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This would buy Greece time while sparing lenders from an actual default.
That still leaves it well ahead of the actual default rate so far.
Congress has raised the debt ceiling more than seventy times since 1960 without forcing an actual default.
Even if an actual default is unlikely, the possibility of one may nevertheless influence both sides' bargaining positions.
Having said that, an actual default would no doubt have implications for the credit rating of the U.S. government.
Aside from possible arbitrage opportunities, what the swap market adds is the ability to bet on an actual default by the government.
Similar(26)
Steve Forbes: If you look at the bad mortgages and actual real defaults, it's bad but seemed no worse than the crisis that we faced 20 years ago.
In America spreads are well above that level.Pushing spreads further might require some actual defaults.
As the credit crisis deepens, the risk of actual defaults becomes real.
We originally said that Zopa claimed no actual defaults when we should have said it claimed very few.
As actual defaults (as opposed to mark-to-market writedowns) rise, banks are racking up ever higher credit losses.
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