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Will Greece be a Contagion? Spread to US Banks?

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  1. #1
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    Will Greece be a Contagion? Spread to US Banks?

    A couple posters here know more than I do, but I've been reading that at least 3 large European banks will be affected by a potential (likely?) Greece crash up.

    But also....American banks are possibly tied to Greece via (once again) Credit Default Swaps.

    I'll post more articles, shortly. A case worth watching.
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    Greece is hurting big time, check out their GDP compared to the rest of the OECD countries.

    1. Gross domestic product

    I know in the US hedge funds are moving a lot of the CDS market. I think the Germans are holding a lot of Greek debt in bonds hopefully they didn't pay for protection out of pocket. since they are such a small country with a rather low GDP they really don't have that "much" debt when compared to larger countries. Their heavy trading partners will bear the lions share if they need to do anything drastic again.

    You can find a lot of data on the IMF website below:
    World Economic Outlook Database April 2011
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    From the report below:

    * Banks hold collateral to cover 72 percent of their NCCE. The quality of the collateral is very high, as 79 percent is cash (U.S. dollar and non-dollar).

    * Trading risk exposure, as measured by value-at-risk (VaR), has declined for each of the five major dealers since the first quarter of 2010.

    * Derivatives contracts are concentrated in a small number of institutions. The largest five banks hold 96 percent of the total notional amount of derivatives, while the largest 25 banks hold nearly 100 percent.

    * Credit default swaps are the dominant product in the credit derivatives market, representing 97 percent of total credit derivatives.

    * The number of commercial banks holding derivatives declined by 23 in the quarter to 1,047.


    http://www.occ.treas.gov/topics/capi...ives/dq111.pdf
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    Yeah, I think Greece will have an effect here. Banks are too interconnected for it not to. Although it may help us in the short term. Lowering of gas prices and such as Greece buys up our currency.

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    EU cant and will not allow Greece to get bankrupt, It will create a domino effect in all Europe.
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    if anything a very small effect, the US doesn't hold much of their debt nor do we trade heavily with them. Their economy is in the shiter because of the 2007 financial crisis in the US, our greedy banks pretty much fucked up the rest of the world. Like the rest of the world they purchased a large amount of mortgage-backed securities from the US.

    the US still hasn't implemented most of Basal II, so it's still business as normal in the US. this is why another market crash is inevitable.
    Last edited by LAM; 06-18-2011 at 02:59 PM.
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