Guest Post: Making Sense Of The French Rollover Plan

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Mon, 07/04/2011 - 11:02 | 1424219 Sudden Debt
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I think some things got lost in translation.




* it sounds better if you use the french accent

Mon, 07/04/2011 - 11:05 | 1424230 Ghordius
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+1 LOL

Mon, 07/04/2011 - 11:25 | 1424287 Janice
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Congratulations on your top placement of the comment section.  It's awesome what a person can accomplish after a smoke break.

Mon, 07/04/2011 - 11:26 | 1424292 snowball777
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Roulons-nous les pouces, conasses.


Mon, 07/04/2011 - 11:32 | 1424312 trav7777
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History Channel goes over the French Rollover Plan all the time.  heil 1940

Mon, 07/04/2011 - 11:56 | 1424368 Hugh G Rection
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yep.  As soon as I read "French Rollover Plan" I instantly assumed it involved biting a pillow.

Mon, 07/04/2011 - 12:08 | 1424395 tom a taxpayer
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"French Rollover Plan"...isn't that what DSK offered the maid?

...or what Christine Lagarde offered the IMF?


Mon, 07/04/2011 - 12:35 | 1424470 Sudden Debt
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So you think he was just practicing his powerpoint presentation in his hotelroom when...


Mon, 07/04/2011 - 11:05 | 1424226 ISEEIT
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Who gives a rat's ass anymore? Just so long as EUR?USD stays over 1.45 its all good right. Fiat will rule because they say so!

The EUR is THEIR thing and THEY won't give it up.

But of course it is going to end just as every other attempt at dominion ever has.



Mon, 07/04/2011 - 11:07 | 1424240 Atomizer
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I'll sum it up.


Gimmie Gimmie Gimmie

Mon, 07/04/2011 - 11:16 | 1424261 Oh regional Indian
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Rollover is a pre-death throes moment, ne? As in rollover and die?

Will the Euro actually have it's day in the sun as a viable currency of a viable agglomeration of nation-states?

Nope. Never.


Mon, 07/04/2011 - 11:19 | 1424274 The Axe
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sounds like chemotherapy...kills just die later.

Mon, 07/04/2011 - 11:22 | 1424280 snowball777
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Guest Post: Making Fun Of The French Rollover Plan


Mon, 07/04/2011 - 11:27 | 1424295 Peter K
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"The French proposal is slightly complex at best and convoluted at worst." No wonder, coming from a people that are slightly simple at best and convoluted at worst. Case in point, anyone ever listen to a French equivalent of the SOTU? 

Mon, 07/04/2011 - 11:28 | 1424300 astrofibo
Mon, 07/04/2011 - 20:28 | 1425367 Havana White
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Mon, 07/04/2011 - 11:31 | 1424302 virgilcaine
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meanwhile back in DC

Time to relax: Obama to Camp David.

Mon, 07/04/2011 - 11:32 | 1424314 Janice
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Mon, 07/04/2011 - 11:47 | 1424348 ThirdCoastSurfer
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I have a €100 million note that I pay €30 million for. 

Another note, that I invest €50 million in, returns €3.85 million per annum. 

Thus, in 7 years my principal for the €100 million note will be returned and this note can be allowed to default with a haircut of 80% of par or a return of €6 million in principal. I will take a tax deductible paper loss and Greece can remove the obligation from the ledger. 

This is nothing more than a Ponzi scheme struggle over Theta or time. 

Mon, 07/04/2011 - 14:11 | 1424754 topcallingtroll
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Very good point.

I also dont see why the rollover may be rated a selective default. The terms look quite good for the bondholders and it appears to be voluntary.

Mon, 07/04/2011 - 12:00 | 1424381 jm
jm's picture

Wonder why there is so much effort expended to twist reality for a country with public debt to GDP of 133% and is paying 15% of all revenue in interest payments?

Well, I have a theory.  I know that 67% of Greek debt is held externally, but the real point is that Irish banks are exposed to periphery debt to the tune of about 40% of Irish GDP.  This practically guarantees an Irsh default.  And about 80% of Irish debt is externanly owned. 

Which I presume will lead straight to the UK, maybe others. 

Past this, no one can adequately grasp the chain reaction. 

Mon, 07/04/2011 - 19:42 | 1425312 jm
jm's picture

It's significantly worse than I anticipated.

The UK is exposed to $195 billion in the event of an Irish Default.  This includes public debt, bank debt, and private debt, and derivative exposures tied to default. Germany $159 billion.  The US $105 billion.


Tue, 07/05/2011 - 08:01 | 1426158 DrunkenMonkey
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If true, then I am jack's complete lack of surprise.

Care to provide a link to the figures please ?


Tue, 07/05/2011 - 11:01 | 1426501 jm
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You'll need to do some tabulation.

Mon, 07/04/2011 - 12:16 | 1424418 disabledvet
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Greece was supposed to have defaulted today.  I don't recall that being "part of the headline" last week but an "ex post facto thanks for the dough."  Does it matter what the government actually does with the borrowed money?  Methinks to S&P it does.  If it's just being recycled back to the banks then who wouldn't be surprised by a few "Union issues"?  When last i checked Greece still had an Air Force.  Anywho "the foreclosure process looks challenging."  And i have noted S&P's stock price has absolutely soared this year.  I get the feeling "no more inaccuracies" is a big reason--but that's just me thinking out loud.  My guess is "we're all on credit watch now."

Mon, 07/04/2011 - 12:19 | 1424423 oldmanagain
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"One thread that weaves through all these instances is the elevation of finance above human needs.

Out-of-control food prices in the Middle East, for example, have been a result of stimulus-driven activity encouraged by the Federal Reserve. When "stuff" amounts to a superior store of value versus paper currency, stuff gets scarce.

In China, the same idea has long been applied through wage suppression, and a government focus on cheap labor dominance. Good for the competitive posture of the country, not so good for those who scrimp and save for meals.

And in Greece, the choices are seen as bankruptcy, i.e. instant fiscal death, or prolonged economic recession or even depression -- with crushing financial debt loads acting as a millstone for years or even decades to come.

The response of governments virtually everywhere has been to (1) protect the bankers, (2) shield creditors from any losses, and (3) pump up paper assets in the hope of getting things going again.

Why continue on this path if the results have been so ugly? Because the plan is working, at least for some. As the U.K. Guardian reports:

The U.K. economy is flat, the U.S. is weak and the Greek debt crisis, according to some commentators, is threatening another Lehman Brothers-style meltdown. But a new report shows the world's wealthiest people are getting more prosperous -- and more numerous -- by the day.

The globe's richest have now recouped the losses they suffered after the 2008 banking crisis. They are richer than ever, and there are more of them -- nearly 11 million -- than before the recession struck.

In the world of the well-heeled, the rich are referred to as "high net worth individuals" (HNWIs) and defined as people who have more than $1m (£620,000) of free cash.

According to the annual world wealth report by Merrill Lynch and Capgemini, the wealth of HNWIs around the world reached $42.7tn (£26.5tn) in 2010, rising nearly 10% in a year and surpassing the peak of $40.7tn reached in 2007, even as austerity budgets were implemented by many governments in the developed world.

But how can the connected rich be getting richer if the recovery is artificial? Where do the gains come from if the global economy is sputtering and threatening to slow?

The extra gain comes from two places: A hidden inflation tax, engineered through pumped-up paper assets, and an aggressive tax on future generations."

Mon, 07/04/2011 - 12:20 | 1424428 sbenard
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Just DEFAULT already!

Mon, 07/04/2011 - 12:32 | 1424464 Redneck Makin-tosh
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There were 10 in the bed and the little one said ...

Mon, 07/04/2011 - 14:45 | 1424834 buzzsaw99
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they all rolled over and one fell out...

Mon, 07/04/2011 - 21:09 | 1425424 Buck Johnson
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They are just delaying the inevitable, nothing more.  This rollover has to be agreed, and two do everyone think that Greece is truly going to have these severe austerity in line and working.  No way, I said last time that within a year of the last bailout that Greece will need another one.  You will hear noise about another one in December.

Tue, 07/05/2011 - 10:30 | 1426408 Highrev
Highrev's picture

. . . this is a good deal for the Participants, a mediocre deal for the Troika, and punitive to Greece.

Just as it should be!

Or is there anyone out there who says it shouldn't be otherwise for a deadbeat debtor?

And the credit agencies want to call it a credit event!!!  LOL


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