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And Irish CDS Is Outtahere

Tyler Durden's picture





 

It seems at least one person read Buiter's 84-page "Europe is pretty much doomed" (our titling) magnum opus over the weekend. Irish CDS tells the whole story.

h/t Andrew Yorks

 


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Mon, 01/10/2011 - 08:43 | Link to Comment swmnguy
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Hey, that's what happened to my PM's last week!  Oh, wait.  I'm holding this upside down.

Mon, 01/10/2011 - 08:49 | Link to Comment HamyWanger
HamyWanger's picture

This would be relevant if bankruptcies, defaults and value were still relevant.

This is forgetting the progress in the science of econometrics.

Some smart men like Dr. Ben S. Bernanke have found the way to unlimited prosperity. Therefore, defaults, bankruptcies, impoverishment do not matter, as you just have to print some money to create wealth.

Mon, 01/10/2011 - 09:28 | Link to Comment cossack55
cossack55's picture

Damn, Hamy has got it figured out.  Don't forget rule of law only applies to those who earn less than 500K.

Mon, 01/10/2011 - 09:47 | Link to Comment Cthonic
Cthonic's picture

This is forgetting the progress in the science of econometrics.

Surely your comment was meant as sarcasm, though I find no indications thereof.

Mon, 01/10/2011 - 09:50 | Link to Comment Translational Lift
Translational Lift's picture

"Therefore, defaults, bankruptcies, impoverishment do not matter, as you just have to print some money to create wealth."

Last I heard that was illegal..........if not immoral, destructive, counterproductive, assanine...........

Mon, 01/10/2011 - 10:49 | Link to Comment Spastica Rex
Spastica Rex's picture

My Hero!

 

Pre-emptive ass-hat-ery!

 

m > rr

Mon, 01/10/2011 - 08:49 | Link to Comment williambanzai7
williambanzai7's picture

Reminds me of the contrail.

Mon, 01/10/2011 - 09:05 | Link to Comment Miss Expectations
Miss Expectations's picture

It's a bird

It's a plane

It's... contrail!

Mon, 01/10/2011 - 09:32 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Like the new cotrail in Texas? ;)

Mon, 01/10/2011 - 08:50 | Link to Comment bhakta
bhakta's picture

When the entire system is fraud upon fraud upon fraud, how can anyone believe in anything or anyone any more?

Mon, 01/10/2011 - 08:55 | Link to Comment Star Warrior
Star Warrior's picture

+1

Mon, 01/10/2011 - 09:02 | Link to Comment HamyWanger
HamyWanger's picture

-1

If you want to see fraud, go to Zimbabwe.

I'm glad I'm an American, and I'm very happy to live in this free, honest, democratic, formidable country, which brings together the finest minds of the world, working for our common prosperity and happiness.

Mon, 01/10/2011 - 09:07 | Link to Comment George the baby...
George the baby crusher's picture

I just know you're being ironic, thank God.

Mon, 01/10/2011 - 09:17 | Link to Comment TheGreatPonzi
TheGreatPonzi's picture

He's not ironic. I feel the same way.

Doomers fail to understand a basic thing: the American public does not want to hear their dooming stories. The American public wants fun, love, Federal Reserve notes, inflation.

America is a wonderful country. Ben Bernanke is wonderfully smart. Keep that in mind.

Mon, 01/10/2011 - 09:22 | Link to Comment EscapeKey
EscapeKey's picture

As opposed to, say, here in the UK?

Whenever I engage in a discussion about the deficit, and the budget in actual numbers (£550bn intake, £700bn spending), socialists stick their fingers in their ears and go "LALALALALA", and expect the issue to go away by "taxing the rich".

Mon, 01/10/2011 - 09:31 | Link to Comment Chappaquiddick
Chappaquiddick's picture

Socialists?  In the UK??  The only socialists I know of live in the USSA.  And they definitely are LALALALALALALALALA!!

Mon, 01/10/2011 - 09:35 | Link to Comment Sudden Debt
Sudden Debt's picture

This weekend I had a discussion with some friends about our state finances. They asked me to quit it because it made the depressive.

I also had a discussion with 2 retired people (+-70years old). Their answer:

Yes, you young people might miss out on pensions and other things. You'd better start saving some more money

They couldn't care more. After that all I could think off was: I wish the system crashes tomorrow and I'll go talk to them again when they realize the tab is dry. And when the real estate market crashes because all these retired people will NEED TO sell their properties, I'll buy it from them for peanuts with a smile.

Mon, 01/10/2011 - 09:52 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

Finally, someone coming out of the should / would / could mentality, simply seeing things how they really are and planning accordingly.

Yes, eventually real estate will crash right to the bottom and people positioned properly will be able to buy it very cheap. 

Doesn't matter if it's your relatives, friends, whatever. If they choose to keep their head in the sand, let them suffer what's coming.

Mon, 01/10/2011 - 10:26 | Link to Comment AnAnonymous
AnAnonymous's picture

Finally, someone coming out of the should / would / could mentality, simply seeing things how they really are and planning accordingly.

 

Funny. 

No, the reality is that the US through Ben Bernanke wants to attract money to the US markets. The US markets are the places to be if you want to fish for money. It looks like a casino table but it is where money converges.

RE might eventually crash but in the meantime...

Elsewhere, especially if you are looking for the kind of opportunities you quoted, you are losing money.

Mon, 01/10/2011 - 10:38 | Link to Comment cranky-old-geezer
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No argument.  I agree.  Enjoy the casino markets while you can.

Tue, 01/11/2011 - 06:26 | Link to Comment APC
APC's picture

Jesus, you guys are lovely.  Tell me you're not my neighbours.

Mon, 01/10/2011 - 11:23 | Link to Comment Dismal Scientist
Dismal Scientist's picture

Easy solution. Stop hanging out with socialists. They are idiots.

Mon, 01/10/2011 - 09:46 | Link to Comment Sands8oo
Sands8oo's picture

Right - but the doomers make money while all the happy-go-lucky American public r'tards enjoy their fun, love Federal Reserve notes...

They took the blue pill - the rest of us took the red pill... we live with that decision for better or worse.

Mon, 01/10/2011 - 09:13 | Link to Comment EscapeKey
EscapeKey's picture

You're overdoing it. A good troll needs to be believable.

Mon, 01/10/2011 - 09:37 | Link to Comment BobPaulson
BobPaulson's picture

Exactly, not as funny as before.

Mon, 01/10/2011 - 09:28 | Link to Comment Chappaquiddick
Chappaquiddick's picture

UUUUUUUUUUUUUUUUUUUUUUURGHHH!!!

Chunky bits!!

Can't breathe!!

UUUUUUUUUUUUUUUUUUUUURGHHHHH!!!

Mon, 01/10/2011 - 09:29 | Link to Comment cossack55
cossack55's picture

You are overdoing it a bit, Hamy.  Take a clue from Dr. Acula last week.  Classic.

Mon, 01/10/2011 - 09:36 | Link to Comment Sgt.Sausage
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==>  free, honest, democratic, formidable country,

 

 

Huh?

Mon, 01/10/2011 - 09:57 | Link to Comment Translational Lift
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"If you want to see fraud, go to Zimbabwe.

I'm glad I'm an American, and I'm very happy to live in this free, honest, democratic, formidable country, which brings together the finest minds of the world, working for our common prosperity and happiness."

 

I'm assuming that all above is sarc.........if not you better get back on your meds boy.....

Mon, 01/10/2011 - 10:22 | Link to Comment ciscokid
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+1

Mon, 01/10/2011 - 13:58 | Link to Comment Hulk
Hulk's picture

Stunning that folks are not "getting" HamyWanger...Thats a 'm' folks, not a 'rr'...

IE, he's not Harry, his name is Julie...

Mon, 01/10/2011 - 16:11 | Link to Comment Cyrano de Bivouac
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HW-you summed it up perfectly, the reasons why America is respected throughout the world.

Mon, 01/10/2011 - 08:52 | Link to Comment johngaltfla
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I wonder if old Trichet's phone is ringing off the hook with BNP, SocGen and the German banksters calling in a panic....

Mon, 01/10/2011 - 08:53 | Link to Comment Drag Racer
Drag Racer's picture

Waddell said Reed did it. I guess they can't descide on double 9 or 12 domino set. Both topple over just the same.

Mon, 01/10/2011 - 09:03 | Link to Comment Mercury
Mercury's picture

Holy bailout half-life deterioration Bankman!

Mon, 01/10/2011 - 09:04 | Link to Comment Star Warrior
Star Warrior's picture

Goodbye Ireland, you will be fondly remembered and much missed!!

Mon, 01/10/2011 - 09:07 | Link to Comment WaltzTangoFoxtrot
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"Houston, we have ignition and the clock is running!"

 

WTF

Mon, 01/10/2011 - 09:12 | Link to Comment Sudden Debt
Sudden Debt's picture

And as NOT A SINGLE European country is actually doing something about it, the outcome is very well known.

This weekend, the mess is finally starting to hit the mainstreet media and we have entered the blame game stage.

By "entered the mainstreet media" I mean that they aired some nasty info shit at 1 o'clock in the morning till 3 o'clock when at least 99.99% of the population was sleeping.

Mon, 01/10/2011 - 09:19 | Link to Comment EscapeKey
EscapeKey's picture

That's how they always do it. Or they send it at the same time as "Coronation Street" or similar populistic dross (here in the UK, substitute for "Melrose Place" or whatever mindless, moronic crap is broadcast in prime time where you live), to bury really bad news. That way, they can rightfully claim "we tried to inform you".

What worries me most about it all, is that the gov't here in the UK is starting to stall on austerity measures. So far, they've only considered 25% of the deficit by 2014, and that's with an expected optimistic 3.5% growth rate. Is this due to the coalition gov't not agreeing, or - as I fear - is it because they know it won't matter what they do; the cards will tumble regardless.

Mon, 01/10/2011 - 09:53 | Link to Comment FullFaithAndCretin
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...mindless, moronic crap is broadcast in prime time...

And football. Oh yes. 

Mon, 01/10/2011 - 09:58 | Link to Comment reload
reload's picture

I think there is an element of `whats the point? it will be too little too late` but also the desire once in power to start kicking the can, down the road. I almost laughed this morning when I heard Cameron was calling for an end to (verbal) `banker bashing` while behind closed doors the treasury are reported to be telling bankers `just lend some money and we will turn a blind eye whatever you pay yourselves`. Our politicians absolutely do not get the fact that borrowing does not equal prosperity, and that in an environment where bankers are insulated from consequences of mal investment capital to fund SME has become non existant. Extend and pretent = no true price/value discovery = no recovery.    

Mon, 01/10/2011 - 10:29 | Link to Comment AnAnonymous
AnAnonymous's picture

Extend and pretent = no true price/value discovery = no recovery.    

 

But accumulation of capital. Which in a depleting environment might be the priority. Better to consume when you can.

Mon, 01/10/2011 - 09:13 | Link to Comment Oh regional Indian
Oh regional Indian's picture

+3 to Mercury's Captain Haddock-esque exclaim. But, billions of blue blistering Euros, this thing looks like it's headed moonwards.

Some troll above made a fake retort about Zim and the like. Well, he needs to understand that Zim, much like Iceland, was a test case. Poor black nation: check. Rich white nation (Iceland) : Check. The same game was played during the famous Asian Crisis of 1997.

The systems boundaries need testing to see how much stress it can take. People need to be tested to see how docile TV has made them (The Irish seem placid enough right now).

The sovereign debt crisis will be guided to it's logical blowout to prove that "sovereign" nations (such a travesty and a joke) cannot handle their finances. One big entity (UN+IMF+WB) through the BIS will do it for you.

No one will riot, mark my words. People are too afraid to be hungry, cold or to be seen as against the system that has them by the short hair.

ORI

http://aadivaahan.wordpress.com

Mon, 01/10/2011 - 09:33 | Link to Comment cossack55
cossack55's picture

Gee, ORI. Then please to explain Iceland.  No riots. Told the IMF to get the hell out.  Slowly working out their problems internally. Please advise.

Mon, 01/10/2011 - 09:49 | Link to Comment AnAnonymous
AnAnonymous's picture

Iceland had some beef at start. Riots are relative in their perception. Some people are not expected to riot so when they riot, their riots are easily pushed under the rugh.

To understand Iceland, you need to go back to years 1998s and so when Icelanders started to discuss the best monetary policy to foster consumption in Iceland.

Any analysis based on the last moves of Iceland is like summing up a chess game to the last sequence of moves, forgetting in the process that the last sequences of moves was enabled by the previous sequences that happened.

Mon, 01/10/2011 - 09:40 | Link to Comment gwar5
gwar5's picture

Yeah I think that's where they're herding us

They want it so bad they can already taste it

Mon, 01/10/2011 - 09:28 | Link to Comment Ferg .
Ferg .'s picture

Well , I suppose this would be more damaging if we were actively selling bonds right now . No need to do that for another while yet but to be honest I'm not sure the macroeconomic environment will be any better when we do return to the market . In fact , given the ever deteriorating situation in the Eurozone I think it will probably be considerably worse .

Mon, 01/10/2011 - 09:33 | Link to Comment mogul rider
mogul rider's picture

What happened to the good "ol days when the Irish just fucking killed people for looking a them wrongly or having the wrong religion.

Jesus Irish people get that loving feeling back and start blowing shit up. That'll the rattle the elite's cage.

 

Euphemistically speaking of course

Mon, 01/10/2011 - 12:46 | Link to Comment Horatio Beanblower
Horatio Beanblower's picture

It didn't seem that attractive any more when they discovered that they were actually working for British intelligence.

Mon, 01/10/2011 - 09:33 | Link to Comment 99er
Mon, 01/10/2011 - 10:27 | Link to Comment Star Warrior
Star Warrior's picture

Sure is one mighty fall from Grace!

Mon, 01/10/2011 - 09:34 | Link to Comment jbc77
jbc77's picture

I'm dying to find out what will actually start the next meltdown. So far the central bankers have kept the plates in the air, but for how long?

I mean how long can you hide global insolvency? How long can we print and prop up? How long can we pretend stocks are not overvalued?

Like a thief in the night, that domino will fall, that land mine will be stepped on....

Mon, 01/10/2011 - 09:55 | Link to Comment Arius
Arius's picture

Enron were the smartest guys in the room until...

watched The Match King movie (1932) last night; funny the more things change the more remain the same.

debt, will deal w/ the problem when it explodes in our face attitude same then as now. 

Humans never seem to learn...and somehow, always believe this time is different until it isnt...

Mon, 01/10/2011 - 09:59 | Link to Comment Sudden Debt
Sudden Debt's picture

There will be about a hundred "attempts" to save the EU by words.

Everytime, the market will recover a bit and at the end it won't matter anymore.

Greece of example is "doing everything it can" to reduce it's deficit... but in the last 6 months, they hired another 40.000 government employees.

And after a 30% cut in salaries (which are Ax2 compaired to A = private sector salaries), they managed to RAISE the government salaries BY 20%!!!

So even if you spell being F U C K E D like D E K C U F, IT DOESN'T CHANGE A THING! People just don't get it what's at stake.

SHORT TERM HAPPYNESS IS ALL THAT MATTERS.

VIVA LOS MICROWAVE BRAINS! 1, 2, 3 TING : RESULT!

Mon, 01/10/2011 - 10:00 | Link to Comment Salinger
Salinger's picture

there are actually two questions: what will start it and what the nature of the next meltdown will be; and a third question, when.

Mon, 01/10/2011 - 10:22 | Link to Comment RunningMan
RunningMan's picture

Been wondering the same thing jbc77... I think the only way for a next wave down is mass hysteria of sorts. Those investors that got back in or stayed in, now need to feel some sort of major sting in order to see a major downshift. Just my two cents...

Mon, 01/10/2011 - 10:28 | Link to Comment Star Warrior
Star Warrior's picture

Japans kept it going for 20 years, don´t under estimate how long fiat can be strung out

Mon, 01/10/2011 - 10:38 | Link to Comment EscapeKey
EscapeKey's picture

a) Japan's debt is bought by domestic investors.

b)The American debt is - through the PDs - bought by the Federal Reserve, thereby adding to the reserve accounts of the Primary Dealers.

a) is not inflationary, b) can be wildly inflationary, given a 10x fractional reserve multiplier. Theoretically, if the money isn't lent out, it isn't inflationary.

In recent times, however, the excess reserves of PDs which SHOULD be increasing due to the ongoing POMOs, have been on the decline.

Mon, 01/10/2011 - 11:22 | Link to Comment Temporalist
Temporalist's picture
Eclectica's Hendry Turns Greece Chaos Profit Into Bet That China Will Fail

“I see Japan as a nuclear bomb strapped onto the chest of the global economy,” Hendry says. “They’ve got uranium -- which is, they sell credit protection: CDSs. I’m the other side of that.” If the Japanese corporate bond CDS spreads widen to equal or surpass their record highs of 2009, Hendry’s fund could rise by as much as 50 percent, he says.

http://www.bloomberg.com/news/2011-01-10/eclectica-s-hendry-turns-greece...

Mon, 01/10/2011 - 09:42 | Link to Comment gwar5
gwar5's picture

That's a nasty looking thing

Greece was way too

Mon, 01/10/2011 - 09:51 | Link to Comment Seasmoke
Seasmoke's picture

Irish Blood, English Heart

Mon, 01/10/2011 - 10:02 | Link to Comment shortus cynicus
shortus cynicus's picture

Just one open question: do you believe that all those CDS will be payed when one country refuses to meet its obligations? Does an issuer of CDS have enough money to pay all this CDS at once "as designed"? If not, is it not a next big scam?

Mon, 01/10/2011 - 10:09 | Link to Comment reload
reload's picture

If Goldman is long the CDS then a taxpayer will be found to make them good.

Mon, 01/10/2011 - 10:31 | Link to Comment ciscokid
ciscokid's picture

+++1 Bingo

Mon, 01/10/2011 - 10:09 | Link to Comment plocequ1
plocequ1's picture

Not one word of this on Marketwatch. Alcola's earnings is the main focus. Lets face it, The world is nothing but a big a stock. IPO coming soon. Stock symbol WLD

Mon, 01/10/2011 - 12:58 | Link to Comment MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Symbol: FTW (if it is not already taken)

Mon, 01/10/2011 - 10:17 | Link to Comment Josephine29
Josephine29's picture

This situation just goes on and on.Officially the Euro zone is fine, unofficially the problems are building. However a novel suggestion has been made by notayesmanseconomics as a way of changing things for Portugal.

Indeed with her balance of trade and external debt problems she could call in the IMF for its original purpose helping with an external balance problem!

 

It would make a change and remind the IMF of its original and proper role...

http://notayesmanseconomics.wordpress.com

Mon, 01/10/2011 - 10:17 | Link to Comment RunningMan
RunningMan's picture

Is the Irish situation not simply self-fulfilling? They will fail if enough people believe they will fail and price their debt (and the risk of default through CDS) accordingly. The key issue is WHEN - as the tagline of ZH says, "on a long enough timeline..." - as in when will Ireland explicitly default (is the time horizon of a 'typical' CDS contract one year?). This whole recovery from the crisis seemingly hinges on putting a new spin around default. By propping everything up willy nilly, those calling the shots are trying to paint a rosy picture to keep those with cash spending and investing. If the person who owns the bat and ball goes home, then the game is over. I just wonder if the people making these swap arrangements actually think they'll be honored if everything really goes south.

Mon, 01/10/2011 - 10:32 | Link to Comment shortus cynicus
shortus cynicus's picture

I just wonder if the people making these swap arrangements actually think they'll be honored if everything really goes south.

That was my question above. Insurance companies insure against isolated events, never against disasters targeting to many insured at once. How can CDS issuers do such mathematically impossible thing? Who are those issuers actually?

Mon, 01/10/2011 - 10:23 | Link to Comment bigdumbnugly
bigdumbnugly's picture

so long once green ireland.

Mon, 01/10/2011 - 10:43 | Link to Comment Flounder
Flounder's picture

@TD, thank you for posting Buiter's paper...restructuring instead of monetary autonomy is his best solution.  Bank runs, political upheaval, and social unrest are possible.

Mon, 01/10/2011 - 14:45 | Link to Comment hardcleareye
hardcleareye's picture

Buiter's article was a wonderful read, thanks for the link.

Looks like the only way out is for the "Global Community" to impose international banking rules that force the insolvent/zombie banks to take MAJOR haircuts...  hopefully  these rules are in place by 2013....

Now does anyone think that the "banksters" are going to "allow" these rules to go  into effect??!!!!

I think I read this "solution" (Internation rules to orderly "dismember" zombie/insolvent banks with major haircuts) in one of Soros's books a few years ago, I also remember reading this in Roubini's Crisis Economics .. 

Not going to happen......... ???

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