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Central Bankers' Worst Nightmares Are Unfolding in Greece
The situation in Greece boil down to the single most important issue for the finacial system, namely collateral.
Modern financial theory dictates that sovereign bonds are the most “risk free” assets in the financial system (equity, municipal bond, corporate bonds, and the like are all below sovereign bonds in terms of risk profile). The reason for this is because it is far more likely for a company to go belly up than a country.
Because of this, the entire Western financial system has sovereign bonds (US Treasuries, German Bunds, Japanese sovereign bonds, etc.) as the senior most asset pledged as collateral for hundreds of trillions of Dollars worth of trades.
Indeed, the global derivatives market is roughly $700 trillion in size. That’s over TEN TIMES the world’s GDP. And sovereign bonds… including even bonds from bankrupt countries such as Greece… are one of, if not the primary collateral underlying all of these trades.
Lost amidst the hub-bub about austerity measures and Debt to GDP ratios for Greece is the real issue that concerns the EU banks and the EU regulators: what happens to the trades that EU banks have made using Greek sovereign bonds as collateral?
This story has been completely ignored in the media. But if you read between the lines, you will begin to understand what really happened during the previous Greek bailouts.
Remember:
1) Before the second Greek bailout, the ECB swapped out all of its Greek sovereign bonds for new bonds that would not take a haircut.
2) Some 80% of the bailout money went to EU banks that were Greek bondholders, not the Greek economy.
Regarding #1, going into the second Greek bailout, the ECB had been allowing European nations and banks to dump sovereign bonds onto its balance sheet in exchange for cash. This occurred via two schemes called LTRO 1 and LTRO 2 which happened in December 2011 and February 2012 respectively. Collectively, these moves resulted in EU financial entities and nations dumping over €1 trillion in sovereign bonds onto the ECB’s balance sheet.
Quite a bit of this was Greek debt as everyone in Europe knew that Greece was totally bankrupt.
So, when the ECB swapped out its Greek bonds for new bonds that would not take a haircut during the second Greek bailout, the ECB was making sure that the Greek bonds on its balance sheet remained untouchable and as a result could still stand as high grade collateral for the banks that had lent them to the ECB.
So the ECB effectively allowed those banks that had dumped Greek sovereign bonds onto its balance sheet to avoid taking a loss… and not have to put up new collateral on their trade portfolios.
Which brings us to the other issue surrounding the second Greek bailout: the fact that 80% of the money went to EU banks that were Greek bondholders instead of the Greek economy.
Here again, the issue was about giving money to the banks that were using Greek bonds as collateral, to insure that they had enough capital on hand.
Piecing this together, it’s clear that the Greek situation actually had nothing to do with helping Greece. Forget about Greece’s debt issues, or protests, or even the political decisions… the real story was that the bailouts were all about insuring that the EU banks that were using Greek bonds as collateral were kept whole by any means possible.
This is why the current negotiations in Greece boil down to one argument: whether or not it will involve an actual restructuring of Greek debt that will affect bondholders across the board.
Greece wants this. The ECB and EU leaders don’t for the obvious reasons that any haircut of Greek debt that occurs across the board will:
1) Implode a small, but significant amount of EU bank derivatives trades.
2) Be immediately followed by Spain, Italy and ultimately France asking for similar deals… at which point you’re talking about over $3 trillion in high grade collateral being restructured (collateral that is likely backstopping well over $30 trillion in derivatives trades at the large EU banks).
Remember, EU banks as a whole are leveraged at 26-to-1. At these leverage levels, even a 4% drop in asset prices wipes out ALL of your capital. And any haircut of Greek, Spanish, Italian and French debt would be a lot more than 4%.
The next round of the great crisis is coming. The ECB bought two years of time with its pledge to do “whatever it takes,” but the global bond bubble is still going to burst. And when it does, it’s going to make 2008 look like a joke.
If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.
You can pick up a FREE copy at:
http://www.phoenixcapitalmarketing.com/roundtwo.html
Best Regards
Phoenix Capital Research
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What to worry? CDOs will take care of all these pesky little problems. Just ask Jamie. There's money, good money, to be made by supplying the muppets with derivative trades.
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Last one out the door, hit the reset button.
An economy produces 1,000 bushels of food a year The banksters "print" fiat that enables them to steal 100 bushels of food. The banksters then loan our 50 bushels of food to the victims of their theft.
Who owes who?
The banksters need to repay us.
dup
Proof positive that economics is merely politics dressed up with numbers. Soverign bonds as the best collateral; you are kidding, right? Subject to default (but not nullification), subject to political risk, subject to fiscal repression.
"The situation in Greece boil down to the single most important issue for the finacial system, namely collateral."
The banksters' system of "printed" grift feeds off of a) interest and/or b) collateral--"Pay or it's ours."
This is not going to end well for the Greeks.
ZATO and/or "Blue Helmets" soon?
The banksters need to repay us.
Borrowing from the banksters is borrowing what they have prior looted from you, and using your soul as collateral.
Keep your soul, and redeem what has been plundered from you, don't pay them, demand they repay you.
Actually what's occuring in Greece right now is an orgy of looting by central bankers, the idea that they're disappointed by the Syriza position is ridiculous, they put Syriza in power with all their "bridge loans to prevent cuts to the Syriza base lending program".
I read several books on the building of the Chunnel (the Channel tunnel connecting UK and France (or the Euro mainland) otherwise I wouldn't have happened upon this tidbit: the major force pushing for the adoption of the Euro was the French branch of the Rothschild family, beginning back in the early 1970s.
Sounds like the banks have been repaid or nearly so for the greek debt through the generous ECB. The only reason that Greece would need to go through the motions of repayment is so that EU citizens have the illusion that they have not been robbed.
Central bankers: you did it to yourselves dolts! Thought you were so smart, didn't ya?
Now why does this remind me of this paragraph from p. 48 of the FCIC Report:
http://fcic-static.law.stanford.edu/cdn_media/fcic-reports/fcic_final_report_full.pdf
p. 48
The CFMA effectively shielded OTC derivatives from virtually all regulation or oversight. Subsequently, other laws enabled the expansion of the market. For example, under a 2005 amendment to the bankruptcy laws, derivatives counterparties were given the advantage over other creditors of being able to immediately terminate their contracts and seize collateral at the time of bankruptcy.
Don't worry about the banks. They likely dumped Greek bonds on pension funds long before the current crisis.
Exactly! And SOP!
Well written article; a nice change for Phoenix.
However, as i do alot of business in Europe,I do think Ireland would also be looking for a deal like Greece as they have been really fucked in this EU deal in the 2008 crisis: of course along with Spain, Italy, France.
Just a step in the process to the creation of a GLOBAL currency deemed as the only legal tender by the IMF.
Community Currencies. They will be the only recourse to avoid zombie land.
Draghi is printing New Drachma in his backyard. They will be distributed in the Greek ATM's next Tuesday. 1 EURO= 1 New Drachma on Tuesday. 1 EURO = 3 New Drachma on Wednesday.
I'm not sure about Phoenix Capital. I signed onto the newsletter. I really like the analysis but the guy was pretty dead wrong for the years that fortunes were being made on the fiat paper bubble. He's got great outsider and realistic analysis but what people need is an "insider". Someone whose ear is to the ground closer to the Fed and NYfed. Investors need to make money on the HFT/Algo swings. Investors need to be more sure about the information they get so they need people who know people. I admire Phoenix's honesty but honesty doesn't cut it in this upside down world. Investors need information straight from the horse's mouth. Many people would have missed out on the recent rally if they had listened to the realistic doom and gloomers and not listened to the insiders like Birinyi and Mobius. (notice I don't mention Cramer here). We'll see how correct Phoenix is. My guess is he's just inviting in more shorts to be squeezed every time the market sells off 5% or so and they buyers come rushing in. Time and charts will tell. "Everything is Awesome."
"Investors need to make money on the HFT/Algo swings. Investors need to be more sure about the information they get so they need people who know people."
If you change "Investor" to "Traders" or "Speculators" then your statement would be more in line with reality. (IMHO)
I can't think of anyone that I know of that I would consider an 'investor' would tries to make a profit on HFTs/Algo swings.
I'm not sure how accurate his (Phoenix Capital) advice will be in the short or long term. I do believe that this financial chicanery WILL come to an end, and when it does it will be BAAAAD for anyone in the Stawk market, Bond market or almost all investments other than certain phyzzical in-hand commodities. With HFTs/Algos providing liquidity in todays markets......when the markets DO sell off, you won't be able to get 'out' fast enough before some type of flash crash or market break wipes you out (if you are using leverage)
One additional comment, I have bought the dips on a certain Phyz metal (ASE) and have never been 'squeezed'. I never use leverage, so I am only using FRNs that are extra or leftover after my bi-weekly expenses, savings, etc. I am starting to think about putting some of those extra FRNs towards those Russian women who are....Sage, Explorer, Photographers.
Just watch Cramer. Ya know he did do 18% after 2 and 20 fees from 1982 to March of 2000. The S&P 500 did 18.2%, but let's don't split hairs. Cramer is your guy.
Then you may wish to pay more attention to this bunch:
www.group30.org
your right.. but.. "making money" .. or even participating these days.. is nickles in front of steam rollers.. dont ya think?
as long as it goes.. sure.. you can run up some paper
but obviously it cant last forever...
it all about that timing... but Im less sensitive to the timing by not playing at all, even if it means.. " coulda made a lot of money!!1!"
You can be right longterm but loose your shirt from now to then.
Anyone who thinks Greek bonds are good collateral,
should have gone broke years ago.
So go arrest and prosecute the banksters or government officials that did the bond deals (good luck with that).
Evil bankers? Sure, and government officials too!
Land, food, tools, knowledge, guns, gold and guts.
PC content is good "primer" stuff for the uninitiated. Seems to be getting more specific too. I have yet to "swing on over to grab a copy" bc my efforts are aimed at putting my precious little capital towards prepping. Not sure I'm making the right decision.....?
so ths goes on until the 28th?
This could go on for months!
Perhaps but that can thier kicking is already as huge as the ass on Mooch.
Default is the only way, both financially, and morally. It is immoral to ask future generations to pay debts they did not incur. Unsuprisingly, my parents and grand-parents don't seem to understand this - though I am sure my nieces, and nephews will agree.
Fiat debt to any private entity that have created the fiat out of thin air is immoral.
So, is it lie and manipulate or manipulate and lie?
to a central bank, YOU are the collateral. now thanks to AAPL and FB, the collateral can be tracked and monitored any place any time.
Rumour has it that there was an invention recently called a "cell phone?". I think it is a combo of a GPS monitoring device with capability of allowing the user to speak to Grandma 2 blocks away at anytime from anywhere. Reviews on this device are mixed.
Rumour also has it that I could also allow my local power facility to install a measuring meter that communicates through thin air all my usage and habits.
I have also had many contacts calling me to some internet place called Facebook. Never liked having my picture taken so I decline all requests.
Rumour has it also that new appliances and electronics will be able to talk to each other without letting me in on the conversations.
Boy this is grand.
"Central Bankers' Worst Nightmares Are Unfolding in Greece"
Another false headliner...
The Central Bankers KNOW about these eventual inevitabilities with their Madoff-scheme debt-based monetary system. Their TRUE nightmare would be in the stupid sheeple of the world waking up to what they have done to us over the past century (ala National Socialist Germany). They're hoping that this particular impending cyclical "collpase" will flow nicely into yet another great war thus shielding them from blame and helping to generate further usurious profits and graft for themselves.
Correct, J S Bach!
Phoenix Capital articles mistakenly presume to use Hanlon's Razor, (although those articles do not explicitly mention that.) The banksters have been acting on the basis of malice, not incompetence. Their political puppets, and the muppets that vote for those puppets, ARE mostly incompetent political idiots. Unfortunately, there are no good grounds to believe that will suddenly stop, because there are no good reasons to expect enough of "the stupid sheeple of the world waking up" to what the banksters have really done.
(Of course, that has been getting exponentially worse for thousands of years, with the "past century" of events in the USA eventually becoming globally dominant, as the Federal Reserve Board plays a major role in the international banksters' systems.)
On the basis of all my research, experience, and on-going political experiments, I would roughly estimate "the stupid sheeple of the world" to be at least 99% of the population. One could justly label those incompetent political idiots as being Zombie Sheeple. The chances of them"waking up" ENOUGH appear slim.
That is especially so because the established systems are a combination of organized crime and controlled opposition. Within the relatively small groups which are attempting to educate the masses of incompetent political idiots, almost all of those are what I describe as the Black Sheeple, or reactionary revolutionaries, whose efforts to educate the masses of mainstream morons are grossly deficient.
They endeavour to lead the Zombie Sheeple backward, because they tend to do a relatively good analysis of the problems, but only on superficial levels. They propose bogus "solutions" which continue to be based on the same old false fundamental dichotomies and related impossible ideals. Those impossible ideals actually make the opposite happen in the real world.
The controlled opposition groups promote bogus "solutions" based on impossible ideals, because they are "waking up the stupid sheeple of the world" in ways which end up recommending that the "solutions" are that everyone should become better Sheeple.
The standing social situation is that the most Vicious Wolves and their Domesticated Dogs are wolves in sheep's clothing. They have controlled the masses of Zombie Sheeple by using the methods of lies backed by violence for thousands of years. Those methods have become integrated systems of legalized lies, backed by legalized violence, through which the best organized gangs of criminals, the biggest gangsters, are the banksters, that effectively control the biggest forms of organized crime, the governments.
That IS based upon ENFORCED FRAUDS!
However, authors like Phoenix Capital, as well as most of those republished on Zero Hedge, continue being Black Sheeple. Hence, their notions of what the "solutions" should be are always shallow and silly, because they continue to believe in the same old-fashioned religious moralities and ideologies, that are based on false fundamental dichotomies and the related impossible ideals.
Most people who make "money" for themselves, and their clients, do not want to fully face the fact that money is measurement backed by murder. They want to believe that "money" is based only upon production, which they could invest in. They do not want to address the issues that the production of destruction controls production. Anyone who is successfully making "money" is necessarily operating inside of the established systems of ENFORCED FRAUDS. The debt controls are backed by the death controls, and that must necessarily be the case. However, that tends to be as deliberately ignored and denied as possible, while there is an elaborate bullshit language, used by professional liars and immaculate hypocrites, in both the established systems and controlled opposition groups, in order appear to explain or defend systems of ENFORCED FRAUDS.
For thousands of years the biggest bullies' bullshit social stories have been dominating the natural languages that we use, as well as the philosophy of science. There continues to be almost total reliance upon understanding the world using DUALITIES, rather than by using more UNITARY MECHANIMS. So far, political science has made practically no progress, compared to physical sciences. It would take intellectual scientific revolutions for enough people to understand enough how the international banksters actually operate, in ways which would then lead to genuinely better resolutions of the real problems, (rather than yet again collapsing back to bogus "solutions" which still continued to operate too much inside of the banksters' world view.)
The Black Sheeple tend to endeavour to educate the Zombie Sheeple by waking them up to some of the central social facts, which have been lied about by omission by the public schools and mass media. However, those kinds of reactionary revolutionaries then try to lead the Sheeple backwards, because merely learning the social facts is not good enough. Rather, profoundly changing paradigms is necessary to perceive those central facts in radically different ways.
There are deeper levels of radical truths which authors like Phoenix Capital are not interested in. Indeed, the overwhelming vast majority of people are not interesting in thinking about the monetary and taxation systems to begin with, and even less interested in thinking in radically different ways about those issues. Therefore, as the established systems rush toward that debt slavery system generating numbers which have become debt insanities, which threaten to provoke death insanities, the banksters continue to be able to rely upon the basic social pyramid systems which have been developing at an exponential rate for thousands of years: there is practically nothing but ORGANIZED CRIME AND CONTROLLED OPPOSITION.
To move beyond controlled opposition to the banksters' ENFORCED FRAUDS, requires more than merely recognizing the social facts about central banks, and the rest of the new royality of Fraud Kings.
The Black Sheeple are doing that kind of educating, but only on relatively superficial levels, and therefore, they are NOT waking up the Zombie Sheeple ENOUGH.
The situation in Greece has become one of the leading edges of the issues that the ENFORCED FRAUDS have driven debt slavery systems to generate numbers which have become debt insanities. The new government of Greece is stating those facts, that they are now inside of a situation which has become DEBT INSANITY.
The SOURCE of that situation is that the international banksters' ENFORCED FRAUDS previously dominated the government and people of Greece, the same as almost every other country. Hence, Greece is merely one of the leading edges of the basic problems that the systems of government enforced bankster frauds inherently drive that debt slavery to generate numbers which become debt insanities.
As you CORRECTLY pointed out, J S Bach, the banksters' "solutions" for those problems are to provoke situations in which there manifest various forms of death insanities. After all, the banksters are the pyramidion people, in social pyramid systems, that have always been based on backing up lies with violence, whose slavery systems became more sophisticated as the legalized lies, backed by legalized violence, found in the monetary and taxation systems, which operated as combined money/murder systems throughout history, as the debt slavery was backed up by wars based on deceits.
Many people who read Zero Hedge are already well aware of those basic social facts. However, few of them are able and willing to go beyond that, to engage in the profound intellectual, scientific revolutions which would be necessary to stop being merely controlled opposition against the established systems. To go beyond being controlled opposition, one must make more effort to move past the ways that the dominate natural languages and philosophy of science are controlling the ways that we think about these problems, and communicate our conclusions.
Phoenix Capital's articles continue to correctly identify some of the most crucial social facts regarding the degree to which there have developed DEBT INSANITIES BASED ON ENFORCED FRAUDS. However, that approach continues to stay too much within the view that the banksters are incompetent, rather than malicious. Tragically, that works because the vast majority of people continue to have similar attitudes, only much more so.
Many of the comments on Zero Hedge, like yours J S Bach, are more perceptive and CORRECT than the original articles under which they are posted. However, so far, that kind of more genuine resistance is very slight, and even smaller in size, compared to the overall population of the established systems of organized crime and its controlled opposition.
I find Phoenix Capital's articles worthwhile to read, because they do focus upon and succinctly summarize the social facts regarding the magnitude of the runaway DEBT INSANITIES, and their possible financial consequences. However, those kinds of articles tend to NOT focus upon and discuss the possible consequences in the forms of DEATH INSANITIES. (Therefore, of course, there is NOTHING whatsoever discussed regarding how we might be able to operate better death controls to back up better debt controls.)
To more fully understand the international banksters' systems of ENFORCED FRAUDS, one has to appreciate the principles and methods of organized crime enough to transcend the bullshit frame of reference regarding that, which was promoted by those banksters and their controlled opposition. After reading several articles by Phoenix Capital, et alia, I have seen no hints that those kinds of authors are evolving beyond merely being Black Sheeple.
Hence, the "headline" to that article above was "false," because the article emerges out of fundamentally false world view, which the author is taking for granted. That results in the social facts being noted and discussed, but only in relatively superficial ways. The rest of your comment, J S Bach, were CORRECT assertions about the deeper nature of the problems presented by entrenched financial systems based on ENFORCED FRAUDS!
Certainly it's a matter of the right kind of people being awakened, not a matter of 'enough' people. So far, those awake don't seem to have done much except try to wake up others. It probably won't be the sheer mass of warm bodies that wins the day in the end, regardless who has them. It will the side with an 'Ender', a game-changing mind/personality.
You are one wordy mofo!
Wow, Radical Marijuana... whatever you're smoking (as your nome de guerre suggests)... I want some! ;)
That was a very in-depth and well thought out synopsis to our world's plight.
If Tyler were observant and true to the assumed ideals of this website, he would post your response as its own separate article. The more people that can think outside the banksters' box, the better our chances of formulating REAL solutions to the endless cycle of treacherous usury which engulfs us all.
Thanks, J S Bach.
There is no "actionable intelligence" that follows from perceiving how profoundly screwed up the established systems have become, since it is like diagnosing a terminal illness, which is still terminal after that diagnosis. I like to try to understand what is happening, however, I am ONLY doing that for its own sake. What I recommend is like political science fiction and fantasy, rather than anything which is more practical.
There were some people who became extremely wealthy from taking positions that enabled them to speculate upon previous bubbles popping. I would expect some to be trying to do that again. Phoenix Capital claims that their advice could assist people to protect themselves, and perhaps profit from the financial forces that could follow from the most spectacular of all bubbles popping ... However, my attitude is that the next bubble popping will be way bigger than any previously popping, and therefore, one is perhaps attempting to hedge against the unhedgeable?
Finally someone wrote an article at ZeroHedge that even I can understand.