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With Greek Bonds In Freefall, ECB Intervention Absence Raises Concerns Greece Is Now Doomed
It seems that the ECB has now resigned to letting Greece fail. While previously any time we had a whopping 2 point drop in one day the ECB would promptly step in and be the buyer of only recourse in peripheral debt, it has been deathly silent today. And as the chart below demonstrates Greek debt is about to go bidless: a par 10 Year note is trading at 62, with the resulting yield now literally going parabolic. And the 2 Year is now at 16.5%. Luckily for a globalized economy, dominoes are completely isolated and what now appears to be a certain "chain reaction" in creditor defaults will have no impact on the Russell 2000: after all the Fed is surely prepared for this contingency.
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CAROUSEL! CAROUSEL! RENEW! RENEW!
awesome.
I thought that Becky always said "duh" before "awesome"?
I swear I heard her say this morning "...and apparently gold has been coming back recently..." as if she were talking about something completely trivial like the price of Hannah Montana tickets or something.
Totally awesome (and would you marry me, Becky?)
Why is the RFID chip in my palm flashing?
It's telling you that you son-of-a-bitch haven't spent enough money this month - you damn "saver"! The only way to get rich is to spend more than you have and you have earned - don't-cha-know! /sarc
Buy more gyros! Or is that Euros?
At least you can eat gyros ;-)
Report to the nearest Sleepshop, Logan Three.
It's telling you that you've used up your monthly allocation of chickens to choke.
...now that was funny.
You are not of the body! Traitors!
Well, that dates you tom. How long till U.S. bonds do the same thing?
Never. The dollar goes first.
If the Treasury market goes tits up, we might get a "renew" rather than a thermonuclear detonation. But the Fed can't resist interfering, and in fact is forced to interfere under any and all circumstances.
Sweet, so I can love my metals AND bonds for a bit longer.
Greece gets access to the Fed's discount window -- problem solved.
I've always wanted to visit/own a sun-drenched Greek island...
RUNNER! Drop the gold and silver.
RUNNER! Drop the gold and silver.
100% contained.
And not a threat to human health (Copyright 2011, TEPCO)
Reality might sink in?
But, but Leo said to buy - back at 8% on the 10-year?!
Maybe he wanted to get in early to max out the haircut... Some like pain, ya know ;-)
No, he traded them for the chinese solars.
Which are getting caught with their pants down in scams like channel stuffing or outright lying on their books.
Let's play dominoes!
make that DOOMinoes
http://www.hedgefundlive.com/blog/friday-market-expectations-41511-the-market-continues
Please Tyler, I can't take any more DOOM...
Doom is bullish for Gold and Silver.
Possible doom is bullish for PMs. Actual doom is only bullish for bread and bullets, not so much rocks, shiny or otherwise.
One step closer to ending like the French Assignats.
Firewood!
DP
Silver, Gold, Iron, clay pot, and urine can be used to make a battery. You can connect several of these battery's to recharge your I-Pad. Recharging these batteries only requires dumping out the old urine and replacing with fresh urine.
The thought of recharging those batteries had me pissing my pants.
Dp.
Double post or double penetration
Oh shit, I thought my wife was going out for Dr. Pepper!
Doom in moderation is actually bullish for the accepted currency.
I am kinda.hoping for a kinder and gentler doom. Like all the dooms we faced in the 20th century.
I prefer my doomworlds to stay on my pc.
endoom-ment, anyone?
So why don't you switch on CNBC...
Here you go, Hamy:
http://mjperry.blogspot.com/
Cheer Up Hamy, look at the bright side, at least they finally made the right decision and stopped "throwing good money after bad", so from that perspective this is a good decision, bullish for AAPL and stuff.
But then I realized there is no 'good money' anymore, well except for Gold but that doesn't count, right Hamy ?
Oh my god.
If hamy is capitulating or becoming scared we are fucking doomed.
Cmon hamy cheer me up.
Get the gold bugs riled up.
Dont you think a one world government will be the result of all this financial stress, and finally bring peace to mankind?
hamy if i remember right you sold all your silver at 26 and your gold at 1320. your feelings of doom are coming from within. are u lookin around at your fellow peons there manufacturing consent and trying to give the illussion of calm and thinkin to yourself " gotta git out of here". dont worry you will wake up to the fact that your pension will be gone your dollars worthless and the stocks you so treasure make good wallpaper lolololo
"Raises concerns"
How quaint. As if it's something newly found, a jewel of knowledge, an ah-hah moment, spiritual insight.
Raised concerns... in reality simply bitch slapping the EU across the face whilst soundly asleep dreaming wistful images of everything's been taken care of, OK, hunkie dorie and if not, we'll have another meeting and release another statement, mission accomplished.
Ms. Kyeptokopolis, book me a first class flight to Berlin for the meeting, a suite at the Kampinski, love. And give Bennie a ring, we'll need another mimeograph copy of the dollar swap drawdown...
European's really don't like to do work on Fridays
+++
No, and since the sun is shining beautifully on the central plateau in the Rhine valley- we have no need for Greek islands or paper (today).
Ummmmm....I think "bidless" is about to become the "next thing" in more than just Greek debt. How the Vix is under 16 right now is...?....simply just a clear example of how broken the market is, what with creation units machines in each and every one of our beloved criminal syndicate Wall Street banks.
As was the case in Mid March, Vix calls are now trending ahead of the spot. Here comes the turn again...in the VXX etn...a nice, fat double bottom.
The lack of response is indeed ominous.
When the authorities are paralyzed and dont know what to say about south european and irish debt then it is time to....
Run away! Run away!
I think I soiled my armour....
They're letting the bonds collapse, then will come in and offer an "voluntary" exchange for new bonds, most likely guaranteed by the EFSF at say 50c in the Euro, making sure not to trigger CDS. They then wait until 2013 (when CDS contracts held by German and French banks have matured) and dump any remaining old Hellenic Republic bondholders. That's my guess....
Everyone realizes that a haircut of some form is unavoidable, but it's going to be funny watching the Greek government meet the deficit reduction targets....
Bring it on!
Buy our bonds, look they are a great deal, just look at the promised return.
Reggie is the man.
Too honest to go for the big bucks by becoming a conventional shill for goldman.
He called it and stuck by it.
Ireland portugal and spain will go too.
The end of euro credibility is near.
True.
I went through Sir Reginald's maths line by line.
In the end, doing turnarounds for a living it all comes back to the same truism.....'Dude, your losing more than your making'.
It doesn't matter if its primary goods, services, manufacturing or interest rates on government debt - if there more negative than postive, then restructuring (read: telling your creditors to suck it up or sod-off) is the only answer.
I must admit, depending on the creditor I sometimes feel sorry for them - the small trader who just wants to be paid, or the investor who was duped; conversley sometimes its called justice.
The greeks need to just give the finger like the Icelanders and let their bondholders take their medicine.
Should be quite a show!
I'll bring the icelandic beer, you bring the greek popcorn.
The Greeks did give them the finger, just not as publicly as the Icelanders did. The Greek pols might have promised to pay back the debt, but only a real idiot (or someone like Goldman that's selling the bonds to their best customers and shorting them at the same time) believes that you really can get blood out of a turnip.
Someone in the GO turnip bidness needs to work on the problem.
Well, the question is, where are the apologies for all the perfectly good money thrown after bad in the months prior to this?
Do they go on television and apologize to all the taxpayers for wasting that $1 trillion stabilization fund, when it made fuck-all of a difference?
Didn't the holders of this debt have literally months, if not years, to get this shit off their sheets? If they go away, it sounds to me like evolution in action.
One trillion bought us two more years.
Place your new bets. The next round is beginning.
Yeah that's a bright idea, buy VXX so you get in before the next reverse split. This is all bullish for U.S. Bonds, stocks, and the dollar. You just don't get it.
someone is going to take it hard in the ass (but the Greeks like that, correct ?)
only mad dogs and ANCIENT greeks, but then nowadays its an art form on the net!
I said before the Greeks will take all the money you will give them...steal it...then default...now who is going to jail for giving the thief the money...no one...its all good
That is wrong - the Greek Government does that - the people work, try to get by, have aspirations inflated by crap talking politicians - just like the US in fact.
In defense of the Greeks, at least their people are doing something about the theft by rising up against the state - in the US you're all just bending over and waiting for the next 'bad news' to be issued by the Fed. The US Gubba-mint took the money, invaded and stole it where needed - and no bankers went to jail for theiving the money...it's all good.
...what's the difference?
Good point.
But greece has the record for sovereign defaults in europe over the last 150 years or so.
Which ijit keeps loaning a deadbeat money?
The answer is greedy ijit's who want to make profit - I thought that was obvious!
It's the same greedy ijit's who lent sub-prime homeowners money...in fact in that case it's all the same greedy GS ijit's.
The real question is not who and how - but why, why does anybody lend money to those who have a bad history of paying it back?
The answer lies here.
http://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall
If you look back throughout history - and at all the crises - they all start with lending to people or nations who are increasingly less likely to pay it back.
The only reason for anyone to engage in such self destructive behaviour (which is ultimately what it is) - is because they fear self destruction if they don't lend it - through competition (i.e. if you don't lend, your competitiors will and you will be bankrupt anyway)
Until the world recognises this fact then we're doomed to keep repeating the same mistakes over and over again.
Your comment really resonated with truth for me. Reading the FCIC report, it was clear that Countrywide and the GSEs both made increasingly poor loan decisions due to fear of losing market-share.
Which ijit keeps loaning a deadbeat money?
One that makes his money from taking a precentage of the pass-through. I'd loan them some of your money if I get to keep a few percentages for making it all possible.
This trade is getting more difficult all the time thanks to all the bad publicity it's getting. Maybe I'll need to up my percentage. How about a 99% loan fee and the Greek gets the 1%? It's even getting hard to find a German widow willing to provide the funds. Maybe I can tell her that she'll get double the interest rate she got before.
...and this is the point at which banking fails....
If you know that someone is going to default (which we all do now about greece) - what is an appropriate interest rate?
99% - too little my friend, it's a default certainty, nothing will stop Greece defaulting now, not even the ECB.
Interest rates only reflect risk that the bankers think they can identify - in truth their logic is flawed as no interest rate covers the 'black swan' event. They hope to play the numbers game (lend to 1 million borrowers, only 10% will actually default) - but the problem with this is it merely hides the risk - the risk of a 80%, 90%, 100% default rate.
The only solution (as you say) is to play 'hot potato' - arrange the debt and then pass it on quick - but as we have now learnt - this is not a problem 'solver' but a problem 'mover' - and it infects the wider economy and eventually brings it all crashing down.
Bankers are not clever people, they think they are, they pay themselves like they are, but they are not clever.
They also underestimate massively the backlash from the wreckage they have created - their profits will be very much down when people are starting to set fire to banks in response to the austerity measures imposed on them.
Most sensible people would quit before the gunfire starts - but these thick bankers can't help themselves and are still dipping into the buscuit tin further cementing their doom.
Max Keiser was on UK TV last night calling for bankers to be hung - at the moment he looks like a nut - but soon this will be the norm.
My question is: what do the banksters actually lose by loaning fiat currency?
Max Keiser is crossing the line when he advocates violence.
The problem we have isn't the lack of violence, it's a lack of critical thinking by the masses.
Max Keiser is crossing the line when he advocates violence.
The problem we have isn't the lack of violence, it's a lack of critical thinking by the masses.
I said before the Greeks will take all the money you will give them...steal it...then default...now who is going to jail for giving the thief the money...no one...its all good
From a European bank's desk this morning (pretty funny):
Sorry. Double penetration
This is classic americana. Even the subtle references.
Has american banking and writing styles taken over europe?
NY desk for a euro zone bank.
Which writer? That is really funny! Thanks for posting.
Banca IMI
If Greece are allowed to default - the real magic won't be in the bondholder haircut for Greece, but in all those other PIIGS as the market (dum dum bullets) finally realise that the EU will allow nations to default
Whoops - there goes the EU guarantee that's been keeping rates down. I know if I were holding other PIIGS debt and I saw Greece fall I would be dumping faster than it's customary after a chicken vindaloo.
This is the real problem with putting off D-Day (default day) - you have made the situation worse as all PIIGS will fall together rather than over time (if the markets had their way.....probably)
Clearly the EU didn't think this through...or they actually convinced themselves that this day would not come.
It's bailout or blowup time Trichet.
This is what happens when central banks raise interest rates. We at the Fed are not going to make that mistake. This is why we are announcing that we are lowering our rates down to minus .25%. That's right, if you are TBTF will give you free money. Wait, aren't we already doing that?
And the American tax payer / cartel printing press / HFT algos all buying the tzaziki-flavoured dip.
Does anyone think of working anymore and simply paying off their debt? or does eveyone want a Bailout?
no,
and,
yes
Why throw good money after bad?
Back before we had TBTFs, everyone knew that lesson.
Somebody must be wanting for Greece to default, exit the euro and go back to the undervalued Dracma so they can start to go back there to vacation to the islands like the good old pre-euro days when it used to be cheap.
Santorini Beaches
They simply are not throwing good money after bad.
All fiat gets worse over time.
Thus, they are throwing worse money after bad.
The chinese will buy up greece further...no problem...they have the bum USD to buy the bum Euro bonds...it a bum's paradise these days!
Print, buy and repeat
"25 species naturally go extinct everyday in the world, let them go gracefully," George Carlin.
Of course, the same could be said about sovereign defaults, and the EU.
If the fed decides to buy up debt and take Greece over can we first airlift some deoderant and razors to the masses prior to our moving in?
The banks have been INCREASING swap positions in these toxic country sovereigns in order to be able to terrify their puppet prime ministers into vectoring tax money into the banks' pockets, but it appears that finally they were forced to divest the Greek swaps.
Make no mistake about it; only if the banks no longer have Greek swap exposure would this be allowed. Or maybe they offloaded the swaps onto US banks and this will be the blackmail weapon to force a return of US air forces to the Libyan disaster.
still have some life left in the Greek yet.. it will be over at around 10 yr @ 16-17% so until then btd.
Jesus!
Greek 2Ybond 17,97% !!!
So we see who's gonna be sacrificed first ... rest of PIIGS to come. Regardless of chinese PIIGS bond lifeline.
Which is just stretching chord more and more on global markets...
The big question is how low will be THE low. My guess is that the default will lead to a bond swap that results in a write down of 75% of par. Then we must ask "Who will be next?" Once Greece plows the road, all the other governments of highly indebted European countries could follow suit, if they have a brain. A big if.
http://www.TheAngryGrapes.Com
Pass me the ouzo.
Au and Ag started their current $13 and 50c runups around the time of TD's post at 934am, showing a quick responce to the Greek bond news.
With oil, grains, softs and REMs generally still flat, we may not yet be seeing the financialization of commodities, but it's looking clearer to me that we are seeing the financialization of the 2 PMs, and perhaps ready to see the fog of global debt-refinancing cleared away by the appearance of Mr. Market.
$1500 Au and $43 plus Ag are easy targets today in this deteriorating environment.
The dimwitted can collector in my home town became Fed Chairman and has his fun these days wiping his ass with Federal reserve notes before handing them to us.
Greece is about to default, I wouldn't be surprised if they don't do it this weekend.
X. Kurt OSis - Great Post!!!