Mr Papandreou said on Friday: “Everyone knows there is speculation and hedge funds that are pushing the market. That is a reality we must deal with, but what we need to do is not changed by that fact. We need to reduce the deficit and do it in a quick and orderly fashion.”
Then along comes BNP Paribas. The bank's comments on Friday are particularly intriguing:
As Greek sovereign CDS spreads continue to widen and underperform today, we ask ourselves the question more pressingly about who is most exposed. We hate to break the news, but it is impossible to say. We detail cash exposures below from the information available to us. However, what will spook the markets is CDS / counterparty risk (our understanding is that Greek banks were active CDS players), and there is no way of finding out about these particular exposures. Therefore, as long as Greek sovereign and bank spreads remain under pressure, this will weigh on the wider European banking sector.
More on this later today.
