Monday, February 6, 2017

How to default for dummies

Grexit 4.0? Varoufakis Urges Tsipras: Ditch Negotiations, Adopt "Parallel System"

Prof V former finance guy for the Greece. Greece is at he rollover crisis again, prof V has a smooth transfer and default to different currency system. I have not read the details.

I say, anything, at this point, will come with some form of multi-currency cash card. With or without the letter to mommy, the new currencies will be digital first, paper second.

In this environment, we can still run the trading pit that forces amortization from invented money.

How can we design the trade?

Greek bonds up for default are on the queue and payments are made by the greeks on interest due. Otherwise, whenever the greeks put up sufficient cash, some part of the bonds is amortized with assistance from invented euro.  So the greeks keep cash on account, mostly half filling the containers.  Whenever they see the chance, go grab the do-re-me, dump it on account, and let the default machine go into action. The probability of a greek deposit mostly matching the probabilility of a subsidized amortization payment.

Inflation is directly euro wide.But it is only fair after everyone has the same cash card and can auto trade,because we are giving the greeks government a hedge. Prof V is stuck, he cannot go dividing the world into segmented currencies. But we can make bond defaulting work, and keep the euro.  What the Prof does get right is multi-currency.   The euro will be sharing space, spending some of its currency monopoly on defaults.

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