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Eighteen Percent of the EU is Literally Junk, Carried As Risk Free Assets at Par Using 30x+ Leverage: Bank Collapse is Inevitable!!!
- Barclays
- Bear Market
- Bear Stearns
- Bond
- Collateralized Loan Obligations
- Creditors
- Danske Bank
- default
- European Central Bank
- European Union
- Eurozone
- Federal Reserve
- Fitch
- fixed
- goldman sachs
- Goldman Sachs
- Greece
- Gross Domestic Product
- International Monetary Fund
- Investment Grade
- Ireland
- Italy
- Lehman
- Lehman Brothers
- Meltdown
- Portugal
- ratings
- Ratings Agencies
- Reality
- Sovereign Debt
- Standard Chartered
- United Kingdom
Note: This may be it for posting for the next 20 hours or so, for I have found what looks like the next TWO (That's right! Two as in number 2) Lehman Brothers and Bear Stearns sitting right there smack in the middle of plain site in Europe and I will need some time to work on it with my analysts. The meltdown should occur just as it did here in the US save the world 2nd largest hedge fund probably will not have the resources to pull that funny little, furry financial creature from the family Leporidae out of their hat like the world's largest hedge fund did in the case of Bear Stearn's and Lehman Brothers. For those of you who do not know, I called the collapse of both Bear Stearns and Lehman Brothers months before the face while they were both trading at healthy stock prices, rated investment grade by "you know who" and rated "buy" by those whose name we shall not utter while still in the confines of downtown Manhattan!
Bear Stearns collapsed in March of 2008, I first warned in September 2007, and gave explicit research and documentation to the public in January of 2008!
Correction, and further thoughts on the topic Posted on Sep 01, 2007
Bear Fight - A most bearish view on Bear Stearns in a bear market:...at I did insinuate, or at least tried to, was that if real assets revert to mean valuations as I interpret them Bear Stearns will not be a prudent investment. As for institutions interested in portion... Sunday, 13 January 2008
Here's the big Kahuna, Is this the Breaking of the Bear? January 2008
Shortly after the "Bear fest", came the biggest foreeable bankruptcy in this nation's history. See "Is Lehman really a lemming in disguise?" and realize that this post was made on February 20th, when Goldman Sachs had a recommended price of about $55 while I warned that Lehman may be done for. This very similar to when I warned about the potential demise of Bear Stearns in January, when the rest of the Street had a "buy" at about $130 per share. Please click the graph to enlarge to print quality size.
Wait, there's much more...
Funny CLO business at Lehman .. loans into new securities. CLOs bought 60 percent of buyout loans before credit markets froze last year, said Mark Shafir, the global co-head of mergers and acquisitions at Lehman, in an ... Thursday, 03 April 2008
Lehman stock, rumors and anti-rumors that support the rumors: ... conspiracy, but if it pops 15% its due to ?????. Of course there are rumors and speculation floating around concerning Lehman, and I am sure a few short sellers may have whispered in someone's ear, BUT ... Friday, 28 March 2008
Of course, this all leads to the final conclusion, as illustrated in the seminal piece More on Lehman Brothers Dies While Getting Away with Murder: Introducing Regulatory Capture. Europe will soon learn a very, very valuable (albeit quite expensive and painful) lesson. That lesson is that lying is often really not worth it.
I will release preliinary findings on the suspect European banks in question, including names, prelimeary facts and figures to subscribers as soon as possible. This would make a very interesting topic for a FIRE sector compan annual board meeting as the keynote speaker, no? Now, back to our regularly scheduled programming of the mind and numbing of what was formerly called common sense...
Eighteen Percent of the EU is Literally Junk, Carried As Risk Free Assets at Par Using 30x+ Leverage: Bank Collapse is Inevitable!!!
So, the next domino falls in the Pan-European Sovereign Debt Crisis. As has been the casse for much of the Asset Securitization Crisis and the Pan-European Sovereign Debt Crisis, the ratings agencies have arrived to smoldering pile of ashes littered with charred bones and remnants of the putrid smell of burnt flesh with a fire hose and a megaphone yelling "Get out! We have word there may be a fire here!"
From Bloomberg: Ireland Debt Rating Cut to Junk, Adding Pressure for EU to Contain Crisis:
Ireland joined Portugal and Greece as the third euro-area nation to have its credit rating reduced to below investment grade as European Union finance ministers struggle to contain the region’s sovereign-debt crisis.
Moody’s Investors Service cut Ireland to Ba1 from Baa3, citing the probability that the country, which received a bailout last year, will need additional official financing and for investors to share in losses before it can return to the private market to borrow. The outlook remains “negative,” Moody’s said in a statement late yesterday.
Irish bonds dropped for a sixth day today after the downgrade, which came after European finance ministers failed to present a solution to the contagion that’s threatening to spread to Italy from the so-called peripheral euro-area states. Ireland’s debt agency said the downgrade will make it “more difficult” for Ireland to return to the market next year.
While Ireland “has shown a strong commitment to fiscal consolidation and has, to date, delivered on” the terms of its bailout, “implementation risks remain significant,” Moody’s said in the statement.
Irish 10-year bonds fell, pushing the yield on the debt up 31 basis points to 13.65 percent. The premium over German bunds widened 32 basis points to almost 11 percent. Italian yields were at 5.47 percent after surging above 6 percent earlier this week. The euro, which dropped to a four-month low against the dollar yesterday, rose 0.5 percent to $1.4049 as of 9:06 a.m. in London.
One must wonder what took Moody's so long to come to said conclusion. BoomBustBlog subscribers were well aware of Ireland's "Junk status" situation at least a year and a half ago. Outside of The Anatomy of a Serial European Banking Collapse nearly guaranteed scenario that I present last month, here are my thoughts starting July 2010:
- Beware of the Potential Irish Ponzi Scheme!
- Many Institutions Believe Ireland To Be A Model of Austerity Implementation But the Facts Beg to Differ!
- Death by a Thousand Irish Cuts: The Poster Child of Austerity Measure Success Gets Downgraded After Several Devastating Expenditure Reductions That Really, Really Hurt the Irish People! Monday, July 19th, 2010
- Many Are Still Underestimating the Damage That Can Be Done By Ireland’s Bank Troubles Wednesday, September 8th, 2010
- As We Have Clearly Anticipated Since Early 2010, Ireland is About to Go Monday, November 15th, 2010
- Erin Gone Broken Bank: The 2nd EMU Nation That Didn’t Need a Bailout Get’s Bailed Out Within Months, Next Up??? Monday, November 22nd, 2010
- The BoomBustBlog Contagion Model: How We Predicted 9 Months Ago That The UK and Sweden Would Rush To Bail Out Ireland, and Why Friday, November 26th, 2010
- Ireland’s Bailout Is Finalized, The Indebted Gets More Debt As A Solution But The Fine Print Is Glossed Over – Caveat Emptor! Monday, November 29th, 2010
- A Comparison of Our Greek Bond Restructuring Analysis to that of Argentina Wednesday, May 26th, 2010
For our professional and institutional subscribers, the Ireland Default Restructuring Scenario Analysis with Sustainable Debt/GDP Limits and Haircuts are available online. All subscribers have access tos the 
Irish Bank Strategy Note which adequately warned before Irish banks dropped 85% in value. The Ireland public finances projections is also available to all paying members.
For those who don’t believe haircuts are possible, remember Denmark already took the clippers out. Ireland looks like they may be bluffing, but suppose their bluff is called???
From Bloomberg Today: Bondholder Haircut from Ireland May Shut Italy & Spain Out of Funding Markets
Ireland making good on its threat to impose losses on senior bank bondholders would precipitate a funding crisis for lenders across southern Europe, according to CreditSights Inc. “The fallout would be big and it would be bad,” said John Raymond, a London-based analyst at the independent research firm. “The senior unsecured market would shut down, at least for a while. Right now, the bigger and better Spanish and Italian banks can still access the market. That could end.”
... Pressure on bondholders to share the burden of banks’ losses is growing. In Denmark, the government inflicted so- called haircuts on senior creditors and depositors of regional lender Amagerbanken A/S, which failed after losing money on investments including real-estate loans. Moody’s Investors Service cut ratings of five Danish banks, including Danske Bank A/S, the country’s biggest, pushing up funding costs. Ireland’s government has similar powers to Denmark’s under the terms of its banking act.
And in other, seemingly forgotten news... Ireland Says Four Lenders Need $34 Billion After Stress Tests:
Irish regulators instructed four banks to raise 24 billion euros ($34 billion) in additional capital following stress tests on the nation’s lenders.
Of course, the most ironic point is that two of Ireland's big banks collapsed/were nationalized directly after passing the EU stress tests. Europe would be better off without the farce commonly known as stress tests for they simply undermine what very little credibilty TPTB (or at least the spokespersons for thesame) have left.
And back to this most recent Bloomberg article...
Irish Bailout
Ireland was forced to seek an 85 billion-euro rescue from the European Union and the International Monetary Fund in November as a banking crisis overwhelmed the government.
The European Commission in Brussels said the downgrade “contrasts very much” with recent economic data and the “determined implementation of the program by the Irish government.” The Irish program is “fully on track,” it said.
Moody’s rationale for cutting Ireland echoed its review of Portugal, which was lowered to junk on July 5. European leaders may hold an extraordinary summit in two days in another attempt to stem the debt crisis, Greek Finance Minister Evangelos Venizelos and Irish Prime Minister Enda Kenny said separately yesterday.
Standard & Poor’s cut Ireland’s rating one level to BBB+ with a “stable” outlook on April 1. Fitch Ratings affirmed Ireland’s BBB+ rating on April 14 and removed it from “rating watch negative.” It said the outlook is negative. Both firms’ ratings are three levels above junk.
Ireland’s debt will rise to 118 percent of GDP in 2012 from 25 percent at the end of 2007, the European Commission has forecast. Taxpayers have pledged as much as 70 billion euros to shore up the country’s debt-laden financial system.
“Things need to get worse before they get better,” said Steven Lear, deputy chief investment officer at J.P. Morgan Asset Management’s Global Fixed Income Group in New York, who helps oversee $130 billion in assets. “There has to be a lot of pain before the alternative of pain seems palatable.”
Oh, Mr. Lear, trust me, there will be plenty of pain to go around. The 2nd biggest hedge fund in the world (right behind the US Federal Reserve) is currently busting at the seems (literally) with junk! Think about it. There are 17 members of European Union, and 18% of those members are trading junk bonds as sovereign debt. These junk bonds (in some cases trading 50 cent on the Euro) are carried on HTM books at par, and have been purchased with 30x to 60x leverage. Care to calculate the losses, because I have. Once again, the endgame is The Anatomy of a Serial European Banking Collapse, but the prequel can be found in my many warnings that will lead up to that event, starting with the abject insolvency of the world's 2nd largest hedge fund - the ECB!:
Over A Year After Being Dismissed As Sensationalist For Questioning the ECB's Continued Solvency After Sovereign Debt Buying Binge, Guess What!
i
Click, Clack, Click: The Sound of Falling Dominoes Behind The Door of the Eurocalypse!
UK banks abandon eurozone over Greek default fears
UK banks have pulled billions of pounds of funding from the eurozone as fears grow about the impact of a “Lehman-style” event connected to a Greek default.
Senior sources have revealed that leading banks, including Barclays and Standard Chartered, have radically reduced the amount of unsecured lending they are prepared to make available to eurozone banks, raising the prospect of a new credit crunch for the European banking system.
Standard Chartered is understood to have withdrawn tens of billions of pounds from the eurozone inter-bank lending market in recent months and cut its overall exposure by two-thirds in the past few weeks as it has become increasingly worried about the finances of other European banks.
Barclays has also cut its exposure in recent months as senior managers have become increasingly concerned about developments among banks with large exposures to the troubled European countries Greece, Ireland, Spain, Italy and Portugal.
In its interim management statement, published in April, Barclays reported a wholesale exposure to Spain of £6.4bn, compared with £7.2bn last June, while its exposure to Italy has fallen by more than £100m.
One source said it was “inevitable” that British banks would look to minimise their potential losses in the event the eurozone crisis were to get worse. “Everyone wants to ensure that they are not badly affected by the crisis,” said one bank executive.
Moves by stronger banks to cut back their lending to weaker banks is reminiscent of the build-up to the financial crisis in 2008, when the refusal of banks to lend to one another led to a seizing-up of the markets that eventually led to the collapse of several major banks and taxpayer bail-outs of many more.
Eurocalypse Cometh! Principal Haircuts, Serial Bailouts, ECB Insolvent! Disruptive Sound Of Dominoes In Background Going "Click, Clack"! BoomBustBloggers Instructed To Line Up Bearish Positions Again!
If one were to even come close to marking the EU banks books to reality, market prices, or anything in between, the Lehman situation would look tame in compariosn! As excerpted from the subscriber document: The Inevitability of Another Bank Crisis
Then there's the obvious twists from other impetuses:
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It Should Be Obvious To Many That The Risk Of Defaulting Sovereign Bonds Can Spark A European Banking Crisis
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For Those Who Failed To Heed My Warnings On Portugal, Visualize The Contagion That Causes European Bank Failure!!!
And in the End, What Does It All Mean?
LGD 100+: What's the Possibility of Certain European Banks Having a Loss Given Default Approaching 100%?
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Reggie. You've been pure gold. But I agree that the style of your latest presentation may reflect badly on you due to association with others who have adopted that style long before you. Thanks for your always good work, and this view is offered as friendly and biased-in-your-favor opinion.
Reggie... We've argued this same exact point like 2 times already...
I've told you I like your work. You don't have to validate yourself to me. You and I were waaaaaay ahead of the curve.
...but to start this article you said: "For those of you who do not know, I called the collapse of both Bear Stearns and Lehman Brothers"
That's innaccurate grandstanding. Like you just said in your follow up, "you're right, I never said XYZ would go bankrupt, but I did say that they would fall, or come damn close to it."
That's what I'm getting at. When you stretch this stuff... it calls into question what else you might stretch. (I am saying this from a readers perpective)
You see, in the validation process, when you call upon the 60 other companies you also called, then you have to realize... that what about the other companies you also "called", but they haven't gone under??? (for example, did you say Citi was ka-put? Yet Citi is still around.)
The first readers slammed your article calling this a "commercial"
I get where they are coming from, and it's my personal opinion that these grandstand/commercials are what undo public opinion on your work.
Like I say all the time... These are just my personal opinions. Take them or leave them. It's just my opinion that your best work, and the most success will come when you let go of the past, while you are doing work about the future.
All the best, MA/RH
Reggie, Can you remind me where that Lehman call was? I saw the attachment where an emailer said Lehman had serious problems... ...but I failed to see the article stating Lehman was going BK.
Actually, I don't see the Bear one either? I remember you pissing on Bear, but we were all pissing on everything back then. I just don't remember the specific BK calls. (not inuendo, or inferences... But specific "xxxxx is going down!")
Sorry to say. You know I like your work. ...and I acknowldge Your ComRe research... but I've never been big on the grandstanding without fact. Straightforward fact. "I say Lehman goes BK, and this is why..."
RH/MA
I don't want to have to defend myself against ad hominems, even if politely phrased. I also don't have the time to parse these articles. I did take a look at the links to make sure you didn't have a point, and I found (in the Bear Stearns link, in just the first few paragraphs)...
As a matter of fact, after reading in retrospect, I realized I called the exact matter and manner of Bear Stearns fall months before the fact
...
Book Value, Schmook Value – How Marking to Market Will Break the Bear’s Back
Bear Stearns has a Level 3 assets (see Banks, Brokers, & Bullsh1+ part 1 ) worth $27 billion, investments in SIVs of $41 billion, and off balance sheet SIVs of $21.3 billion. Furthermore, Bear Stearns has counterparty credit exposure (Banks, Brokers, & Bullsh1+ part 2 ) towards Ambac which recently was downgraded from AAA to AA by Fitch Rating Agency. I have written extensively on Ambac – material that was quite controversial, and in hindsight highly prescient. I feel I have a handle on this company's situation, and it is not as positive as management and investors would make it out to (see Ambac is Effectively Insolvent & Will See More than $8 Billion of Losses with Just a $2.26 Billion of Equity, Follow up to the Ambac Analysis, Monolines swoon, CDOs go boom & I really wonder why the ratings agencies are given any credibility, Ambac Management Should Read Blogs More Often, Ambac Now Has a Municipal Bond Issue to Worry About - I'm not going to say I told you so! , and Download a "Window" into Ambac's Problems). Faltering counterparties have further aggravated the company's credit position. Bear Stearns' 5 year CDS spread is also widening significantly, following concerns that the company will need to take additional write down on assets in the coming quarters. The deteriorating US credit situation has negatively impacted almost all the banks and brokers alike with $133 billion of asset write downs to date, with two of the biggest names in the industry, Citigroup and Merrill Lynch, leading the pack. We believe the amount of write downs taken by Bear Stearns as compared to other big investment banks seems insufficient. Moreover, the selling of stakes by some of the top executives at Bear Stearns validates the trouble at the company is far from over and is likely to get worse.
...The relationship between the types of assets Bear Stearns holds in its inventory, the current default rates, the litigious liability exposure, the precarious situation of the mononlines (actually, the multi-lines, since the only ones that are in trouble are the ones that strayed from their knitting) and where my research says the underlying must move price wise to achieve equilibrium, just may cause Bear Stearns to enter into a spiral where no amount of PRUDENT capital may be able to rescue it.
So, with all of these excerpts in mind, how about acknowldgement that I (or somebody) obviously has to toot my horn when people who apparently haven't read my work make comments such as " I've never been big on the grandstanding without fact. Straightforward fact" or "Actually, I don't see the Bear one either? I remember you pissing on Bear, but we were all pissing on everything back then. I just don't remember the specific BK calls. (not inuendo, or inferences... But specific "xxxxx is going down!")"
You're right, I never said XYZ would go bankrupt, but I did say that they would fall, or come damn close to it.
As a matter of fact, here is a list of about 60 companies whom I correcty called: http://boombustblog.com/content/view/526/34/
Shame. On. You.
Heh - hire me. I could put a book together on this trade, er "idea".
The neat thing about the setup is it is basically a highly pos convexed digital option now, unlike the overall negative convexity of all related securites in the US mortgage trade. In the US trade one had to short to gain positive convexity and then pay a tough carry.
In Europe you are long a digital, and long thereby massive positive convexity with massive positive carry. Ponder that.
Be interesting to see, speaking of this being a political problem and not a fiscal problem, what the new razor sharp American ( I dont buy this international India stuff - this is a school of Edson Mitchell grad) trained new co-CEO of Deutsche Bank will do - along with my favorite Donald Tusk. Deutsche Bank will of course have a pretty good idea via PB how the general hedge fund community is positioned. What could be better to say hello in your new role to your legacy home country than to set up a trade that destroys speculators, that has masive positive carry, uses very little Tier I, makes a trillion or so in profit, repairs your capital base, affirms great regard from your home country's corporate clients, your board, and puts you in history right up there with JPM busting up the oil and steel trusts? And makes you without a doubt the most powerful bank in the world given your new context and home country suddenly morphed from 3 trillion to 17 trillion country.
You are welcome.
Very clever indeed...
Now my brain hurts...
+++
Reggie FYI
I only found your post via Harvey Organ, maybe I am dense but I could not find it via the ZH daily listing, interesting...
GMR's theory is the first thing I've read on a financial site that actually makes me think so far this year; this is the first time I've bothered to login here in months. I made a sultan's fortune in the collapse of Bear, but I think the End of the World trade is pretty damned crowded this time. Thanks for something worth pondering.
That, my friend, is the biggest scam of century. A scam which makes Madoff/Worldcom/Enron look like bubble gum theives in a small neighborhood candy store.
Yes, I think many European banks are going to see big problems. Many are already insolvent economically. I think many US banks never got to pay the piper either. But none of that ever meant the end of the world! Banks have been going bust for over 2,000 years and the world has got along just fine without them.
What the hell makes you think we can't live without these people and institutions, as if their replacements won't pop up in less than 12 hours of their demise?
TBTF bank failiures are only the end of the world when your world consists of a bank. That is probably why Treasury Secretary Paulosn gave that Do or Die (and I don't mean Bed-Stuy) black mail speech on his knees a few years ago in order to racketeer that $750 billion dollar downpayment to save his buddies. I persoanlly went down to DC to tell my congressperson (in person, and a personal acquaintance of mine for many years) not to believe the hype.
"...racketeer that $750 billion dollar downpayment to save his buddies..."
Absolutely right. Extorting the US taxpayer in broad d-d-da-daylight.
damnit i sure hope so Reggie
In aggregate, the Eurozone is highly solvent and experiences great growth with low inflation.
Thats the risk - the aggregate reality becomes applicable to the granular level, the countries become states and become shareholders in the aggregate.
Lots of good reason why one pursues Union.
Go ask Hamilton, go ask Franz Joseph, go ask the Canadian MacDonald.....heh, go ask Keynes - check out his "Economic Consequences of the Peace".
Again, any Pol named Donald Tusk, is my candidate to seize history - I love that name. (But seriously, check out how he built his career by making tough constitutional changes in Poland)
The "United States of Europe" is already bankrupt, union or no.
Reggie, the difference between 30x leverage and 60x is a joke played on everyone but banks. There is NO difference.
These numbers matter not in the mark-to-fraud fantasy we live in.
BREAK UP TBTF and END MARK TO FRAUD ACCOUNTING!
....also, never underestimate the ego of the usual political leader. On the current course Merkelor her successor will recieve but a part of the blame and only some will remember her in even only 10 years. But the Great Man/Woman (or even plural) who emerges and creates Eruope will be memorialized for a millenium, if not forever.
My bet is it will be Mr. Tusk.
As for all those languages and culturs here is an interesting list:
The joke of course is that is the list of how Austria Hungary was pronounced in all of the official state languages.
The $ 2 trillion is the total asset appreciation that will occur is Union is declared - no new GDP is required or austerity or discovery of natural gas or anything - just a word.
And that was just the liguid markets I looked at, so if my idea makes sense it is certainly not a problem to start building your long, especially if all those hedge guys who learned their trade on developmental crisis like Lehman and Bear short into you. And that is very important to understand - Europe is a problem of political structure while the recent American crisis was a problem of value. With a problem of political structure all you have to do is change the structure with an edict - provided you have the power and the people have the motivation.
Lastly - just ask yourself the question - what would best suit Desutsch Bank? being a political problem that is what matters, not the overextended sepculative home buyer of a condo in Miami.
One is a problem that requires only a course correction, the other is a train wreck that isnt a problem at all but a situation.
Keep this in mind, there are other Germans beside technocrats like Merkel - I know, I know it dose turn into a calamity as well - but there are these words:
Freude, schoner Gotterfunken,
Tochter aus Elysium,
Wir betreten feuertrunken,
Himmlische, dein Heiligtum.
Deine Zauber binden wieder,
Was die Mode streng geteilt,
Alle Menschen werden Bruder,
Wo dein sanfter Flugel weilt.
Seid umschlungen, Millionen!
Diesen KuB der ganzen Welt!
Bruder - uberm Sternenzelt
MuB ein lieber Vater wohnen.
( if you hum the tune as you read you dont even need the translation)
Reggie, my respect for you, but could you just tone it down a little please? Example:- "Bear Stearns collapsed in March of 2008, I first warned in September 2007, and gave explicit research and documentation to the public in January of 2008!"
- This is more than a tad OTT for UK tastes. Us Brits are programmed to be turned off by self-promotion, even when we don't want to be! - Best wishes, & thxs for all your investigative insight. Gina
Only the question "when?" remains open.
Reggie... you are a Grand Master!
Another great article Reggie!
+1000!
Reggie picked Bear to fail in 2008 long after everyone else had Fannie/Freddie on the slab in 2006.
Bear's MBS hedge funds croaked back in June, 2007. Who is failing now? Pick a euro- bank, any euro- bank. The operative question is which two banks will survive the next 12 months?
A better question is whether Bernanke going to risk the Fed's virginal so-called 'reputation' by trying to keep the euro in liquidity? Swaps made 'sense' when the euro- side collateral was highly rated by the agencies. Now, euro paper isn't worth the paper its printed on. What will the euro banks offer for collateral? Drachmas? Lira? Pawn tickets? Ha haha!
What's baked into the cake is a liquidity crisis that torques the money markets. Nobody will dare to freely offer liquidity to banks now provent to be slightly less crooked than Al Capone. It's the THREAT of bank failure that has been more damaging than the actual failures will prove to be ... failures which cannot do any more damage once underway.
The time to succor banks has passed which the banks will soon learn to their chagrin: they've overplayed their hands. What's next is triage and saving what passes for 'production' in the EU. Companies such as AEG, SAP, Areva, EADS, Fiat etc will be assured funding. The rest will have to fend for themselves.
Dollar denominated paper and 'other' assets will be on the auction block as the desperate hunt for euros will be on. Thinly traded PM markets are going to be volatile w/ flight to quality intersecting with margin calls and asset dumping. Liquidity providers will be under severe pressure.
Next week? Getting closer, watch the big banks in the US w. euro exposure.
Do you think this (Europe/USA) can hold up for 12 more months?
Reggie, I hope you realize that you're never gonna get a table at Nick & Toni's in East Hampton.
Dexia?
I think one important point that everyone should keep in mind is that to agressively short important parts of Europe and to look at solely the financial data available now - no matter how exhaustive research and how broad the data set is - is to not consider the massive and epic morphing than can immediately be applied.
All of the negative views and the current bear market moves in Europe are a function that the current structure, the union, of the European nations remains unchanged.
Unlike Bear/Lehman, a 180 change in government policy can suddenly make all the difference - with Bear and Lehman there was nothing the administration could do in the face of a crashing home value market. In Europe, just 3 or 4 sensible leaders have to agree to Union (with a capital U) and say all steps required such as difficult ratification conferences to long arduous drafting will be their singular focus.
That a "United States of Europe" will be created. (I am getting very bored with Eruopean pseudo-intellect who confuse the long legacy of Hegelian Liberal Democracy that was defined in Europe with some sort of pro-American stance.)
With that effort, overnight, the largest general rally in the world histor will occur - a result that in itself likely is already having secret groups opf bankers and some thoughtful hedge guys plotting, and imemdiately a power that is the full match to the USA is created.
So, the very act of shorting and agressively betting on the demise of Europe and continueing to weight the merits of Greece without any context within Europe may in fact be the reason occurs.
Union would be a complete departure from the technical ECS to Maastricht to...so on and so forth, but would be a glorious call to Romantic tradtions of Europe - the stuff that prompted Beethoven's Eroica.
So be careful - behind almost all major historical markers of the creation of a country usually had the forge of a fiscal crisis start the forming.
I think Europe is there now.
So get ready for that surprise announcement with a new set of folks on the dais that simply announce that the creation of Europe has commenced. If you are short anything at that pointyou might as well not even bother to try and cover. Instantly Greek debt snaps to a large premium over par as well as every other peripheral debt. All financials would enjoy at least a 50% rally, and one of the largest general stock rallies of all times would take place on every European bourse.
Want a precedent? Read up on the formation of the "first" "United States of...." just before 1800 and when Hamilton aggregated the new states debt into a national debt. That was the true start of the nation. Prior to that most Americans were split up in ways that are very very similar to how Europe is talking and behaving now. Revolutinary War debt was bought at .12 cents and sold at 120.00 almost immediately. Jefferson thought the character of the country was irreparebly harmed by this bizarre intense wave of specualtion, especially those sharpies in New York.
I predict that twice what was gained by clever lads as with this writer will be cleaned out if they persist and do not think that there is a feed back loop in the market from their presence and from learning.
Why would Europe be declared? I roughed out a back of the envelope calc and find if full Union is declared over US $ 2 trillion profit/recovery happens almost immediately. Forget Hegel - that is sufficient to base a prediction upon. Now if they carry on with this death spiral? Maybe another $ 300 billion in damage is done before we emerge with the end of the Euro and a return to a tribal Europe. I think that is enough said.
interesting thesis built on a faulty premise. comparing EU to early US negares the fact that theEU has ~17 different languages, 17 different cultures, 17 diffeent legal systems, , 17 different and distinct economies and 17 different and distinct federal govts., not to mention the trye canary in the coal mine which is the fact that everyone is trying to ignore, and that is that manynhundredd of billions of euro of capitsl hasbeendestroyed and needs to be replaced or recognizd as gone. eithe way, unhapy things will occur.
Reggie
matters not the EU has 17 different cultures, Govts, languages, legal systems etc. The EU's integration is not at all about integrating its people, it is a purely political process. I can tell you from here not a single European gives a rats arse what Brussels wants. They may like the dreamy ideal but day in day out nobody gives a crap
it is purely an idealistic political smokescreen for the real political agenda of Brussels which is the socialist-Marxist centralisation of political and fiscal power which growing sections of each country are waking up to and realising (and voting against).
I'm not too much into the New World Order conspiracy theory but for a fact we have every saddo Commie and leftie in Europe following this central socialist plan to the letter and none of these political zombies give a crap about Europes diverse cultures. The EC may have "Strength through Difference" as their motto but 2,600 new Laws in 15 years on how all good European zombies should behave according to their central dictate blows the smoke off of that smokescreen that socialists respect anybodies own culture
...and like all socialist plans just as they think they're closing in on Nirvana it always but always starts to come apart at the seams, the sands pour through their sweating fingers and falls apart just beyond their grasp (such a sad story repeated over and over and over!). And yes the the usual bankrupt finances are completely fucked too because socialists cannot count. The Story of Socialism throughout history: 100% failure on all fronts... morons
reggie for the win!
Hannah
when you predict "all hell will break lose... bang, bang" if the PIIGS don't get their checks in the post do you mean Greece is going to war with Germany and the US?
I'd just point out it's hard for the Govt to start a war when the politicians in said Govt are being chased down the road by an angry mob (the people)
The Press and establishment call this "anarchy" or "mob rule" of course. I call it real natural justice as apposed that pompous dumb elongatated expensive pretty useless clown show the Law Courts
None of those things matter in the initial creation of a fiscal union. What matters is striking enough fear deep enough into the people that you can convince them that it's the only way out. The rest of it comes later.
I'm neither agreeing or disagreeing with the premise, but your rebuttal falls on its own face. A crisis like this is the only way the bankers could ever hope to convince all those countries to band together in a fiscal union.
the germans 'fear' is going to be the fear of giving all their wealth to the piigs..that fear will make them run from the bailouts sooner or later. the piigs have a fear that they wont keep getting a free handout....i think you have your fears reversed.
when the piigs realize that the check isnt in the mail they will strike out against germany and the usa and all hell will break out then....as in 'bang bang bang'.
You gotta wonder though. Fiat is fiat. Fiat can be created in unlimited quantities at zero cost, and is totally under the control of the criminals who would lose in an EU split-up.
So... though I'm not sure what the gangsters have planned... the notion of a shooting war over literally NOTHING seems a bit too far over the top.
But only just a bit, given the depravity of those cretins.
Those leaders won't last a month.
You are on the wrong foot. NO USA of Europe would ever be willing
accepted now.
They had their shot before the latest disasters. WHen times were propped up
by fake "facts" and easy money , that was their chance.
Maybe in a couple of hundred years.
see ya.
The planet and potential to harness abundant new forms of energy was considerably more promising during all the periods you speak of. With 7 billion, heading to 8 billion mouths to feed and all the easy fossil fuels extracted and a serious lack of political will or capital to fund the next energy revolution, things will indeed be different this time around.
If you are talking about "paper" profits, no one is going to give a shit. The paper and the physical world will continue to uncouple. Be sure to turn all your paper profits into something real before they are gone. I agree, the can will be kicked and the great reinvestment will occur until everyone is a paper billionaire but surviving is another matter all together. You also neglect to mention the great deflationary periods (with respect to human lives) that occurred during all the periods you mentioned. Good luck.
If you can't afford the buy-in you are best not a playin, i am justa sayin!
What a tease. LOL
"I have found what looks like the next TWO (That's right! Two as in number 2) Lehman Brothers and Bear Stearns sitting right there smack in the middle of plain sight in Europe "
...wow Reggie, cock teaser of the month. Can't wait to hear who they are. Commerzbank is one?
Cheers, good work
so this is what zero hedge really is....write a few good articles and build up a readership then switch over to 'the world is ending' so buy a subscription to our 'buy gold' weekly newsletter......
Hannah, how long you been reading Reggie? I have been for 3 years now. His record speaks for itself. The man needs to earn a living, right? I'm guessing you don't work for free, right? What's wrong with him pitching his services? Oh, and if you haven't noticed, the world as we know it, is ending.
this isnt the place to 'pitch your services'......zero has always been above that come-on bs. put these kinds of stories on another site or just forget bias and have this site be like all the others with big secrets to sell to make you rich.....
Apologies in advance Gentlemen (and Hannah) but would you mind terribly buzzing off ?!!
Reggies warnings on banks are important, timely, damn useful and pretty unique for that simple reason, they are honest, a rare commodity on 'Planet Fraud'
They've certainly put a rocket up my arse shortening my timeline to go private and move out of banks and will probably save my deep impoverishment (the bank and no useless banking regulator is going to help us are they?)
had any of you deposits in Lehmans and heard Reggies warning you'd sure not be talking this "selling his services" rubbish. Reggie's a credit rating agent that actually does his job, not downgrades the day of the banks liquidation leaving you high and dry and spineless Auditors and Govt regulators wimpering hiding in the long grass
Reggie also data mines behind the dishonest accountancy professions fraudulent accounts to find the truth theyre hiding, has the balls to make a prediction and tells it like it is. If you don't like the truth maybe it's because you prefer to be drowned and deluded in snake oil from all the Western institutions that deserve what they've got coming (insolvency)
I don't know of anyone that is either as institution specific or accurate in his forcasting as Reggie, do you? See if you can get these warnings from your local bank, their compliance team, the accountants, the Govt, their regulator, Trcihet, Barruso and the EU's stress tests. Good luck getting a straight answer from any of those teams of integrity
If you guys aren't trolling or shilling then you're just plain moaning for the sake of it... so either wise up or do the community of banking depositors around here a favour and fuk off
Can you name a single analyst that gives away more research than Reggie?
ah............bill buckler?........
Reggie Rocks
I'm not necessarily disagreeing, but please provide some reasoned arguments and data to your thesis.
How about- EVERYONE IS BROKE ?
Reggie: Congrats on the Call of the Fall
However, LEHMAN / WAMU might be coming back in a Grand BKquel Rising from the Ashes like the Phoenix.
You may want to look into this developing story. WaMu in Court Today with an Equity Committee that is kicking ass. The GRAND THEFT BANK BY FDIC/JD IS GOING TO BE EXPOSED to the World. They ran the crash LEHMAN playbook on WAMU.
Cheers
Excellent and true analysis Reggie.
The STRONZONE (formerly eurozone) is about to blow up as it was intended to by it's creators -the Bilderbergs.
The euro-fiefdoms will once again engage in full blown war.
The predictability of their train of thoughts will once again be exploited by the death merchants.
There's not gonna be a war in Europe, go back to watching Lord of the Rings man...
there is already a war and there's going to be more.. between people and the scum (elite) ...see Greece or The Arab Spring
the war starts with the broken promises of the scum (politicians) made to students and the public sector.. then it'll move on to private sector people versus the parasites/scum (elite groups like banksters) as per The French Revolution
...only i think this'll be a soft revolution... just pull your money out (pay zero taxes) to Govt which is my simple effective suggestion to bring Govt down fast... or pull your money out of Big Bad Banks which is Eric Cantonas suggestion a few months ago ...far easier to drain the parasites than chase them down a street and give them some real social justice