Credit Default Swaps for PIIGS

The online newspaper Linkiesta from Italy posted this graph with the Credit Default Swap prices for the PIIGS-countries. Credit default swaps are securities which insure against default of the underlying asset. In this case the underlying assets are the government debts of the countries. So when you own government debt of a country you can insure against default by buying a Credit default swap on this government debt.

The fact that the Credit default swap prices for the PIIGS-countries have risen lately show that the demand for insurance against a default has grown as well.

Where Grecia = Greece, Irlanda = Ireland, Portogallo = Portugal, Spagna = Spain and Italia = Italy.

The graph starts January first 2010 until 22 September 2011.

Linkiesta

Banks Under Pressure

This chart shows that Credit Default Swaps (financial security that insures against default of the underlying subject: in this case banks) have risen dramatically in August. This means that the market perceives the risk of these banks to default has increased. According to this article by the Telegraph these credit default rates are even higher than in the credit crisis of 2008.

ZeroHedge

Euro Zone Credit Ratings

Reuters made the following chart with the Credit Ratings of selected countries on the left side and the spread of the bonds of Greece, Ireland, Portugal, Spain and Italy compared the german bonds on the right side.

LISwires

Who has claims on the PIGS CDS derivatives?

This chart shows the exposure from European and United States Banks to Credit Default Swaps in the PIGS countries. Business Insider: 'a default woud trigger a ''credit event'' payout on these insurance.'

Bond Vigilantes

The Federal Reserves Balance Sheet

This is the Federal Reserve Balance Sheet from 2007 till now. Notice the increase in the Treasury and Mortgage-Backed Securities assets since the crisis.

Source: Fed

Collateral deposited at the ECB

The current financial guarantees that the ECB has on it balance sheet are double the size as they were before the crisis. The picture from Der Spiegel graphs what these guarantees consist of.

Source: Der Spiegel