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In The Aftermath Of The Greek Blue Light Precedent: Belize Demands Half Off On Its Debt... Or Else

Tyler Durden's picture




 

"Greece set a precedent for 'Here's what you're going to get, take it or leave it'" is how the WSJ summarizes an analyst's 'shocked' thoughts on the growing game of 'call my bluff' being played among beggars being choosers. Belize, a Central American nation with an economy the size of Pine Bluff, Arkansas, is surprise surprise running out of money to pay its debts and is insisting that creditors forgive 45% of what they are owed - OR allow it to delay any debt payments for 15 years (yes, seriously, read that again) - leaving a default on the country's $543.8mm almost inevitable.

Three things stand out to us: 1) the nation's government simply posted a note on its website that it would be 'skipping a payment' as opposed to telling creditors directly; 2) none other than 'Long GGBs are the slam-dunk trade-of-the-year' Greylock Capital are "mystified" that yet another trade has gone pear-shaped adding that they are "sure every country could benefit from not paying their debt but this isn't the way to do it!"; and 3) this would be one of the worst restructuring terms ever as the "Greek effect" could inspire other countries to pursue restructurings on more favorable terms - especially given that: "Even if you don't need a restructuring you can force one upon bondholders because it's so hard to recover money from a sovereign who won't pay,"

 

With the Belize 2029s trading at $37.375 (against a $55 'offer' of restructuring from the government), the market is obviously saying that a restructuring event will occur and be somewhat rapidly followed by a REdefault...

 

From the WSJ:

...

 

Prime Minister Dean Barrow in a March television interview said the global 2029 bonds, issued by a different administration, had come at too high a price.

 

The bond's interest rate rises over the course of its life, reaching 8.5% for the August payment, from 4.25% in 2007, when several loans were consolidated into a single bond.

 

...[preventing] the current government from using "our recurring revenue to do more for the people, to push employment and to push job creation,"

 

... triggered a sharp selloff in Belize's bonds, driving yields higher. The yield peaked at 30.2% after the restructuring proposal earlier this month, from 16% at the start of the year. The bond yielded 26.3% on Friday.

 

Roberto Sanchez-Dahl, an emerging-market portfolio manager with Federated Investors, said...

 

"We thought that the probability of the government being bond friendly was going to be low, given [Barrow's] rhetoric of pushing against foreign holders [that] resonated very well domestically," Mr. Sanchez-Dahl said. "They would definitely not give priority to foreign investors, or put them in front of domestic needs."

 

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Sun, 08/19/2012 - 22:01 | 2719460 Neethgie
Neethgie's picture

Funny thing is, belize got all its money from tory boss, lord ashcroft, in the uk.... damn guess hes broke now? only got 1 billion left.

Sun, 08/19/2012 - 22:15 | 2719506 DoChenRollingBearing
DoChenRollingBearing's picture

It's a GOOD thing that Reshma Kapadia ("Emerging Markets" writer at Barron's) did not suggest buying banks in BELIZE!

"Review of Barron's -- Dated 20 August"

http://tinyurl.com/9qq6k4e

Sun, 08/19/2012 - 22:18 | 2719522 economics9698
economics9698's picture

Oh fuck another country Bernanke will print for.  Bend over.

Sun, 08/19/2012 - 22:28 | 2719537 Precious
Precious's picture

The Greek parliament is facing a difficult fiscal decision: Twitter or butter.

Sun, 08/19/2012 - 23:19 | 2719674 Harlequin001
Harlequin001's picture

So, WTF happened to the 'risk free' rate?

Sun, 08/19/2012 - 23:39 | 2719710 flacon
flacon's picture

It's time to sell your silver, your moms silver, your brothers silver, and get into rock solid high denomination zimbabwe (or Belize) bank notes! /s

http://www.youtube.com/watch?v=FGnDXdI67ms

Mon, 08/20/2012 - 01:43 | 2719841 redpill
redpill's picture

As soon as more countries start to figure out that instead of adding to their already unpayably large debt that they are better off by just defaulting on the debt they already have, then things will really start to get fun.

Mon, 08/20/2012 - 02:12 | 2719858 Harlequin001
Harlequin001's picture

Me, I'm just one of them dum bad ass 'speculators' that's selling gold at the moment to buy... er, silver, for the bounce that is.

When silver tops $75 I'll sell it and buy back into gold for the lesser volatility.

and then when I'm really rich I'm going to pile it all into a basket of European and US T bills for that elusive 'risk free' diversified return.

Hang on, do I detect a flaw in there somewhere?

Of course I do, if I had any sense at all I should just pile it all into US T's, just for safety, you know...

Mon, 08/20/2012 - 08:16 | 2720109 economics9698
economics9698's picture

Condos around Disney, Orlando, are going for 25 cents on the dollar.  

Mon, 08/20/2012 - 00:01 | 2719740 sitenine
sitenine's picture

'risk free' - LOL

Sun, 08/19/2012 - 22:01 | 2719462 Newsboy
Newsboy's picture

A beggar with a gun is no longer a beggar.

Sun, 08/19/2012 - 22:07 | 2719483 boogerbently
boogerbently's picture

We talked about this YEARS ago.

Once they allowed one country to do this, the floodgates would be open, and ALL the beggar nations would want their free money.

This is just another case of "Hear me now, believe me later"....

Sun, 08/19/2012 - 23:21 | 2719678 Harlequin001
Harlequin001's picture

and if they don't print they default, and if they default poof goes your pension fund and then everyone who ever dreamt or actually did try to retire will sell their next biggest asset for liquidity, and then the entire retail housing market heads very swiftly in the general direction of the earth's core...

oh dear, never saw that one coming. Why not just print and be done with it?

Mon, 08/20/2012 - 10:09 | 2720381 Omen IV
Omen IV's picture

the core of the issue is not "allow" the default or discount but a recognition that the debt shouldnt have been extended to begin with

it is NOT the borrowers problem - loans are extended (provided) not by borrowers but by LENDERS - borrowers cannot "demand" someone extend them a loan - the lender does it out of his own free will

the reality is the lender wanted "fees" and created a "scheme"  and sold the loan because of the greater fool theory said they could find a home for the paper - the Fool!

fucking the lender is what belize should do - why? - because that what the banks do themselves to begin with - all belize is doing is picking up existing banking practices - when citi lies /falsifies about a syndication in its representations and Judge Rakoff calls them on it - it is prima facia what Belize should do as well

where is the logic not correct?

 

Sun, 08/19/2012 - 22:35 | 2719563 CheapBastard
CheapBastard's picture

But...but...but my broker said 'Government Bonds are Safe...No chance of loss...... !!!'

He also told, "there's never been a better time then now to buy a house."

I should have known better then to buy Debt backed by more debt.....

At least he was nice enough to put me in a "balanced allocation" style investment to spread my roisk around:

25% Belize bonds;

25% Greek and Italian bonds;

25% FB, Zynga and Groupon

25% in California municipal bonds.

Sun, 08/19/2012 - 22:41 | 2719592 holdbuysell
holdbuysell's picture

Reminds me of this SNL clip:

http://www.hulu.com/watch/10310

 

Sun, 08/19/2012 - 22:54 | 2719622 AynRandFan
AynRandFan's picture

Very clever.  The comment writing here is superior.  Enjoying it.

Mon, 08/20/2012 - 04:16 | 2719921 Rogue Trooper
Rogue Trooper's picture

Gee, this really got me thinking. It was so simple, are world bond, perhaps a New World Order Bond.  Fully backed by the UN. All 140 odd countries could borrow, just what they need for social harmony, fund grand projects to capture all our imaginations and other miscellaneous good works.  Of course an elite team of our intellectual betters would be necessary to make these judgements.

The 10 year would be -0.03455.  What could go possibly wrong and why has no one suggested it.

Someone call the squid or at least put up a facebook page... see how many likes this gets.

Mon, 08/20/2012 - 07:14 | 2720021 ZeroAvatar
ZeroAvatar's picture

'......a New World Order Bond.'

 

That's it!  The obverse of the bond could feature a picture of the all-seeing browneye.

Sun, 08/19/2012 - 22:02 | 2719463 Dr. Kenneth Noi...
Sun, 08/19/2012 - 22:04 | 2719468 bobert
bobert's picture

We're going to discover the true price of interest if this trend continues.

Sun, 08/19/2012 - 22:55 | 2719623 AynRandFan
AynRandFan's picture

Yup.  Zero.  Free interest, but partially guaranteed return.  Good enough?  Then I've got some Treasury bills for ya.

Sun, 08/19/2012 - 22:05 | 2719472 quantum dines
quantum dines's picture

You didn't default on that bond

Sun, 08/19/2012 - 22:35 | 2719573 holdbuysell
holdbuysell's picture

The "You didn't..." meme has got to be the meme of the year.

Sun, 08/19/2012 - 22:57 | 2719625 AynRandFan
AynRandFan's picture

Mom:  What happened here?

Kid:  I didn't do it.

Sun, 08/19/2012 - 22:59 | 2719629 CrockettAlmanac.com
CrockettAlmanac.com's picture

You didn't make it the meme. Somebody else did that.

Sun, 08/19/2012 - 22:06 | 2719476 mammoth mo
mammoth mo's picture

Well if you are giving stuff away......

Sun, 08/19/2012 - 22:07 | 2719479 fonzannoon
fonzannoon's picture

I would not be looking at Greece to set any precedents. Maybe Iceland.

As for Federated, at least they have that money market fund....oh wait.....

Sun, 08/19/2012 - 22:59 | 2719632 AynRandFan
AynRandFan's picture

Excellent point.  The smart debtor would default the most, the earliest, and drive a hard bargain.

If I were a Brit, which I'm not thank God, I'd say, "quite right".

Mon, 08/20/2012 - 01:19 | 2719821 Matt
Matt's picture

Other than the fact that Iceland didn't default on sovereign debt at all, but simply opted not to bailout their banks. Also, defaulting is great if you never plan on borrowing again, but probably not so good if you are planning to borrow immediatly afterwards.

Mon, 08/20/2012 - 01:36 | 2719834 Spitzer
Spitzer's picture

aregentina was back into the bond markett quite quickly

Mon, 08/20/2012 - 06:25 | 2719980 samcontrol
samcontrol's picture

bs, wtf are you talking about ? you mean Boden2012 that where restructured AGAIN, they will never pay.

Personally i got 33% three years later and put it into apple , you do the math. Some still have not seen a penny, and i.,m talking Paris Club here...

What i also learned is that 3-6. month after a default it,s a great time to buy EVERYTHING. Who wants to partner up and buy a mini resort in Belize?

Mon, 08/20/2012 - 06:25 | 2719981 samcontrol
samcontrol's picture

bs, wtf are you talking about ? you mean Boden2012 that where restructured AGAIN, they will never pay.

Personally i got 33% three years later and put it into apple , you do the math. Some still have not seen a penny, and i.,m talking Paris Club here...

What i also learned is that 3-6. month after a default it,s a great time to buy EVERYTHING. Who wants to partner up and buy a mini resort in Belize?

Mon, 08/20/2012 - 11:08 | 2720537 rayduh4life
rayduh4life's picture

Uh Matt, how about a little dose of reality.  plenty of folks line up pretty quickly to loan to folks not long after a BK.  Iceland did the right thing by not bailing out their banks.  Where would Ireland be today if they had been Allowed to do the same?

Sun, 08/19/2012 - 22:07 | 2719484 jplotinus
jplotinus's picture

Cash-strapped Municipalities in the USA, take note.

Sun, 08/19/2012 - 23:03 | 2719649 jcpicks
jcpicks's picture

+1

Sun, 08/19/2012 - 22:08 | 2719485 reefermadness
reefermadness's picture

If you were dumb enough to buy Belize debt then you get a crewcut. It's a global debt crisis stupid.

Sun, 08/19/2012 - 22:21 | 2719531 Paul Atreides
Paul Atreides's picture

Anybody who buys sovereign debt is a slave trader.

Sun, 08/19/2012 - 23:24 | 2719683 Harlequin001
Harlequin001's picture

Anybody who buys sovereign debt is a fucking idiot...

Sun, 08/19/2012 - 23:32 | 2719696 flacon
flacon's picture

A slave trading fucking idiot at that.

Mon, 08/20/2012 - 00:05 | 2719744 tmosley
tmosley's picture

Yup, you are buying a slave with a couple of gatling guns instead of arms, and laser beam eyes.  Also, he's very lazy, and will force other people to do his work for him, if he can be bothered to force them to do it, and if they CAN do it, and if they are WILLING to do it.

Sun, 08/19/2012 - 23:33 | 2719692 flacon
flacon's picture

I wish more people spoke the truth like you just did. The sad thing is most people don't know that a bond = BONDAGE, and if they ever did make the mental connection they shrug it off as just coincidence that they are the same word.

Sun, 08/19/2012 - 23:00 | 2719637 CrockettAlmanac.com
CrockettAlmanac.com's picture

Forgive me, I'm just a Daydream Belizer.

Mon, 08/20/2012 - 04:46 | 2719936 Theosebes Goodfellow
Theosebes Goodfellow's picture

OUCH! Stop it, Crokett, that one really hurt!

Sun, 08/19/2012 - 23:02 | 2719642 AynRandFan
AynRandFan's picture

You get what you pay for.  I imagine that Belizean debt is very cheap, given the high interest rate.

Sun, 08/19/2012 - 23:26 | 2719687 Element
Element's picture

It was Dubai World that kicked it off in Nov 2009 when they unilaterally 'recommended' a ten-year suspension in it's debt repayment schedule.

Mon, 08/20/2012 - 01:04 | 2719806 slewie the pi-rat
slewie the pi-rat's picture

a surreal spectacular!

did michaelJackson moving to one of the islands after his santaBarbara trial;  remember when he showed up @ the courthouse  late, in his pajamas with the umbrella so his nose wouldn't melt?  and told the damned judge he had a cold?   was that the time he got up on the limo? 

anyhow, dubai had that great indoor skislope and indoor snowmaking & snowstorm extravaganza

in fairness, lasVegas has had some pretty tough sledding also tho...

Sun, 08/19/2012 - 22:09 | 2719488 Dr. Engali
Dr. Engali's picture

Oh Belize as much as I enjoy seeing the bankers get screwed , didn't you learn anything from Ben? Just print a bunch of money and pay down the debt. Ben is going to screw you when he prints with your dollar peg . Beat him to the punch.

Sun, 08/19/2012 - 22:14 | 2719499 fonzannoon
fonzannoon's picture

Is Belize on the USD? Why don't they just hike the price of their pina coladas? Those rich dudes will pay it.

Sun, 08/19/2012 - 22:19 | 2719511 Dr. Engali
Dr. Engali's picture

Belize has their own central bank. They can print at will. They keep their currency pegged with the U. S. dollar. I prefer a Margarita, Pina Coladas are disgusting in my book.

Sun, 08/19/2012 - 22:19 | 2719525 fonzannoon
fonzannoon's picture

Wait a minute....hold on and just wait a minute....Are you telling me that a country that has the ability to print it's way to solvency is instead choosing to default on it's obligation? I need a minute.

Sun, 08/19/2012 - 22:37 | 2719579 Dr. Engali
Dr. Engali's picture

Yeah. It doesn't make much sense to me. It would be much easier if they changed their dollar peg and inflated the the bond market wouldn't be so vicious on them. With an outright default the bond market will cream them. Either way it's not pretty.

Sun, 08/19/2012 - 23:07 | 2719653 AynRandFan
AynRandFan's picture

If the Belizeans, or Belizians, whatever, decided to drop the dollar peg 6 months from now, what do you think a Beliziean dollar would be worth even now?  I don't want one.

Sun, 08/19/2012 - 23:35 | 2719703 flacon
flacon's picture

I recall Panama tried loosening their dollar peg but they ended up with a lot of inflation. I don't know what has happened there since that time. 

Mon, 08/20/2012 - 00:50 | 2719796 Matt
Matt's picture

Dr. Engali: Belize can print Belize dollars, which doesn't help since the bonds seem to be USD denominated. Also, you know you're in trouble when Standard & Poors lowers you to CC. Would love to see the Egan-Jones rating.

http://www.caribbean360.com/business/607491.html

Mon, 08/20/2012 - 14:27 | 2721182 pashley1411
pashley1411's picture

duh - lots of inflation, of course

Sun, 08/19/2012 - 22:37 | 2719582 LetThemEatRand
LetThemEatRand's picture

They can print, but they have this small problem that they don't have the world reserve currency.  Only one printer in chief has the ability to export much of the inflation created by his Ctrl P fetish.

Sun, 08/19/2012 - 22:39 | 2719586 fonzannoon
fonzannoon's picture

Ahhh thank you LTER I knew I had to be missing a piece.

Sun, 08/19/2012 - 23:04 | 2719650 AynRandFan
AynRandFan's picture

This is the problem of emerging market economies pegged to the U.S. dollar.  They can't inflate to promote growth, if they ever could of course.

Sun, 08/19/2012 - 22:09 | 2719490 boogerbently
boogerbently's picture

Germany needs to say "Good luck with that, we're out of here."

Sun, 08/19/2012 - 22:11 | 2719494 Timmay
Timmay's picture

This is what ARMIES are for.....

Sun, 08/19/2012 - 23:10 | 2719657 tmosley
tmosley's picture

Careful, Belize is a de facto protectorate of the UK.

Mon, 08/20/2012 - 02:33 | 2719871 Joe A
Joe A's picture

The British army is tied down at the embassy of Ecuador in London.

Sun, 08/19/2012 - 22:13 | 2719496 Yen Cross
Yen Cross's picture

 Let the handouts begin! Merry Christmas everyone!  You all get a free " color laser printer"!   Coupons will be in " http://www.spiegel.de/international/ " until further notice.

Sun, 08/19/2012 - 22:12 | 2719497 erg
erg's picture

Me: I'm skipping my payment this month bro.

Banker: Cool enuff. Love Ya!

Sun, 08/19/2012 - 23:09 | 2719655 AynRandFan
AynRandFan's picture

LOL

Sun, 08/19/2012 - 23:22 | 2719677 XitSam
XitSam's picture

How can I get in on this action? D'oh! I haven't had any debt for the last twelve years. Guess I'm just a dope. I think there a name for this ... some kind of hazard.

Mon, 08/20/2012 - 00:28 | 2719776 StychoKiller
Mon, 08/20/2012 - 07:24 | 2720042 ZeroAvatar
ZeroAvatar's picture

'Mooks' is more like it.

Sun, 08/19/2012 - 22:15 | 2719504 fonzannoon
fonzannoon's picture

Goldman will be in there tomorrow with a Bridge loan.

Sun, 08/19/2012 - 22:16 | 2719512 Whoa Dammit
Whoa Dammit's picture

Making one's living off of debt is grand...until its not.

Sun, 08/19/2012 - 23:16 | 2719662 AynRandFan
AynRandFan's picture

So far, "not" is never.  Our global economic collective cannot survive unless failure is impossible.  The idea of individual responsibility cannot be reconciled with socialism.

Sun, 08/19/2012 - 22:16 | 2719513 Bill D. Cat
Bill D. Cat's picture

Hold on , Goldman says buy ........

Sun, 08/19/2012 - 22:17 | 2719518 gwar5
gwar5's picture

Belize is broke? Leapin lizards, a banana republic having money problems? What up?

Sun, 08/19/2012 - 22:17 | 2719519 ThisIsBob
ThisIsBob's picture

You're supposed to be chasing pussy down there, not yield.

Sun, 08/19/2012 - 22:36 | 2719578 delacroix
delacroix's picture

the pussy chases you.

Sun, 08/19/2012 - 23:23 | 2719680 XitSam
XitSam's picture

In Soviet Russia, Pussy Riot goes to jail.

Mon, 08/20/2012 - 07:26 | 2720047 ZeroAvatar
ZeroAvatar's picture

Yeah, the pussy chases you.  50% has some type of STD, 1 in 10 has HIV.  YEEHAW!

Sun, 08/19/2012 - 23:18 | 2719669 AynRandFan
AynRandFan's picture

Are there any 50 year olds?

Hot ones, I mean.  Yeah, there aren't any here either.

Sun, 08/19/2012 - 22:23 | 2719533 T-roll
T-roll's picture

Welcome to the new normal.  It starts with countries, then states, then municipalities.  The final blow will be when those with underwater mortgages will demand, en masse, that the banks restructure loans or else they will walk.  It'll be an interesting game of poker on a global scale.  Let's see who has the better poker face, the creditors or the debtors. 

Sun, 08/19/2012 - 23:35 | 2719588 Things that go bump
Things that go bump's picture

At this rate, it will be free houses for everybody.

Mon, 08/20/2012 - 00:45 | 2719792 Matt
Matt's picture

As it was explained to me, that's practically the case in Belize already. When a citizen is ready to start a family, they apply for a 50' X 100' lot and when a new area is designated, they get assigned one. Then, they can get a mortgage (possibly government backed) to build the house.

 

Where does this land come from? Confiscated farmland. They take the developed farm and give you a piece of jungle further away of equal size.

 

The housing programs, infrastructure programs and buying electricity from Mexican hydrocarbon power plants then reselling the power at a lower price to residences are likely big factors as to why they are broke.

Sun, 08/19/2012 - 22:48 | 2719604 nowhereman
nowhereman's picture

Just what do you think all those hollow point bullets are for?

http://dailycaller.com/2012/08/17/who-does-the-government-intend-to-shoo...

Sun, 08/19/2012 - 22:48 | 2719607 HappyCamper
HappyCamper's picture

The creditors in this poker game have blinked more times than I can count…  always backed up by the sovereigns.  And the sovereigns always say "we’re not going to back you up any more.  No, really, we really mean it this time!  Get your house in order."

Right.

Yes, it’s on like Donkey Kong.

Sun, 08/19/2012 - 23:21 | 2719676 AynRandFan
AynRandFan's picture

Most asute syopsis with humor and irony in condensed form I've ever seen.  Wow.

Sun, 08/19/2012 - 22:49 | 2719608 you enjoy myself
you enjoy myself's picture

the debtors will.  Gonzalo Lira has a great piece on the coming middle class anarchy.  if you live in a non-recourse state there are only two things keeping underwater borrowers from mass strategic defaults - their sense of morality and a potential hit to their credit rating.  the threat of a credit rating hit is diminishing rapidly since there's now so many people with adverse credit events on the horizon.  you'll just be one of millions, no longer a risk outlier.   and the morality play, as detailed by Lira, will collapse rapidly once everyone who's bothered to play by the rules, people who were never leaches on society, who didn't cheat and didn't suck on the govt teat, realize that they're being played for suckers.

Sun, 08/19/2012 - 23:25 | 2719684 AynRandFan
AynRandFan's picture

That is a completely absurd theory, and I mean that in the nicest way.

In my experience, there is no relationship between integrity and money.  Corollary: If you believe people will act without integrity when money is involved, you will be right almost all the time.

Sun, 08/19/2012 - 23:54 | 2719732 gmrpeabody
gmrpeabody's picture

Especially the ones that find they've been played for suckers.... that was his point!

Mon, 08/20/2012 - 03:49 | 2719905 you enjoy myself
you enjoy myself's picture

your experience has obviously never led you to meet a middle class homeowner that took out a mortgage. 

Sun, 08/19/2012 - 22:24 | 2719541 holdbuysell
holdbuysell's picture

they are "sure every country could benefit from not paying their debt but this isn't the way to do it!"

Unintended consequences sure suck.

 

Sun, 08/19/2012 - 22:24 | 2719543 fonzannoon
fonzannoon's picture

from marketwatch....yup

A whopping 62% of the Brits don’t trust the banks and more than a third admit they haven’t trusted them since the U.K. slipped into recession, according to research published by Currencies.co.uk on Friday.

Recent controversies about the country’s leading banks have fueled mistrust among the British population and 40% have started to move their business away from banks to peer-to-peer lending companies, personal loan providers and currency specialists, the study said.

Sun, 08/19/2012 - 22:43 | 2719597 Offthebeach
Offthebeach's picture

If people do p2p lending at lower costs, higher profit, low overhead....were do old style banks fit in? They go the way of record companies, snail mail, dead tree media. How will central banks keep fiat with out banks having deposits to print 20-30 times more?

Cool.

Sun, 08/19/2012 - 22:47 | 2719602 fonzannoon
fonzannoon's picture

Yup and as p2p lending increases and people withdraw funds fractional reserve banking is standing there naked with the tide receeding.

Sun, 08/19/2012 - 23:26 | 2719685 Schmuck Raker
Schmuck Raker's picture

Banks will see to it that regulators drive P2P lending into the ground.

I hope P2P still survives Underground. Less inter<net>working and more pencil & paper might do it.

Sun, 08/19/2012 - 23:29 | 2719690 AynRandFan
AynRandFan's picture

For person-to-person lending to have any economic impact, we would need 3 billion fewer people or a complete breakdown of the global socialist state.

Come to think of it, I'm betting on the latter.

Sun, 08/19/2012 - 22:26 | 2719551 CheapBastard
CheapBastard's picture

"...just walk away...." is carried to a new level.

Sun, 08/19/2012 - 22:30 | 2719560 holdbuysell
holdbuysell's picture

<--- Productive society prevails

<--- Bloated global financial system prevails

Sun, 08/19/2012 - 23:31 | 2719694 AynRandFan
AynRandFan's picture

I'm struggling with the peer pressure.

Could you please change the psychology of your question?  What if noone prevails?  We all lose, and humanity isn't up to the task?  That's what I worry about.

Sun, 08/19/2012 - 23:53 | 2719709 CrockettAlmanac.com
CrockettAlmanac.com's picture

That sounds more like Keating than Roark.

Mon, 08/20/2012 - 00:18 | 2719767 AynRandFan
AynRandFan's picture

Survival of the fittest sometimes means everybody dies.  Just sayin'.  Economics in particular is not always win-lose.  Sometimes it's lose-lose.   A lack of economic activity will impoverish us all.

Sun, 08/19/2012 - 23:59 | 2719737 holdbuysell
holdbuysell's picture

Couldn't fit 'none of the above' into the two-choice selection set (the up/down selection wasn't meant for this type of voting comment).

Reversion to the mean is inevitable; financial systems will always exist and thrive, but not when they've outpaced productive capabilities. That's the point; they will revert to the mean.

I'm quite sure we'll be growing food, building homes, producing clothing, etc. going forward. Similarly, I'm quite sure the current financial system is going to change to reflect the productive economy that it's intended to serve. Right now, there's a massive disconnect.

I saw a movie years ago and it seems to be becoming popular on DVD of late. Worth watching, as the end describes the shedding of complexity that's occurring right now.

Laputa (Castle in the Sky)

http://www.imdb.com/title/tt0092067/

Welcome to Zero Hedge.

 

Sun, 08/19/2012 - 22:32 | 2719564 Whoa Dammit
Whoa Dammit's picture

The world would be a much better place if no government was allowed to issue debt.

Sun, 08/19/2012 - 23:38 | 2719711 CrockettAlmanac.com
CrockettAlmanac.com's picture

The world would be a much better place if no government was.

Sun, 08/19/2012 - 22:34 | 2719568 tahoebumsmith
tahoebumsmith's picture

Personally I kind of liked Iceland's approach...Fuck off Bitchez!

Sun, 08/19/2012 - 23:13 | 2719659 tmosley
tmosley's picture

Yes, if they follow through as Iceland did, they will be in much better shape.  Even more so if they manage to cut their spending to match their expenditures.

Sun, 08/19/2012 - 23:33 | 2719698 AynRandFan
AynRandFan's picture

Accident or not, Iceland scored as many points as possible in being a completely irresponsible country full of entitled people while not paying for it.

Sun, 08/19/2012 - 23:51 | 2719728 Things that go bump
Things that go bump's picture

Why should the people of Iceland pay for mistakes those banks made.  I hadn't heard that they were collectively owned by the people of Iceland.  I don't suppose the people of Iceland were individually going to get a cut of the profits.  Why should they allow themselves to be enslaved to pay for the failure of those banks.  Good for them.  They have a small population and were able to enforce their will on the Government.  Good for them.

Mon, 08/20/2012 - 00:25 | 2719774 AynRandFan
AynRandFan's picture

Obviously the people are never responsible.  They only elect people like Barney Frank and Chris Dod to run the worldwide economy into the ground.

Mon, 08/20/2012 - 01:25 | 2719809 Things that go bump
Things that go bump's picture

That's a mighty wide and generalized brush you paint with there, AynRandFan, ZH member for 6 days and 4 hours.

Mon, 08/20/2012 - 01:54 | 2719848 Bear
Bear's picture

This is Fight Club ... no rules, no longevity

Sun, 08/19/2012 - 22:34 | 2719571 Vidar
Vidar's picture

Maybe people will finally realize that states don't pay their debts and stop buying "sovereign" bonds.

Sun, 08/19/2012 - 22:38 | 2719583 holdbuysell
holdbuysell's picture

That's the next unintended consequence in the sequence.

Sun, 08/19/2012 - 22:36 | 2719576 wombats
wombats's picture

How long until Belize is "liberated".  GS, JPM financed freedom fighters should be arriving there to "free" the people from their gov't any day now.

Sun, 08/19/2012 - 22:38 | 2719584 fonzannoon
fonzannoon's picture

No shit...they can write the whole thing off.

Sun, 08/19/2012 - 23:35 | 2719702 AynRandFan
AynRandFan's picture

I hear this a lot.  GS is the headquarters of some global financial cabal.  Sorry, I don't read comic books anymore.

Mon, 08/20/2012 - 10:44 | 2720472 Maghreb
Maghreb's picture

Have you dropped the Comic Books for Romantic Novels,  about getting T-bagged by bankers in your moms basement. 50 Shades of Goldman's hairy Sack? Your an Ayn Rand fan so i figure thats the way you gotta roll.Are you bitter because Bwarney Fwank won't have you?

What do you read? Wall Street Journal? The whole world took a hit based on the actions of a small group of people in Wall Street, it doesn't matter what you call if they are powerful and fucking people over.It Has nothing to do with Iceland's "Entitlements" ,Barney Frank, or this 20 percent of the population that you think might need to die. I don't usually comment much but you are the creepiest troll i have ever come across here, the little compliments here and there, subtle hints approving genocide, Ayn Rand fan. Do you give out ice cream to disabled kids out the back of your unmarked van?

Sun, 08/19/2012 - 22:50 | 2719611 nathan1234
nathan1234's picture

Actually it is the US which is the biggest beggar with all it's guns threating all those who desist from using their dollars and their banks and banking system.

It's time other countries realised that it is best to forego their dollar reserves and regain their economic and individual freedom.

 

Sun, 08/19/2012 - 22:50 | 2719612 vegas
vegas's picture

Just like people that trade through US brokers, those that buy any soveriegn debt are idiots. In today's global environment of Cntrl-P, the only asset class that will preserve wealth and purchasing power, over the next 10 years and beyond, is gold. No, not bullshit CME paper futures that will eventually default, but physical bullion you own. Who the fuck would seriously buy Belize paper and not expect to get screwed? Might have better luck with those Nigerian emails.

 

http://vegasxau.blogspot.com

Sun, 08/19/2012 - 23:40 | 2719713 AynRandFan
AynRandFan's picture

Completely short on sovereign bonds is a bad call.  There's so much cash in the world, everything is worth more money, as long as it's a liquid asset.  Bonds are liquid, real estate ain't.

Sun, 08/19/2012 - 22:53 | 2719621 Me_Myself_and_I
Me_Myself_and_I's picture

Like the Fed isn't doing anything different with easing, monetization of the debt, and manipulation of inflation statistics. 

Sun, 08/19/2012 - 22:57 | 2719626 jcpicks
jcpicks's picture

ehhh......I'll just make my next mortgage payment in 15 years.  We cool?

Mon, 08/20/2012 - 00:10 | 2719714 AynRandFan
AynRandFan's picture

Save your money and lease from me.

Sun, 08/19/2012 - 23:00 | 2719635 oogs66
oogs66's picture

Once again. This is why the big distressed players stay away from sovereign and stick to corporate - mostly us corporate

Sun, 08/19/2012 - 23:23 | 2719673 tahoebumsmith
tahoebumsmith's picture

Maybe Governor Moonbeam ought to take notes as well? Oh but that's right, they got a 18.3 BILLION dollar hole to fill! I got ridiculed by some saying the # was going to be 18 BILL but here we are. And while the debts and obligations keep piling up, there seems to be a serious problem with revenues to the tune of -33.5%...BAWAHAHAHA Fricken Libtards on steroids. Not only has the tax revenue dried up by the tune of 33.5% but check out the increase in outlays in Chaing's report.. Looks like a 54% swing to me? California is truely fucked, meanwhile all the focus is on Greece and their 450 billion eu problem, looks like things are heating up closer to home. California has had to borrow some 30 billion over the past 3 years to end the fiscal year.Read it and weep Bitchez, doesn't look very pretty to me.

http://www.sco.ca.gov/Files-ARD/CASH/fy1213_jul.pdf

 

"With tax revenue plummeting and the state already the second lowest rated credit in the country, if the independent credit rating agencies downgrade the state to “junk bond", California will be short up to $18 billion and default."

 

http://www.breitbart.com/Big-Government/2012/08/18/CALIFORNIA-SALES-TAX-...

 

Sun, 08/19/2012 - 23:48 | 2719723 XitSam
XitSam's picture

Oh, don't be so melodramatic. They'll make it all up on taxes on the new Facebook millionaries and the LA/SF high speed rail.

Mon, 08/20/2012 - 01:50 | 2719845 Bear
Bear's picture

If am looking forward to my $500 ride sometime in 2037

Mon, 08/20/2012 - 00:05 | 2719745 AynRandFan
AynRandFan's picture

At least Californians are still proud of their belief in a redistributive society.  At least they still have that.

Mon, 08/20/2012 - 01:56 | 2719850 snblitz
snblitz's picture

Actually, we Californians are well over 28 billion in the hole.  But BO promised us more dollars if we vote for him again.

Sun, 08/19/2012 - 23:23 | 2719681 ejhickey
ejhickey's picture

many years ago when I was a small boy , my family got a new car.  One of the options was a cigarette lighter.  It worked by first depressing the button and then pulling it out and the end of it glowed red hot and one lit their cig off that.  I knew enough NOT to touch it when it red hot BUT I wondered "Could it still burn me if it was NOT glowing?"  Only one way to test it -  touch it. Predictable result - one cooked fingertip and two angry parents who said " How could you be so stupid".  "I wanted to see if it was hot"  I said while crying.  "You idiot! Of course it's hot.  It's a damn cigarette lighter" said my dad.  So I got some axle grease for my finger (no trip to the ER back then.  why waste the $$ on an idiot) and a whack on the behind and was banished to the back seat and told to shut up.  I never touched another car cigarette lighter.  Once burned , twice shy.  Sadly , it appears that Hans Humes never got his finger burned as a small child. 

Mon, 08/20/2012 - 00:11 | 2719753 lolmao500
lolmao500's picture

IMO they should lose all their money. You made a bad investment? TOO FUCKING BAD.

Mon, 08/20/2012 - 00:18 | 2719770 holdbuysell
holdbuysell's picture

And therein lies the rub.

When the banksters issued the debt, they then sold it to pension funds and other entities to whom you've entrusted your savings.

A classic Mexican Standoff.

http://www.youtube.com/watch?v=FQ3ujsh_xC4

 

Mon, 08/20/2012 - 00:23 | 2719773 Nachdenken
Nachdenken's picture

Bargain sale before the crash. Who is buying ?

Mon, 08/20/2012 - 00:32 | 2719779 Arthur
Arthur's picture

The thing was a great ploy.  

Belize can purchase their bonds back at a huge discount without ever having to formally restructure.

Of course they will need cash for the purchase.

Mon, 08/20/2012 - 01:34 | 2719832 Bear
Bear's picture

Or just issue more bonds for more suckers to buy

Mon, 08/20/2012 - 00:36 | 2719781 vincent
vincent's picture

"Goldman will be in there tomorrow with a Bridge loan."

Sign here Bitchez.. Thank you.

And now all your wonderful natural resources are belong to us.

Handing out greenies like M&M's in this thread.  Hats off to all.

Mon, 08/20/2012 - 01:47 | 2719844 walküre
walküre's picture

Greece, Belize ... all childs play ..

The day the US is going to demand haircuts from its creditors is coming.

+ 100% debt/GDP can only be "twisted" so much longer

Mon, 08/20/2012 - 02:55 | 2719880 Joe A
Joe A's picture

It would be remarkable to see how creditors are likely to give in when the argument of 'damage to human health' would be used. Just like Stalin said to his industrial managers when he ordered them to move heavy industry eastwards in 3 months time when the Germans invaded in WWII. "We can't do that", they told Stalin. Stalin's reply: "meet Mr. AK-47"

But America's creditors are next to financial institutions countries such as China. Will the US say to China "meet Mr. nucleair ballistic missile"?

Mon, 08/20/2012 - 02:40 | 2719877 Joe A
Joe A's picture

Hmm, expect a Granada-like liberation action in Belize, sponsored by the IMF.

Mon, 08/20/2012 - 05:24 | 2719958 roger714
roger714's picture

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Mon, 08/20/2012 - 05:32 | 2719961 Peter K
Peter K's picture

Takes the meaning of "dash for trash" to a totally different level. :)

Mon, 08/20/2012 - 06:06 | 2719973 falak pema
falak pema's picture

Que Passa in Europe burning...Is the Squid getting optimistic in run up to Obammy election period?

GOLDMAN: Time To Bet On A Big Comeback In Europe - Business Insider

That and this : Spanish 2 Year August 20 - Business Insider

After this yesterday : ECB Interest Rate Spread Caps - Business Insider

All this is the MSM financial blogs ramping up optimism in Merkel's ultimate cave in to ECB's demands. Pressure on to force Karlsruhe's and Bundes bank to melt their intransigeant stand! 

If this rally confirms itself it will for sure help Obammy in November. Making Eurozone safe from market mayhem for the next three months is vital for Potus.

Having said that; as ZH has clearly shown, the Squid is aiming at year end S&P at 1250...as they feel that the fiscal cliff will be ominous; all the more so if Bush tax stimulus packages are prolonged in January 13. 

Mon, 08/20/2012 - 06:13 | 2719976 chistletoe
chistletoe's picture

Belize.

 

been there, done that, got the baggage claim ticket.

Six separate races, all getting along with each other;  blacks, indians, spanish, chinese, Jimmy Buffets, and Mennonites.

The only ones who work are the Mennonites.  They are German, speak low German, escaped from Germany in the late 1930's.

http://chistletoe.net/photos/Belize-ethanol.JPG

Mon, 08/20/2012 - 06:41 | 2719989 CatoRenasci
CatoRenasci's picture

Once upon a time in Latin America, Africa and Asia, this sort of behavior resulted in the imminent arrival of gunboats and the collection of port revenues (at least) by the Powers until the debts were paid.

Mon, 08/20/2012 - 09:28 | 2720281 Hedgetard55
Hedgetard55's picture

The Great Blue Hole of Belize has new symbolic meaning.

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