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Here Is What Happens After Greece Defaults

Tyler Durden's picture




 

When it comes to the topic of Greece, by now everyone is sick of prevaricating European politicians who even they admit are lying openly to the media, and tired of conflicted investment banks trying to make the situation appear more palatable if only they dress it in some verbally appropriate if totally ridiculous phrase (which just so happens contracts to SLiME). The truth is Greece will fold like a lawn chair: whether it's tomorrow (which would be smartest for everyone involved) or in 1 years, when the bailout money runs out, is irrelevant. The question then is what will happen after the threshold of nevernever land is finally breached, and Kickthecandowntheroad world once again reverts to the ugly confines of reality. Luckily, the Telegraph's Andrew Lilico presents what is arguably the most realistic list of the consequences of crossing the senior bondholder Styx compiled to date.

What happens when Greece defaults. Here are a few things:

  • Every bank in Greece will instantly go insolvent.
  • The Greek government will nationalise every bank in Greece.
  • The Greek government will forbid withdrawals from Greek banks.
  • To prevent Greek depositors from rioting on the streets,
    Argentina-2002-style (when the Argentinian president had to flee by
    helicopter from the roof of the presidential palace to evade a mob of
    such depositors), the Greek government will declare a curfew, perhaps
    even general martial law.
  • Greece will redenominate all its debts into “New Drachmas” or
    whatever it calls the new currency (this is a classic ploy of countries
    defaulting)
  • The New Drachma will devalue by some 30-70 per cent (probably
    around 50 per cent, though perhaps more), effectively defaulting 0n 50
    per cent or more of all Greek euro-denominated debts.
  • The Irish will, within a few days, walk away from the debts of its banking system.
  • The Portuguese government will wait to see whether there is chaos in Greece before deciding whether to default in turn.
  • A number of French and German banks will make sufficient losses
    that they no longer meet regulatory capital adequacy requirements.
  • The European Central Bank will become insolvent, given its very
    high exposure to Greek government debt, and to Greek banking sector and
    Irish banking sector debt.
  • The French and German governments will meet to decide whether (a)
    to recapitalise the ECB, or (b) to allow the ECB to print money to
    restore its solvency. (Because the ECB has relatively little foreign
    currency-denominated exposure, it could in principle print its way out,
    but this is forbidden by its founding charter.  On the other hand, the
    EU Treaty explicitly, and in terms, forbids the form of bailouts used
    for Greece, Portugal and Ireland, but a little thing like their being
    blatantly illegal hasn’t prevented that from happening, so it’s not
    intrinsically obvious that its being illegal for the ECB to print its
    way out will prove much of a hurdle.)
  • They will recapitalise, and recapitalise their own banks, but declare an end to all bailouts.
  • There will be carnage in the market for Spanish banking sector bonds, as bondholders anticipate imposed debt-equity swaps.
  • This assumption will prove justified, as the Spaniards choose to
    over-ride the structure of current bond contracts in the Spanish banking
    sector, recapitalising a number of banks via debt-equity swaps.
  • Bondholders will take the Spanish Banking Sector to the European
    Court of Human Rights (and probably other courts, also), claiming
    violations of property rights. These cases won’t be heard for years. By
    the time they are finally heard, no-one will care.
  • Attention will turn to the British banks. Then we shall see…

h/t Anthony

 

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Sat, 05/21/2011 - 19:48 | 1299108 vote_libertaria...
vote_libertarian_party's picture

So it's bullish for stocks...

Sat, 05/21/2011 - 19:58 | 1299128 The Count
The Count's picture

Yes, just like my foot fungus.

Sat, 05/21/2011 - 21:22 | 1299289 astartes09
astartes09's picture

You should get some CDS taken out on that fungus.

Sat, 05/21/2011 - 22:38 | 1299426 jeff montanye
jeff montanye's picture

i want to know why Kickthecandowntheroad world is two words (bitch to type but i'm willing to learn).

Sun, 05/22/2011 - 12:28 | 1300079 ElvisDog
ElvisDog's picture

A new acronym: KTCDTR

Sun, 05/22/2011 - 13:53 | 1300186 Dr. Impossible
Dr. Impossible's picture

"So it's bullish for stocks..." NO...it's bullish for lawyers.....

Sat, 05/21/2011 - 22:38 | 1299435 I am Jobe
I am Jobe's picture

Get these guys to write the IPO.

CONGRATULATIONS, LINKEDIN! You Just Got Screwed Out Of $130 Million

http://www.businessinsider.com/linked-in-ipo-2011-5-b

Sat, 05/21/2011 - 20:07 | 1299156 MarketTruth
MarketTruth's picture

Stocks? It is the golden rule...

He who has the gold makes the rules.

Sat, 05/21/2011 - 20:11 | 1299161 DonutBoy
DonutBoy's picture

Ha! +1e6

Sun, 05/22/2011 - 09:53 | 1299879 Frankie Carbone
Frankie Carbone's picture

 

in a post 911 world, even bubonic plague and ebola are bullish for stocks. 

Sun, 05/22/2011 - 11:43 | 1300030 carbon
carbon's picture

  • Just Great
  • AT LEAST THE GRECCE HAVE THE CLEANEST
  • SEA WATER AND BEACHES IN EUROPE.
  • Every bank in Greece will instantly go insolvent.
  • The Greek government will nationalise every bank in Greece.
  • The Greek government will forbid withdrawals from Greek banks.

Sun, 05/22/2011 - 12:46 | 1300105 Urban Redneck
Urban Redneck's picture

All this was known before they jumped into bed with the ECB & IMF.

Sat, 05/21/2011 - 19:52 | 1299110 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

Truth, bitchez!

Sat, 05/21/2011 - 23:50 | 1299541 LaLiLuLeLo
LaLiLuLeLo's picture

 

  • "We are out of money, but we can pay you in fish."

silly icelander, slavery is for PIIGS

http://youtu.be/ZowKXiPdk6c

 

Sat, 05/21/2011 - 19:55 | 1299116 RobotTrader
RobotTrader's picture

Sound like it was written by Nic Lenoir.  Where has Nic been, lately, anyway??

Sat, 05/21/2011 - 23:08 | 1299488 dogbreath
dogbreath's picture

Robo

Did you see the hit Peter Schiff did on Mega Precious Metals claiming NIA was trying to pump and dump them.   The stock is near its 52wk lows and they have good properties and management.  There is also a spike in volume and there is somthing odd about this story.  I am not a trader but am familiar with many exploration companies.  You seem to have a impartial broad view of the markets, whats your take on this.

The reason I ask is Mega is drilling a 3000 meter hole on its headway property in Red Lake Ontario.  The stakes are high because they started the hole in early 2010 and there is no news or results yet.  They believe they are down dip from Gold Corp and so IF they hit it will be huge.   At the same time it could be just another 1.3 million dollar hole in the ground.  

 

Sun, 05/22/2011 - 10:58 | 1299969 oddjob
oddjob's picture

Jim Rogers who runs MGP was mine manager for Goldcorp in Red Lake. Mega is a credible exploration company unlike 80% of the other stocks that list on the TSX-V.

Sun, 05/22/2011 - 14:05 | 1300205 dogbreath
dogbreath's picture

Thats part of my WTF reaction when Schiff claimed this stock was being P&D'd.  That ultra deep hole with no news????  

Sat, 05/21/2011 - 19:56 | 1299120 RockyRacoon
RockyRacoon's picture

Isn't that a big jump from Greece to Ireland?  There are too many possibilities to choose just one "next step" but I guess you had to start somewhere.

Sat, 05/21/2011 - 23:03 | 1299485 jeff montanye
jeff montanye's picture

rocky, could the other side of this be that china learns from the mistakes of the u.s. and japan (1929 and 1989) and does NOT stay long equities but puts their (third) world record foreign exchange pile into gold, silver ...?

Sat, 05/21/2011 - 23:17 | 1299503 jeff montanye
jeff montanye's picture

this is solipsistic but the u.s. did just that when it got gold at $20.67 and repriced it at $35.  fdr's first worst....  maybe most of what we've got left.  only 90% gold -- not really tradable.

Sun, 05/22/2011 - 10:07 | 1299904 Confuchius
Confuchius's picture

The USSA no longer sets the price of Gold, or Silver, or anything else.

Sun, 05/22/2011 - 10:11 | 1299908 Confuchius
Confuchius's picture

The USSA no longer sets the price of Gold, or Silver, or anything else.

Sun, 05/22/2011 - 00:15 | 1299571 M.B. Drapier
M.B. Drapier's picture

Well, the Irish banks (and likely Irish sov. debt) are almost certainly toast very soon after any Greek default. Unless the EU really hurried to agree a huge Euro-devaluation spree in response, maybe. There would surely be other exciting things happening around the same too, but you can understand a UK newspaper focussing on Ireland - an Irish meltdown would be Bad News for the UK in several ways. If anything the piece doesn't jump directly enough from trouble in Ireland to trouble in the UK.

Sun, 05/22/2011 - 13:04 | 1299572 M.B. Drapier
M.B. Drapier's picture

[double post]

Sat, 05/21/2011 - 19:58 | 1299135 knukles
knukles's picture

Aaaaarraghhhhhhhhhhh!!
A major role for Goldilocks!
ECB prints their/Greece/EU way out of insolvency (just like the Fed, etc.)
So, since they (EBC) cannot buy their own debt that they issue, they issue debt to Goldman, have daily POMO like activities whereby they Don't Monetize their Own Debt, they just wash it through none other than the magical and wondrous..........

Oh, Jesus H Fucking Christ.
Another round of enrich the investment banker, at the expense of the public.

Sat, 05/21/2011 - 20:03 | 1299141 XenoFrog
XenoFrog's picture

If you can't trust your central bank leadership, who can you trust? come on!

Sat, 05/21/2011 - 21:01 | 1299248 johnnynaps
johnnynaps's picture

your federal politician?

 

Sat, 05/21/2011 - 23:16 | 1299510 jeff montanye
jeff montanye's picture

i overheard someone explain what the federal reserve does:  "they protect our money".

Sun, 05/22/2011 - 01:33 | 1299636 Ben Dover
Ben Dover's picture

+infinity

Mon, 05/23/2011 - 00:01 | 1301116 Harlequin001
Harlequin001's picture

I trust Bernie Madoff...

Sat, 05/21/2011 - 23:24 | 1299525 Budd Fox
Budd Fox's picture

Ghostbusters???!!!

Sat, 05/21/2011 - 20:04 | 1299144 desgust
desgust's picture

No.

Freegold. ECB. Reference Point Gold. Zoellick.

This article is too stupid.

Sat, 05/21/2011 - 21:15 | 1299270 BlackSea
BlackSea's picture

That comes after the currency collapse (hyperinflation) that these clowns introduce through their "helpfull" measures.

Sun, 05/22/2011 - 05:14 | 1299731 Misthos
Misthos's picture

Silly fairy tales.  What have European policymakers done so far to give anyone the idea that EU Freegold will occur?  The architecture of the Euro is faulty.  You can back the Euro with all the gold you want, but the different economies in Europe can never share the same currency.   Surplus and Debt imbalances will always exist under a common currency without trade surplus recycling.

It's not just a paper debt issue, but a currency and political issue.  Europe is not one big happy family.  If ANOTHER truly exists - it's time for him to speak up.

The fact that Freegold/ECB has not happened yet proves that the system is broken.

Sat, 05/21/2011 - 20:03 | 1299151 IdioTsincracY
Sat, 05/21/2011 - 20:07 | 1299152 michigan independant
michigan independant's picture

Instead of being told what to do from the cheerfull and usefull idiots I remember a chart of who is, and who not on task. Greek productivity was not that bad in the scope of things. I would be interested more on the ground intel on prices and reality of the common man since they are the glue to keep things togeather overall. As long debt equates wealth nothing will change. Getting tired of the left, right morons who are stiffling the moderate position as they are in the States. 

Sat, 05/21/2011 - 20:57 | 1299241 snowball777
snowball777's picture

Careful, that kind of insightful thought will get you ostracized from all the best parties.

Sat, 05/21/2011 - 21:03 | 1299249 Yen Cross
Yen Cross's picture

Finally! You live. GET IT DONE! The Blue Helmet is (BEST).

Sat, 05/21/2011 - 22:25 | 1299398 snowball777
snowball777's picture

The UN?! Or are you a Canuck?

Sat, 05/21/2011 - 22:33 | 1299424 Yen Cross
Yen Cross's picture

 Nope. Just a white boy on a trip in your neck of the woods. I hope you and your family are safe.

Sun, 05/22/2011 - 18:06 | 1300586 zuuuueri
zuuuueri's picture

well, to make a long story short, the reality of the common man in greece is 

that he is being bled dry. 

Aside from the politically connected few, people tend to work hard and get very little money for it. A few exceptions exist, which of course get tons of attention- the public sector , for the most part, doesn't do jack shit, but the salaries there are pathetically small as well. 

There are a few strong unions in the private sector which also pull several times the

average income of the typical working man, and they get a lot of attention too. 

You'd think that everyone in greece was working one of those cushy jobs, but

of course, the truth is that very few do. 

 

In the urban scene, most people under the age of 35 are lucky if they get some 

job that's technically part time, but sometimes might offer the chance to work 50-60 hour

weeks just so that the boss renews thier contract. These people might make 800 euros a month, and if theyre lucky maybe get up to about 900. breaking a thousand a month is

out of reach for most. 

 

For the majority of the public sector flunkies, similar salaries prevail- 

most of them are in the 1000 a month range. 

 

there is a small slice of people, private and public sector, who have

worked their way through this 800-1000 euros barrier and either by

playing office politics (public sector) or busting their asses (private sector) 

manage to pull in between 2 and 3k a month. They are usually aware that 

they got where they are by their own ability and they are often very

aware that while they are comfortable, they are not in the actually

wealthy class. There are a lot of yuppy types in this segment, sadly, 

being told by foriegn television what they should want. 

 

Like the americans who make six digits but have negative net worth,

about half of the people in this middle class in greece fell for the

consumer fantasy, so they are in debt and basically fucked. The

other half are a bit more responsible and often had a lot of savings, 

maybe in some rental property, maybe more recently in the banking

system. Those people, represent wealth yet to be robbed, so

they _will_ be fucked, just as soon as someone get around to ripping

them off one way or another.

 

In the cities, supermarkets and all sorts of things are controlled by 

cartels, mostly foriegn owned now. It's cheaper to buy greek products in a

supermarket in germany where there is competition, than the same products in a

supermarket in greece, owned by the same parent company as the german one.. why? 

partly because they can. 

 

The self-employed are doubly screwed. Most business in greece is still under the shadow of

this medieval system of concessions and monopolies farmed out by politicians to their cronies or friends or maybe if they owe someone a favor. As a small 

independent (almost always just a family business, because to hire 

someone outside of the family is a sure way to bankrupt such

a fragile venture), not only are there heavy taxes to deal with (comparable 

to western europe), but there is an immense bureacracy set up 

partly to obstruct anyone from competing with these politically connected 

shitheads. Lets not forget how corrupt folks like tax inspectors are. 

They will size you up to get a feel for just how much they can squeeze

out of you, then make up some kind of numbers from pure fantasy,

just to force you to cut a deal with them. 

 

so, you have to deal with that shit, then you have to deal with the mountain of 

permits, paperwork, etc, all opportunities not so much even for

bribes to be collected by the people in the machinery, but to force you

to, in a sense, pay into the franchise of the bigshot who owns the

monopoly on whatever the hell is is youre trying to do. you can even

bribe officials , etc, but if you fail to pay into the bigshot's syndicate,

then you'll be busted for bribing an official, or something. 

 

At least this shitty system is so far not enforced so much by thugs as it is by 

courts and sheer paperwork. 

 

If you have any money left over to support your family, well, you are lucky. 

 

There are 'closed professions' like civil engineers, lawyers, etc, where

you have to somehow get a license from someone who already has one - inherit one or buy it - and those guys, along with the services they sell, often name their price. 

 

curiously doctors are not a closed profession- full on competition, and

private sector cash-customer healthcare costs are actually affordable, 

though maybe not if you're one of the poor SOBs making 800 euros a month.

 

smart, capable, ambitious people, if they dont have any real ties , family 

reasons, etc, to stay in greece, usually leave to find work abroad, paying 5x what 

they could get in greece. almost all of them would wish they could stay in greece, 

but they are so fed up with this shitty system, and the lack of oppurtunities, 

that they give up and move away. 

 

the actually rich people? the politically connected, or folks who were positioned well

and making money from back in the days when there was a healthier economy (like, in the 70s), those guys are living in another world entirely. Some of them are well off because of

actual genuine hard work, but the majority of them got their money from

the corrupt machinery of power. They're obviously not going to give

it back, and theyre obviously not going to squeeze themselves to 

pay off a government bond, either. 

 

There is a humongous gap between 30 years odl and 40 years old

in greece. people younger than early 30s know the system is full of

shit, they have no confidence at all that it works or will keep any

promises, they see all politicians as lying scumbags, and for the most

part they know the thing is falling apart around them. They are

largely not inclined to violence, either.  The demonstrations, etc, 

you see, are _so far_ organized. There was always a small hooligan

element in , big surprise, spoiled middle class kids, who would go

make some trouble to stick it to 'the man' (their parents, usually

in the middle class i mentioned), break some shit, spray some graffiti,

and then hang out in a cafe and brag to each other and on facebook

how they were resisting being oppressed. 

That was a common formula for a friday night around the university.

Someone would then call the cops, the cops would show up, they'd

all go through the drill, chase the kids for a few blocks , and then go home. 

the kids would then, go hang out and brag about how they were 

resisting being oppressed by cops. 

 

and every so often this might culminate in the recreational torching of

a macdo or maybe a foriegn bank. 

 

The demonstrations are not usually those kids, because demonstrations

aren't just a thing on the whim of the moment some friday night... 

most of the demonstrations are organized by unions and political parties, 

mostly, so far, on the left, and mostly they are about people bitching

and moaning to protect some bit of their share of the gravy train. 

yes, sometimes it does get out of hand. 

 

when the actual hard working sucker making 800 a month gets 

pissed enough to start smashing things, look out, because the whole

country would go up in flames. As these people are increasingly

unemployed, some of the tension in the streets is beginning to be

genuine and not just organized. This is not organized by any parties,

though there is a growing awareness that the huge about of illegals

in the country working the bottom-rung below minimum wage jobs 

are there to drive down the price of labor at the low end, and i would

expect to see more tension between them (also now out of work in

large numbers, but not yet leaving the country in large numbers) and

unemployed greeks. 

 

 

The attitude in the country has changed immensely in the past year

or two. everyone, whether he's a 'worker' making 800 a month

or whether he's a small time self-employed businessman or a farmer

or whatever, knows that the system is hopelessly corrupt, cannot be fixed, 

and is bleeding them dry to pay for it all, while behind them the banks

loaned fantasy printing press money to them with the premeditated goal of foreclosing on them anyway.. and they almost all agree that the main goal of the euro is

to allow germany to dominate the rest of europe, and that it's a bad deal

for greece. almost everyone who doesnt directly depend on the

status quo knows and says this, and they are all just waiting for

the moment when it breaks. Announcing default is what that means for 

a lot of them. 

 

Greek police will go on strike if they are ordered to really use force 

to control the population- the violence you see so far is mild compared to other

countries and , really, genuinely, the police in greece are up and down

the ranks , not trained, indoctrinated, or expected to employ force against 

the population. When two years ago a cop shot a kid in a demonstration,

even though the court found that he fired in self defence, the cop

went to jail for murder. You don't find cops brought to account like

this in other countries either. This does not put a smile on the faces of the

empire-builders, but they can't change it overnight either. 

 

the army? if the army was ordered to use force against the population... 

the army would probably gently assist the government in abdicating, like what

happened in egypt recently.

 

 

Sun, 05/22/2011 - 21:17 | 1300900 Orly
Orly's picture

Thanks for that perspective, z.

Sat, 05/21/2011 - 20:04 | 1299153 binky
binky's picture

Happiness is a warm printing press.

Sat, 05/21/2011 - 20:08 | 1299162 Smiddywesson
Smiddywesson's picture

"Isn't that a big jump from Greece to Ireland?  There are too many possibilities to choose just one "next step" but I guess you had to start somewhere."

I'm with Rocky, it's impossible to know the details, but then again, when a big bag of sh*t is trod upon, it's likely to spurt it fragrent putresence in the direction of the weakest point confining it.  That could be Ireland.

So much to dwell upon.  These are indeed exciting time for people hedged in physical gold...FIRE!!!

Just kidding.

Sat, 05/21/2011 - 20:10 | 1299165 oklaboy
oklaboy's picture

Gyros anyone?

Sat, 05/21/2011 - 20:12 | 1299171 mt paul
mt paul's picture

Question please

what is the average length and interest % on the national debt ...

figure the" hedge" is the place for honest intel

thanx ..

Sat, 05/21/2011 - 21:47 | 1299321 Yen Cross
Yen Cross's picture

Overlays. I see your point though.

Sat, 05/21/2011 - 20:15 | 1299172 Manthong
Manthong's picture

Preposterous - That's about as crazy as if a single company like AIG could take down the whole US financial system if it went broke.

It's not as if Greece is systemically important to the EU or anything.

Nobody is crazy enough to let one entity become that critical to the whole system.

Sat, 05/21/2011 - 20:23 | 1299187 Howard_Beale
Howard_Beale's picture

Nice sarcasm. You forgot to tag it.

Sat, 05/21/2011 - 22:42 | 1299437 Manthong
Manthong's picture

Oops. But surely, most people are aware and understand that the financial system of the whole western world is in the death grip of a horribly complex and mind numbingly huge web of bets in the form of debt insurance in which relatively small defaults can be amplified and wreak global havoc that will cost many trillions of dollars. /sarc/

Sat, 05/21/2011 - 20:34 | 1299203 Noah Vail
Noah Vail's picture

Ain't just Grease, my man, its about contagion and around $600 billion in CDS on which the fuse is already lit to blow up the German and French banks. The domino theory is Baaaaak!

Sat, 05/21/2011 - 23:25 | 1299526 bigkahuna
bigkahuna's picture

heck, did it ever leave? These banks are all over each other, all its going to take is one big flame out and the whole damn thing is coming down...

Sat, 05/21/2011 - 21:45 | 1299317 Milestones
Milestones's picture

Does the name Lehman Bros. ring any bells??        Milestones

Sun, 05/22/2011 - 00:34 | 1299597 Keri at Bankste...
Keri at Bankster Report's picture

My question is, who are the major counterparties on the credit default swaps?  Who is going to be fronting that money to the bondholders with CDS "insurance"---who's the AIG of Greek debt?

Also, what percentage of outstanding Greek debt is currently "insured" by CDS agreements (if that information is reported)? Also, what happens with the "average" CDS when a default occurs: does the counterparty take hold of the debt and pay the original bondholder/CDS buyer face value, and so the debt becomes the "asset" of counterparty?  Or is it more complicated than that?

Sun, 05/22/2011 - 08:10 | 1299805 Ned Zeppelin
Ned Zeppelin's picture

I thought there was a recent post by Tyler pointing out that the Greek CDS are relatively modest in amount as compared to the debt.  Something like 10% is covered by CDS? 

Sun, 05/22/2011 - 10:16 | 1299911 oogs66
oogs66's picture

Net Hellenic republic CDS exposure is less than 4 billion Euro.  The is about 55 billion Euro of Gross exposure. So if there is a Credit Event that triggers the CDS the net 'winners' and 'losers' have about 4 billion euro of open exposure.  Since most of the CDS is already trading in the range of 20 to 30 points up front, the gap from current markes is likely to be less than 25 points on average (assuming a 50% recovery).  So total payments at 50% recovery would be 2 billion Euros and the loss from todays mark would be 1 billion, as 1 billion should already have been priced in.  Not small numbers, but tiny by comparison relative to the 300 billion euro of Greek debt outstanding.

What is the CDS writers don't have the capital to make the payments.  Although this is still a possibility it is far less likely than 2008, and even then AIG was a complete exception.  The street has much lower lending thresholds to institutions.  The collateral provisions are quite high, so not only would clients that sold protection to the street have to post the up front premium as margin (25% say), but depending on their deemed creditworthiness, they would post an additional margin, possibly as high as 20%.  So most, if not all of the people who sold protection to the system will already have posted margin close to the amount they are likely to pay.  Some might have to come up with additional money in event of default, but these will be the bigger, better institutions.  You really are left more with the risk that one big, highly respected, institution that wrote a lot of credit protection and didn't post much margin, suddenly becomes insolvent.  This seems incredibly unlikely, and I'm usually a pessimist.

What about some daisy chain effect from the 55 billion of Gross exposures?  Well, there are 2 ways gross exposures build up.  One is that if you buy CDS and then sell CDS but don't close out the positions, you would have a Gross notional that adds the 2 notionals together, but you would have zero net notional.  This risk will be concentrated primarily at dealers because hedge funds in particular, but most clients, aggressively close out CDS trades via unwind or assignment rather than leaving offsetting trades on the books.  Offsetting trades would leave the hedge fund exposed with credit risk to the counterparties.  Its not a big risk, but there is no point taking it, so clients don't take that risk.  For any client that is subject to margin requirements (mostly hedge funds, but also smaller banks) they would have to post margin on the long position with one counterparty, and these days they would also have to post margin on the short position.  So leaving the trades open would mean the client has to post margin, possibly on both legs, so they are incentivized to close out the position rather than keep offsetting trades on the books.  Therefore, most of the Gross Notional will be retained at the market making institutions.  If there is a credit event they will quickly run Tri-Optima or some equivalent to net down the interdealer contracts.  Once this is done, the gross notional will drop significantly.  The street does this regularly since at least 2008 to prevent gross notional build up, and definitely does it around times of the credit event.  It is in everyone's interest to reduce that daisy chain risk, and the street has been successful at doing it.

The other way that Gross notionals build up is when clients have on 'curve' trades.  They buy 1 year CDS and sell 5 year CDS for example.  They are betting on the timing of a credit event.  These trades would increase gross notional, but have a net notional of zero.  If there is a credit event, under current protocols, the client would have these trades collapsed, so there is no daisy chain effect from these sorts of trades either.

Yes, CDS is still murky and not completely transparent, but it is not a black hole.  And AIG was fairly unique and most of its losses came from pure pass through regulatory capital CDS trades rather than single name CDS trades.

Sat, 05/21/2011 - 20:12 | 1299173 silvertrain
silvertrain's picture

Didnt everybody just pass stress tests a few months back?

Sat, 05/21/2011 - 20:16 | 1299175 IdioTsincracY
IdioTsincracY's picture

Yeah ... everybody was positive ...

they're all stressed out over there!

Sat, 05/21/2011 - 20:15 | 1299178 RNC
RNC's picture

BTFD!!?

Sat, 05/21/2011 - 20:16 | 1299181 kito
kito's picture

harry dent is sure gold plummets along with everything else...what to do with my physical gold?

Sat, 05/21/2011 - 20:41 | 1299217 Roger Knights
Roger Knights's picture

Asian central banks will buy the dip. China wants to become #1--for that it needs gold to back its currency. There won't be a drop of more than 25%, and it won't last long.

Sat, 05/21/2011 - 21:49 | 1299322 tired1
tired1's picture

I'm just guessing here. Gold is of course important to China. But I sense that Silver will be the metal of choice to back the yuan internationally.

Sat, 05/21/2011 - 22:43 | 1299438 WonderDawg
WonderDawg's picture

No way. Silver is too volatile and also gets consumed, whereas gold largely does not. Not only no way, but no fucking way.

Sun, 05/22/2011 - 01:07 | 1299627 slewie the pi-rat
slewie the pi-rat's picture

yes fuking way.

really.  i'll bet 1/2 the people who are writing on this fiatosis dominosis have PMs in their jeans.  genes.  jeeeenz! 

Sun, 05/22/2011 - 04:07 | 1299707 Sudden Debt
Sudden Debt's picture

Yes, because you need a second PM to divide the gold. 50$ in gold isn't that much, if you rub on it twice it's gone.

50$ of silver will be 15 times bigger and more easy to handle.

Unless there's not enough silver... than it will go to 5 times bigger.

WHATEVER!!! EVERY PM WILL GO UP BIGTIME!!

 

 

Sat, 05/21/2011 - 20:44 | 1299222 DosZap
DosZap's picture

kito,

You HOLD.

It likely will go down, but with Asia/China/India, and the current state of the entire world, look for a short down cycle before relaunch.

Plus,if you sell, their is a hell of a good chance you will not get a shot at buying it back even at lower prices.

 

Sat, 05/21/2011 - 21:47 | 1299328 Calmyourself
Calmyourself's picture

Two choices: eat it or save it to trade for a nice spot on the FEMA train.

Sat, 05/21/2011 - 22:12 | 1299362 Euskara
Euskara's picture

harry dent, a PM bug's best friend , even if he's right just BTD!!!

Sun, 05/22/2011 - 05:48 | 1299737 shortus cynicus
shortus cynicus's picture

don't trust "fiata (JP) Morgana" ®©™

Sat, 05/21/2011 - 20:17 | 1299184 Cleanclog
Cleanclog's picture

Then get out of the way of Hungary, Romania, Serbia too.  Then Austrian Banks which are too into Hungary and Romania.  Oh, and Romania is into Greece.  Oh Oh Oh and Portugal timber, Spain housing implosions even further, and Italy remembers that its government behaviors are really not much better than Greek - - - and all those Libyans and Tunisians coming in needing assistance. Dependency ratio about to go tilt.

Yep, an inflagration will ensue.  And 99.99% of Americans neither no nor care.  Just don't get it. t won't happen here.  They're sure this is just noise somewhere far far away in a galaxy . . .  More Americans believed in the rapture today than think we're really in debt that will cause them a problem.  Argh!

Sat, 05/21/2011 - 20:27 | 1299192 Hansel
Hansel's picture

+1 Argh!  No one seems to care about anything.

OM

Sat, 05/21/2011 - 20:37 | 1299210 Noah Vail
Noah Vail's picture

I find it great entertainment watching the rich and powerful (or so THEY think) twist in the wind while hanging from a rope they braided themselves. Be of good cheer and find a big tree to stand behind when the bullets start flying, as they invitably will.

 

Island real estate should be getting pretty hot soon, so get you'rs quick.

Sun, 05/22/2011 - 10:09 | 1299906 TIMMAYYY
TIMMAYYY's picture

nothing happens without them allowing it.

Sun, 05/22/2011 - 10:36 | 1299941 911 4S
911 4S's picture

Grand Manan,NB. Canada

perfect place

Sat, 05/21/2011 - 20:49 | 1299225 DosZap
DosZap's picture

Hansel, because they can do nothing about it..................

Sat, 05/21/2011 - 21:05 | 1299258 johnnynaps
johnnynaps's picture

Didn't the messiah say yes we can?

Sat, 05/21/2011 - 21:18 | 1299281 Sean7k
Sean7k's picture

+100 

Has there ever been a time in recent history when the population felt as helpless as this? Did they want Tarp? Did it matter? Did they want the banks bailed out? Did it matter? Did they want healthcare? Did it matter? Did they want to keep the fourth amendment? Did it matter? Did they want frankenfoods? Did it matter? 

We have a government and central bank that function with total disregard of the population. They station standing army troops for civil unrest. They grope us at airports. They poison us with flouride, even as studies show damage to the developing brain. They then seek to expand homeland security to trains and buses. They place capital controls on citizens, but allow corporations to manage billions offshore.

Is there a more paralyzing concept than open revolution as the ONLY choice to restore your Republic? Forget the fact most have been so dumbed down, they are just beginning to realize it's fubar. 

The europeans are just as screwed as we are. That is over 600 million first world citizens- not counting the Japanese that have just been placed in radioactive land. 

 

Sat, 05/21/2011 - 21:51 | 1299334 Selah
Selah's picture

 

Ooooh! I see that someone wants to get flagged by Homeland Security!

I, on the other hand, love Big Brother...

 

Sat, 05/21/2011 - 23:41 | 1299539 bigkahuna
bigkahuna's picture

then -- you must walk softly, and carry a big jar of lube...  and yes, the irs introduced me to this concept.

Sat, 05/21/2011 - 22:20 | 1299393 Caviar Emptor
Caviar Emptor's picture

Agree. As the pie diminishes, TPTB and lackeys will fight the population over the crumbs that are left. Mubarak and Gaddafi have their devoted followers who gladly execute people in the street to keep their power. Same would happen in developed countries the minute people turn off dancing with the stars. 

Sat, 05/21/2011 - 23:05 | 1299481 JR
JR's picture

Your eloquent statement gives others the courage to make their strong statements. 

We live in complicated times with many messages reaching us throughout the day, the largest number of them misrepresentations of fact.   To finally face where we are and where we need to go, we need clear, strong words such as yours on Zero Hedge to give those of us who can spread the word the courage to do so.  People need information and clarity.

Information is going to turn the tide.

Leaders throughout our history have warned us and fought against the crooked financial system we have in America today. G. Edward Griffin tells how The Creature from Jekyll Island, the Fed, can be slain: “By piercing it with a million lances of truth…by a million crusaders with determination and courage.”

Zero Hedge is at the forefront of exposing the truth.

“We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money  system…. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.”

— Robert H. Hamphill, Atlanta Federal Reserve  Bank

Sat, 05/21/2011 - 20:40 | 1299211 WonderDawg
WonderDawg's picture

Truth. That's why the crooks and their clowns will get away with claiming "no one could have seen this coming", because 95% of the population doesn't see it coming. Or they're too afraid to recognize it.

 

Sat, 05/21/2011 - 21:14 | 1299268 johnnynaps
johnnynaps's picture

That's fine! Once again I will be in the 5% category. It's a shame that type of insight can't help my job prospects! Then again, if I was part of the Corptocracy, I would wan't sheeple as employees too!

Sun, 05/22/2011 - 00:19 | 1299579 CompassionateFascist
CompassionateFascist's picture

You are mistaken. Of the people in my cab who I bother to talk to about what's coming down, approx half have some strong awareness that a Crash to end all Crashes is on the way. They just don't feel able or motivated to do anything about it. Yet.

Sat, 05/21/2011 - 20:34 | 1299194 Re-Discovery
Re-Discovery's picture

The reverse prisoner's dilemma.  Ireland missed their first bite at the apple, but when some country -- likely Greece, possibly Spain, definitely Italy -- decides it will forgoe long term slavery for short term anarchy, then they all will in some form or another. 

And by 'they', I loosely mean the people and more specifically mean organizing forces that seize the opportunity to topple the existing power structures. 

What happens when you throw a 'bailout' and nobody comes? 

Sat, 05/21/2011 - 20:30 | 1299196 sellstop
sellstop's picture

Damn!

Sat, 05/21/2011 - 20:29 | 1299201 Brokenarrow
Brokenarrow's picture

blah, blah, blah.....aint nothin gonna happen.

want to see a sawn? go to the zoo!

the pumpers will zoom the euro up mon...the es will be up 10 by the close.

this is just another tempest in a teacup.

much ado about nothing

adios

sp 1450 coming up

forget it

dont bet against it

keep ur cash

 

dont be a fool

Sat, 05/21/2011 - 20:34 | 1299202 Yen Cross
Yen Cross's picture

 Lets go to Macau! The Domino effect Steve Wynn style.

Sat, 05/21/2011 - 21:03 | 1299251 snowball777
snowball777's picture

A 2049 LEAP call? That's bold. ;)

Sat, 05/21/2011 - 21:08 | 1299257 Yen Cross
Yen Cross's picture

 Nice to have you back!

Sat, 05/21/2011 - 20:37 | 1299204 XRAYD
XRAYD's picture

Ben has already created the "Quantitative Easing" model.  The choice is blood in the street or ink from HP!

Sat, 05/21/2011 - 20:42 | 1299214 Noah Vail
Noah Vail's picture

Methinks it will soon be both.

New world order is now the old,

It will end violently as it always does.

Mark Twain was an ass, history does indeed repeat.

Only the names are changed to protect the guilty.

Sat, 05/21/2011 - 20:45 | 1299218 Yen Cross
Yen Cross's picture

I agree!

Sat, 05/21/2011 - 20:38 | 1299205 Arius
Arius's picture

economic birthers are in full force protesting in Spain...more fuel to the fire....it seems to be a mediterranean profile...

Sat, 05/21/2011 - 20:36 | 1299207 XRAYD
XRAYD's picture

Send in the clowns.

 

Oh, sorry. They are running the circus already.

Sat, 05/21/2011 - 20:51 | 1299227 Coldfire
Coldfire's picture

+BermonkeyJeethnerJCDechets

Sat, 05/21/2011 - 20:56 | 1299233 XRAYD
XRAYD's picture

And NO Strauss-Kahn or DStressCan't!

Sat, 05/21/2011 - 21:09 | 1299259 zaknick
zaknick's picture

The new dollar, bitchez! With Obama and Soros' mug on them and GOLD AND SILVER backed (after confiscation that is). Millions in FEMA camps! Iranian and Venezuelan nukular flase flag! Black helicopters everywhere ! Riots! No food in cities! No gas! Three aircraft carriers at the bottom of the Persian Gulf! Blocking the Strait of Hormuz! ObaMao comes into his Mao/Stalin own! Fuck the Indiana Supreme Court; Martial law! AmeriKKKlans fall into death worship trance and back banksters' puppets depopulation strategy of billions! Release the Plagues!

 

Orson Welles, eat your heart out!

lmao! 

 

 

Fluorine in the water, AmeriKKKlans!

Sat, 05/21/2011 - 23:22 | 1299518 serotonindumptruck
serotonindumptruck's picture

I can envision all of that happening in the next 6 months.

Sun, 05/22/2011 - 06:07 | 1299745 shortus cynicus
shortus cynicus's picture

Millions in FEMA camps!

Quite a positive scenario. More pessimistic would be if  only some thousands are allowed to "live" in FEMA camps. The rest will be put into FEMA coffins stored in millions all over the country.

http://www.google.com/search?q=FEMA+coffins

Sun, 05/22/2011 - 07:53 | 1299790 Dejean Splicer
Dejean Splicer's picture

"some thousands are allowed to "live" in FEMA camps."

It won't be The Chosen People living in the FEMA camps. They will be running the FEMA camps living freely on the outside.

Sat, 05/21/2011 - 21:08 | 1299263 Orly
Orly's picture

More likely a two-teired Euro?

Any thoughts?

"D

Sat, 05/21/2011 - 22:14 | 1299306 Yen Cross
Yen Cross's picture

Orly any thoughts on  the eur/gbp retrace? Thank you.

   Orly you are a very good trader. You  however, are soo girly in your trades. I'll bet you ARE STILL SHORT USD AND EUR (chf).

Sat, 05/21/2011 - 23:02 | 1299469 Orly
Orly's picture

The odds are very good, from a technical perspective, though not right away.

The pair finished last week on a bullish hammer but the Daily charts show that the four days of previous gains were wiped out on the last day of the week.  I would expect that trend to continue short-term.

The bearish candle on Friday was very, very strong, indicating that the longs got smoked and would be reluctant to get back in right away.  For a few days, the shorts should have their way with the Euro on most crosses.

But...I don't think the Euro goes quietly into that good night.  If there is some stabilising news out of Brussels or Oslo or Athens, then the Euro could turn on a dime.  This idea, however, seems unlikely, according to the charts.

The Pound Sterling has been showing surprising strength since the debacle unfolded in 2008 and there is no reason to believe the trend should stop now- except for the fact that the chart seems to have finished the first half of a cup formation, with a higher high than the last high formed in late October, 2010.  I think this is the biggest clue we have and it is formed on the Weekly chart.

If that scenario plays out, then one should expect the Euro to double top against the Pound at ~ 0.946, which is the correlation with the Fibonacci level in that area. A rising trendline can be drawn from the bottoms of late June, 2010 and early January 2011.  This is most likely the destination before the Euro continues higher against the Pound.  The best bet I see is for the EURGBP to hit ~ 0.85 and trend sideways for a few weeks before turning higher.  Excellent scalping potential there, I'd say.

Depending on the rate of descent, the pair should turn positive in the area of between 0.84 and 0.85.  Sorry I can't be more specific than a hundred pips but the turn should come off a bounce along the trendline to finish the back edge of the cup.  Obviously, if the trendline is broken, then you could be in for a short position to tell your grandkids about because the next stop would be 0.77!

Best of luck trading!

:D

Sat, 05/21/2011 - 23:08 | 1299486 Yen Cross
Yen Cross's picture

 Thank you. I'll short commodity based currencies (vs) YEN.

 

  I'm not a scalper. I also trade without stops. You run a decent FiBI. Your trendlines are a bit suspect.

Sat, 05/21/2011 - 23:29 | 1299506 Orly
Orly's picture

I tried to respond to your other point but my comment got swallowed, most likely because you were responding to mine...

Anyways, what I said was girls are better traders than boys any day of the week.  You probably clench your fist and curse the pair, vowing vengeance; double-down, Martingale-style.  You're gonna show them who's boss!

I just have a good cry and a glass of wine and pull up another chart.

:D

Scalping is fun, if you have the time.  Go in hard, high and heavy and see what happens.  I am mostly a longer-term trader myself but this market has whipsawwed so many times, I get a neck-ache.

By the way, how can you extrapolate what I said to shorting commodity-based currencies against the yen?  That was curious.

For what it is worth, the AUDJPY looks like it is headed for ~80.64 and CADJPY has completed its Gartley retrace and is headed back down to hit the declining trendline at ~79.18.

Sat, 05/21/2011 - 23:41 | 1299536 Yen Cross
Yen Cross's picture

 I stand corrected, and your rebuttal was well written. Y/C

 

 P.S. I can extrapolate your love of CHF because you are reluctant to draw weekly trendlines. You play the safe trade. P.S. you are welcome for the AUD/JPY short  hint.

Sat, 05/21/2011 - 22:12 | 1299371 Euskara
Euskara's picture

I have many relatives in Spain who all hate the "Puto Euro" as they call it

Sat, 05/21/2011 - 22:21 | 1299390 Yen Cross
Yen Cross's picture

  Your family is very smart.

Sun, 05/22/2011 - 02:08 | 1299661 Hephasteus
Hephasteus's picture

"More likely a two-teired Euro?

Any thoughts?"

I think you been playing in FX market too long. Are you talking about like a party country euro and a business country euro. Like a euro mullet?

 

Sun, 05/22/2011 - 09:48 | 1299876 falak pema
falak pema's picture

Its got my vote since two months, as both RM and DSK have pointed out : Haircuts, debt restructuring inevitable in Euro zone but unacceptable to Merkel/Sarkozy/ECB/FED; as it COULD  spring banking collapse and world wide asset deflation. They would prefer that POST 2012 elections, would the Oligarchy. But they will HAVE to go that way. The math is awful for the hide under the carpet' 'kick the can further' way. It' ll lead to further pain in the DCs if they wait. So two tier looks necessary...Ask DSK's ghost as he writes his memoirs...ask RM as well!

Sun, 05/22/2011 - 10:34 | 1299926 Orly
Orly's picture

From Charles Gave of GaveKal, courtesy of John Mauldin:

"Can the ECB continue to support the Euro through open refinancing operations—or are we not reaching a point where the whole system is stretched beyond credulity? Look at it this way: Greek issued debt is €330bn (forget the off balance sheet liabilities as the numbers get too scary) . This debt is now trading at 55c on the Euro on average. So there is a paper-loss of roughly €150bn on Greek debt alone floating out there. For the sake of argument, let us agree that there is probably another €150bn paper loss (conservative estimate) on Portuguese and Irish debt together. So European institutions face some €300bn of paper losses on Irish, Greek and Portuguese debt alone."

This is real money he's talking about, not some cook-the-books, off-balance-sheet sleight-of-hand job.  The really scary thing:

"This is why the Euro is a Frankenstein: what started as an earnest attempt to foster greater European integration is instead pitting age-old nations against one another and reviving dangerous nationalisms and populism (watch for Marine Le Pen to make a massive score in the French presidential election, or for the rebirth of the far-left and anarchists in Greece, Italy, Spain, Sinn Fein in Ireland etc.). It is the law of unintended consequences at work!"

It seems that unless they manufacture some way to save to the Euro by dividing it into a good Euro and a bad Euro, Gave may be correct that the entire system will disintegrate into a chaotic pool of nationalism, social upheaval and political unrest.

I have seen this movie before and it doesn't turn out very good in the end.

Sun, 05/22/2011 - 14:57 | 1300274 falak pema
falak pema's picture

the trojan war... two tier euro to keep Helen of Troy, safe and sound.

Sat, 05/21/2011 - 21:12 | 1299265 samseau
samseau's picture

this is a good excuse for the state to assume total control of greece and go full totalitarian

Sat, 05/21/2011 - 21:10 | 1299267 fedspeak
fedspeak's picture

It may very well be May 22nd...take a look!!!!

 

http://www.godlikeproductions.com/forum1/message1497808/pg1

 

 

Sat, 05/21/2011 - 21:17 | 1299271 Comrade de Chaos
Comrade de Chaos's picture

Mostly agreed, hope the above, the most reasonable outcome will come soon & some of us can proclaim - default b!... Hallelujah.

Sat, 05/21/2011 - 21:18 | 1299278 Atomizer
Atomizer's picture

Meanwhile, 6 million Spain squatters await their IMF cheque.

Live broadcast

http://www.ustream.tv/channel/motionlook

Sat, 05/21/2011 - 21:19 | 1299282 zaknick
zaknick's picture

Big Brother is watching you, bitches! Or should I say, the All Seeing Eye of the Illuminati banksters is upon you, AmeriKKKlans! (and in a spiffy PDA app too!)

 

The Associated Press

Don't trust the boss to keep track of your wages? Gov't releases smartphone app so you can do it yourself -CC 7 minutes ago Favorite Retweet Reply

 

 

Sat, 05/21/2011 - 21:32 | 1299298 JW n FL
JW n FL's picture

http://goo.gl/sqbEu Senator Al Franken asks Apple why the IPhone Tracks its Users EVERY MOVE! Even while the Phone is OFF!

 

https://rt.com/usa/news/swat-kills-american-hero/ You better shoot first and shoot a LOT! Because YOU! Are Dead! for sure if YOU! Don’t!

 


“Matt Taibbi” Explains How Wall Street Works http://goo.gl/HC2U8 and how Wall Street Wives Grabbed $220 Million in TALF Funds!

 

You ALL can Wake Up! at any time now!

Sat, 05/21/2011 - 21:19 | 1299284 dick cheneys ghost
dick cheneys ghost's picture

probably gonna happen sooner rather than later.......thats why DSK was taken out....

Sat, 05/21/2011 - 21:22 | 1299290 mkkby
mkkby's picture

It really won't matter.  For the slow learners out there... large banks will be bailed out.  Bailed out mainly by good 'ole Bernanke, but also all the other bankster-owned central banks.  So it won't be a big deal, except to the countries facing austerity and the resulting loss of jobs.

Sat, 05/21/2011 - 21:29 | 1299295 JW n FL
JW n FL's picture

How about some White House Propaganda about how the Middle Class is going to be richer in 2020.. Not! the Rich!! Yet!!! Richer!!!! in 2020.

Sat, 05/21/2011 - 21:27 | 1299297 Itsalie
Itsalie's picture

"The truth is Greece will fold like a lawn chair: whether it's tomorrow (which would be smartest for everyone involved) or in 1 years, when the bailout money runs out, is irrelevant. The question then is what will happen after the threshold of nevernever land is finally breached, and Kickthecandowntheroad world once again reverts to the ugly confines of reality."

 

So how much bailout money has been printed by the ECB to buy PIIGS bonds, does anyone know? but surely the public should be at least be told once in a blue moon (like once every quarter) what the balance sheet of the ECB looks like, non? I know the Fed's balance sheet always point to higher gold and silver, but shudn't ECB prinitng be good news to PM too?

Sun, 05/22/2011 - 06:55 | 1299756 Daedalus
Daedalus's picture

The ECB balance sheet is partially transparently disclosed.
My recollection is that the total exposure of the ECB to Greece is about €180bn and to Greece, Ireland and Portugal a total of about €430bn.
And don't ask about Italy and Spain.

Sat, 05/21/2011 - 21:31 | 1299300 michigan independant
michigan independant's picture

Looting by any other name on bearing asset productive capital. Remember When Bond holders in risk analysis took over a failed business from the incompetant to repair? Now they get a so called haircut, Profit winfall, and the Local's which is politics have to acount for the truly incopetant Viatical product called CDS. Paper jockeys top to bottum called .gov and yes we all reap what sow. Call it sticky wage issues and go from there to whatever model they suggest.

Sat, 05/21/2011 - 21:45 | 1299318 fiatspyder
fiatspyder's picture

Rapture Bitchez!  Oh, wait ...

Sat, 05/21/2011 - 21:52 | 1299332 RobotTrader
RobotTrader's picture

I wonder what kind of "coordinated attack" is being arranged right now for TPTB to deal with "enterprising speculators" attempting to "make their year" by shorting European bank stocks?

Sat, 05/21/2011 - 22:01 | 1299350 michigan independant
michigan independant's picture

Only two groups allowed to gain since the rest is only speculation capital. Look, CDS are stragem landmines on structual issues are they not? Call it what you wish as a social benefit, but really that will is not yours, but you are still paying for it. Capital can only function if it allowed and that truly is the paradox of numbers and fact. Let me put it this way Gen X ? Who is paying for you since you cannot yet fill the shoes of what has even happend? Those with .gov fill trenches not dig them. We all know the course if most do not.

Sun, 05/22/2011 - 08:05 | 1299798 jm
jm's picture

CDS are not landmines.

Leverage, correlation, and inadequat risk management are the issue.

These three things don't need CDS.

Note that we had thousands of crises before CDS and will continue to have them with CDS.

Too much emotional response going on here.

Sat, 05/21/2011 - 21:57 | 1299340 dark pools of soros
dark pools of soros's picture

Portugal just bent over for a few billion

 

"Under the agreement, Lisbon will have to carry out steep spending cuts, raise taxes, reform its labor and justice systems, and embark on an ambitious privatization scheme."

 

 

Sat, 05/21/2011 - 21:57 | 1299343 gwar5
gwar5's picture

Painful, but I hope Greece defaults and gives them the middle finger -- followed by Ireland, Portugal, Spain and even Italy soon thereafter. I know the Greeks did it to themselves, but they were enabled, and it means the ECB and EU squid will have to die.   

It will be a bad day for the NWO and a good day for humans. Any NWO boasting there can be a global fiat banking regime behind a global UN government facade would just be comical at that point. If they can't collectivize and pull off a solvent region like the Eurozone then the entire planet is more than a bit of a stretch. Just ask DSK. 

I think it's over already. Even before surrender is called in any battle the losing side starts to defect when they see the bodies pile up. And it's getting deep over there. Which one of them wants to be the last elitist shithead standing up in Belgium defending it? Noone. They'd never be able to go back home. It won't be long before they start singing the virtues of their national sovereign interests again.

 

 

 

 

 

Sun, 05/22/2011 - 04:18 | 1299715 michigan independant
michigan independant's picture

What could there bent of mind allow as in political streamlining to illustrate morality and personal worth, or failure?

Sat, 05/21/2011 - 22:15 | 1299373 expectplannedevents
expectplannedevents's picture

Big News! 125 documents that could impeach Obama for Dual-Citizenship!

http://www.wnd.com/index.php?fa=PAGE.view&pageId=301329

listen

Jerome Corsi on air:

http://www.youtube.com/user/TheAlexJonesChannel#p/u/4/OqvvqGqpkgE

Sat, 05/21/2011 - 23:31 | 1299533 serotonindumptruck
serotonindumptruck's picture

Corsi is a neocon, chickenhawk piece of infectious human waste.

Alex Jones can suck a wet, sloppy turd out of my ass.

Sun, 05/22/2011 - 00:26 | 1299586 Mariposa de Oro
Mariposa de Oro's picture

Yeah, so we should just ignore the commie fraud with the keys to the kingdom doing as he's told and destroying the country from within.  Works for me.

Sun, 05/22/2011 - 10:37 | 1299944 Orly
Orly's picture

Maybe he would but you're head is stuck so far up there, all he can get is sloppy seconds.

Wake up.  If you're embarrassed because you bought into this "neo-con" vs. "Neo-lib", Blue good, Red bad crap all these decades, don't blame us.  Just shake off the shackles and open your eyes to the truth.  The truth will make it all better.

:D

Sun, 05/22/2011 - 20:16 | 1300800 DeadFred
DeadFred's picture

Common, don't be shy tell us what you REALLY think. lol

Sat, 05/21/2011 - 22:28 | 1299407 ILikeBoats
ILikeBoats's picture

I find this forecasted behavior hard to believe.  Wouldn't it be more likely that more extend and pretend and mark to unicorn would be done, but just in a different way?

Sat, 05/21/2011 - 22:26 | 1299411 sunny
sunny's picture

At least we can't blame the Rapture for what happens next.

sunny

Sat, 05/21/2011 - 22:35 | 1299422 farmer1
farmer1's picture

Derivatives (swaps) pull forward future earnings into current periods.  Greece had better cash flow 5-10 years ago because of derivatives; not now.

Sat, 05/21/2011 - 22:38 | 1299434 Monedas
Monedas's picture

Got any more bright ideas, John Maynard Keynes ? Monedas 2011 Hoarders have more fun !

Sat, 05/21/2011 - 22:44 | 1299440 eureka
eureka's picture

The USUKs (US+UK) will fail BEFORE the Euro zone.

Telegraph's propaganda, like all USUK propaganda, intends to

divert attention from the globalist anglo-jewish bankster scum -

who btw rigged Greece.

Greece (2% of EU GDP) will not dent ECB.

The USUKs will CRASH in the next 12-18 months!

The USUKs are bankrupt. Watcg closely next 6 months.

Sun, 05/22/2011 - 00:24 | 1299583 Troy Ounce
Troy Ounce's picture

 

i will, i will, i will.....

Sat, 05/21/2011 - 22:44 | 1299443 I am Jobe
I am Jobe's picture

Hang the politicians and bankers and celebrate Freedom.

 

 

Sat, 05/21/2011 - 22:48 | 1299453 Caviar Emptor
Caviar Emptor's picture


Georgia erupts in protest as MENA-inspired revolts spread: 

TBILISI (AFP) – Thousands of people rallied in Georgia on Saturday calling for President Mikheil Saakashvili to resign, but the protests failed to unsettle the ex-Soviet state's Western-backed administration.

 

LINK

Sat, 05/21/2011 - 23:15 | 1299499 Tail Dogging The Wag
Tail Dogging The Wag's picture

TO ALL GREEKS: CASH IN HAND IS KING - take it outta the bank, like yesterday!

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In times of change you need new alternatives and new ideas.

Land in Panama is one of the most undervalued assets in 2011.

PROTECT YOUR CAPITAL. INVEST. SAVE. OWN. LAND.

http://www.thorssoncapital.com/land-portfolio.html

In the event of a sale of land from any of the Thorsson Capital properties to any Zero Hedge reader, the vendor (Thorsson Capital) hereby pledges a donation of 1% of the total sale to Zero Hedge, said donation is to be made within 30 working days of settlement.

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Sun, 05/22/2011 - 03:01 | 1299685 BigDuke6
BigDuke6's picture

Fuck me, these ads are very tedious.

Fuck off with your panama bollocks.

Sun, 05/22/2011 - 08:25 | 1299813 Dejean Splicer
Dejean Splicer's picture

1% off the top going to the hedge. Panama. You too can live in swallor with some of the ugliest bitches ever given birth to. The only hot bitches in Panama come from Columbia.

$2 - $3 million for a few acres of Panamanian farm land, lol! What a joke.

The upside to living in Panama is all the nice CIA dudes you will meet.

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