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European Insurer Needs Insurance As $6B Of Its Bonds Are Instantly Subordinated Due To "Spain's Pain"
So, Spain finally gets a bailout, as I pretty much guaranteed in The Economic Bloodstain From Spain's Pain Will Cause European Tears To Rain and The Spain Pain Will Not Wane: Continuing the Contagion Saga. I'd like to draw attention to an excerpt from the aforelinked article:
Subscribers, be ready. When/if Spain cracks, these two short positions will explode:
On the banking perspective:
Bank Haircuts, Derivative Risks and Valuation10/20/2011Of course, in today's environ of mega banks, mega marketing, mega investment returns, white hot IPOs, it may be hard for many to appreciate the words of an entrepreneurial investor and blogger. Then again, just remember that this also coming from the same man that called Bear Stearns, Lehman, GGP, CRE, RIM, housing, the entire Pan-European Debt crisis, etc. See Who is Reggie Middleton for more.
So, I have set up the play, now let's take a look at how its rolling out, as excerpted from ZeroHedge's morning posts via Market News:
Any aid that might come from the European Stability Mechanism, which is expected to start work next month, would enjoy a preferred creditor status second-only to the IMF, the spokesman confirmed.
Whoa! Of course, we've broached this topic in the past, over two years ago actually- How the US Has Perfected the Use of Economic Imperialism Through the European Union! Long story, short - there is no free lunch. Bailout's of indebted nations using more debt is NOT a NET POSITIVE! Anyway, back to the bailout that subordinates existing senior bondholders, guess who some of those largest bondholders are? Here's a hint, F.I.R.E.!!!. As duly predicted in BoomBustBlog published research dated 12/11...
As you can see below, Spain and Greece have already taken big shots. Greece has already defaulted and is about to default again - exactly as we predicted...
- Beware The Overly Optimistic Greek Speculators As Icarus Comes Crashing Down To Earth!
- Greece Gets "Corzined" In Its Fruitless Pursuit of Euro Unity, Sans Its Own Sovereignty As Simple Arithmetic Sets In Again
- Greece Sneezes, The Euro Dies of Pneumonia! Yeah, Sounds Bombastic, Yet True
And not only has Spain performed as expected (The Spain Pain Will Not Wane: Continuing the Contagion Saga), the CDS market is pushing it along at breakneck speeds - reference Zerohedge's Spanish CDS Storms Above 600bps
Spanish 5Y CDS broke back above 600bps (just shy of their record 603bps level) and 35bps wider of their intrday low spread from 5 hours ago. Spanish 10Y yields are over 50bps wider/higher than their intraday lows just after the open in Europe. Italy also just broke 550bps. EURUSD is almost unch now.
Next up in the bond vigilanted shooting gallery is Italy - Italy Moves Into Debt-Crisis Crosshairs. I will dive into this in detail in my next post on this topic, but for now we should all see what this means for those insurers on F.I.R.E.?
Subscriber downloads:
Insurer Preliminary Observations (498.08 kB 2011-12-08 10:05:24)
Insurer Report_122511 - Professional/Institutional edition (975.49 kB 2011-12-27 11:05:59)
Insurer Report_122511 -Retail edition (876.11 kB 2011-12-27 11:04:09)
Insurance cos. EU exposure 11-2011 (10.72 kB 2011-11-28 16:20:21)
Insurance Cos. Operational Stress (11.92 kB 2011-11-29 10:11:51)
»
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be creative ....destroy yourself . firstly , answer erudition with drivel . done !
After reading the late Tanta's articles on MBS structure,this senior suborninated stuff in Europe is looking awfully familiar.The Posh top tier tranches get the cream and then the rest get theirs....
why is this shithead allowed to post this babble on here week-in-and-week-out?
Yep, miss her. She had the most amazing mind and wit.
Fuck you Reggie. You are no better then cunt Goldman. Fuck I'll never read any self promoting bull-fucking-shit you write any more. Wtf is writing something and blanking content. Douche, asshole.... mmmm what else? F U !
Whoa dude.
Do you feel entitled or what?
Reggie has a business to run. He is sharing more than enough for anyone to figure out the name of the target firm. His paying customers are saved the effort.
If the ZHPTB give him a forum through which to share some market insight and in the process generate feed stock for his operation, that is business.
Be nice.
[Thanks Reggie!. Great work as always.]
I agree, thank you reggie. He has done more to help us than alot of people and have been right everytime.
Regarding EU use of ceding of sovereignty over finances:
Note that it is Brussels, Washington,DC, London, etc, where One World Government psychopaths salivate and drool on the delicious dream of having a Special Few rule planet Earth.
How better to accomplish this than to have a small number of Control Points [e.g. Brussels, London, WashDC, et al], each with only a few humans in-charge, who in turn can easily be either corrupted or disappeared/replaced.
A work in progress.
A local exaample: The 5 members of Los Angeles County Board of Supervisors wield enormous authority over abt 10 Million people. How expensive might it be to sway a majority of 3 votes?
true..."but false as well" of course. And unfortunately "it doesn't take a genius to figure it out" as they say.
"It doesn't require genius to see something once someone else has pointed it out. Genius is seeing it first without help."
-Galileo
I hate shorts of any kind, and prefer to go long into physical.
The only "money" I have in Europe is in the form of heavy bricks of Silver in a real quiet basement room. I couldn't agree more with you. As the national and supra-national "leaders" get more backed into a corner a lot of peoples "money" is going to go "whoops".
You are talking to a guy that could be a top paid analyst on Wall Street (Reggie) if Wall Street had the ballz to hire someone this bearish (rigjt). He foregoes $10-$20mm a year and makes money off THOSE LETTERS. AND YOU WANT HIM TO GIVE IT AWAY? SIGNUP and pay him for his research. If you want free, can I sugfest Ghram Summers? His analysis is worth exactly what he charges.
I will probably subscribe to Reggie once this gets past the point where you have an easy way to bet on it. IE once people are afraid and assets reflect it. Then you need to pick specific stocks.
But with the market at 1,300 people are treating armageddon like a flee. Too easy to short EVERYTHING.
At 1,000 its a different question. Some stuff will be undervalued and some under.
When DAX is at 5,000 and EUR is at USD parity I will need Refgie to tell me what companies are safe.
Very nice support Reggie! The details like these are always helpful.
This just gets better and better. ... NOT!
Reggie,
Isn't there a "Bond Covenant" somewhere that states the priority of the existing bonds? Maybe governments don't have to spell out the terms?
If I have a Bridge & Turnpike Authority Bond for example, in a certain state in the US, all the revenue derived from that source is suppose to go to pay certain costs and interest to bond holders according to a specific order, as described in the "Bond Indenture"
I know it is apples vs flame-throwers but doesn't a similar indenture exist that prevents some other entity from stepping in front of you?
The whole purpose of buying a more "senior" safer bond, just gets thrown out the window? Don't the owners of these bonds have "legal Standing" ?
International government always has supremacy over domestic law. It is the natural heirarchy. of things. That is true in the USA as well, since Treaties supercede the US Constitution.
We now live in a world corruptacracy where law means nothing. In the US and Europe, governments routinely override legal contract rights without even a pretext of process. As an attorney, I have seen this trend explode over the last 25 years, since judges are completely spineless.
Thanks, that answers my questions on "senior" bond standings.
Well, they're still "senior." Thing is though, you're in line behind the "super-senior" holders.
Next, they'll be behind the "super-duper-senior" holders.
And so on.
I blame the fast food industry's destruction of meaningful labels.
As this trickles down to pensions and insurance coverage (or lack of it) there's gonna be a lot of pain Reggie. Good article.
My guess is AXA.
Indeed it looks like AXA to me:
http://www.axa.com/lib/axa/uploads/rs/2011/AXA_Half_Year_Results_2011_Ap...
Thanks for those links to the Subscriber Downloads. Very, Very, Very helpful. Most articles on ZH aren't as helpful as these.
goog was reggie's cnbc stock draft first round choice, followed a few days later with a 10 page bull scenario of how goog would basically rule the world
if someone used leverage to follow that recomendation they'd be broke now
Yeah, and if at the same time someone followed his recommendation to short euro trash banks, they'd be retired at the island of Capri sipping martinis with Berlusconi ex girlfriends right about now.
Grow up for fuck sakes.
Yawn.... missing some letters there Reg.
I bet your the kinda person who'd complain that the car picking you up, if you were stranded in the middle of a hot Death Valley desert, that the make and model were wrong and therefore refused the ride... Brilliant...
Reg, forget this genius and continue to inform us with your great insights because you've saved me a boatload of money in the past my friend.
Perfect analysis of a liberal socialist. Wants something for nothing. Brilliant post EO. I love when I post something that supports free markets and anti government commentary. I immediately get a few thumbs down. They never learn and they always finish last. LOL. They are nature's clowns so I love them.