11 AM

RE China inflation

they're fighting it. raising rates, raising bank reserve requirement to slow down lending

i would be more concerned if i was selling to China than buying from China

as China tries to slow down their economy demand for raw materials will slow

so everyone who supplies raw materials to China will be affected

**uls** · July 12th, 2011 11:17 AM

Originally Posted by Ry_Tower

BTW, which is better or none pa rin? "Current options, diplomats said, include a buyback of Greek debt or a debt swap."

Read more: Euro debt contagion threatening Italy, Spain

basta anything that won't trigger credit default swap payout

**uls** · July 12th, 2011 11:19 AM

sovereign debt is risk free?

http://cache.dealbreaker.com/uploads...-Q2-Letter.pdf

According to current banking regulations, sovereign credits are considered “risk-free.” This means that banks can take on as much sovereign credit risk as they like without setting aside any capital. Under such a structure, selling short CDS protection is akin to free money for the banks.

Likely, the real worry is that the first default will expose the fiction that sovereign debt is risk-free. If the authorities permit one default, their credibility to prevent additional defaults will be lost. No one knows just how much aggregate exposure to sovereign debt and CDS is hidden in the banking system, and no one is itching to find out. The European regulators are trying to calm the market by conducting “stress tests” on the banks. This might be more comforting if the stress tests included testing for the possibility of a sovereign default. They do not. What is the point of a stress test that fails to test for the most obvious and visible risk facing the banks?

**Monseratto** · July 12th, 2011 11:20 AM

Oil Prices and China...

Oil Prices Slump on China Concerns - TheStreet)

NEW YORK (TheStreet) -- Oil prices were being trampled over fears about slowing demand in China.

Brent crude oil for August delivery was tumbling by $2.29 to $116.04 a barrel and the August West Texas Intermediate light sweet crude oil contract was falling $1.14 to $95.06. The U.S. dollar was gaining 1% to $75.91.

"Part of the decline may be explained by seasonal factors and widespread power shortages, but we have to suspect that the government's tightening macro stance must be having some impact as well," said MF Global analyst Ed Meir.

Crude oil imports fell to an eight month low.

"Today's selloff is courtesy of news out of China that oil imports shrank in June to an eight-month low, combined with further European sovereign debt concerns; next stop is Italy and Spain, as both see the price of their debt spreads reach record levels as confidence in them evaporates," said Summit Energy analyst Matt Smith.