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This is more of a reminder chart than anything else, but don’t forget that worries about global credit are not just Dubai based.

In the chart below, Matt Hedrick and Howard Penney have outlined the recent activity in Greek CDS – as in the credit default swaps (CDS) of a country (Greece). The Greek stock market was down -7% last week for reasons that are not new this morning.

Issues with credit default swaps are also glaring in Japan. This has been one of the major reasons why we have remained short the Japanese stock market. When a country’s currency appreciates like Japan’s has (hitting 14-year highs today), it puts tremendous pressure on DEBTORS.

Again, this Aiful news out of Japan is not new, but maybe it matters more in concert when considered with Greece and Dubai. Japan’s 2nd largest consumer lender by assets, Aiful, is having major issues with their CDS. We are also seeing CDS issues related to Thomson (levered European media company) and Cemex (levered Mexican materials company).

Aiful – as in awful. That’s what a world addicted to debt gets – new spellings for new paradigms of globally interconnected risk.


Keith R. McCullough
Chief Executive Officer

Credit Problems: It's Not Just Dubai - cds