Lehman Deja Vu: There Goes Market Liquidity

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Wed, 06/15/2011 - 12:44 | 1371465 Ahmeexnal
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Euro, we have a problem!

Wed, 06/15/2011 - 12:45 | 1371468 baby_BLYTHE
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DOW/GOLD ratio @ 7.82!

Wed, 06/15/2011 - 12:56 | 1371537 equity_momo
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Along way to 3 , 2 ....1 still.

Wed, 06/15/2011 - 14:09 | 1371925 eureka
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Vive La France!

Wed, 06/15/2011 - 17:39 | 1372682 Greyhat
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God save the Irishmen! Jesus, bail them out, they are swapping shares for bonds. ;)

Wed, 06/15/2011 - 12:45 | 1371471 hedgeless_horseman
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Wed, 06/15/2011 - 12:47 | 1371476 Ahmeexnal
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Like I noted days ago, it is infinitely easier to place Frankreich under another Vichy, than to deal with a Greek intifada.

Wed, 06/15/2011 - 12:52 | 1371502 Rider
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The F-PIIGS to be precise.

Wed, 06/15/2011 - 13:53 | 1371833 Ropingdown
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Pfigis.  And it sounds kind of German.

Wed, 06/15/2011 - 12:53 | 1371523 Cleanclog
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Might FIIGS be "Financial Institutions Including Goldman Sachs"?

Separate note - liquidity in equities IS gone except for HFT and options expiry prep.  Really raising the stakes for a gianourmous problem when several HFT unable to be got off simultaneously in different names.  Get out of the way of that panic!

Wed, 06/15/2011 - 13:10 | 1371622 Arius
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or...Financial International Institutions Goldman Sachs aka FIIGS.... peut- etre...

Thu, 06/16/2011 - 02:28 | 1373679 FlyPaper
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LOL.  Excellent.

Wed, 06/15/2011 - 12:55 | 1371531 glenlloyd
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Wed, 06/15/2011 - 13:03 | 1371550 Rodent Freikorps
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Wed, 06/15/2011 - 13:31 | 1371682 TruthInSunshine
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Even a pig can fly [temporarily, before being rendered dead when slammed to the ground] if caught in a Typhoon.


- Ancient Chinese Proverb

Wed, 06/15/2011 - 14:42 | 1372075 Rodent Freikorps
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Wed, 06/15/2011 - 14:42 | 1372061 eureka
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For general enlightenment I coined the term the "USUK"s (US+UK) -

The true, original Mega Fi Scum of the Earth.

The world caught its disease:

Anglo-Fi-Filia (symptums: cannibalism, incest, rape & murder).

Ceterum censeo Angloginem USUKs delendam esse!

Wed, 06/15/2011 - 12:48 | 1371477 etrader
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Those PhD's Desks @  Soc Gen sure nailed it ;-)

Wed, 06/15/2011 - 12:49 | 1371482 slow_roast
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"Lehman who?" - Wall St.

Wed, 06/15/2011 - 12:47 | 1371492 Internet Tough Guy
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FRA/OIS spread was 128 after Lehman. Not quite there yet.

Wed, 06/15/2011 - 12:49 | 1371504 Tyler Durden
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Where was it before?

Wed, 06/15/2011 - 13:02 | 1371565 No Bid
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80.8 on 08/15/08, exactly one month before bankruptcy.


As the original poster noted, a long way to go.

Wed, 06/15/2011 - 13:02 | 1371571 Tyler Durden
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And how many trillions in short-term central banking bailout capital was pledged on 8/15/2008 one month before bankruptcy?

Wed, 06/15/2011 - 13:07 | 1371604 falak pema
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TD how come Euro zone is short of liquidity given the QE-2 pumping they are supposed to have received according to ZH estimates? 

Those Euro banks must be washed with 600 B USD of cash!

Wed, 06/15/2011 - 13:13 | 1371620 filletandrelease
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and TED Spread heading lower, not higher?

Wed, 06/15/2011 - 13:14 | 1371626 Tyler Durden
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TED spread is completely irrelevant as it is based on LIEBOR

Wed, 06/15/2011 - 13:15 | 1371635 Tyler Durden
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That was base cash needed for statutory requirements. Any incremental cash will need to come from the ECB, which in turn means reactivation of FRBNY FX swap lines.

Wed, 06/15/2011 - 14:44 | 1372066 dark pools of soros
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you guys are totally missing out on Pandora.. empty your pockets and back up the truck!

Thu, 06/16/2011 - 00:17 | 1373565 Rusty Shorts
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-- is it a full moon or what

Wed, 06/15/2011 - 14:20 | 1371982 slewie the pi-rat
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@ falak_p:  good question! 

ducking the Q of cause here, i think one of the underlying "reasons" for these liquidity events is the leverage of the financials, esp TBTF, even the FED.  so, a relatively normal event becomes a whoop-tee-freaking-doodoo as a 2-3% dip wipes out the entire capital equity structure of __________ (fill in blank; use xtra pages as needed).

Wed, 06/15/2011 - 13:08 | 1371614 No Bid
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Not arguing that they should be weighed on the same scale.  Just agreeing that implying  Lehman II is around the corner via Greece is a bit heavy-handed.

Wed, 06/15/2011 - 13:21 | 1371665 Cassandra Syndrome
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Why? Similar debt levels and possibly more rampant of a contagion, both financially and especially politically. Also need to factor in how more battered, bloodied and bruised the Global Financial System is in comparison to 2008.

The fact they cannot agree on a bailout may infer they simply haven't the resources to do so anymore.

Wed, 06/15/2011 - 16:27 | 1372504 Takingbets
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One can only hope they've run out of bullets. All these bailouts should have never have happened in the first place, including here.

Wed, 06/15/2011 - 13:22 | 1371674 Arius
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another thing to factor in....people are much more alert now, and expect smt to happen....which means they are much more inclined to shoot first and ask questions later...only this could speed things up very quickly....

not the same mindset as prior to Lehman....not many will stand up to the coming wave....people are not so sure the federalis got it together....its everyone for himself...

Wed, 06/15/2011 - 13:24 | 1371693 Cassandra Syndrome
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Excellent point. People are more in touch with where whatever is left of their savings and investments are and can easily call their fund managers and cash it in.

What percentage of the entire system is available in liquid cash? Less than 1% possibly. Imagine more than 1% of people cashing in their chips at the same time?

Wed, 06/15/2011 - 13:30 | 1371707 Arius
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yep...lets hope for the best and prepare for the worst...

Wed, 06/15/2011 - 13:34 | 1371748 Lord Welligton
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It is I think about 3%.

I have made the point previously that if the people knew there was virtually no "cash" in the system they might panic.

Wed, 06/15/2011 - 13:48 | 1371824 trav7777
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cash is now available, ad infinitum, by the CBs, especially the FRBNY

Wed, 06/15/2011 - 18:27 | 1372866 Cassandra Syndrome
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Good point. I was working on a combined value of €10 Trillion worth of Gold, Silver and liquid M0 cash assets as a tiny subset of €1 Quadrillon worth of Derivatives, Property and real estate, equities, bonds and other capital and short term money market instruments.

A lot of the derivatives cancel each other out, so the 3% may be more accurate, in a fire sale event.

Wed, 06/15/2011 - 14:45 | 1372081 Eyes on the World
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Posted the play-by-play to my blog in hopes my regular folks reader will catch the drift - WE WON'T GET FOOLED AGAIN!

So, if a similar event occurred today where do we stand?  From the exchange above we gain some perspective:

  1. The "collateral" damage of a Greek collapse would be far-wider and more devastating than Lehman's collapse.  Check.
  2. The global financial system was much more prepared to absorb the collapse of Lehman in '08 than it is today if a similar event occurred.  Check.
  3. People who don't have resources don't make deals.  They sit on the sidelines.
  4. The populace is much more on edge and will panic financially sooner - i.e., runs on the bank.
  5. More people are educated today and watching the banks' every move, we won't get fooled again.
  6. Only a small percentage of total "money" is available in cash at any given time - maybe somewhere between 3 - 5% of total outstanding assets.  This means all it would take to shut down the financial system would be for somewhere around 5% of the people to demand all their money in cash.

Link: Here.

Wed, 06/15/2011 - 15:48 | 1372354 Bananamerican
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eotw ftw

Wed, 06/15/2011 - 16:07 | 1372432 Lord Koos
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I'm sooo glad I got most of mine out some time ago.

Wed, 06/15/2011 - 16:34 | 1372515 Takingbets
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Wed, 06/15/2011 - 18:28 | 1372873 Cassandra Syndrome
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Nice summary of this interesting thread EOTW. Even 5% is a dangerous low number in a day of unravelling credit events.

Thu, 06/16/2011 - 02:30 | 1373678 Jalaluddin
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Do you remember what happened after the assassination of Archduke Ferdinand?

Thu, 06/16/2011 - 02:33 | 1373680 Jalaluddin
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Do you remember what happened after the assassination of Archduke Ferdinand?

Wed, 06/15/2011 - 12:48 | 1371495 banksterhater
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Joe ASSHOLE LAFORNICIA on CNBS to the rescue!

Wed, 06/15/2011 - 12:48 | 1371499 Alea Iacta Est
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And 3...2...1...queue French Riot!

Wed, 06/15/2011 - 12:56 | 1371518 The Fonz
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At least the French remember how to properly riot.

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