Surging Libor-OIS And Cross Currency Basis Swaps Indicate Europe's Response Is Too Little Too Late

Tyler Durden's picture

Even as the immediate factor for the 1000 point drop in the Dow is investigated for the next several months by the SEC, a process which will likely not come to any reasonable market structure regulatory recommendation before the SEC is forced to analyze the next subsequent (and even greater) crash, the one primary fundamental cause for the sell off in stocks this week was the ever deteriorating situation in Europe. As the euro tumbled on Thursday afternoon, which we noted 20 minutes before the stock market crash began in earnest, as implied correlation algos went berserk, and as viewers were witnessing the near-warfare in Athens live, things just got too real for speculators (investors is so 20th century). Various computerized trading platforms merely kicked on (or rather, off) after the initial panic had already set in, and liquidity evaporated, leading to the implosion in the market. And the primary reason for the initial market pessimism early on Thursday was the fact that even as the whole world was listening to Jean-Claude Trichet to say soothing words after the ECB's rate decision, the central bank president once again did not realize the gravity of the situation. And to speculators, long habituated to Bernanke's endorsement of infinite moral hazard and speculative mania, the fact that someone refused to play "ball" and leave open the possibility that failure is still permitted in our day and age was the last straw. Now, 48 hours later, we learn that the rumors, which we reported about the ECB preparing a bailout fund, were indeed true. Our sense is that at this point the ECB's action is "too little, too late" as contagion fear has already crept deep within the fabric of various overt and shadow funding/liquidity mechanisms. Additionally, the world is now convinced that Europe can only deal with problems retroactively, and who knows how big and unfixable the next problem will be: the ECB, which has lost most of its credibility after "inviting" the IMF to do a heavy part of the bailout, is about to become the laughing stock of global central banks. Trichet is seen merely as a powerless bureaucrat, caught between Merkel's electoral struggles and Bernanke's demands for contagion interception and implicit Fed supremacy over Europe. The contagion from the "isolated" Greek fiasco is rapidly spreading. Here are some of the ways in which markets are about to be affected.

First, we present Evidence A of how the market reacted on Thursday to the critical (lack of) announcement by Jean-Claude Trichet. The chronological sequence of events culminates with Accenture trading at $0.01 and begins with rolling disappointment that Trichet had not received the "Global Moral Hazard" memo:

To be sure, those conspiratorially minded could say that a primary reason for the Thursday sell-off was to prove to Europe, whose various parliaments were voting on Friday on the Greek bail out package, that the end of the world would surely come if they did not do as the French and German banks demanded... Because as we have repeatedly demonstrated those standing to lose the most from a Greek collapse are merely Europe's incarnation of Wall Street. And as the ECB and the IMF had wasted all of their credibility and "doomsday talk" ammo, a practical demonstration would have served the best purpose.

The biggest worry that the ECB has let matters go too far, is that what was considered purely an exercise in sovereign risk, has now spread to financials as well. And will likely not stop there. This makes sense, as the banks are at the nexus between the public (bail out) vertical and the private (shareholder) space. As an aside, if Obama continues on his warpath with Wall Street, banks will very soon become regulated utilities: equity upside will be capped based on what side of the bed the president wakes up on. Until then, increased risk within the financial space will merely bring up PTSD flashbacks to the last quarter of 2008. As BofA shows in the chart below, sovereign risk has become a proxy for financial risk (and vice versa). In this sense what is happening with Greece (and the next much bigger country to be bailed out), is identical to the Bear-> Lehman catastrophic progression, as Zero Hedge has indicated repeatedly.

So now that financials (away from America) and European sovereign risk are congruent, this brings up the question of who is supposed to resolve the escalating crisis in Europe. And unfortunately, the two parties in control are the ECB and the IMF, the two most bureaucratic and ineffectual organizations in our day. It is no surprise that pundits hope that the Fed steps in and takes charge of the European bail out. Yet even the Fed's arms may be tied - unlike in the US, debt monetization will be difficult to pass in a traditionally hawkish ECB, not to mention the political complexity of dealing with one currency union but 20 different bond markets. Whose debt will the ECB monetize? Who will benefit the most? These are all questions that the Fed did not have to worry about. Which means that the Fed could be limited to providing merely FX swap bailout lines (more on this in a second).

And that Europe will need vast amount of liquidity imminently is beyond a shadow of a doubt. With Spain forced to pay a recent record 3.5%+ on its auction Thursday, a surge of almost 100 bps in a little over a month, it is only a matter of time before Spain follows Greece and Portugal into the penalty box of public capital markets exclusion. To demonstrate just how massive the check will be if the Greek contagion remains solely within the PIIGS, below we once again present the redemption calendar for 2010 and 2011 in Bills and Bonds for the peripheral countries. In a nutshell, there is over E700 billion in contractual bond redemptions in just the next two years. And this excludes any short-term funding needs by the banks of the PIIGS.

The critical observation here is that merely meeting Europe's funding needs, now that the ECB is increasingly relegated to second-tier status, the IMF's recently expanded to $500 billion New Arrangements to Borrow facility will be insufficient by nearly half to meet liquidity demands for the next 18 months. Let alone any discussion that by the time it becomes clear how unsalvageable the euro and Europe are, the US will be underrated by $100 billion as the one single biggest contributor to the NAB.

Yet all this would be irrelevant if, as some permabulls claim, America could simply decouple itself out of the Europe-shaken world and continue pretending that a +34k clear NFP print is really +290k, thus claiming all is well. However, as the very much globalized credit markets have demonstrated over the past week, decoupling is and has always remained a myth. And for those keeping a close finger on the pulse of the credit markets, one needs look no further than Libor, as well as the slightly more arcane cross-currency basis swap.

As can be seen below, the TED spread (spread between LIBOR and the 3 month UST), has been aggressively moving wider as LIBOR surges.

If you notice a similarity between the last week's LIBOR widening and the panicked blow up in the interbank lending rate in August 2007, September 2008 and March 2009, you are not alone. As Bank of America points out:

Libor [has begun] to set higher, widening out the spread between Libor and the central bank rate policy (OIS). This has a similar feel to August 2007 when the first signs of banking credit risk surfaced due to underperformance in subprime. The issue this time is not necessarily about the quality of the underlying assets, but rather the counterparty – a European peripheral country. The concerns are ultimately due to European banks holding the largest amount of peripheral sovereign debt. The effect on Libor and other metrics has therefore been a function of the exposure of different country banks to the debt of the peripherals. In contrast, Japan, Australia and Canada have very little exposure to this sovereign debt, and thus have had the lowest movement in Libor-OIS.

Yet the biggest concern aside from the actual asset value of underlying sovereigns, is the amount of dollar-notional held by European banks, and the currency funding mismatch, manifesting itself in an even more aggressive move in the EURUSD cross currency basis than in LIBOR (for now at least).

What this means in plain English is as follows, again from BofA:

One might be tempted to conclude that the situation in Europe should not matter much for the US. We do not believe this is the case since the financial markets would create the “contagion”, and Libor can be the conduit. USD Libor spiked over the past few weeks due to higher Libor submissions by non-US banks in the USD Libor setting panel. The higher USD Libor submission is ultimately a function of demand for dollars in Europe, which arises from large holdings of dollar assets by European banks. According to the BIS, as of December 2009, European banks held $3.59 7tn of US debt (this US debt is both private and public dollar-denominated debt). Note that total dollar-denominated debt held by foreign banks is $5.393tn, implying that European banks hold two-thirds of the US debt held by banks worldwide. This demand for USD financing overseas is also reflected in the significantly negative cross currency basis swap (see above), with the one-year EUR/USD swap at -50bp (versus -37bp at the end of March).

Further, the forward Libor-OIS have widened more than spot. We believe the market is essentially pricing in that the sovereign credit risk is not going away soon. This is also consistent with other measures such as the Libor 3s-1s basis, which also prices in continued stress. Until there is some significant plan put in place that can be scaled up to support any country, contagion risk should put upward pressure on Libor. As Chart 10 shows, even though longer maturity Libor-FF have increased, it is still moderate compared with 2007-08. Thus, we believe there is more room to go in the Libor-FF widening.

And herein lies the rub: it is always these excessive dollar asset holdings by European banks that force the Fed to come out and bail European institutions which get clobbered with margin calls once the euro plummets. Recall that at the peak of the post-Lehman crisis, in December 2008, the Fed disbursed over $580 billion in liquidity swaps to prevent just the kind of liquidity crunch that LIBOR is indicating could be in store for Europe all over again. And rumors are rife that the Fed is about to launch just these swaps again, if it hasn't already. Surely, Bernanke can not take the risk that left to its own devices, Trichet will only make an even bigger mess out of things. And due to the interconnectedness of credit markets, a liquidity crisis in Europe would promptly take the S&P back to 666, killing the Chairman's incipient debt inflation experiment in its tracks. Which is why we expect that the Fed will likely announce the reintroduction of currency swaps imminently, as the Fed is all too aware of how critical it is to be prepared in advance for another liquidity "risk flaring" episode.

Curiously, Bank Of America disagrees that the Fed will go ahead with currency swaps for the following very valid reasons:

  • Even though Libor-OIS has widened out significantly recently, current levels are still fairly moderate compared with 2007.
  • The Fed has been discussing ways to drain excess reserves from the banking system via term reverses/deposits etc. Currency swaps would increase the size of the reserves. Note that the Fed can drain reserves via increasing the SFP program, increasing the scale of reverse repos  and term deposits. But the Fed will need to be very careful about communication to prevent being viewed as a precursor to tightening.
  • A political issue is around the “exigent circumstances” clause in the Fed’s charter that has to be invoked in order to allow currency swaps with nonbanks. In the Finance Reform Bill currently being debated in Congress, there is some discussion about removing the exigent language from the Fed’s charter. We imagine the Fed would not want to bring unnecessary attention to the exigent clause just yet.

Good points, although we have no problem seeing Bernanke override the market any time on threats of Mutual Assured Destruction for bullets 1 and 2, and seeing the facility with which he has invoked 3 in the past it probably would not be an issue either, although we would love to see Alan Grayson's response, who will likely crucify the Chairman if that is the pretext used to bail out Europe... again.

The bottom line is that Europe is caught in a corner, in which every subsequent action is now seen as a reactive response to the most recent calamitous incident, and thus not even last night's announcement of a bail out facility will do much for the EURUSD rate. And should the EUR crash to the 1.20 support level, then the Fed will have no option but to institute currency swap lines, which in turn will activate a whole new set of liquidity parameters. Not the least of which will be that the realization that the recovery leg of the fabled V-shaped economic expansion has been a mirage. The only other option for Europe, is outright monetization. We think this will not happen, as that action would be the death knell of the Euro, which would then tumble close to parity, once again forcing the Fed to get involved. If anyone will monetize anything, it will be the Fed, which is so far saving the worst for last. It is likely that the mid-term elections are seen by Bernanke as the Maginot line past which it will still have sufficient time to deflate enough of the dollar to catch the massive CRE refi wave in advance of the 2012 cliff. Yet the clock is ticking - each day that the DXY rises, is another day that makes the trillions in worthless maturities increasingly more difficult to roll, and thus will force all the mark to myth on bank balance sheets to come out in the open on the maturity date. While the clock has now run out for Greece, and most of the euro periphery, its ticking has just gotten that much louder for the United States itself. But not before Europe is forced to make the difficult choice of submitting to Fed authority or face the future on its own, and without its own consolidated currency.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sqworl's picture

He who hesitates is Slovaki lunch...

Tyler: Thank you for keeping it real...:-)

tj3's picture

The clock is ticking on the FED too. No matter how worthless the thought of the one time audit is...people in the money are starting to shat the pants.

and also

pants

+1 Tyler

Inspector Asset's picture

Ah yes, like a line of dominos they will fall. 

And I thought it was just sub prime, 

 

Blue print for the new world currency.  Maybe a fast track to the chip.

 

T.D. thanks for bringing up the notion "why are you still trading?"

Forget the idea you will always get burned. 

Why contribute to the problem and the illusion.

 

 

hedgeless_horseman's picture

***********************************************

"Prevent a sovereign debt crisis...[with]...money borrowed by the European Union’s central authorities with guarantees by national governments."

These guys are brilliant!  Prevent a sovereign debt crisis by the sovereigns borrowing more money.  Makes perfect sense to me. 

***********************************************

Bloomberg.com

By James G. Neuger and Gregory Viscusi

Germany, the biggest contributor with as much as 22.4 billion euros over three years, fell in line yesterday with endorsements in the lower and upper houses of parliament. A group of German academics filed a lawsuit to try to halt the payout. A court today rejected the challenge.

The political leadership of the $12 trillion economy also signed off on a 110 billion-euro ($140 billion) aid package for Greece negotiated by finance ministers last week. So far nine governments have cleared the way for funds to be sent to Athens.

May 8 (Bloomberg) -- European leaders agreed to set up an emergency fund to halt the spread of Greece’s fiscal woes, seeking to prevent a sovereign debt crisis from shattering confidence in the 11-year-old euro.

Jolted into action by the sliding currency and soaring bond yields in Portugal and Spain, leaders of the 16 euro countries said the workings of the financial backstop will be hammered out before Asian markets open late tomorrow European time.

“We will defend the euro, whatever it takes,” European Commission President Jose Barroso told reporters early today after the leaders met in Brussels.

Europe’s failure to contain Greece’s fiscal crisis triggered a 4.3 percent drop in the euro this week, the biggest weekly decline since October 2008. And it prompted the U.S. and Asia to rally around in a bid to prevent a global sovereign-debt crisis from pitching the world back into a recession.

“Europe is getting its act together,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Time will tell if this statement is enough to satisfy the European bond market vigilantes.”

European officials declined to disclose the size of the stabilization fund, to be made up of money borrowed by the European Union’s central authorities with guarantees by national governments. Finance ministers will meet at 3 p.m. tomorrow in Brussels to flesh out the details. A press briefing is scheduled for 6 p.m.

‘That’s Significant’

“When the markets re-open Monday, we will have in place a mechanism to defend the euro,” French President Nicolas Sarkozy said. “If you don’t think that’s significant, you haven’t been to many EU summits.”

Barroso said he wouldn’t push the independent European Central Bank to, for example, buy government bonds. ECB President Jean-Claude Trichetaccelerated the market selloff on May 6 by rejecting that measure.

With the euro facing its stiffest test since its debut in 1999, the summit -- called to discuss efforts to coordinate economic policies -- turned into a crisis-management session that dragged past midnight.

The euro slid to $1.2715 from $1.3293 during the week, and is down 15 percent since late November. European stockssank the most in 18 months, with the Stoxx Europe 600 Index tumbling 8.8 percent to 237.18.

Surging Spreads

The extra yield that investors demand to hold Greek, Portuguese and Spanish debt instead of benchmark German bonds rose to euro-era highs yesterday. The premium on 10-year government bonds jumped as high as 973 basis points for Greece, 354 basis points for Portugal and 173 basis points for Spain.

Europe came under pressure on a hastily arranged conference call of Group of Seven finance chiefs yesterday. All agreed on “the need for a clear, timely and strong response,” Canadian Finance Minister Jim Flaherty, who chaired the call, told reporters in Ottawa. “We hope to see a strong, early policy response in Europe.”

The spreading contagion also drew the attention of President Barack Obama, who said in Washington that U.S. regulators will examine the “unusual market activity” that on May 6 briefly drove the Dow Jones Industrial Average down by almost 1,000 points, erasing more than $1 trillion in wealth before the market bounced back.

“There are impacts on financial markets, including share markets, from the events in Europe and in Greece more specifically,” said Australian Treasurer Wayne Swan, speaking to reporters in Canberra today. “We are urging as speedy a resolution as is possible in the circumstances.”

Merkel’s Call

In Brussels, German Chancellor Angela Merkel stepped up German calls for a closer monitoring of government finances and more rigorous enforcement of the deficit-limitation rules, originally drafted by Germany in the 1990s.

Europe will send “a very clear signal against those who want to speculate against the euro,” Merkel said.

With the euro region’s overall deficit forecast at 6.6 percent of gross domestic product in 2010 and 6.1 percent in 2011, the vow to bring budget shortfalls back below the euro’s 3 percent limit echoes promises that have been regularly broken ever since governments in 1999 set a three-year deadline for achieving balanced budgets.

Plans for a European credit-rating authority are already under consideration at the EU Commission, the bloc’s Brussels- based executive agency. It also is investigating whether ratings companies such as Standard & Poor’s wield too much power over investors’ perceptions of governments.

Restrictions Considered

Asked whether steps to stem speculation against government bonds would include restrictions on short sales or credit default swaps, Barroso said “some of the points you have mentioned will be contemplated.”

hedgeless_horseman's picture

“If you don’t think that’s significant, you haven’t been to many EU summits,” said French President Nicolas Sarkozy.

True.  I don't, and I have not.

If France is going to see, "surging spreads," I wish Ségolène Royal would have been elected, versus Sarkozy, if you know what I mean.

http://therichlife.files.wordpress.com/2009/01/segolene_royal.jpg

ambrosiac's picture

 

...seeing that Greece did elect a socialist, and has been doing SOOO well?!...

Inspector Asset's picture

Gee, I wonder of Goldman did a bulk of their business in Greece?  Maybe with a guy named John Paulson? Na, must be another Paulson.

 

 

M.B. Drapier's picture

Barroso said he wouldn’t push the independent European Central Bank to, for example, buy government bonds. ECB President Jean-Claude Trichet accelerated the market selloff on May 6 by rejecting that measure.

Would it really hurt for some financial journalist somewhere ever to mention in passing to his readers that, oh, by the way, for the ECB to directly buy government bonds is completely bloody illegal?

With emphasis on 'directly', of course. So the "overblown pawnshop" will soon slosh cheap money on the commercial banks at the same time as it pledges to take all Greek sovereign debt forever at shallow, shallow haircuts: nudge, nudge, wink, wink.

Amsterdammer's picture

The ECB has already 'broken' its book

by accepting the 'near-to-junk' or 'junk'-rated

Greek bonds. As the spanish El Pais reports

(and they've been having pretty good information

of late, 600 billion euros are in discusssion

right, either through a stabilization fund or

the E.C.B buying soverreign bonds, and possibly

helping the banks. Imho, you are totally right, but

now that both treaties have been broken

de facto, maybe is it time to rewrite the book.

When you watch the speed at which the Greek

bail-out was voted, you can expect a few

amendments to see the light of the  day by tomorrow

afternoon

 

cossack55's picture

Is the ticking clock Big Ben or Big Ben B.?

plocequ1's picture

Come on Tyler, Lets be fair now. You gotta like the way it sounds.. " IMF bails out Greece" Thats good for a 50 point gain on the Dow. Who gives a fuck if its too late. We must protect the all sacred, Untouchable, Godly, Higher than thou , My shit dont stink Wall street and the Stock market. Of course im being ultra sarcastic. I cant wait for this bubble to pop and watch all the filth, corruption, Dirt and Feces to come spewing out. I sure hope your charts and theories are correct.

Al Huxley's picture

The magic bull spell that resulted in a 50 point rally every time any piece of ridiculous propaganda was spouted by the MSM is now broken.  It truly is too late.  If TPTB truly manage the market, they should have allowed a decent correction in March or early April to maintain some stability and support points in the market.  Now its completely screwed.

And while I share your opinions about the corruption, when things really go down I expect it will cause so much suffering and misery that it will be way too nasty to enjoy.

geminiRX's picture

Reminds me of the movie "The Matrix".  Unplugging the masses from their manufactured reality will indeed be a spectacle. I look forward to the day. I can't stand the deception.

anonymike's picture

Also, check out Credit Derivatives Research Counterparty Risk Index which has turned north in recent days (Mar '09 peak was 305)

jal's picture

 

“Whose debt will the ECB monetize? Who will benefit the most?

 

... not even last night's announcement of a bail out facility will do much for the EURUSD rate. And should the EUR crash to the 1.20 support level, then the Fed will have no option but to institute currency swap lines, which in turn will activate a whole new set of liquidity parameters. Not the least of which will be that the realization that the recovery leg of the fabled V-shaped economic expansion has been a mirage. The only other option for Europe, is outright monetization. We think this will not happen, as that action would be the death knell of the Euro, which would then tumble close to parity, once again forcing the Fed to get involved. If anyone will monetize anything, it will be the Fed, which is so far saving the worst for last.... “

 

I’ve read opinions that expressed that Germany wanted a lower EUR and that as a result Germany would be the beneficiary. 

jal

 

Mercury's picture

At least most of these countries don't have much of a military standing around. Plenty of major European wars have been triggered over smaller potatoes.

I'd still be nervous about Turkey if I lived in Greece.  There's some bad blood there and the Turks have the largest standing army in Europe by far.

cbaba's picture

Don't even think about it. Turks will never go into war with Greece or any other country. Its and old Greek myth for centuries. Its true that  Ottoman Turks invaded Greece and controlled the land few hundred years , but not only Greece, they controlled all middle east and north Africa too, but that was something in the past, in old times everybody invaded another country to get tax and money but in the 21st century those invasion times is over. There is a new Republic in Turkey which has a  motto " peace in the country, peace in the world" and nobody likes a war with any country unless there is a threat coming to defend the country.Besides Turks likes Greeks , they want to  have more close relations and forget the past.

Charlie J's picture

There is indeed bad blood between the Turks and the Greeks.  In the mid-60s I lived in Istanbul and my step-mom was Greek ethnic.  When I went to Athens and said (in Greek) that I lived in "Istanbul", the folks bristled and pointedly told me it was "Constantinopolis".  I was absolutely amazed that they still called it that. 

I could tell many more stories, but, my real comment is that Turkey is not going to invade Greece and try to take it over.  They might still fight over Cypress, but Turkey is not going to try and annex Greece.  Sheesh.

youngandhealthy's picture

I am puzzled over ZH. For almost 2 years ZH has been hammering Ben B, Geithner, Paulson for their bail-out of US investment Banks and rightfully so. Now when ECB keeps to it rules and act as being independent from politicians, the Euro Parlament, and the EC and "refuse" to bail-out banks by buying their sovereign bonds (from Greece) then ZH "turn" against ECB and JCT? I don't get it.

Cheeky Bastard's picture

Its hard to admit that the USA has become more socialist, fascist, whatever-ist than Europe. Its like a giant kick in the balls to America. Also, Tyler seems to suffer from multiple personality disorder *tsk tsk*

Prof Gulliver's picture

It's true. Tyler has been predicting a market pullback for a long time based on the lies and manipulation that floated the indexes to unwarranted highs. Then when we get a crashlet, he says that was manipulated by Bennie Mae so he could sell his bonds. I think Tyler is just a cranky contrarian, even if it means he has to contradict himself.

Cheeky Bastard's picture

No, Tyler is cool man, but he needs to coordinate sentiments between his various selfs

Psquared's picture

Wait a minute. He has been talking about a crash based on the lack of fundamentals not a manipulated one caused by computers - although he has been warning about that too. We don't know if this was a crash or just a temporary setback. Personally, I think we have an attempt at a rally next week based on 1) an SEC coverup; 2) ECB bailout; and 3) pump monkeys on CNBC telling everyone to buy, buy, buy.

If a rally does not happen next week we drop further, and if the news gets worse out of Europe this "could" be the beginning of the end.

I also think there is some chance that Thursday was an orchestrated warning to the EU/ECB to bailout Greece and not leave banks holding the bag, and to the Senate not to fuck with Mother Market/Wall Street. It was the equivalent of, "there will be riots and "Marshal Law" only they have hollered for that wolf a little too often. This was a different kind of threat and it may have worked.

Tyler Durden's picture

When the ECB formally announces it will be doing no monetization, covered bond buying, etc. and is actually tested to that statement (which should happen in the next 168 hours) we will applaud them. In the meantime, Trichet's discourse has been meandering from one hypocritical end to another. At least Bernanke is steadfast in his slash and burn tactics.

M.B. Drapier's picture

At least Bernanke is steadfast in his slash and burn tactics.

Careful what you wish for. I wouldn't interpret JCT's Mr. Probity act, or his lack of silky Maestro skills at timing and theatre, as a lack of fundamental will to do Whatever It Takes to postpone the evil day. My best guess is that - excuse my business French - when cornered Trichet will print like a motherfucker. (He'll have to do it to save his own bank, never mind anyone else's.) And that the German politicians won't stop him, not this side of something snapping.

Biff Malibu's picture

I have a friend with >20 years as an officer in the military.  We had a few beers and began to talk.  He told me some interesting things I thought I would share with all of you, as the ZH community is THE ONLY place to find interesting information...

1) there is talk that a North Korean submarine torpedoed the oil well in the Gulf.  Maybe the same one that sunk the South Korean ship.  A huge environmental disaster would show Barrack that they can F- with us at will.

2) the 9/11 airliner that crashed in Pennsylvania that was "overtaken" by the passengers was actually shot down by an F-16.  Probably the one that Cheney ordered shot down.  He said most national guard pilots are airline pilots for their regular jobs and that he had heard talk.

3) also there is confirmation that there is a woman out there that had breast implants with explosives.  they know it happened, they know she exists, but they don't know who she is or where she is.

Anyway, obviously this is second-hand and third-hand info, but to me it makes sense, especially the torpedoed oil rig.

Have a good weekend everybody.  Tyler, thank you for once I'm on the right side of the market.  It's fun watching the R-TARDS on CNBC try to spin something as fact, now that we ZH'ers are armed with the truth.

Biff

 

MaxPower's picture

As a long-time military officer, I'm sad to report that you're not passing along second and third-hand info; you're passing along second and third-hand rumors.

It's important to highlight that everyone in the military, officer or enlisted, is a puppet lynchpin in the flag-waving cornerstone of the propaganda machine that is the congressional-military-industrial complex. All of what you've mentioned are broad strokes of the "paint an enemy" brush, resulting from too many bored pilots sitting around a briefing room, collecting what's known as "welfare with dignity."

In 2002, during a deployment, I personally (just for fun) started a rumor that our unit would be trading one aircraft type for another just to see what would happen. That rumor met me at a base ten hours away in another country by the time I landed there on the same day that I started the rumor.

Also important to remember that National Guard units tend to draw local recruits. Where I served, many members still flew Confederate flags on their cars, which should indicate their willingness to create an alternate reality through the rumor mill.

Could all of what you've listed be true? Possibly, but you've provided nothing to indicate that. We have too many factual, important issues to deal with right frickin' now to be distracted by this.

Simon Jester's picture

Completely off the general topic, but, as far as flight 93 is concerned, I KNOW what I saw with my own 20/15 vision while looking through my Swarovski 7x42's on that clear eastern Ohio morning. The "official" story is bunk.

Day_Of_The_Tentacle's picture

Please see my comment to Biff below, and share your story.

Bringin It's picture

Agreed - official flight 93 story is pure bunk/junk.

There was lot's of debris miles away.  Impossible if the plane did not break up in the air.

I watched local news coverage, live on 9/11 morning from PA. showing locals at a boat dock on a lake holding airline seat cushions and similar debris.

I pray for the sheeples to overcome their ignorance.

Pure Evil's picture

Not to shoot down your NK theory, but even the military has its own rumor mill, called scuttlebut.

And, who's to say some other person in the military didn't read the same story and start passing it around as a joke only to end up being taken seriously by others.

The official propaganda from the MSM is that the drilling rig hit a Methane Hydrate pocket that travelled up the drill pipe blowing out the seals. This is coming straight from the rescued platform workers.

http://apnews.myway.com/article/20100508/D9FIH0G00.html

I always thought that NK story was a disinformation campaign put out to titillate the masses.

But, who's to say it ain't a little coincidental that a SK naval ship was torpedoed a few weeks before the drilling plateform could have been torpedoed. The torpedoing of the SK naval ship was just NK's way of showing the US what it could accomplish.

But, the GOM is full of Methane Hydrate pockets as well as the Caribbean so I suspect the accident was caused by Methane Hydrate.

Although, if they wanted to they could send down submersibles to view the drilling platform and attempt to find the cause of the explosion.

At the same time, who can believe anything put out by official sources now days.

Day_Of_The_Tentacle's picture

Blow-outs are caused by a gas bubble that rises up through the well. Because of the depth (in this case a 18000 feet well as far as I remember) a teeny weeny bubble will expand and excalate the blow-out rapidly on its way up through the well as pressure decreases. In a normal oil reservoir you also have gas. This is not unique to the GOM. Drilling is dangerous work.

Ned Zeppelin's picture

Sooo.....in essence you're telling me the Gulf oil rig blowout was caused by a giant Earth fart?

Day_Of_The_Tentacle's picture

HA HA...ahemn.....well... yes I would say that is just about accurate. As in all things concerning Mother Earth - she is truly great - also when it comes to matters of flatulence.

cougar_w's picture

Yes.

"Quick! Light me!"

Nature has a dorky sense of humor.

abc123's picture

Wow.  Scuttlebut really moves fast. 

 

Do a little research that involves non-blog material....

 

http://www.glossary.oilfield.slb.com/search.cfm

 

Check under BOP for blow out preventer.  Also read up on underbalanced drilling...

 

 

seventree's picture

Wouldn't an NK deisel sub have to make most of that trip at the surface? Possibly accompanied by a fuel tender? How closely does US surveillance monitor NK sea traffic? Just wondering.

Kayman's picture

Come, come now....

I heard that North Korea dis-assembled an entire sub, smuggled the pieces via suitcases to New Orleans, re-assembled the sub, and rammed it into the platform. 

Jeez, people, if China wanted its puppet to cause damage, it would not be an oil platform in the Gulf of Mexico.

When I want to understand what's going on with things like an oil platform igniting, creating a monstrous oil leak, I first think Keystone Cops...

Then, and only then, will you start finding the truth.

Psquared's picture

hehehe ... yep, that would be correct

It would have to slip through the shipping lanes all the way across the Pacific, then up from Cape Horn, make a stop at a friendly port or two along the way (say Venezuela/Cuba) and get into the Gulf without being spotted.

Ain't gonna happen.

THE DORK OF CORK's picture

You mean I cannot even fondle womens breasts anymore, this police state is becoming intolerable.

MaxFrost's picture

Nothing wrong with dying while doing something you love...

THE DORK OF CORK's picture

The ultimate sacrifice for your country.