3 Little Things That Aren't So Little

Tyler Durden's picture

Via Peter Tchir of TF Market Advisors

The EFSF pulling a 3 billion bond sale due to market conditions is pretty bad. These bonds are cleaner and safer than the binary default options the EFSF plans to be selling in the future. Shouldn't the EFSF generally be expecting to issue in choppy market conditions? It's like a fireman showing up at a house and refusing to fight the fire because, ah, um, ah that house is on fire and could be dangerous. Regling should spend some time focusing on the blocking and tackling of the EFSF. So far markets (equities in particular) are doing a good job of ignoring this, but not being able to sell at a decent rate, 3 billion of straight debt, doesn't bode well for selling a trillion of complex debt.

IIF is still working on the haircut - heck they even called Greece. It is now almost a week since the grand plan and all we know about the IIF deal is that it will be a 50% NPV reduction and help Greece's debt to GDP by 2020.  How about for every 100 euro of Greek debt you get 25 euro of some new Greek 4% coupon 5 year bond and 25 euro of a new 4.5% Greek 10 year bond. That is a real haircut and is easy. At first I thought the IIF was tricking Merkozy but I now think they were in on the joke - just Greece and the citizens and Geithner fell for haircut headlines.

If Greece and China have any side meetings I would view that as very bad for the grand plan as they are most likely arranging post default financing. China and Greece could both do well in a Chinese backed post default Greece. I would not take meeting between china and Greece as euro positive.

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moskov's picture

EU is finished unless they allow China to join the EU

paarsons's picture

Nevertheless, these "dumb motherfuckers" keep all those balls in the air.

I don't know how they do it.

I guess I'm not "that dumb".

Like a lot of people, I've been losing money waiting for the collapse.


HelluvaEngineer's picture

That blog is hilarious, dude

LawsofPhysics's picture

Don't give away the ending moskov, you are scaring the sheep.

CPL's picture

You mean when Europe joins (owned by) China. 


I wonder if the local armies will follow Beijing or just make sure the orders are carried out like with their current US owners.

oh_bama's picture



moskov's picture

Euro is going to be worthless, so that means those socalled customers would become peasants overnight

Leopold B. Scotch's picture

China is it's very own centrally planned, soft-red-mercantilist cluster-f*#@k, bottom line.  They can, for now, gloss things over.   But inflation / money printing ain't just a problem of rising prices.  It is, at its crux, a problem of price formation destruction and mis-allocation of resources.  In that, holding onto China as a life-preserver is, long term, nothing but another collapse waiting in the wings.

moskov's picture

Chinese rarely put their so called LIFE-PRESERVER faith into Europe, but Europe used to put their footsteps everywhere around the global by colonising a bunch of 3rd world natives and slaves until all those big wars erupted like backfire and spank them into the tiny island of reality. And It was the the Europe at the moment still trying to maintain their Old World Order by waving a piece of broken currency and thousands of mosques behind their backyard to tell and preach how the Chinese, the Japanese, the Non-White, even the Russian what to do and what Not to do.


I hope Europe LALA LAND would collapse sooner than later before those illusional distracting European doomers get a reality check before it's too late. In meantime, another The collapse of China or Russia is going to published soon by the Europeans, including some on-fire Greek bookstores

Leopold B. Scotch's picture

Not sure what you meant in this post.   Hence, not sure if you understood my Life Preserver analogy by your use of it. 

Europe is screwed, no doubt.  If they think they can rely on China to save them, I'm saying it's a lead life preserver since China itself is a giant economic mis-allocation itself on the cusp of an inevitable collapse.  These are the seeds sown by every central planner and money manipulator. 

As for what that has to do with the West's history of colonization and global mercantilism is beyond me.  I can understand its victims being frustrated by it, as would they be when confronted by any authoritarian -- e.g. China and Korea dealing with Japan leading up to WWII.  The history of conquest is anything but a history of liberty and freedom.  Although, Mao killed more than all combined in just a few short years. 

moskov's picture

The pathetic fact is US-Europe Hegemony System is the one biggest economic mis-allocation itself ever been witnessed in the history of mankind. And basically that's going to be ended like super nova when you considering the demographics and industral strength of today's West is no longer that comparable to the past and the rest of the world. Who are the biggest central panners and money manipulator, please do figure where the world's biggest printing press and ponzi  is


The interesting fact even though Mao did kill the people, but eveutally he's a Chinese himself and his sin will be judged or forgiven by Chinese's own will. On the other hand, the conquest of the West or Japan is about controling one's money system, put them into a ponzi, and feed them with GMO then evetually vanish the whole race just like what Spanish did to Incan or American did to Native Americans. It's not the same. Plus, if it's not that serious, Why would American rather drop a nuclear bomb on Japanese civilians rather than just taking over Tokyo by peace

qussl3's picture

Consider this before being so smug about Chinese reserves.

The US has 8000+ tons, population 300+ M

EU 10000+ tons, 500+ M

China 1000+ tons, 1.3B

Both the EU and US can be self sufficient in food and water, maybe even energy.

China cannot be in any of the 3.

China's "wealth" is primarily denominated in USD and EUR.

China has NO interest in seeing either worthless before it can convert them into resources or power.

In a nightmare scenario, EZ citizens may not be able to afford Chinese products but will still eat pretty well, China will implode.


tmosley's picture

Too bad we are no longer manufacturing specialized.  How do you think we will live without any manufactured goods?  Take 30 seconds to look around your computer and try to find something made in America.  Now imagine that those few American goods are all you have.  Would you be able to live or perform your job?

Manufacturing economies always rule commodity economies.

qussl3's picture

That i agree with.

Economic war which the US waged so effectively against the USSR is now being won by China against its creators.

That said, as long as the technology isnt transferred, and continued to be created in the US, manufacturing can potentially be ramped up in remarkably short periods under a war economy directive.

Although China is clearly catching up to the US, it hasnt completely hollowed out US manufacturing either.

I would be interested to see how much of Chinese manufacturing/assembly can continue to exist should its export markets stumble.

There isnt likely to be a clear winner in this conflict akin to the USSR's "collapse", but a dynamic equilibrium that would only be upset when the US's bases are finally excised from around the globe.


moskov's picture

The US has 8000 tons. Lol

Don't you know Fort Knox has no Gold at all?


US and EU can be self-sufficient in food and water, only if there will be peace and stability out there. As far as I can see, not that pretty.


China is vast enough to maintain a stability of food resources as long as the food technology works fine with a controled birth of population.


In the mean time, EZ and US has the population breeding like rats and worshiping Allah all day and rather in favour of strike than working hard. I am not worried at all

Hephasteus's picture

It's like that episode of friends where they were all gong to split up but kept fighting over joey.

slaughterer's picture

Somebody send Bud Fox to Cannes with a camera to follow G-Pap and see if he is meeting with any Chinese. 

LawsofPhysics's picture

Well he just came out of an asian massage parlor, does that count?

bigdumbnugly's picture

it would if he is looking all spent and serene-like and smoking a cigarette.


GeneMarchbanks's picture

'If Greece and China have any side meetings I would view that as very bad for the grand plan as they are most likely arranging post default financing. China and Greece could both do well in a Chinese backed post default Greece. I would not take meeting between china and Greece as euro positive.'

With 111t of collateral, Jim Rickards style.

sabra1's picture

all greece has to do is convert to the yuan! what's the big deal?

SeverinSlade's picture

"It's like a fireman showing up at a house and refusing to fight the fire because, ah, um, ah that house is on fire and could be dangerous."

Hahahaha had a good laugh on that one.

TooBearish's picture

Ben's gunna save the world with gads of liquidity , knocking down USD


disabledvet's picture

i have no idea what was just said here. we do know this now however: Credit Default Swaps are no different than options in the sense that "they are allowed to expire worthless." Of course "they're trillion dollar options" and "involve the actual existence of sovereign nations"--but that was never a consideration to begin with. "we'll just blow the country up!" is all.

Tsar Pointless's picture

"we'll just blow the country up!" is all


And people think "they" don't have a plan.

Pfft! You're seeing it unfold live and in HD.

What - you thought they'd include YOU in the process of creating the plan? Bah!

ziggy59's picture

3 Little PIGIES have gone to market , to market jiggity jig...

Mercury's picture

China is certainly in a position to make Greece a very attractive offer if they're willing to dump the Euro: investment, cheap stuff, the appearance of military protection.  Even if it's a money loser for China they still might want a sphere of influence in the Mediterranean.

They could probably sell it as simply "Us or the Germans" too.

youngman's picture

What to me is the big event...is that TPTB are not calling this a default...no sir...no default here...no CDS payouts at all buddy boy...see...we can take a 50% cut ....we just bend over and get er done...but we did it with smiles on our faces.....cue deliverence song please

drivenZ's picture

ehh, not as big of an issue as people are making it out to be...if you hold a CDS and don't opt for the restructure your protection is still good. Besides, this is actually having a negative effect on markets and prolonging the pain...a straight default would have been better. 

lizzy36's picture

This is like handing Hitler the Sudetenland and pretending that is all he wanted.

Yes, the ESFS is going to work, even though the couldn't get off EUR 3B bond. WTF?

I mean i recognize that HF and MF are all underwater (missing highwater and benchmarks) so the chase for returns is on.

But chase into the end of the year so we can all celebrate the demise of the EU in Q1 2012?

Greed is so awesome.

Mercury's picture

Yeah, I think the takeaway here is the dawning realization that the global daisy chain of credit cards is starting to fall apart.

If market conditions weren't "choppy" fella...there wouldn't be a need for an ESFS or its bonds in the first place.

socratesplus's picture

the chinese/greek post default financing angle is brillant.  i can see a whole lot of solar generating plants in greece financed by yuan.

jubber's picture

meanwhile 2Y Greek bonds hit 93% while the crazy I year hit 233% earlier, how can the Euro be up over 100pips?

dereksatkinson's picture

Greece gives political concessions to China.  China buys a bunch of greek assets and does the same thing they did with Albania.  People are completely ignoring what China is in the business of doing.

Dick Darlington's picture

Bullish data from zEurope today:

Spain mfg PMI 43,9

Italy mfg PMI 43,3 (dropped 5 points!)

France mfg PMI 48,5

drivenZ's picture

Live reuters blog about the EZ fiasco, for those interested.....



drivenZ's picture

Can't argue with this...


economist Nouriel Roubini "Greece is insolvent, uncompetitive and stuck in an ever-deepening depression, exacerbated by harsh and excessive fiscal consolidation. It is time for the country to default in an orderly manner on its public debt, exit the eurozone (EZ) and return to the drachma to rapidly restore solvency, competitiveness and growth." 

Cluelesscitizen's picture

how can it be bullish today?!? Those basterds at work again..

drivenZ's picture

well, a 5% drop in two days is a big move...If we don't hear anything out of the EZ i think this little rally fizzles and we end negative. 

slewie the pi-rat's picture

finiminis in clown cars forever, BiCheZ!

Georgesblog's picture

In the divide and conquer world of commerce, I wouldn't be surprised at anything China does. Using Greece to get over on the EU would be expected. If China gets moving on it, they could beat Germany to sticking a fork in the Euro.


Georgesblog's picture

Now would be a good time to shift gears and look at how the central banks are doing at herding cats.  The news is becoming nonsense and confusion.  This situation is either fertile or futile, depending on your perspective.  In any case, I'll just have to  restrain myself, once a day, in "The Daily Climb"