3 Year Greek Bonds Trading At 28.6%

Tyler Durden's picture

At this point the Greek bond market is pretty much irrelevant, although it bears pointing out that the 3 Year is now at 28.6%. Also, the price on the 4.6% 30 year just hit 40.5 cents on the dollar. That Cheapest to Delivery physical CDS settlement sure is going to be fun, and for nobody more so than for the ECB, which will suddenly find itself with a basement full of live collateralized grenades that are not only worthless but that will set off the avalanche that annihilates the asset side to the EUR liability side.

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PaperBear's picture

Derivatives like CDS are financial weapons of mass destruction according to Warren Buffet back in 2002.

Why did no one understand back then what he meant ?

augie's picture

It's not that no one understood, it's that no one (including buffet) really cared(s).

ZeroPower's picture

lol. I assume you think so are bonds, CDs, treasuries, and pretty much every other security.

The Fonz's picture

Under the circumstances that is not an entirely an incorrect presumption. We are expecting the collapse of our lifetimes are we not?

ZeroPower's picture

Was ridiculing the fact that OP thinks CDSs are evil. Whether or not all financial securities will have any sort of value if said collapse comes is another question - something where my opinion varies greatly from that of the board. Namely: fuck corp bonds fuck stocks, fuck silver (at least until no round of further easing). Potentially would hold some strong sovereigns debt (Canada/CEE to an extent), coupons received would suffice for day to day expenses since food will NEVER be priced in PMs (too impractical); and of course some solid rental properties as main investment. Mix it in with some gold (maybe ~5% of total wealth), and ready for hyperinflation to run its course.

oogs66's picture

buffett is a hypocrite.  he is quoted for that but is a large user of derivatives of all kinds, including credit derivatives


the losses will not be a result of CDS they will be just like in good old fashioned bonds and stocks because people lent to people who could not pay back the debt and they either had no collateral or collateral that was not worth enough



Id fight Gandhi's picture

Who cares what he said, he says one thing and does another. Reality hits when his top guy got caught playing games. He's not the all knowing, moral perfect amazing investor the cnbs channel keeps shoveling at the masses.

holdbuysell's picture

In space, no one can hear bankers scream.

Cast Iron Skillet's picture

shoot 'em up there, the banksters ...

scratch_and_sniff's picture

I think the only people buying greek bonds are souvenir hunters, it’s a novelty market now.

hugovanderbubble's picture

*Greece will exit Euro Yes or Yes.

youngman's picture

This will all have to be finished by August.....that is when Europe all goes on vacation....and then we can come back...sift thru the ashes...and start working on the next failing country...

centerline's picture

Reminds me of CD's essay on avalanche triggers from some time ago.  The instability does not have to be huge.  The cascading effects amplify.  What a tangled web has been weaved in the shadows here.  When the chips start the fall, that is when the bankers start to turn on each other in earnest.  And precisely why this can't be allowed to happen (at least not until the right moment).

i-dog's picture

The bankstas engineered this situation ... so, the question is: How is the dénouement going to play out? They have their plan, so why don't we have ours?

They deliberately engineered this current meltdown through encouraging borrowing by deadbeats who could never pay it back -- whether free-spending governments, or ninja homebuyers, or unemployable Ph.Ds in basket weaving. Then they made bets against the same borrowers! They financed technology transfers to Russia and China then sat back and watched all the manufacturing jobs being offshored there too. They lobbied to remove all regulations over banking practices and derivatives. They actively assisted Greece to swindle the EU into granting admission to a country that was already breaking all EU fiscal guidelines.

Their endgame...as they have been proudly announing for over 20 years (and planning for nearly 150 years)...is for a New World Order under a central World Government with a single World Currency and 'keep yo' mouf shut, slave'. What's our endgame...more bickering over left or right?

It has taken them well over 100 years to slowly destroy the national sovereignty of the European nation states and the American commonwealth states, but we could undo all that in a few weeks...if we really wanted to work together on it!!

jtmo3's picture

Hey, it's no 30%. Should be good enough for another green day here in the states!

hugovanderbubble's picture

Long Italian CDS

Long Belgian CDS

Long Dutch CDS


Playing the 2-5yrs CDS spread

trav7777's picture

short the Greek 30 and long the 2?  Pair trade, bitchez?

One of 2 things is gonna happen...they default on everything or else they restructure

Ikea nesting instinct's picture

Yield is pointless when it comes to distressed/default.  Tylers should have pressed PgDn and posted the next page... far more useful.  Long 30 and short the 2 would make more sense if there will be a plain vanilla default...

Id fight Gandhi's picture

No, I think yield is a relevant measure as things fall apart.

Euro should be down harder but it's not.

USA yields should ticking up because were not too far from all this

john_connor's picture

TD, off topic, but can you provide more clarification on this "operation twist" for the 2-3 year?  I think it means simply that the Fed will buy all 2-3 year Treasurys at some pre-determined price in order to lock the yield (presumably at near 0).  So, essentially the Fed would be underwater relative to whatever market pricing dictates? 

It also means that the Fed realizes the US government debt is about to implode when they attempt to roll all of the existing ultra short term paper into 2-3 year maturities, correct?  So wouldn't the market price discrepancy be even greater when the market realizes that the Fed is continuing to support profligate gov spending?  This will end very badly IMO. 

Just trying to understand and would appreciate further commentary.

holdbuysell's picture

I agree on an 'OT for Dummies' follow-up. I read all the other OT articles, including the SF one, and I'm having a hard time getting my head around the implications.

When OT was implemented in the 60's, it was to prevent gold from going abroad. But we were on a gold standard at that time. So, I'm having a hard time understanding what the arbitrage is/was and what the implications was/are.

Otherwise, it seems as if this is a very targeted form of QE for short term paper only.

dark pools of soros's picture

looting a burning ship is easier once it begins to sink.. but doesn't give much time before losing it all...

HamyWanger's picture

The "black swan" all doomers are waiting for won't probably arrive until 2013. Then, yes, the global financial system will engage in a rapid collision course. 

But in the meantime, the money is to be made on being long stocks. 

fuu's picture

Thanks RoboMathTraderMan!

falak pema's picture

I've just bought greek bonds at this price and return. I know from my Bilderberg connection that Greece is now Troy and Helen is inside that greek tunnel. The whole world is now rallying to protect her; the face that launched a thousand ships cannot be thus debauched. That is why I say go long on Greek bonds as all Bilderberg is there in those thousand ships to save Helen. Oh Helena, I would dance a Sirtaki for you sweet Helena, like Zorba, even as your walls fall like those of Troy.

I know my investment in your underwear will pay gold dividends!

Oh the Sirtaki of it!

gwar5's picture

Eur Annihilation, Bitchez!

Seems to me this has also been mentioned as the doomsday scenario for Fed insolvency. The Bernanke is holding massive UST and will need to unload them before they become worthless when rates rise. The lower the rate, the more they lose, and they're at record lows.

Ned Zeppelin's picture

The Collapse of the Fiat edifice has begun.

youngman's picture

Do these people..entities..governments think they are going to be paid back on these bonds at this rate.....to maturity....come on...to me...anyone buying a bond today is an idiot..."full faith and credit".....what a joke....IMHO

sheep92's picture
With the bonds trading where they are the banks already have to mark their portfolios to market.  If they do a restructure now, so what.  If they converted them to 10 year zero coupons with an implied yield of about 8% they wouldn't have to pay an interest for 10 years and then repay the current face value of the bonds.   The cds market is a zero sum game.  Who cares.
Chinese Busboy's picture

If Greece defaults and wipes out a portion of its debt isn't that deflationary for the Euro?

And if Euro's are being destroyed because of a debt "restructuring", doesn't that make the remaining Euros more valuable?

Someone please help poor Busboy understand why the value of the Euro's relative to the Dollar should fall if Greece or other PIIGs default?

Eireann go Brach's picture

"The "black swan" all doomers are waiting for won't probably arrive until 2013"...you are changing your tune now Hamy?..a few weeks ago you were mentioning all would be well in the world for years to come..2013 is around the corner! I think middle 2012 will be the day that all wankin fucking bankers will have their day in the sunshine!

dark pools of soros's picture

they already have their condos and yachts in the Cayman Islands - are you planning a formal for next year?

Tenma13's picture

At what % does this become ridiculous? At that % it seems akin to burning money. Can we not just get on with restructuring/ defaulting?! I get the feeling the longer this charade goes on for, the worse it will be for everyone. Would it not be better for a short sharp round of burning the debt for the system and starting over again? Is it really more complex than that?????

AldoHux_IV's picture

Now it's clear why operation twist 2 is targeting that area-- it's the illusion of the current broken system that is cracking.

dark pools of soros's picture

the EU snake is eating itself.. those that destroy will begin to destroy other destroyers  and even themselves since that is their nature...