This page has been archived and commenting is disabled.

As ECB Finds Rating Agencies Have Suddenly Found Religion, It Prepares To Flip Flop On Accepting Greek Bond Collateral

Tyler Durden's picture


Well this was unexpected: the rating agencies, for years and years patsies of their highest paying clients, have suddenly found their conscience, if not religion, and adamantly refuse to bend long-standing rules which qualify the proposed Greek MLEC/CDO type rescue as an event of default. Per Bloomberg:  "The rating companies have signaled the plan would trigger because it is being done to avoid default, so couldn’t be considered voluntary, and because investors would be worse off than by holding the new securities." The ECB is so confused by this intransigence and unwillingness to bend to the will of the criminal cartel that earlier today the ECB's Novotny was complaining to Austrian TV about this unexpected demonstration of independence: "Debt rating agencies are being much tougher on potential private-sector contributions to Greece's debt woes than in past bailouts, European Central Bank Governing Council member Ewald Nowotny said on Monday. "We are conducting a very difficult conversation with the ratings agencies," he said."This is what we have to try to find: a way that on the one hand certainly involves banks without having this lead to a default as a consequence," he added. "I also must say it strikes me that the ratings agencies are being much stricter and more aggressive in this European matter than they were, for example, in similar cases in South America. I think this is something we will have to think over." As a result of all this sudden uncertainty, Bloomberg now speculates that the ECB will have no choice than to flip flop on its own adamant position of isolating defaulted collateral, and accept Greek bonds even in an event of default: “The ECB cannot remove liquidity from the big Greek banks,” said
Dimitris Drakopoulos, an economist at Nomura. “This discussion is a
waste of time. The ECB is going to back down in the end -- what can they
do?” he added."


Trichet put Greece’s fate in the hands of ratings companies when bank officials began saying in May the ECB, which has lent 98 billion euros ($142 billion) to Greek banks, would refuse to accept the nation’s bonds as collateral if any “burden sharing” by private investors produced a default rating. Growing support for a rollover by investors helped push the yield on Greece’s 2-year bond down 327 basis points in a week to 26.11 percent.

The loophole: make a "transitory" breach of your rules:

The ECB’s rulebook leaves the bank room to accept the defaulted bonds, saying only that rejecting them “may be warranted.” Trichet has already shown a willingness to skirt the collateral rules when he suspended minimum rating requirements on to give Greece and Ireland more breathing room.

Under a French-designed plan being used as a basis for talks with private investors, creditors would voluntarily agree to roll over 70 percent of bonds maturing by mid 2014 into new 30-year Greek securities backed by AAA-rated collateral. Under a second option, banks and insurers could roll over into new five- year bonds with no guarantee. ‘ S&P roiled markets yesterday, erasing the euro’s early gains, when it said the French plan would likely trigger a default rating, repeating assertions made by Fitch on June 15 about general debt rollovers.

The companies did leave Trichet with a way out, saying Greece may have to endure this pariah status only until the rollover was carried out. Fitch also said that despite the default issuer rating, its rating on Greek bonds themselves would stay above default.

Trichet’s dilemma is that he must either allow the ECB to accept the rollover and keep funding Greek banks, or risk scuttling a new aid plan that Greece needs to avoid default.

And so forth. The net result is that the ECB will ultimately have no choice but to bend its rules unless it wants a freefall run on the global bank, unless it manages to bribe the rating agencies with enough money created out of thin air, to make all the other money printed out of thin air, and soon to be collateralized with defaulted bonds, still valuable.

Is it any surprise then that this news that a key backstop of the European currency is now essentially bonds that have zero value, is sending the EURUSD higher?

We sure hope not.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 07/04/2011 - 21:05 | 1425403 CrashisOptimistic
CrashisOptimistic's picture

This is an ongoing mistake.

People are doing logical analyses of a situation that will eventually be addressed through redefinition.  The ECB will manufacture the money and provide it. 

Period.  Germany will acquiesce.  "Default" will be redefined.

This detailed tracing of the logic of this and that is pointless.  A decision has been made.  Greece will be bailed out.  Words will be redefined to permit the ECB to create money loaned to Greece.  All the layers of obfuscation mean nothing.

That's why the Euro climbs.  The markets know it's all a charade.  The layers of detail are just to provide work for junior bankers.  The layers of detail are actually not important.  The end point is . . . money will be printed and given to Greece.  The markets know it.

Mon, 07/04/2011 - 21:24 | 1425445 Thomas
Thomas's picture

Presuming that CDSs have a reason to exist--I am not convinced--one could argue that preempting their payout eliminated that reason.

Tue, 07/05/2011 - 01:53 | 1425873 Popo
Popo's picture

There is more to this than meets the eye.   Don't forget that a CDS contract is an agreement between TWO parties.   The banks who are whining loudly are just one side of the equation.  

There are some other (notably silent) parties who stand to earn billions from a Greek default.  

Or to put it another way:   There are other parties who stand to *lose* billions if the ECB prevails.

Who are these other parties?  Likely thousands of hedge funds,  and probably quite a few big banks including the squid.

But this "unusual" toughness on the part of the ratings agencies isn't likely to be some sudden 'love' for regulatory adherence,  as much as it is a 50/50 allegiance to parties on both sides of the table.  (Which suggests to me that some of those 'other' parties are likely to be very big players).

Tue, 07/05/2011 - 02:32 | 1425926 Troublehoff
Troublehoff's picture

Couldn't agree more

Tue, 07/05/2011 - 11:21 | 1426537 Harlequin001
Harlequin001's picture

This is what happens when governments refuse to give immunity to ratings agencies with regard to the consequences of their own faulty ratings...


Tue, 07/05/2011 - 02:37 | 1425929 Ghordius
Ghordius's picture

you shall not change debt agreements without involving Wall Street & the City of London, and therefore generate holy fees (remember the Dubai Bonds?)

Tue, 07/05/2011 - 06:49 | 1426104 malikai
malikai's picture

Very good points indeed.

I get the feeling this thing is like the little attention-starved girl who will stop at nothing to get you to pay attention to her. Perhaps it's misplaced, but my sense of it is that this whole thing is here to entertain us while some other theft is ongoing.

Tue, 07/05/2011 - 08:48 | 1426208 Marco
Marco's picture

Unless there is some TBTF patsy being set up solely to issue mountains of CDS's we don't know about, I don't think the CDS angle is a big part of this ... the volumes we know about pale in comparison to the actual debt.


AFAICS it's all about dumping as much of the Greece debt on the ECB as possible before the default, the ECB needs time and plausible deniability for this bailout of the private holders. Which is kind of hard if the ratings agency are already calling them on it now.

Tue, 07/05/2011 - 10:41 | 1426441 boiltherich
boiltherich's picture

"...there is some TBTF patsy being set up solely to issue mountains of CDS's..."

Just tell me how much it's going to cost me this time and when do you need the check. 

                                                                         John Q. Taxpayer

Mon, 07/04/2011 - 21:49 | 1425477 phungus_mungus
phungus_mungus's picture

They can call it whatever they want, color it however they like, but in the end this train wreck is going to happen. Everyone seems to be caught up in the notion that default is unavoidable. 

That's the stupidest thing on Earth. 


Greece will default, either now or in a few months... they can call it blue dog shit and wrap it in as many financial lingo terms they want. But but it will not change the dynamics of what is going to happen.



Mon, 07/04/2011 - 23:12 | 1425695 Thomas
Thomas's picture

You meant "avoidable" not "unavoidable"?

Tue, 07/05/2011 - 01:44 | 1425879 phungus_mungus
phungus_mungus's picture


Mon, 07/04/2011 - 22:55 | 1425664 decon
decon's picture

Anybody know about this guy linked below?  He's making some bold and interesting predictions!

Mon, 07/04/2011 - 23:21 | 1425709 Thomas
Thomas's picture

Don't know how the pieces fit together but they are indeed and interesting collection of puzzle pieces.

Tue, 07/05/2011 - 08:35 | 1426189 The Profit Prophet
The Profit Prophet's picture

I just went through the entire piece.....brilliant!

The ducks are indeed being lined-up for the introduction of a gold-backed SDR....printed with: "In Gold We Trust"

T.E.I.N. everyone!

Tue, 07/05/2011 - 11:20 | 1426539 boiltherich
boiltherich's picture

It is a lot of links to follow, but with patience and a little time reads like a plausible international thriller.  In fact, given the mess we are now in we are all on record here as speculating over the timing of the inevitable collapse and what will take shape in the aftermath, but we all have pretty much agreed that kick the can and extend/pretend is just buying time till a new system can be spit balled into place.  This shows that there is already an existing plan and that everything till now has been intentional as a precursor to the divorced currency and SDR system unfolding.  The only problem with it in my opinion is that the real plan is actually significantly more complex and the occidental currency bloc will I think end up as an "Amero" that combines Canadian resources, Mexican cheap labor, and US technology, military power, and scope of markets into a confederation of nations in all but name.  If you follow Dave's threads of thought through this is a major realignment of power throughout the world.  Worth keeping an eye on. 

Tue, 07/05/2011 - 07:22 | 1426122 slaughterer
slaughterer's picture

Any default will be temporary and partial.  Euro will climb, Greece will be bailed out, Russell 2000 will climb.  Stay long.  No crash coming.   Markets are unshortable.

Mon, 07/04/2011 - 21:04 | 1425412 THE DORK OF CORK
THE DORK OF CORK's picture

Fuck those souless bastards - I spit on their empty dreams.

They have no vision - they are a nothing.

Mon, 07/04/2011 - 21:30 | 1425454 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Heidegger would be proud.

Tue, 07/05/2011 - 05:51 | 1426064 Ghordius
Ghordius's picture

Nice anthem.

Mon, 07/04/2011 - 21:03 | 1425413 statlawyer
statlawyer's picture

market's going to scream higher tomorrow on no volume. I'm half tempted to cover all my shorts at a massive loss and go 100% long NFLX

Mon, 07/04/2011 - 21:51 | 1425481 phungus_mungus
phungus_mungus's picture

The market will go higher because the sun comes up... on this volume its suffering from improbable movements and is in no way any type of reflection of the economic reality we face today.



Tue, 07/05/2011 - 01:46 | 1425881 Popo
Popo's picture

At some point the "big short" will become so tempting that even the annointed banks won't be able to resist.  

You can ignore the amount of meat currently on the bone for a little while,  but at some point it starts to look very tasty.

Mon, 07/04/2011 - 21:05 | 1425415 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

reading this stuff is like reading the parole board's notes on whether to let your rapist go free or not for good behavior.

Mon, 07/04/2011 - 21:08 | 1425419 CrashisOptimistic
CrashisOptimistic's picture


It's like reading those notes after you've been told there is no budget to keep him in jail.

You already know the final chapter.  How you get to that point really doesn't matter.

Greece will be bailed out to avoid contagion.  That's all you have to know.  How it happens . . . you don't need to know.

Mon, 07/04/2011 - 21:10 | 1425425 Quinvarius
Quinvarius's picture

I would like the rapist to rape the parole board.

Mon, 07/04/2011 - 22:14 | 1425515 Milestones
Milestones's picture

All the thing you don't get told in Econ. 101. Point on! My this is getting delicious.  Milestones

Mon, 07/04/2011 - 21:55 | 1425489 tom a taxpayer
tom a taxpayer's picture

Damon Wayans - Up for Parole

Mon, 07/04/2011 - 21:07 | 1425421 JustACitizen
JustACitizen's picture

Old time credit guys (the kind that banks no longer employ) would tell you:

"Your first loss is your best loss."

Call it delicious irony.


Mon, 07/04/2011 - 21:09 | 1425423 ReactionToClose...
ReactionToClosedMinds's picture

Great catch & post Mr Darden.

After being 'sued' in the North Americano fashion for their functional failings, the high priests of western credit standards are going to stand back for awhile and let eurobankers dangle in the wind for their arrogance & stupidity.

Mon, 07/04/2011 - 21:13 | 1425428 ISEEIT
ISEEIT's picture

So go long EUR right?

Wish I could do that eeeeviil laugh thing. Ha-ha-ha.

Mon, 07/04/2011 - 21:17 | 1425433 buzzsaw99
buzzsaw99's picture

Ratings agencies work for Gollum, not the ECB.

Mon, 07/04/2011 - 22:16 | 1425517 Tabarnaque
Tabarnaque's picture

That's exactly right. 

Tue, 07/05/2011 - 00:12 | 1425785 Oh regional Indian
Oh regional Indian's picture

Said on the earlier thread, ratings agencies are the devil's helpers. They helped make the mess that is the US of A and they'll take that contagion to the world.

Cui Bono accounting.


Mon, 07/04/2011 - 21:19 | 1425437 holdbuysell
holdbuysell's picture

The entire bankster racket needs to bone up on this one:

Kübler-Ross model, also known as the five stages of grief.

  1. Denial — "I feel fine."; "This can't be happening, not to me."
    Denial is usually only a temporary defense for the individual. This feeling is generally replaced with heightened awareness of possessions and individuals that will be left behind after death.
  2. Anger — "Why me? It's not fair!"; "How can this happen to me?"; '"Who is to blame?"
    Once in the second stage, the individual recognizes that denial cannot continue. Because of anger, the person is very difficult to care for due to misplaced feelings of rage and envy.
  3. Bargaining — "Just let me live to see my children graduate."; "I'll do anything for a few more years."; "I will give my life savings if..."
    The third stage involves the hope that the individual can somehow postpone or delay death. Usually, the negotiation for an extended life is made with a higher power in exchange for a reformed lifestyle. Psychologically, the individual is saying, "I understand I will die, but if I could just have more time..."
  4. Depression — "I'm so sad, why bother with anything?"; "I'm going to die... What's the point?"; "I miss my loved one, why go on?"
    During the fourth stage, the dying person begins to understand the certainty of death. Because of this, the individual may become silent, refuse visitors and spend much of the time crying and grieving. This process allows the dying person to disconnect from things of love and affection. It is not recommended to attempt to cheer up an individual who is in this stage. It is an important time for grieving that must be processed.
  5. Acceptance — "It's going to be okay."; "I can't fight it, I may as well prepare for it."
    In this last stage, the individual begins to come to terms with her/his mortality or that of a loved one.

So, I'd say they're still at stage one, in denial that their beloved system is broken beyond repair.

Mon, 07/04/2011 - 21:27 | 1425451 buzzsaw99
buzzsaw99's picture

1. Irrational Exuberance

2. Fear

3. Extortion

4. Looting

5. Diversion


Stage 4 right now.

Mon, 07/04/2011 - 22:18 | 1425520 LongBalls
LongBalls's picture

Excellent post.

Mon, 07/04/2011 - 21:27 | 1425452 PulauHantu29
PulauHantu29's picture

+1. Thank you for taking the time to post the Five Stages. I forgot two of them. The other book Greeks might want to get a hold of is The Grief Recovery Handbook. It may help some of their pain ...alot.

Mon, 07/04/2011 - 21:24 | 1425446 PulauHantu29
PulauHantu29's picture

Rating agencies? You mean those companies that rated Subprime worthless C-R-A-P as Tripple AAA?

I was hoping they would be out of business now since even Bill Gross calls the rating agencies "worthless."

Mon, 07/04/2011 - 21:36 | 1425461 tom a taxpayer
tom a taxpayer's picture

Yes, it's a sickening spectacle. The rating agencies, one tentacle of the criminal octopus, telling Eurobankstas, another tentacle how to behave.

Godfather: "How did things get so far? I don't know. It's so unnecessary...

When did I ever refuse an accommodation?"

Mon, 07/04/2011 - 22:15 | 1425516 Tabarnaque
Tabarnaque's picture


Tue, 07/05/2011 - 08:00 | 1426157 Reptil
Reptil's picture

It's the pigmen in Brussels finally realising their betrayal did not earn them the penthouse.



Tue, 07/05/2011 - 11:29 | 1426567 boiltherich
boiltherich's picture

Ratings agencies were simply bought and paid for both by the banks that wanted to sell at unbelievable profit the crap they invented as AAA paper, and by AIG which knew the paper was not but as long as the ratings were there they could point their fingers at someone else and say look it was not our fault we were duped by false ratings like everyone else.  They knew the CDO's were shite on a stick but did not fear jail for fraud because the legitimacy the ratings agencies provided.  They did know it would kill AIG, but that was no problem, either the losses would be wiped clean in Bankruptcy court and they would keep their jobs and start all over again, or they would be bailed out as too big to fail, either way there was just too much wealth to steal for them to resist.  Greed is good remember? 

Mon, 07/04/2011 - 21:42 | 1425456 THE DORK OF CORK
THE DORK OF CORK's picture

What exactly is the ECB , me thinks it is the servent of the power behind the nothing.

The ECBs function is to pretend that Fantasia has boundaries.............. .

What is the nothing ? - its the emptiness that is left, it is like a despair - destroying this world

But why ?  - because people who have no hopes are easy to control  and who ever has the control has the power..............


Tue, 07/05/2011 - 06:38 | 1426097 Ghordius
Ghordius's picture

You are barking up the wrong tree - the ECB is working as designed

Tue, 07/05/2011 - 07:27 | 1426126 THE DORK OF CORK
THE DORK OF CORK's picture

Yes I am afraid it is - I have experienced the nothing.

Ireland once was and is now no more - It is a devestating blandness.

I fear nothing can stop it now - nothing will be left , not even the memories.


Mon, 07/04/2011 - 21:37 | 1425460 RobotTrader
RobotTrader's picture

Any and all dips this week are to be bought with utmost urgency.

As long as the 200-day holds fast.

I see that both EUR and AUD are down in Asia trading, yet ES is still pinned around 1335.

If this is a false bull move, then the financials will start underperforming, retail stocks will turn tail and head south, and any slight weakness in EUR and AUD will result in immediate panic selling in risk assets.

Right now, EUR weakness is not having much impact, so I assume the bull trend is still intact for now.

And if gold re-takes $1,500, then stock market weakness is an impossibility.

And absolutely nothing bad can happen as long as LULU is over $100.  LOL.....

Mon, 07/04/2011 - 21:45 | 1425471 ISEEIT
ISEEIT's picture

Okay Robo. Everybody dumps on you for some reason. I've got to give you a little love though because you definitely are not a quitter. It does my heart good to see EUR drop under 1.45. I'm a little less poor now. Off the cliff for AUD as soon as EUR/USD dips below 1.40.

That is (I think, and I don't really think all that good) when the fun starts.

B.T.W Nice you know whats!

Mon, 07/04/2011 - 21:54 | 1425488 steveo
steveo's picture

This was just too tasty, I had to post.

Cable pinged off an important, and clearly defined Bernoulli channel.

This should drive down ES, and EURO is also following down, which has been the 8000 lb deception chimpanzee in the room--i.e. GBP and Euro have been manipulated opposite each other last week, very odd.

Mon, 07/04/2011 - 22:56 | 1425668 disabledvet
disabledvet's picture

i've just stumbled on the "secret practice session" for Wall Street vs Euro Land.  Shhh, don't tell anyone:

Mon, 07/04/2011 - 21:37 | 1425462 Hondo
Hondo's picture

If I owned the CDS I'd sue the bastards if they try and call a default not a default because I'm the governmnet

Mon, 07/04/2011 - 21:42 | 1425467 Buck Johnson
Buck Johnson's picture

They are playing this whole thing by ear.  They don't know what they are doing, they are making it up as they go along.

Mon, 07/04/2011 - 21:47 | 1425474 Yen Cross
Yen Cross's picture

 Ratings agencies found, their (XLF) marketing departments, getting pressured. I like this story. It's developing for sure.  Did anyone catch that spike in (DXY) Yes low liquidity, I know.

Mon, 07/04/2011 - 21:48 | 1425476 MFL8240
MFL8240's picture

Ok, I think I got it.  The issue is, how can the criminals make a default not look like a default.  Right?  This is ridiculos.

Mon, 07/04/2011 - 23:24 | 1425714 island
island's picture

+ 1000

Mon, 07/04/2011 - 21:50 | 1425478 cognus
cognus's picture


I can add nothing valuable to Crash-Opt's point. 

I do have a lingering question, however, and know the knee-jerk answer of PM-bugs...   still remains a ? 4 me...  will the ECB charter be rewritten to grant unlimited credit/'money' creation as has our Fed Rsv ?  I think yes.  Either that, or the massive conversion/convergence of western currencies will be thrust forward sooner than later.

Mon, 07/04/2011 - 21:52 | 1425482 gianakt
gianakt's picture

Looks like the Chinks have figured out all the Euro's they have been buying up are going to become worthless!!!  Chinks are such gamblers!!!

Mon, 07/04/2011 - 21:56 | 1425490 ISEEIT
ISEEIT's picture

Funny shithead. Seriously, pretty funny.

Mon, 07/04/2011 - 21:53 | 1425487 steveo
steveo's picture

This was just too tasty, I had to post.

Cable pinged off an important, and clearly defined Bernoulli channel.

This should drive down ES, and EURO is also following down, which has been the 8000 lb deception chimpanzee in the room--i.e. GBP and Euro have been manipulated opposite each other last week, very odd.

Mon, 07/04/2011 - 22:08 | 1425504 Yen Cross
Yen Cross's picture

  Thanks for the link. Yen.  The mid summer (short) squeeze. I said trade trade SMALLS. Or better yet stay flat, unless you do it all the time.


   You may want to incorporate sma's and fibis, on recent moves within the channels. Just a thought. Thanks again.

Mon, 07/04/2011 - 21:55 | 1425491 chump666
chump666's picture

1.45 handle was taken out. The ECB won't print, then France and Germany get the oil inflation which will turn their taxpayers into rapid maniacs.

It will be a default which ever way you want to look at it, EZ banks will have to start writing down on Greece debt and quickly.  EUR is toast, only bullish once it hits low 1.30's

Mon, 07/04/2011 - 22:02 | 1425499 chump666
chump666's picture

That's french banks for you, self interested driven a-holes.  Glad the rest of the EZ banks lead by the S&P are saying f**** you.


Tue, 07/05/2011 - 02:44 | 1425934 Ghordius
Ghordius's picture


Mon, 07/04/2011 - 22:10 | 1425503 ISEEIT
ISEEIT's picture

And then we wake up and make yet another short cover. I'm in the hole for 900.

Hello, my name is Bob and I am in the hole for over 900 825 pips. 1.40 & again at 1.41

This crap really is kinda funny.

Mon, 07/04/2011 - 22:10 | 1425510 Yen Cross
Yen Cross's picture

 That's right, you can't hedge. You can use opposing currency pairs.  EX;  Long aud/jpy short eur/gbp.

Mon, 07/04/2011 - 22:40 | 1425607 chump666
chump666's picture

the EUR rally was legless.  you got 50 crossing over the 100 thin liquidity, spec longs...hard markets to hedge in even when they were bid.  probably close to the deleveraging trade = just sell.  trying to time that...

china news is tasty, EZ could be on the own now.

Mon, 07/04/2011 - 22:46 | 1425617 Yen Cross
Yen Cross's picture

 We will be laughing in 2 weeks chump666. +1 Just be carefull of the covering in light trades. You know that though.

Mon, 07/04/2011 - 23:33 | 1425733 chump666
chump666's picture

I hear ya.

good hedge at the moment is an out-of-the-money (non margin) put on the ASX200, looking at 4400 to 4300. 

Tue, 07/05/2011 - 02:05 | 1425898 Yen Cross
Yen Cross's picture

 You are trading the ASX. I'm impressed. Based on my charts and the dovish RBA. You may be on to something.

Mon, 07/04/2011 - 22:08 | 1425508 blindman
blindman's picture

John Prine : You've Never Even Called Me By My Name
the euro or the dollar goes first ?
serious buying opportunity of pms,
seems soon. then the window closes
and the walls blow out.
ian fleming rolls over in his grave.
Ian Fleming: In His Own Words
By Loeffelholz | Published: 6 December, 2008
“No self respecting agent would use such things [the gold-ringed cigarettes of Balkan and Turkish tobacco mixed for Bond by Morland's of Grosvenor Street]. He’d smoke Players or Chesterfields. But the readers enjoy such idiosyncrasies, and they accept them—because they don’t stop to think about it. The secrecy of my secret agent is pretty transparent, if you think about it even briefly. But the pace, the pace of the narrative gets one by these nasty little corners. It’s a sleight-of-hand operation. It’s overpowering the reader. You take him along at such a rate, you interest him so deeply in the narrative that he isn’t jolted by these incongruities. I suppose I do it to demonstrate that I can do it.”
Catherine Austin Fitts, 6.16.2011: Watch For Congress To Move After Bohemian Grove Signals
Written on June 17, 2011 by DiamondTiger in Economic Collapse, Fascism, New World Order
"(10:28) Here’s the reality; there are alot of honest people in leadership positions, and what they have been taught is trying to do the right thing for the whole which will always get you punished, and it’s not just punished from the top, it’s punished from the bottom. So that’s part of the conundrum of how we get here to there. Now what we can people do? And I think the first thing is to think traction. What you want to do is you want to separate yourselves out as much as possible. You want to put as many degrees of separation between you and the people that are centralizing things and also, you and the people who are not productive. I mean, you want to limit your network, you want to limit your work and business life to people who are positive and get real things done. And alot of this is going to come because millions and millions of people; you know I once had a friend who ran for governor in the state of Tennessee, and he said, ‘you think the snowflake is powerless until you realize that enough get together they can shut down New York City’, and the reality is that the system we are watching can’t succeed and so the rest of us have got to withdraw and start; this comes down to thousands of incremental things to build a more self-sufficient and de-centralized economy…..and part of what we are seeing in the economy is people just withdrawing because they’ve had it. They realize that something in a sense terribly unhealthy and terribly perverted; so that’s the natural recession that happens when people say, ‘I don’t want to invest in this, this is kooky.’
They are going to pump the economy really hard, and they are going to do that, but they want political support for it, so they’re going to let us really choke during the summer, the Grove will approve a qe3, and they will come out and it’ll be quite a fractured fall, but one in which inflation will kick up even more. ...working on a deal that really sticks it to main st. ..."

Mon, 07/04/2011 - 23:30 | 1425724 island
island's picture

and he said, ‘you think the snowflake is powerless until you realize that enough get together they can shut down New York City’, and the reality is that the system we are watching can’t succeed and so the rest of us have got to withdraw and start; this comes down to thousands of incremental things to build a more self-sufficient and de-centralized economy…..

This is similar to what I have been saying to friends for a year or two. I'm glad to see I'm in good company.

Mon, 07/04/2011 - 22:10 | 1425509 Jack Burton
Jack Burton's picture

 You can smell the desperation in the air! The Euro banks can not stand a default, they hold enough Greek debt to sink them and god himself only knows where all the CDS bodies are buried. Although Greece is hopeless, there are assets to be sold off and profits to be made, so keep the show going. Cram austerity and sell off the Greek assets. Some will make easy fortunes while the majority sink into poverty. All that easy money that flowed into Greece when they joined the Euro has turned out to be a poisened pill.

This whole situation is a make it up as you go desperate series of actions to hold of literal default until as much money can be made and as much liability can be dumped onto Euro taxpayers.

The bankers will win, the paid off politicians will win, the elites will win, and the speculators will win. Workers, savers and retirees will be screwed to the wall for generations. I lay the blame on the people who sat by and bought into the Neo-Liberal agenda and the Euro hoax. Greece was never rich or economically growing, it was all a borrowed money hoax.

Seems only tiny Iceland had enough people with enough brains and courage to tell the bankers to go piss up a rope! We see Icleand is now growing and able to sell it's sovereign debt in the market. While growth is slow, it is steady and Iceland is not in debt for decades to come. Ireland caved to the bankers and are in so much worse a condition for it. Greece is caving to the bankers and are now a client occupied state of slaves to the banks. America? Our turn is coming, and we are well and truely screwed.

Mon, 07/04/2011 - 22:40 | 1425587 Tabarnaque
Tabarnaque's picture

Unless there is an uprising by the people. There needs to be a revolt against this privately owned central banks’ monetary system. Their monopoly over money creation should be ended and given back to our governments. The creation of money supply out of debt and using a fractional reserve system has to be terminated. This is the root of all the problems. Not only is this system the biggest scam ever created by mankind but it is unsustainable. It is totally flawed and unstable as it needs to grow at an exponential rate just to sustain itself. If the money supply (or better said the total debt supply) doesn’t grow permanently then the system collapses. And each and every time the system has collapsed since 1913, huge amount of wealth was transferred from the people to the banking cartel. The banking cartel has to be brought down and stripped off its powers. Their greed will eventually push humanity to revolt against them.  

Mon, 07/04/2011 - 23:32 | 1425727 island
island's picture

Agree.  Revolt is the only solution for "the small people."  The sooner the better.

Tue, 07/05/2011 - 02:41 | 1425930 stirners_ghost
stirners_ghost's picture

Did you just say "our governments"?

Look-- your government will never be yours while there are others with deeper pockets. 

Fractional reserve isn't the root of your problems. One can easily imagine a market of competing currencies--some issued by full reserve banks, thus demanding a premium, and others issued by fractional reserve banks at a relative discount. Absent fiat (e.g., legal tender laws), such trashy currencies would pose no systemic risk.

Tue, 07/05/2011 - 05:52 | 1426065 Tabarnaque
Tabarnaque's picture

Fractional reserve monetary system and a complete monopoly on the creation of money in the hands of privately owned central banks are two of the most important pillars of the banking cartel.


A fractional reserve monetary system is a system that not only allows banks to lend money they created out of nothing but it is also a system that bases 95% of the entire money supply on the issuance of debt. In this system, any money supply expansion has to be done through the creation of more debt. Paying back all the debts would simply mean to whip out 95% of the money supply of the market. Without debt there would be no money supply. This is what people have to understand. It is this system that enslaves us perpetually to a debt repayment to private banks. This has to change.


In the history there were several other monetary systems that did not base their money supply on the issuance of debt and on fractional reserve. And these systems worked really well. Just to finish, I will give you these 2 quotes:


Give me the control of a nation’s money supply, and I care not who makes its laws.


Amschel Rothschild The founder of Rothschild banking dynasty.


If you want to remain slaves of the bankers and pay for the cost of your own slavery, let them continue to create money and control the nation’s credit.


Sir Josiah Stamp. 

Tue, 07/05/2011 - 13:02 | 1426865 boiltherich
boiltherich's picture

"...imagine a market of competing currencies--some issued by full reserve banks, thus demanding a premium, and others issued by fractional reserve banks at a relative discount..."


Bad money always drives out good, black letter law in econ.  People do not spend gold when they can spend silver, they do not spend silver when they can spend paper, and they will not even spend paper when they can spend sand, or words.

Absent fiat this would only really mean that real risk/reward would be setting money prices as it has not done in quite a long time.  But, if there are competing currencies within a marketplace there will also be what amounts to an internal FX between them with the inevitable arbitrage. 

We have been there, in our history we used all kinds of things as money in America, letters of credit, scrip, privately issued banknotes, waybills, coins of varying content and issuers, all at the same time.  The constitution just says nothing could be made legal tender by the states except gold and silver, and described/defined the dollar by content of the metal.  But, it did not prohibit the use of other things as a medium of exchange by mutual agreement between private parties or even ban legal tender laws by the federal government, though some would argue forcefully that is implied, all the possible arguments that can be made have been repeatedly, when Lincoln introduced the greenback, when the Fed was created, when WJ Bryan was running for president, when antitrust laws were first promulgated, when FDR confiscated gold by presidential order, when the gold window was closed, etc. etc.

We still ended up where we are, so a new revolution whether it starts with the "Arab Spring" and spreads to Greece or Ireland, or America might be able to change things ala the snowflake analogy above, for a while, but greed always wins like a game of Whack-a-Mole, their plans universally require losses by the many to feed the ever larger appetites of the ever smaller few that enslave us, it will always find a way, it is almost as predictable and primordial as the conflict of good and evil itself, the Gini coefficient grows ever more distorted till it snaps, there is a revolution and bingo we start over.

This is not to say we should not refresh the tree of liberty occasionally with the blood of patriots in order to quell those greedy few, but one must understand that correcting great injustices requires great sacrifices, on a level few here would voluntarily put up with from what I have read.  In the real world a lot of people will lose a lot and many will lose everything including their lives, all the PM's and hoarding in the world will not save you and your kids that fate, and in fact it might just make you a prime target.  In a global economy revolution probably will also be global so there will be no getting out of Dodge as I have seen suggested by some. 

Judging by the language I have seen some use at ZH regarding the useless eater/non productive nature of those that have served you in the military I would say that there is little to no incentive for anyone to put their asses at risk in this refresher of that tree of liberty lest they be compared to a leech when injured in battle.  I would almost believe that Kissinger himself and Paulson, and all the other greedy players in finance are posting at ZH with the anonymity it affords.  But, for the majority who benefit from the service of others and yet who do not object to such a portrayal as immoral, I say your silence is proof that you cannot find the courage to stand up to power as it now exists anyway, and I am recalling all your "support the troops" magnetic stickers from your bumpers and tailgates because your slavery to these monsters is really by acquiescence is it not? 

Hope you all had a nice 4th.

Tue, 07/05/2011 - 08:52 | 1426214 oogs66
oogs66's picture

the best part is that what the agencies do has no affect on cds, and the banks and ecb will alter their rules to ignore the agencies as well in the end.  only a few idiots in the government don't get it, and keep going on debating with the worthless agencies

Tue, 07/05/2011 - 11:13 | 1426523 el Gallinazo
el Gallinazo's picture

Yeah, but one has to realize that Iceland was a weird serendipity based on a unique constitution. One honest politician, a titular president with almost no power, refused to rubberstamp the theft and threw it into a popular referendum. The strategy of the pigmen is to ignore the people and buy off the legislature. The people vote the old party out, and the pigmen buy off the new ones. Sound familiar, Americanos? Worked so far in Ireland, Portugal, and Greece. The only way people can counter this is to make it much too personally "expensive" for their corrupt politicians to sell them down the river.

Mon, 07/04/2011 - 22:16 | 1425518 ISEEIT
ISEEIT's picture

What a terrible thing to say on the 4th of July. I for one am agast!

Mon, 07/04/2011 - 22:20 | 1425522 Ray Elliott
Ray Elliott's picture

This is the collapse.  It is surprising in  that it appears to be happening in slow motion.  The signals are confusing, the dollar appears to be strenghening, yet we know that the dollar rats are jumping ship.  The financial gurus are voicing perplexity, the banksters are uniting in reassuring all is well. 

But we know all is not well and that we have less chance than a snowball in hell that any of our "bought and paid for" politicians have the slightest idea of how we can survive the shit storm that is rapidly engulfing us.

Hang on friends.  We must join on the other side.

Mon, 07/04/2011 - 22:22 | 1425527 Yen Cross
Yen Cross's picture

 Tyler just gifted everyone. Happy 4th Tyler. I noticed.

Mon, 07/04/2011 - 22:34 | 1425555 ISEEIT
ISEEIT's picture

Oh goodie. EUR is sniffing 1.45 again. Fuck these punks. Pretty sure you need to think evil to understand how this market works. I can think evil. I am very capable of doing that. I won't though. I choose not to be evil.

Mon, 07/04/2011 - 22:41 | 1425609 SmoothCoolSmoke
SmoothCoolSmoke's picture

All I know is price action. An the Euro has been getting spanked pretty hard since 19:50.  Any blips up have been beaten down.



Mon, 07/04/2011 - 22:43 | 1425614 SmoothCoolSmoke
SmoothCoolSmoke's picture

P.S.  the Euro is really getting creamed vs. the CHF. 

Mon, 07/04/2011 - 22:41 | 1425610 maw53704
maw53704's picture

couldn't the financial institutions that everyone loves to hate,  currently be big holders of cds and that is why the rating agencies are at least playing ball (not necessarily hardball)  these 

institutions paid big money for these swaps   now  "show me the money"

Mon, 07/04/2011 - 23:34 | 1425735 island
island's picture

Good, and plausible, theory.  I think it is naive to believe any rating agency has found religion.  They are just players in the financial terrorists' game.

Mon, 07/04/2011 - 22:50 | 1425636 Yen Cross
Yen Cross's picture

 CHF creams everything. Just lay low, until some numbers come out on Thursday.


   You could try a very small (aud) short vs the (chf)

Mon, 07/04/2011 - 22:52 | 1425656 SmoothCoolSmoke
SmoothCoolSmoke's picture

Good advice.  But I got an itchy trigger finger earlier today.  Shorted EUR/USD and long USD/JPY.  Cashed out very happy....but too soon!

Mon, 07/04/2011 - 23:14 | 1425701 Yen Cross
Yen Cross's picture

  Good on you! Just remember Risk/Reward. I know it's tough. Manage that margin.



Mon, 07/04/2011 - 22:56 | 1425670 SmoothCoolSmoke
SmoothCoolSmoke's picture

Of course the London open will tell the tale if this news has any traction to the down side.  I may wake up at 2:50 just to see if there is a quick buck to be made.

Tue, 07/05/2011 - 02:09 | 1425903 Yen Cross
Yen Cross's picture

 Lets stay in touch. I like your trading style. N.Y. is a dumping ground    I love trading Asia into Europe. That overlap into N.Y. also helps for the next Asia open. We both know The Tokyo fixing has a mind of it's own. :)

Mon, 07/04/2011 - 22:53 | 1425659 HileTroy
HileTroy's picture

I think we can all say that after all the comedy its time for the shit to hti the fan!!! then us productive and crafty bastards can get  a long with life. I'm anxious to be a leader of the rebellion.


May the forth be with you

 and god save the county




Mon, 07/04/2011 - 23:50 | 1425755 Killer the Buzzard
Killer the Buzzard's picture

The ratings agencies are smaaart... not dumb... like everybody says.

Tue, 07/05/2011 - 01:50 | 1425884 CrashisOptimistic
CrashisOptimistic's picture

I don't think there's anything to add to the first comment.

We don't need to know these manufactured details.  They have clearly decided to bail out Greece.  They will lie and pretend and redefine words, and that doesn't matter.  All that matters is that it will happen.

The endpoint will be defined by oil.  Not by any "tipping point".  Tipping points can be printed away or redefined away.

Only oil cannot be denied.

Tue, 07/05/2011 - 03:15 | 1425961 johny2
johny2's picture

The rating agencies are still being accepted as the authority after subprime mess? They should be writting their reviews of the life in the jail. 

Tue, 07/05/2011 - 03:23 | 1425969 Global Hunter
Global Hunter's picture

All the geeks and nerds have lost the game and they want their ball back.  Punch them in the nose!

Tue, 07/05/2011 - 05:56 | 1426069 Peter Pan
Peter Pan's picture

If all the facts of the Greek economy and the parlous state of Greek government finances were known when the debt was first sold, the debt would already have been rated CCC at that time. Therefore nothing has changed. Therefore any scheme put forward by the ECB or the French cannot make the situation worse. Therefore the default clauses are not triggered. How's that for twisted thinking?

Tue, 07/05/2011 - 06:01 | 1426071 Peter Pan
Peter Pan's picture

In other words, had the ratings agencies done their homework correctly at the time the Greek debt was issued, they would have rated it as junk (which it still is). Therefore nothing has changed. If anything, the French scheme might be improving the lot of the deluded investors who first bought those Greek bonds.

Tue, 07/05/2011 - 06:23 | 1426086 DarAdder
DarAdder's picture

All part of the plan. The rating agencies will nix any bailout scheme that disadvantages bondholders. It follows that eventually a scheme will emerge that, far from imposing a haircut or duration penalty on the French banks, will unequivocally be worth more to them than cashing in their bonds on the due date for 100%. "Can you see what it is yet?"

Tue, 07/05/2011 - 06:51 | 1426106 dcb
dcb's picture

I find these debates to be stupid. There is a path, but the outcome is known. they will do anything, and all they can to poreserve the status quo regardless of rules. There are no rules, regulations, laws, etc that can't be broken to preserve the status quo.

Do NOT follow this link or you will be banned from the site!