From Merely Ridiculous To Outright Ludicrous - Greek Bond Curve Update

Tyler Durden's picture

Look up the word ludicrous in the dictionary and you may just get a picture of the Greek bond curve. The 2 Year spread has exploded by over 400 bps just today, and is now back to 14% - the market is now convinced that even with €110 of additional money the country is done for in just over one year. The problem, as we pointed out earlier, is that the IMF can not appeal for greater assistance without appearing totally clueless (which it is), while any additional funding requests will may finally provoke the US taxpayers into recognizing they are being fleeced to save a country 5 thousand miles away. As the attached curve indicates, the bond vigilantes still think that Greece could remain solvent for about 1 year, however with the rate of widening, we expect the 1 year point on the curve to defy gravity quite shortly.

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Cursive's picture

Would love to see the e-mails and phone logs for the Treserve and GS today.  The rational mind wonders what changed from today as compared to 3 or 6 months ago?

monmick's picture

I think the market is convinced that the €110 of additional money will not be forthcoming...

4shzl's picture

Great title for the chart -- "Intraday changes for Greek govt."  Soon to be followed by "Intraday changes of Greek govt." headlines.

sheeple's picture

clearly principal component ain't working here for yield shift analysis

jm's picture

You tracking DGX?

Mr Lennon Hendrix's picture

So I see they are going with two years!  That is my timeline for when this is all over too.  Good call!

asteroids's picture

OPA! The party will go straight to dawn. Greece takes the money now and defaults in a year or defaults in a few weeks. If I was Mr. Greece I know what I would do.

Sudden Debt's picture

Take the 110 billion, buy some gold from the IMF for the whole amount and send out a press release you need AT LEAST 10X more :)

Euro crashes, gold explodes and they pay down their debt with the profits and buy Turkey as a early newyearsgift!

Truth's picture

LMAO!  Great call. Speaking of calls... let's add some June GLD calls  (not much further out on the time horizon since the Comex is about to get busted!). 

AnAnonymous's picture

Has the IMF  enough gold for $110 bn?

Leo Kolivakis's picture

Forget the US, the ECB is finally waking up, breaking rules, and buying Greek bonds. It's warfare out there, and a lot is riding on Greece right now. If they don't contain this situation, the EU is doomed and they know it.

Mr Lennon Hendrix's picture

Leo, I mean this sincerely; we are all doomed.

Sudden Debt's picture

You're right... do you know any good slogans that rime with DOOOOooomed?

Carl Spackler's picture

No, but if you should want to conceive one, you might try to incorporate the word "kaboom" along with the "doom" word.  Might make your slogan snappier.

Leo Kolivakis's picture

Lennon, that is my fear too, ultimately we are all doomed as the debt supercycle implodes. Where is Bubble Ben today? PPT to the rescue this afternoon?

Mr Lennon Hendrix's picture

BS stepped out, jetset, stood and took in a breathe of the island breeze.  He was wearing stunner shades, flip flops, and a Hawaiian shirt.  "Where the bitches at!?"  He said down the flight of stairs to a waiting Billy C.  "Waiting for you, buddy.  How we doing today?"  Clinton had a glass of Champagne in one hand, and a floozy on the other.  "Better once I get on the course."  Hillary was also at the foot of the steps, Lady MaGaga was her escort.  "Benny so good to see you!"  She was the only one he allowed to call him that.  "Hill!!  Kiss Kiss!"  Barney Frank was also there, Bernanke gave him a hug...a rather long one that made everyone else rather uncomfortable.  BS had whispered something in his ear.  Barney responded emotionally by uttering with a smile and a raised fist, "Scowll an Bownes, Scowll an Bownes!"  The group knew that now was not the time for business.  They would have to cater to BS to find out what they wanted to know.  "Shall we have a round of 18?"

Later, after golf, whores, and drinks, the group made their way to the Marriot for dinner.  After friendly conversations of murders and drug running by the Clintons, and wild endeavors by Frank, BS raised a glass to them.  "I know that you are wondering, and I will inform you, that we do have the cache.  It is here on Maui, and we will go to it after dinner."  Smiles, then erupting laughter ensued.  Hillary kissed MaGaga, Lady MaGaga kissed Bill, Bill kissed Barney; they were overjoyed. 

Rumors of gold has followed geo-politics with ever presence since the times of Egypt, even before, for who has the gold.  Now these "politicians" were being led to a cove on the Western side of the island.  BS in the lead car pulled over and motioned for the others to park.  They followed him down to the shore where there was a bonfire and tiki torches.  "You have all done thy bidding, and we welcome you to the cache."  Out of the shadows a man emerged.  "BS, I just love yer beard.  Tickles me pink."  It was W.  He gave BS two quick slaps on the check, cocked his head to the side and smiled right into BS' eyes.  "Ladies and Gentlemen, you have done everything we have asked of you.  I also mean yer families.  There are others who will be joining us shortly, others whose families have been as instrumental as the Rodhams," he pointed at Hill, "What is she doing here?"  He was referring to MaGaga.  "This is my new plaything."  Hill grabbed MaGaga by the ass.  "Hmmm, lovely.  Anywho, Poppy is very pleased and wer gonna reward yous with whatcha came for."  At that moment Timmah Geithner jumped out of the bushes with an AK-47.  "Nobody move!"  "Calm down Timmah."  Said W.  "We don't want anyone gettin' hurt."  "Whats this?"  Asked Bill.  "I thought you said no guns?"  "Well, there is something I have to inform you all of.  You see, the rule is that we do not share the gold.  My Poppy and his before him worked very hard to get what is theirs, WWII was a bitch and you do not even know what we went through to get the gold under the Towers, and there isn't enough to go around."  Lady MaGaga took off running but was met with gunfire. Timmah ran over and scalped her while Bush kept talking.  "You see, we never share.  We only take.  You should have known this."  Then Timmah lead McCain, Gore, and Kerry onto the beach and shot them down.  "Sorry folks.  You had it coming."  Timmah, wearing cammo and an American flag bandanna, let fire.  "GET SOME!!!!"

After all the "politicians" were executed, W. thanked Timmah and BS.  "Good job boys.  Now go start up the car."  Timmah ran up the hill, followed by BS as he hit his peyote pipe, and got into the vehicle.  As Timmah turned the ignition, KABOOM!

"They all thought I was stupid.  Guess they didn't read the autobiography.  Dyslexics can't talk, but we do have a photographic memory.  Jokes on them.  Heh heh...."

A helicopter flown by Jeb came overhead.  W. starting singing an old rap song.

2pac-Tupac Can't C Me:

Canucklehead's picture

ECB breaking rules is end of story... EU is doomed.  Humpty Dumpty has taken a great fall.  All the dollar horses and all the dollar's men cannot put the EU together again.


ZackAttack's picture

Good! Next, they can get started on Portugal's bonds, then Spain's and Italy's.


These assclowns have built a world that self-destructs if long rates rise even a couple of percent. A wag named Murphy had some thoughts on scenarios like this.

Miramanee's picture

RE: "...The problem, as we pointed out earlier, is that the IMF can not appeal for greater assistance without appearing totally clueless (which it is), while any additional funding requests will may finally provoke the US taxpayers into recognizing they are being fleeced to save a country 5 thousand miles away..."

Tyler, I LOVE ZH. Hand down, the best blog on the planet for all things fiscal, financial, fiduciary, or otherwise phuqued up.

HOWEVER, your prediction that, at some point the U.S. taxpayer is going to balk at servicing his tax bill because he (she) is being asked to finance the malfeasances of the world is far too simplistic.

As you and I know, FED and Treasury's operational ability to add trillions of dollars to the reserve accounts of the IMF and ECB has nothing (NOTHING!) to do with the ability or willingness of the American citizen to pay her taxes. The FED adds those trillions by computerized debits and credits BECAUSE THE POWER SWITCH IS ON AND THE COMPUTERS ARE WORKING, not because the American taxpayer has provided sufficient revenue to the government to make such infusions of liquidity.

The American taxpayer is frankly unaware that his standard of living---not the rich ones, just the entire middle class---is going to suffer because of these (and other) operational actions at the FED. He understands it in the abstract, but it is a slow burn, and slow burns tend to mollify true revolutionary anger.

I have said it a thousand times before...the ONLY thing that would end up, in the near term (the next 10-20 years) literally and volcanically destroying the global economy, would be a choice, en masse, by the American electorate to stop believing that they NEED for dollars in order to pay their taxes. Until that moment occurs, the dollar---all of the hudreds of trillions of them---will not crash, and the world economy will not collapse.

JimboJammer's picture

The  Euro  will  go  down  more ,  then  pull  down  the  US  Dollar.

China  will  dump  the  US  Gov  Bonds  to  raise  cash..

BlackBeard's picture

That's one of the most interesting yield curves I've ever seen in real life.

Leo Kolivakis's picture

Really? Get used to it, it's coming to America in the near future.

Bruce Krasting's picture

Really? I thought you were a bull, buying those dips etc.?

Change your view?


Truth's picture

There is almost no doubt that our (U.S.) yields will be going up soon.  As early as this fall.  Got gold?

Leo Kolivakis's picture


I am not a raging bull and I do believe this dip will be bought too. But there will come a time when you want to get out of the stock market altogether, perhaps after two or three rate hikes. Of course, if the EMU implodes, this is a mute point. Deleveraging will rattle global stock markets once again.

Truth's picture

i'm sure there's some leveraging out there but no-where near as much as 2007.  upcoming stock market deflation will be some deleveraging but more sub par growth, high inflation (with probably multiple waves of sovereign debt troubles includes here at good ole USA).


Bruce Krasting's picture

I think the G bonds are telling us that there is no way that the bailout as currently configured will go through.The bond market is telling us Greece will default and restructure, rather than be bailed out.

The bailout is dumb. It does not help Greece at all. Adding to their total debt is just idiotic. I doubt that even the IMF wants to do this. It is a slippery slope to hell.

Sovereign defaults will be the new reality, not sovereign bailouts. The bond market has that figured out. The EU leaders will conclude the same in the next few weeks.




Al Huxley's picture

There is no way to help Greece, short of letting them move into Germany's basement suite, rent-free so they can continue to live the party life off Mom and Dad's tab. 

They won't accept austerity measures, and the austerity measures wouldn't help balance their budget at this point anyway, so short of outright agreeing to support them forever, there's no possible resolution except default.

Pedro's picture

What macro events will unfold if Greece defaults?  What happens to the Euro and will our markets be disrupted to a significant degree similar to '08-09'?  I don't have the background to understand the full consequences because some say Greece is too small, but then again, I don't know.

ZackAttack's picture

50,000' view, it would be a massively deflationary event.  


Miramanee's picture

@ Bruce...

RE: "...Sovereign defaults will be the new reality, not sovereign bailouts..."

ONLY IF the U.S. deems it in its best---or not 'LEAST'---interest. The FED can, with a mere flick of the wrist and several hundred keystrokes, add trillions in liquidity to the reserve accounts of the ECB. The FED---and the Treasury, and the White House etc etc etc--- is only concerned with the issue of INFLATION as it might impact private sector growth. The FED has no qualms, as we know, about monetary inflation per se.

Oh...and yes, we are doomed...but it's going to be a very long, slow, sustained burn into the global financial abyss.

ElvisDog's picture

The hyperinflation, "add trillions with a keystroke" argument is silly. Question 1: What power do central banks have? Answer: They control the supply of money. Question 2: How would the central banks lose their power? Answer: by destroying the value of their money. If you assume that central banks want to hold onto and increase their power, then they will never voluntarily allow hyperinflation to occur.

AnAnonymous's picture

Mass production is kicking the bucket. (Hyper)Inflation, not the one touted through the money chasing too few goods or stuff like that, appears very hard to avoid.

The question is therefore not about striving to avoid an event that is very hard to avoid but how to make the best of the time left before the event happens.


With the USD, a central bank controls much more than the supply of money. It controls the access to the commodities world market.

Miramanee's picture

@ Elvis

IMO, you miss the point.

Hyperinflation is not a function of the money supply per is a function of the VALUE given to fiat currency by the tax-paying citizenry. If dollars remain in demand, hyperinflation does not occur. At this point the U.S. central bank---the FED---believes that it can create trillions MORE and still retain aggregate demand for dollars.

AnAnonymous's picture

USD has de facto value. That is not a belief.

The story about tax payers is old.

Aggregated demand for dollars is not an option. People need dollars to buy certain resources required to live.

The peg between oil and dollar is vital. The USD will stand strong as most of the world requires oil to support itself.

If you do not have an aggregate demand here...

Manbarepig's picture

I could use some liquidity in my accounts...

Leo Kolivakis's picture


Wait till they go after public pensions all over the developed world. Sovereign defaults means workers and pensioners will experience severe haircuts.

JR's picture
Speaking of fleecing…

Rahm Working With Fed To Beat Back Audit

May 3, 2010 -- The White House, Federal Reserve and Wall Street lobbyists are kicking up their opposition to an amendment to audit the Fed as a Senate vote approaches, Sen. Bernie Sanders (I-Vt.), the lead sponsor of the measure, said on Monday.
Banking Committee Chairman Chris Dodd (D-Conn.), who is shepherding the bill through the Senate, told Sanders Monday afternoon that "there's a shot we'll be up tomorrow," Sanders told HuffPost.
In the spring of 2009, Sanders brought a similar amendment to the Senate floor and won 59 votes. Eight senators who voted against it then are now cosponsors of his current measure.
"I think momentum is with us. But I've gotta tell you, that on this amendment, you're taking on all of Wall Street, you're taking on the Fed, obviously, and unfortunately you seem to be taking on the White House, as well. And that's a tough group to beat," said Sanders.

velobabe's picture
by chindit13
on Mon, 05/03/2010 - 22:07


Another suggestion for Howard Beale.....

Incidentally, Rahm Emanuel is working with Wall Street to block the Audit the Fed Bill, thus the need for this shirt.

It's hardball time.


just noticed this, a couple of great minds thinking on the same page.

fxrxexexdxoxmx's picture

Rhanm working with Sanders while doing Barry is the only thing happening.

Sanders is a socialist. Barry is a socialist. Rham likes to chase down older men in gyms to get their vote or their seat.

This audit the fed by the all powerful Bernie Sanders, who is nothing more than Reids little bitch, when Reid runs out of 9 year old boys, is bullshit by bullshitters from Chicago.


lbrecken's picture

Harry where are you?

Al Huxley's picture

He's busy buying the dips.

Comrade de Chaos's picture

damn markets :) , must cancel those or ELSE. 

Steaming_Wookie_Doo's picture

OK, so we have Greek bonds heading north of 14%. What does that mean for other carry trade countries, and those longer term/larger scale impacts? I'm thinking specifically of Brazil, which used to have a high 8% rate. Will they be on the near term crash path as well?