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LCH Hikes Irish Repo Margins From 30% To 45%
If you are wondering why Irish bonds are ready to take out 10% by the end of the week, wonder no more. Any minute to follow: Portugal and Spain.
Dear RepoClear Member,
1. In accordance with the Sovereign Risk Framework issued on 5 October 2010, and in response to the yield differential of 10 year Irish government debt against a AAA benchmark, LCH.Clearnet Ltd has revised the risk parameters for Irish government bonds cleared through the RepoClear service. The margin required for positions of Irish government bonds will consequently be an additional 45% of net positions over the standard margin rate.
2. This will also apply to Irish government bond exposures in the single 'A' €GC basket.
3. This decision is based solely on publicly available yield spread data and in no way represents a forward looking market view. LCH.Clearnet will continue to monitor yield spreads closely and keep the parameters under close review in accordance with the Sovereign Risk Framework issued on 5 October 2010.
4. The additional margin will be charged on net exposure at close of business on Thursday 25 November 2010 and will be reflected in a margin call on Friday 26 November 2010.
5. Details of the Sovereign Risk Framework can be found on the LCH.Clearnet website (www.lchclearnet.com) under Risk Management > Ltd > Margin rate circulars > RepoClear.6. Report 74 (available on the LCH.Clearnet Member Reporting website) will detail any further changes in the margin levels charged under this framework.
7. This circular supersedes circular LCH.Clearnet Ltd Circular No 2720; RepoClear/152 dated 17 November 2010.
8. For further information please contact either myself (chris.jones@lchclearnet.com), +442074267103 or Tom Chapman (tom.chapman@lchclearnet.com) +442074266338
Christopher Jones
Director, Risk Management
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Well Im sure its all quite bullish of course, after all RoboT and Harry dont detect an equity top yet.
one word for those who see an endless stock market bull run... Zimbabwe. And with the added twist that the carpet can be pulled out from underneath at any moment.
Thanks for posting Tyler...i was getting fidgety...did not know what to do with my time.
I think i am one of those, ZH addicts...need my daily fix..
One stop shopping for the addicts, get the fix and then the support group all in one shot.
Happy Thanksgiving to the entire ZH crew.
Hopefully they provide hourly updates as these babies are like ice cream melting in the sun.
If you look at the fundamentals, the global recession is over and you're just throwing away an opportunity to make the most money in your life! I work for a company that sells very expensive items to lower middle class people, and we've never had a better quarter. You can cite "underemployment" figures all you want, but it doesn't change that reality.
Good imitation. I've laughed.
It got me good too! Nicely done.
I can't even see your lips move when the Harry puppet talks :)
Have you heard: There has never been a better time to buy a house/mutual fund/weapon system/a trillion in T bills/ etc...
... sells very expensive items to lower middle class people ...
as in DVDs with the title
"How to become rich again, trading the Harry Wanger method"?
You work for Mossberg Arms?
Almost got me. Cheers. Nice one.
"sells very expensive items to lower middle class people"
WTF?
This is like trying to figure out what is is.
Very, expensive, lower and middle class people, by whose and what standards?
What you selling, bottled water?
By very expensive items do you mean gold and silver coins. In that regard you are corrects. Sales have been great.
Would I be right in assuming the Irish bonds will become untradeable at this level of margin?
And European stocks rally on the news.
The screws are tightening.
Eventually, those rates on Irish and Portugal bonds are going to get high enough where "enterprising speculators' (as Doug Noland describes them) using 1.4% margin interest rates and 400% leverage in their Interactive Brokers account are going to start chasing this garbage.
Heh, remember that guy John "Positive Carry" Devany who crashed and burned in 2008?
Well, guys like him are back up in running, somehow able to solicit new investors with ease. They will be back buying this distressed garbage with a vengeance.
Some will fail. Some will succeed.
But in the end, it will be the same. The rich will get even richer.
Nouriel Roubini will still be driving his 2002 Nissan Altima, making a paltry salary at NYU.
Perma-gloomers will still be typing out their blogs from some basement in East Texas: "Any minute now, I swear!!".
And the "gunslinging" speculators will be ordering the latest "supercars" from AMG, Lamborghini, Brabus BMW, etc.
http://www.thesupercars.org/top-cars/most-expensive-cars-in-the-world-top-10-list-2007-2008/
"Wash, Rinse, Repeat".
It's not wise to feel invincible.
http://www.youtube.com/watch?v=-L6UWk6-Hg8
If you're going to waste virtual space, please post pictures of more attractive women showing more skin.
The global bail out is certainly attempting to shoot the moon.
They're going to have to get the Queen of Spades and all the hearts.
It will either work or it won't; and even if it works - it will work until it doesn't.
The last end game was confiscation of privately held gold and price pegging, closed banks, socio-facism, and ultimately - World War.
The Lambourghini's and Maserti's and other trophies end up being someone else's trophy over bullets and blood, then someone else's with more bullets and blood.
Eagle's Nest 3rd Infantry Division Ditto's
http://3rdid.homestead.com/historical_photo.html
yes...those specs who hit the right number on the wheel will get rich then start believing it was more than just luck.
I think Spain will be at 8 by the weekend...over 5 today.....
http://www.independent.ie/national-news/your-euro4600-bill-2434878.html
Beast of burden soon to be extinct... "the middle class." Yikes. Years ago, the writing was on the wall. Assuming we don't see an outright collapse, this is a neat preview of what is to come here soon enough on a much more grand scale. In fact, even in a collapse the net effect is the same - poverty. Just the bullet train version of the same journey. Makes one wonder where this all leads... hmmmm....
Looks like investors in Europe are "cheering" this news...
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aU41AoVAV.nw&pos=1
Nov. 25 (Bloomberg) -- European Central Bank council member
Axel Weber said governments can increase the size of the
European Union-led bailout fund if necessary to restore
confidence in the euro.
“Seven hundred and fifty billion should be enough to
assure the markets,” Weber said at the German embassy in Paris
late yesterday. “If not, it will have to be increased.”
Now we just need the Junk Corporate Mkt to join in .
Eu bond blowout... chk!
Muni bond blowout.. chk!
Corp Junk should be next.!
IB Margin call..!
Did you see the Irish Garda get tossed around by the Sinn Fein? Not a bunch of Teenage students and Girls there Mr Cowen. That was a peaceful demo also.
The thrill of victory and the agony of margin calls!
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