Wednesday, December 09, 2009
Quantifying Sovereign Risk
After the 2008 worldwide financial panic crisis, people are obsessed with the probabilities of sovereign default. Yesterday it was pointed out that Greece is very near of the breaking point, today it is Spain (the Bolsa de Madrid fell 2%). According to the CMA Sovereign Risk Monitor, at least ten other countries are in risk: Venezuela, Ucrania y Argentina (over 50% probability of default), Pakistán, Dubai y Letonia (30%); Island (23,4%); Lituania (19,3%); California (18,4%) y Rumanía (17,2%). This uncertainties and risks offer beautiful opportunities for speculation. I would like to have time, free time, to study these situations. but I am working like a mule.
Illustration: A Republic of Haiti Bond. It has a collector worth of 100 dollars. Never paid back a cent.