Dominoes, Anyone?

Tyler Durden's picture


Submitted by Mark J. Grant, author of Out of the Box,

Before a midnight breaks in storm,
Or herded sea in wrath,
Ye know what wavering gusts inform
The greater tempest's path;

Till the loosed wind
Drive all from mind,
Except Distress, which, so will prophets cry,
O'ercame them, houseless, from the unhinting sky.

                   -Rudyard Kipling

I stand not upon laurels but what I have printed.

For two years I said, "Play the game but when it turns---Flee." The turning points were always two things. The first was a serious event that turned over the applecart. The second was the Fed reversing course. 

When the Fed did reverse course I put out a warning moments later, "Take money off the table." I repeated that warning for three days. I repeat it again today if you have not done so already and if you have; take more off the table.

The consequences of the Fed's decision tosses hand grenades into the wind with tumultuous reverberations. Shrapnel is ensuing. More blood will be spilt.


Two Ministers resign. The yield on their ten year is back above 8.00%. The  government is in turmoil and may topple. Contagion will be retched upon the streets of Madrid, Rome and Paris. Crises has returned.


The President of Cyprus is meeting with Mr. Draghi today and requesting that the terms of their loans be lowered, extended perhaps pretended but anything at all so Cyprus has to pay less money. He is not asking for this, he tells us, he is just whispering it into the wind I suppose. Ah the Europeans; so good at whispering and denying that they spoke.

In the meantime Cyprus implemented a debt restructuring that is not a debt restructuring because it is now called a, "debt management operation." It looks like a pig and acts like a pig and smells like a pig but the Europeans insist that it is a boar.

"Here piggy, piggy, piggy," I say.

The Cypriots have a problem though. They have $2.6 billion in outstanding bonds that are governed by English Law. Don't you just hate it when that happens? If you read this and tell Mr. Draghi or Ms. Merkel please bring along the smelling salts.

Here is the language for Cyprus’s English Law bonds. This is the "moratorium" section of the events of default:

"A moratorium on the payment of principal of, or interest on, all or any part of the External Indebtedness of the Republic or any State Agency shall be declared or any such moratorium occurs de facto or the Republic or any State Agency is unable to pay its debts as they fall due or commences negotiations with any one or more of its creditors with a view to the general readjustment or rescheduling of all or any part of its External Indebtedness…"

Here is the definition of "external indebtedness" taken from the bond covenants:

“External Indebtedness” means any (i) indebtedness of the Republic in respect of moneys borrowed or raised by the Republic and (ii) guarantees or indemnities given by the Republic in respect of indebtedness in respect of moneys borrowed or raised by others."

I know that you are just, "shocked, shocked" but it gets even better.
If the English Law bonds are declared in default by the British courts and the bonds must be immediately paid in full then the ESM loan to Cyprus gets called into play. The following is from the ESM loan agreement:

"The ESM, may…declare the aggregate principal amount of any or all Financial Assistance made and outstanding under the Facilities to be immediately due and payable… if…


Relevant Indebtedness of the Beneficiary Member State or (if applicable) the Fund having an aggregate principal amount in excess of EUR 250,000,000 is the subject of a declaration of default as defined in any instrument governing or evidencing such indebtedness and as a result of such a declaration of default there is an acceleration of such indebtedness or a de facto moratorium on payments…


Relevant Indebtedness means all External Indebtedness and Public Internal Indebtedness."

Dominoes anyone?
Egypt's coup is complete but perhaps the most interesting part was when the Egyptian army released the following statement:

We swear to God that we will sacrifice even our blood for Egypt and its people, to defend them against any terrorist, radical or fool…"

I wish someone in the United States would say that. I would vote for them as President. Of course if the "fool" part was truly operative we would have to replace all of the members of Congress too.

Ah! What avails the classic bent
And what the cultured word,
Against the undoctored incident
That actually occurred?

                -Rudyard Kipling

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Wed, 07/03/2013 - 20:46 | 3720184 nope-1004
nope-1004's picture

In between each domino is a Fed controlled HFT or political replacement.  Good luck.  Someone will have to break ranks for something to happen.find

Wed, 07/03/2013 - 20:50 | 3720204 prains
prains's picture

just google; army fail


it says it all

Wed, 07/03/2013 - 22:51 | 3720415 spine001
spine001's picture

Break ranks? Snowden? Snowball?

Wed, 07/03/2013 - 23:13 | 3720452 Town Crier
Town Crier's picture

What Fed decision?

Wed, 07/03/2013 - 20:44 | 3720186 Jim in MN
Jim in MN's picture



Horseshoes and hand grenades blow dominoes all to hell.

--A drunk, insane lawn gamer, or else Ben Bernanke, forget which

Wed, 07/03/2013 - 20:48 | 3720189 francis_sawyer
francis_sawyer's picture

"We swear to God that we will sacrifice even our blood for Egypt and its people, to defend them against any terrorist, radical or fool…" [until a 'Rothschild' central bank pays us some BLUEBUX to do otherwise]...


Welcome, folks... to the 'spectator sport' of the next 2 decades... KIDNAPPING 101:

Wed, 07/03/2013 - 20:57 | 3720219 tenpanhandle
tenpanhandle's picture

what, you can't say joobux any more.  Damn, I gotta go elsewhere for the laffs.

Wed, 07/03/2013 - 21:00 | 3720224 francis_sawyer
francis_sawyer's picture

You can say it... I can't... I'm under house arrest...

Wed, 07/03/2013 - 21:15 | 3720233 prains
prains's picture


your visa has been revoked, please make payment in gold only

Wed, 07/03/2013 - 21:20 | 3720252 francis_sawyer
francis_sawyer's picture

I'm more than happy to oblige with all the 'liquid gold' I can squeeze out [after a case of beer]...

Wed, 07/03/2013 - 21:38 | 3720285 prains
prains's picture

not to be mistaken with a cheesepoop, those can be passed out at a party

Wed, 07/03/2013 - 21:22 | 3720262 Bringin It
Bringin It's picture

Francis - you're beautiful. 

Wed, 07/03/2013 - 21:37 | 3720284 francis_sawyer
francis_sawyer's picture

“We can ignore reality, but we cannot ignore the consequences of ignoring reality.”

~Ayn Rand [cheespopette] ~ which begs the following addition... "On a long enough timeline the survival rate for everyone drops to zero"...

Wed, 07/03/2013 - 22:00 | 3720319 prains
prains's picture


I swear with just a smigg more Daft Punk in your life you could actually do hot yoga, and pull it off. I'm telling you, a full onsey with stirrups and a "flames" print, is signature franc. Right in front of the instructor and not miss a beat.

you's da Killa, shake that squirrel, 1,2,1,2....

Wed, 07/03/2013 - 22:03 | 3720356 francis_sawyer
Wed, 07/03/2013 - 22:11 | 3720367 prains
Wed, 07/03/2013 - 22:35 | 3720394 francis_sawyer
francis_sawyer's picture

The car is killing me there... What's that?... Like a '75 Maserati?...

Wed, 07/03/2013 - 22:51 | 3720414 prains
prains's picture

funny you said that i just pulled up beside a '13 mas yesterday, nicely appointed, but if it's not a pickup with chickens flying out of the back I'm not too good on id

Wed, 07/03/2013 - 23:15 | 3720453 francis_sawyer
francis_sawyer's picture

Sheriff JW Pepper?


"Now you listen to me tropper boy ~ We've got a swamp full of black russians drivin boats to beat the band down here"...

LOL ~ j/k... Not 'insinuating'... Jus that your 'chickens flying out of the back' comment reminded me of this...

Wed, 07/03/2013 - 23:26 | 3720473 prains
prains's picture

francis ! what are you some kinda doomsday machine ??????



subtitle: francis ! what are you some kinda domedagsmaskin ?????


Wed, 07/03/2013 - 22:30 | 3720388 OS2010
OS2010's picture

Whose house?  Just asking....

Wed, 07/03/2013 - 20:47 | 3720193 slotmouth
slotmouth's picture

Then we played bones and I'm yellin' dominoes.

Wed, 07/03/2013 - 22:54 | 3720199 francis_sawyer
francis_sawyer's picture

& momma cooked the breakfast wit no hog...

Wed, 07/03/2013 - 20:49 | 3720198 Atomizer
Atomizer's picture

Global systemically important banks: updated assessment methodology and the higher loss absorbency requirement


The Cyprus Bank 'Bail-In' Is Another Crony Bankster Scam 

Domino Effect Bitchez

Wed, 07/03/2013 - 20:55 | 3720214 tenpanhandle
tenpanhandle's picture

Law? Law?  What is this law you speak of?  It is my understanding that law has been deemed an outdated concept - sort of a Barbarous relic, so to speak.

Wed, 07/03/2013 - 21:19 | 3720247 knukles
knukles's picture

Aye laddie, t'is locked away under the sheriff's keys unavailable to man, alongside the realm's missing gold.

Thu, 07/04/2013 - 09:44 | 3721010 Bobbyrib
Bobbyrib's picture

Just because blatant default did not trigger default in past events for CDS, doesn't mean the rule of law is dead. /sarcasm.

Wed, 07/03/2013 - 20:57 | 3720218 ironmace
ironmace's picture

So, what are you saying? All hell is coming down the pike? I've heard that before.

Wed, 07/03/2013 - 21:07 | 3720230 q99x2
q99x2's picture


Money is off table. Dog not so much.

Wed, 07/03/2013 - 21:09 | 3720232 Dareconomics
Dareconomics's picture

The system is becoming more fragile by the day.  Any one of those events could start a crisis.



Wed, 07/03/2013 - 21:16 | 3720241 Divine Wind
Divine Wind's picture



There was approximately 3 hours between when Muuuuuursi made his last speech and when the Egyptian Army issued their rebuttle.

I would be interest to see if there were any huge bets placed between the two events.

Kind of like the massive shorting of airline stocks in the run up to 9/11.

Wed, 07/03/2013 - 21:43 | 3720299 Tsar Pointless
Tsar Pointless's picture

Kind of like the massive shorting of airline stocks in the run up to 9/11.

That was merely a coincidence, I'm sure.

No conspiracies in this world. Just coincidences. So I've been told repeatedly.

Wed, 07/03/2013 - 21:47 | 3720314 espirit
espirit's picture

The $BDI might be the place to start, turned around the last few.

Wed, 07/03/2013 - 22:02 | 3720352 HowardBeale
HowardBeale's picture

So EVERYONE believes:

1) the Fed can control everything;

2) thus, the market cannot go down; 

3) this can go on eternally.

Really? "Eternally"? Can't there come a time? And if so, why is that time not now? 

I say the Fed. has decided to attempt to unwind--lower the markets (bonds and stocks)--by tapering covertly; yes, they are doing it now. Problem is, when People realize they are doing it, it's over. See sequence 1, 2, 3 above.

Wed, 07/03/2013 - 23:10 | 3720446 Go Tribe
Go Tribe's picture

The more the fed is in control, the looser their grip becomes.

Wed, 07/03/2013 - 22:22 | 3720377 chump666
chump666's picture


Foreign investors buy net Y479.7 bln Japan stocks in latest week.


Net Y1.1003 trln in short-term Japanese bills sold.

Japan's PPT will try and hold 14000, get ready for bond, stock and FX volatility again.

Wed, 07/03/2013 - 23:28 | 3720477 HowardBeale
HowardBeale's picture

Y479.7 bln ~ $4.8B


So what!

Wed, 07/03/2013 - 22:29 | 3720385 CaptainSpaulding
CaptainSpaulding's picture

More blood will be spilt

" I'm a business man. Blood is a big expense"

                           - Sollozzo. The Godfather

Wed, 07/03/2013 - 23:21 | 3720456 erg
erg's picture

The whole edifice awaits but one errant butterfly; slightly askew of its magnetic lines of force.

Thu, 07/04/2013 - 06:03 | 3720749 Rusty Diggins
Rusty Diggins's picture

Right? Who knew a single strand of spider silk could keep that sword dangling above our heads for sooooo long.

Thu, 07/04/2013 - 01:59 | 3720636 orangegeek
orangegeek's picture

Dominoes, house of cards, shit storm - pick your metaphor.

A rise in interest rates from larger economies should push things over the cliff nicely.


Central banks can only buy up so much in bonds - eventually rates will go up to attract other buyers.

Thu, 07/04/2013 - 04:51 | 3720711 Son of Loki
Son of Loki's picture
6 ways the Fed hurts retirees


"Our firm has long been of the belief that artificially low interest rates have punished savers and retirees," says Samuel Scott, president at Sunrise Advisors in Leawood, Kan.

"We heard someone say that the 'haircut' to depositors by Cypriot banks pales in comparison to the 'theft' by Bernanke and the Fed from savers."

How does Fed policy hurt retirees? Bankrate counts six ways.


Alan Greenspan and Bernanke have irreperably injured these people, and society in general, as this article (and the above one) describe.


Based on history and basic economics, I believe the Fed will continue to devalue the dollar due to several reasons including deeper profits for the financial industry as well as the only palatable way to solve the over $100 Trillion in unfunded liabilities.


Plan accordingly.

Thu, 07/04/2013 - 04:54 | 3720714 pnfteixeira
pnfteixeira's picture

Watch VIX chart, we have now a golden cross. The last golden cross in the VIX was in August 2011 and the SPX lost 200 points and DAX 2000. New leg down is coming?

Thu, 07/04/2013 - 05:28 | 3720729 nickels
nickels's picture

Got yer dominoes right here-

Thu, 07/04/2013 - 11:47 | 3721261 Disenchanted
Disenchanted's picture

2 Kiplings...


1) Dedication


2) The Benefactors


which ends thusly:


All Power, each Tyrant, every Mob
Whose head has grown too large,
Ends by destroying its own job
And works its own discharge;



And Man, whose mere necessities
Move all things from his path,
Trembles meanwhile at their decrees,
And deprecates their wrath!



Thu, 07/04/2013 - 12:44 | 3721438 Car 54 Where Are U
Car 54 Where Are U's picture

How can you not have Greece and the systemic unsolvable problem there not listed as one of the main dominoes? Damn man there are wagonloads of unsolvable problems but as the rule of law slowly evaporates the charade will continue. Print print nausuem.

Thu, 07/04/2013 - 12:52 | 3721470 Crash Overide
Crash Overide's picture

If Americans ever got their collective heads out of the TV's ass and demanded the current government be removed due to the laundry list of crimes from constitutional to international and of course moral... Who the hell would step in to reside over a fair reset to the constitution and the renewal of the republic??? It seems like everyone in government is tainted to an extent.

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