Credit Default Swaps are the elephant in the room

Again an American interview on a Russian media channel is where I have to turn to find an honest discussion. Credit Default Swaps are a financial mechanism much loved by traders everywhere. Basically they use them as insurance. American bankers found them a particular souece of comfort in the past but now if Greece, or pretty much anywhere else, defaults they have insured large parts of the losses. As American banks are resisting recapitalisation like a beauty queen resisting the advances of a leper it is a question not only of which bank fails first but how many will follow. Many US banks have closed already and there would certainly be no support for another bailout package for the banks. America has tried its slice of Socialism and does not like it one little bit.

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