U.K. Government Credit-Default Swaps Rise to Record

Short_Seller

"Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a country or company fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline, the opposite. "

http://www.bloomberg.com/apps/news?pid=20601087&sid=aIfg0QFewDnA&refer=home

I have to echo some of the other posters who say that, the £50K savings protection is a none issue with british banks.
The bigger issue is, who bails out UK PLC if it defaults while tring to bail out/backstop the banks and the wider economy...

FT has the Bloomberg chart...http://blogs.ft.com/westminster/2008/11/investors-place-their-bets-on-a-uk-default/

purch

What seems to be lost in all this, is that these contracts are traded i.e. bought and sold in order to make a profit.

They shouldn't just be looked at in isolation as the equivalent to a Car Insurance contract or something similar.

eeja

Short_Seller wrote: »

I have to echo some of the other posters who say that, the £50K savings protection is a none issue with british banks.
The bigger issue is, who bails out UK PLC if it defaults while tring to bail out/backstop the banks and the wider economy...

FT has the Bloomberg chart...http://blogs.ft.com/westminster/2008/11/investors-place-their-bets-on-a-uk-default/

Jees, Short Seller that is truly mind boggling. We were all brought up to beleieve that Government stock was 'gilt edged 'and rock solid.
Of course we knew that there was the occassional wobble such as at Waterloo in 1815 and Dunkirk in 1940/1 when we were in danger of being defeated, but NOW in peace time ?
Out of interest does anyone know which country's debt is the safest with the lowest number in the cds table ? Please do not say Singapore as we all know they have no debt !

Short_Seller

Yes, the risk of default is the real problem people should be concerned with.

Canada has the lowest CDS rating of the G7 @ 13 the last time I looked...