Earlier today, the Greek Prime Minister blasted “traders and speculators” for driving up the interest rates Greece must offer to issue debt. He lamented that markets seem beyond the control of government and called for regulation of credit default swaps.
Of course, the credit default swap market did not cause the Greek debt crisis. It is the long history of the Greek government’s spending akrasia, the ancient greek term that literally translates as “out of control.” Far from pouring fuel on the fire, the CDS market served as an important alarm bell to debt investors about the risks of Greek debt.
This afternoon our John Carney went on CNBC’s Power Lunch to explain why blaming speculators and derivatives is just wrong.
Business Insider Emails & Alerts
Site highlights each day to your inbox.