First Greece, Now Spain: Moore Capital, Brevan Howard, Paulson As Well As JPM And Goldman Implicated In Spanish CDS Rout

Tyler Durden's picture

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Madcow's picture

What happens if suddenly, GS, JPM, etc are recognized as criminal organizations preying upon the weak and defenseless sovereign governments of the world. 

 

Suddenly, there's no political crisis, no austerity programs ... only righteous indignation and lawsuits and claw-back efforts at financial restitution. 

BS Inc.'s picture

What happens if suddenly, GS, JPM, etc are recognized as criminal organizations preying upon the weak and defenseless sovereign governments of the world.

 

These institutions might not be the ideal manifestation of the concept of "market discipline", but, frankly, I'm glad the market is punishing governments who've lived beyond their means.

As for their being "weak and defenseless", ask the people who've been taxed to pay for the government's spending spree if those governments are "weak and defenseless".

Commander Cody's picture

As for the people who get it in end: Strike until it really f'in hurts.

jmc8888's picture

Wow amazingly wrong. Just amazingly

 

How about the market is imploded by the greedy who set up the first disaster? How about the fact they'll run these countries in the ground to remove social spending and raise taxes at the same time?

 

It's never been about social spending.  Pity the fool who thinks so.

Anonymous's picture

Indeed - somehow capitalism has to move beyond greed (possibly impossible, given human nature) and and move toward innovation and productivity - but not just with dubious 'financial products' - otherwise make no mistake - the system is doomed.

Anonymous's picture

... only righteous indignation and lawsuits and claw-back efforts AND PUBLIC HANGINGS.

Anonymous's picture

Honestly, where do you find these confused websites and meaningless translations to boot? I thought ZH would be at least a bit more aware, before publishing rubbish about "evil speculators". BTW why don't you reread "Lords of Finance", where you'll see how distressed sovreigns were using the same lame excuses about "evil speculators", far before the advent of "evil" CDS and hedge funds

jmc8888's picture

Ok we'll see how this turns out.  When the dow is at 3,000 you can repeat your statement.

Anonymous's picture

New aYork city is one giant criminal organization. Financed by the US taxpayor. But this is nothing new. The new york banksters financed stalins bloody reign of terror. But never an apology or acknowledgement. These "people" consider themselves the "persecuted". Really.

E pluribus unum's picture

Their actions are essentially an act of war on a sovereign state. Isn't this a "terrorist act"?

Captain Willard's picture

It's no secret that the Macro funds are doing this. The more interesting question is: Will the ECB try to break them with a short squeeze? Somebody is selling this protection after all.

Frankly, I'm more interested in who is writing the protection and why they are doing so. Tyler: can you help on this? Anybody else have any thoughts?

 I already know who is bearish. It would be quite amusing if it ended up that well-connected banks and insurance companies were writing this protection with a tip-off from the ECB that a bailout was in progress.

Conspiracy theories abound....

lsbumblebee's picture

Looks to me like an attack on euro the by the fascist U.S. to buy the dollar more time.

plongka10's picture

The readers on this site aren't the only ones to join the dots between the Treserve and GS. And yes, irrespective of the financial culpability of the Sovereigns in profligate spending, there are people who will view this as financial terrorism being implemented by the US on susceptible entities that would normally be viewed as allies.

And so the disgust in the actions of the US gets ratcheted up another notch.

 

Anonymous's picture

What did politicians do when the stock markets were rising 30% annually?. Did they tell us that macro funds were bubling the markets? NOOOO. They were telling us the markets were representing the growing of our economies...Now, the same actors are selling and they are considered as criminal...

Anonymous's picture

Watch this guys. Here is the definition of what if TBTExist

http://www.youtube.com/watch?v=oxDZW4k8tCY

Yossarian's picture

I think the Goldman bashing is becoming irrational.  Yes, I think ALL of the TBTF banking institutions use their influence in govt for their advantage and are far too large as a share of the US economy.  And, yes, I do think GS does manipulate markets for their benefit...but they are not doing anything different than the other institutions are tryingt o do- they just do it better. 

I can't get all worked up about Goldman shorting housing and taking down AIG because betting on a housing bubble and the collapse of an insolvent institution was the right bet. I would have liked to make such a bet.  What I can get mad about is using their influence in govt to get a special deal that other creditors would not be privy to.  

Same goes for this: if Greece is in so much better shape than the CDS mkt indicates then why don't some of these more noble institutions with massive excess reserves gladly accept the 7% annual payment and write CDS against John Paulson and the evil speculators?  Maybe because everyone knows the ECB has been using it's giant broom to sweep all the dirt under the carpet for the last year and now they are going to have to deal with the problem (probably through monetization).  

 

But I'm wondering what the end-game is for the CDS buyer since I strongly believe teh ECB will bail them out with "printed" EUR.  Who are the CDS buyers planning on selling to?  Is the plan to force capital deficient European banks to buy CDS as a hedge against their bond book?  Or are they short the market against the long CDS and will reverse the trade very quickly?  

Commander Cody's picture

I think the Goldman bashing is becoming irrational.

Oh, really!  Do you ever listen to yourself?  Why should we even be talking about alleged "financial" institutions making bets to enrich themselves at the expense of a profligate government?  What purpose does it serve?

Just because the system has been set up this way and these "financial" vehicles are condoned does not make it right.  It is fraud.  Why? Because it will all boil down to who ultimately pays for the losses that are incurred.  And that will be the only people who have no choice in the matter - the citizens of the world and not their controllers.  Vote out the bums?  Yeah, and vote in other bums.  Choice.  Right.

tenaciousj's picture

"I can't get all worked up about Goldman shorting housing and taking down AIG because betting on a housing bubble and the collapse of an insolvent institution was the right bet."

What if I went around and sold you and your buddies an investment that I knew was toxic, then turned around and shorted that same investment?  So I basically take some of your money up front, and then take the rest when it collapases. 

That would be cool right?  I'm mean I did make the right bet...

If there happens to be a chance that you run out of money and cant pay all of it, the rest of your friends and family all have to chip in to bail you out and pay me 100%.

Anonymous's picture

Were the people who purchased the so called toxic crap foreced to buy it?

tenaciousj's picture

nope, but if you package something up pretty enough you can get anyone to buy anything.  especially if you ((massage)) the numbers and cater to the greed side.

plongka10's picture

This post sums up in a nutshell the issues at stake. Why for fucks sake should bank holding companies and hedge funds be allowed to participate in BETTING? If you can't see why this is so fundamentally wrong on so many levels.....

And don't come back at me saying that this is just the way the market is - the market needs to be changed if there's to be any semblance of a revertion to normal. Casino capitalism is just plain wrong.

What am I saying? It's all phucked anyway.

 

Yossarian's picture

Right, the focus should be on the flawed system that functions on the concept of OPM (Other Poeple's Money), special status for Primary Dealers, shelter from competition for banks, easy money, govt backstops via the discount window, commercial paper mkt, etc. and all the other clear frauds taking place legally within this bullshit financial structure.  

But I'm tired of hearing stories about how GS is the monster taking down poor Lehman and AIG when Lehman and AIG were playing is the same bullshit contest of who can steal more US resources.  My point is, we should be focusing on outright fraud and the deeply flawed institutional structure rather than try to paint one Bogeyman. 

As far as Greece goes, I view govt as an equally evil and wasteful commandeering of private resources.  No, I don't support anarchy without government so I'll stop anyone who responds by trying to put those words in my mouth.  I do advocate less government in order to take care of the tasks best suited for central planning: defense, roads, some social welfare perhaps, sanitation, pollution control, etc.  The scope of govt is an argument that rational people can have but there is little doubt that the Greek govt operates in a corrupt manner that results in an inefficient allocation of teh countries resources.  So I say bravo to the bond vigilantes for calling out both the Greek govt and the insolvent (without ECB bailout/monetization) European banking system.  

plongka10's picture

Top marks for a reasoned, cogent response. The only point I would make is that the US is just as insolvent and that monetisation in a reserve currency is the only thing keeping you going. Europe is a mirror image of the US without the benefit of a reserve currency. But my point made earlier above is that, to all intents and purposes, the "bond vigilantes" are seen as proxies for USG by people OUS and will not be serving you well as we move into a time when friends will count for much.   

Yossarian's picture

We just went through a financial crisis between 2007-2010 where the common perception wwas that 90% of the problem was derived from the US.  In December nobody wanted to hold $'s and financial wizards such as Hugo Chavez were borrowing perpetually depreciating $'s and switching reserves into the stable EUR of the financially responsible European Monetary Union.  

The problems in the US have been acknowledged throughout this site and I will be the first to concede that the US has MAJOR problems (although a fiat currency means financing the deficit is irrelevant in nominal terms).  What has not been appreciated is just how indebted European consumers (Denmark, Ireland, Netherlands, UK, POrtugal, Span, etc.) and European sovereigns are.  Furthermore, the ECB's stealth monetization exercises such as NAMA and the process whereby they accept sovereign bonds as repo collateral (which can be used to buy more sovereign bonds) is very similar to the much more well publicized Fed fraud.  Bottom line: this is about fraudulent central banks and irresponsible fiat money regimes fighting to preserve their inflationary growth mirage while the respective nations struggle to preserve their insolvent welfare states.  Europe is only coming into the same light as the US now.

California's next for the bond vigilantes when Europe is done.   

pak's picture

"I think the Goldman bashing is becoming irrational."

Did you mean "unfair"? So what?

"Goldman bashing" is absolutely rational. When you launch a publicity attack, you need a "face of the enemy" which is well-known and easy to identify. TBTF as a generalized identity is too vague to be useful.

As for "Goldman shorting housing", the most prominent issue is lack of full disclosure on MBS. Denninger has written volumes on that, check him out.

Would like to note that these "macro-hedge-funds" are yet to receive their fair share of housing related bashing, too. "The Greatest Trade Ever" by Gregory Zuckerman is worth reading. Too bad GS was complicit here as well..))

Yossarian's picture

I get your point but I disagree.  What if you succeed on bashing Goldman into bankruptcy just to see the entire vampire squid infrastructure migrate down the street to JPM?  People may mistakenly think: "problem solved" and not follow through on the necessary institutional reforms. 

As far as GS misrepresenting the financial product they are selling and thus violating their fiduciary responsibility, yes I think it is fraudulent.  But John Paulson asking for a way to short subprime housing loans is more of a grey area.  You cannot suppose that he KNEW it would be correct- he had a view and he wanted to express it.  He thought that others were way to optimistic about the returns offered by high interest rate subprime loans and he wanted to take the other side, risking 100% loss on his bet in the process.  He didn't have a Chrystal ball and there is no evidence so far (even though it's implied) that he asked GS to sell a fraudulent product to their clients.  It is a grey area though, I will grant you that.    

pak's picture

If Goldman is an easy target for a publicity attack, that's an opportunity not to be wasted. A true financial reform can only succeed if the idea catches up with the unwashed masses, as it was with Standard Oil.

That's just my opinion anyway.

The John Paulson story is a grey area, it's true. But not a "white" one anyway, because CDO's are complex securities, and here we have smb on the short side instructing investment banks how these securities should be structured..

_Biggs_'s picture

There are so many holes in your arguments.  The end game is going to be "say goodbye to sovereignty (ie...I am an American)" and one world currency due to the printing you talk about.  GS is the #1 player in all of this.  The goal for them is suck all the blood out of wherever the next crash they have created.  The taxpayer of country xyz will be stuck holding the bag of shit.  Domino, bitches should be the saying around here.  We're all getting looted. 

 

Totally in the moment, unabashed greed that is limitless in its scope is GS.

Anonymous's picture

Watch this guys. Here is the definition of what if TBTExist

http://www.youtube.com/watch?v=oxDZW4k8tCY

imaginalis's picture

There is absolutely nothing wrong with taking short positions. Although regulations are needed to prevent such actions against the "too big to fail" banks.

John McCloy's picture

Meanwhile Ron Paul responded to my email from a month ago this morning. I believe encouragement and appreciation for those trying to do the right thing is important. I should also note that the harshly critical emails we send to pro Bernanke & anti-regulation politicians makes an impact as well. I believe a strong third party is finally about to emerge. Anyway here is his response:

Thank you for taking the time to contact my office with your kind and supportive words. It is reassuring and encouraging to hear from those, such as yourself, who understand the issues and the positive impact of a pro-freedom philosophy.


Such active citizen participation, as the founders well understood, is absolutely vital to our form of government and to the preservation of the liberty they entrusted to us.

 

As I serve in the 111th Congress, rest assured that I shall continue to take very seriously my oath to uphold the Constitution of limited federal powers and work to make ours the freest, and hence most prosperous and tranquil society in the history of mankind.


Thank you again for taking the time to communicate your thoughts.
Sincerely,

Ron Paul

Anonymous's picture

I think the only "evil" here is the same people in goverment who enabled such speculators to rein havoc left and right. They all are doing what they can to protect the said criminal organizations,and supply them with capital neede to conduct their "wolf pack" attacks on the markets of their choice,by giving them access to customers deposit through dubious banking regulation. So,and since the winers belongs to goverments,why don't they come up and voice their support for "the Volker rule" and even a stricter version of it. Seperate banking from gambling and abolish margin in any and all markets. But they probably complain to the public media about the public enemy,and then they hide somwhere to take their cut from GS, Paulson or others. For those sharks will not be ablt to operate without complicit goverments,as goverments are the ultimate source of regulation and prosecution...

bugs_'s picture

Greek spillover.  Spanish rout.

Portuguese .....um..... PANDEMONIUM!!

tom a taxpayer's picture

 

Maybe the Europeans will show America how to bring government officials, Goldman Sachs, and GS wannabes to justice. 

The culpability of the European governments in this crisis does not diminish the culpability of Goldman Sachs and GS wannabes. In fact, often it is a joint conspiracy and fraud, just like in America (e.g. AIG, Treasury, FED, Wall Street).

"Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules."

http://www.spiegel.de/international/europe/0,1518,676634,00.html

So, when the general public in Greece or Portugal or Spain or Italy see what their government officials and Goldman Sachs and GS wannabes are doing to Euroland, the public outrage may spur at least one angry country to bring government officials, Goldman Sachs and GS wannabes to justice. 

 

Hephasteus's picture

It's like there's not a single rule goldman sachs doesn't know how to get around.

I love our lawless montary system running around behind a backdrop of lawed society. It's a nice illusion.

Anonymous's picture

"So, when the general public in Greece or Portugal or Spain or Italy see what their government officials and Goldman Sachs and GS wannabes are doing to Euroland, the public outrage may spur at least one angry country to bring government officials, Goldman Sachs and GS wannabes to justice. "

How? War?

Anonymous's picture

Patience
They have not enough paper to cover their short on CDS

Leo Kolivakis's picture

The ECB should just crush these speculators. Teach them a lesson for fucking around with sovereign debt.

Anonymous's picture

Britain couldn't hold off Soros. Why do you think the ECB can outmaneuver US backed behomoths JPM and GS? It can't, short of outlawing CDS or revoking banking charters or something that totally upends current policies.

The Euro is being sacrificed to buy the Dollar and Pound more time. Why is this difficult to understand?

"Teach them a lesson for fucking around with sovereign debt."
- Are you talking about Bernake, Summers, and Timmay?

Anonymous's picture

The blame starts with irresponsible governments and central bank policies. Don't blame the shorts. As someone pointed out above, there weren't alot of complaints when asset prices were inflating. I didn't hear alot of complaining when people were using their home equity as an ATM and buying toys and taking nice vacations and building mega mansions. How bout the contractors who built those mega mansions and home remodels, I didn't see them complaining. Most of them were driving big new trucks. Mortgage brokers weren't complaining, realtors weren't complaining, furniture salespeople weren't complaining...... Were investment managers forced to buy toxic crap, were people forced to buy 0% no down loans? Go look in the mirror before you start passin out blame. Get with the program. Protect your assets and get short.

Problem Is's picture

Hey Tyler... maybe you could find some grad students at NYU or Columbia in the languages you are finding these articles in to help translate Spanish, Greek and Italian...

"I am finishing my phd in Spanish at Columbia and translate articles for Zero Hedge..."

Is sure to get you laid...

Cursive's picture

I read yesterday that Spain, although it has a a high youth unemployment problem, has great infrastructure and some of the world's best banks.  In fact, I read that Spain is an economic powerhouse.

laughing_swordfish's picture

It was - in the 17th Century.

Read George Washington's blog yesterday for more info - also naked capitalism has more on this theme as well.

Can't seem to get the link posted but you'll find it there.

Anonymous's picture

Can someone please lay out for me what Goldman did wrong exactly? I think I'm missing something. It sounds like Goldman is accused of trying to harm Greek bonds.

But the profit motive is reason enough to short a failed organization. And if this causes the failed entity to be wiped away from the marketplace, so much the better. Capitalism is all about wiping away failures and alowing the strong to survive - and in the process serving consumers better. I am sure the Greek consumers of services like arbitration and police protection can find better and cheaper solutions on the free market than having no choice but to submit to a cruel monopolistic provider like the Greek government.

It's not Goldman's responsibility to prop up or bail out a failed state. Goldman has a duty to its shareholders. If you want to bail out the Greek government, by all means do so, but please use your money.

It does bothers me that Goldman received a lot of bailout money from the US government. But remember, the US government obtained the money partly through robbery (extracting funds from its US citizens/chattel under threat of violence) and counterfeiting (fiat currency). If the bailouts help offset some of the involuntary theft (taxes and fiat currency inflation) suffered by Goldman, I see nothing immoral about that.

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kummar's picture

If indeed these are the actors set on setting the world ablaze, they are more than likely the same ones who are involved in Greece, Portugal, Dubai, and elsewhere. Presenting: Moore Capital, Brevan Howard and Paulson & Co... Oh and JP Morgan and, ahem, Goldman Sachs.1995 Toyota Pick-Up Truck AC Compressor

jackiboa's picture

I will forward this article to him. Pretty sure he will have a good read. Thanks for sharing!
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