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

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Mon, 07/04/2011 - 21:05 | 1425403 CrashisOptimistic
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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
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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

+1
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
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"...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
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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
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Thanks!

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!

 

http://tradewithdave.com/?p=7173

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

They have no vision - they are a nothing.

www.youtube.com/watch?v=wygzJtJwPnk

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
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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
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Correction:

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
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I would like the rapist to rape the parole board.

Mon, 07/04/2011 - 22:14 | 1425515 Milestones
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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
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Damon Wayans - Up for Parole

http://www.youtube.com/watch?v=WrjCX8ude04

Mon, 07/04/2011 - 21:07 | 1425421 JustACitizen
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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.

ORI

http://aadivaahan.wordpress.com/2011/07/04/a-year-and-a-day-later/

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.

http://en.wikipedia.org/wiki/K%C3%BCbler-Ross_model

Mon, 07/04/2011 - 21:27 | 1425451 buzzsaw99
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1. Irrational Exuberance

2. Fear

3. Extortion

4. Looting

5. Diversion

 

Stage 4 right now.

Mon, 07/04/2011 - 22:18 | 1425520 LongBalls
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Excellent post.

Mon, 07/04/2011 - 21:27 | 1425452 PulauHantu29
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+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
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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 unfortunate...so unnecessary...

When did I ever refuse an accommodation?" 

http://www.youtube.com/watch?v=gtYjdEwa8GA

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

+1

Tue, 07/05/2011 - 08:00 | 1426157 Reptil
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It's the pigmen in Brussels finally realising their betrayal did not earn them the penthouse.

 

 

Tue, 07/05/2011 - 11:29 | 1426567 boiltherich
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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
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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..............

www.youtube.com/watch?v=bjW30BiJ5gw

 

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
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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.

http://oahutrading.blogspot.com/2011/07/independence-from-great-british-...

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:

http://www.youtube.com/watch?v=bsdJ90w7hkw&feature=player_detailpage

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