Barclays Explains Why A 50% Greek Haircut "Would Be Considered A Credit Event, Consequently Triggering CDS Contracts"

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Wed, 10/26/2011 - 23:31 | 1815773 tom a taxpayer
tom a taxpayer's picture

Is credit event? It depends on what the meaning of the word "is" is.

Wed, 10/26/2011 - 23:35 | 1815836 Oh regional Indian
Oh regional Indian's picture

Is : Reality 


As you can See : Fiction

Looks like a huge wind-up. Shiver me timbers etc.


An Audio Visual Journey

Wed, 10/26/2011 - 23:41 | 1815858 Harlequin001
Harlequin001's picture

Ok, so explain to me then how a 50-60% writedown can possibly be considered as anything other than a credit event?

and then explain to me what the point of a CDS is if this isn't it.

and please spare me the bit about 'derivatives are for trading, not for collecting...'


Wed, 10/26/2011 - 23:48 | 1815889 qussl3
qussl3's picture

Haircut taken on the creditor's initiative.

Debtor took no action to force.


No credit event.


Thu, 10/27/2011 - 00:18 | 1815938 Harlequin001
Harlequin001's picture

Magic. No credit events with gold, eh...

Unless of course, you're with GLD...

Now let me see, the only way as I understand it to force a collective haircut on all creditors is through bankruptcy in one form or another. So even one fund manager insisting on full payment would effectively force either a claim for preferential treatment or a default, otherwise it is the insolvency route. I still don't see how this is not a CDS event...

Personally I find it somewhat staggering that these clowns would try to negotiate a 'market rate' based on whether they can or cannot avoid a default.

A market rate is precisely that, regardless of derivative contracts...

Time to start really benefiting from the consequences of all that 'financial innovation'...

Thu, 10/27/2011 - 00:27 | 1815993 flacon
flacon's picture

Is this the moment of nuclear fission? Or will the communist leaders in charge of the global monetary system resort to their LAST DUTY?


 “The last duty of a central banker is to tell the public the truth.” -Federal Reserve Board Vice Chairman Alan Blinder

Thu, 10/27/2011 - 00:44 | 1816038 Harlequin001
Harlequin001's picture

The only time a central banker is ever going to tell you the truth is when they tell you it's over, last week, and oh by the way, here's the bill...

Please pay promptly to avoid penalties...

Thu, 10/27/2011 - 01:28 | 1816114 DoChenRollingBearing
DoChenRollingBearing's picture

All of these little Euro-thingies going on are non-events.  Stop worrying!  This ain't no stinkin' Credit Event!


Of course they will find a way to muddle this one through, just as always.  And they will keep on doing it. 

Until it does not work anymore

Thu, 10/27/2011 - 01:58 | 1816168 derek_vineyard
derek_vineyard's picture

"its a wrap"

Thu, 10/27/2011 - 03:40 | 1816269 Harlequin001
Harlequin001's picture

The Fed will pay. It's the only entity that can...

Don't you just love this spreading wealth around mularky. It's just so easy, fast and well, relatively inexpensive, for me anyway.

Wed, 01/18/2012 - 23:14 | 2076837 haibop
haibop's picture

exactly... junk car for cash

Sat, 11/26/2011 - 11:36 | 1915075 haibop
haibop's picture

thanks for the great information! frameless shower doors

Tue, 05/01/2012 - 21:04 | 2389830 haibop
haibop's picture

hmmmm Inteligator

Thu, 10/27/2011 - 05:20 | 1816348 goldenbuddha454
goldenbuddha454's picture

I'm not an expert, but it seems like it is obviously a "credit event" a trigger, if you will, setting off the CDS contracts against Greek sovereign debt.  The problem is will the governing body representing the CDS financial system consider it as such.  How can they not?  If they do consider it a "credit event" then a bunch of money is going to be hemmorrhaging out of the banks selling the CDS contracts thus causing a major run, but in all likelihood, they will not lable it a "credit event" to prevent a complete collapse of the banking system.  How many trillions have been bet against Greek debt?  How much is actually backed by hard money in the CDS contracts?  What will happen as a result of the moneys not being paid out per the CDS contracts will be that noone will want to buy interest in the CDS's anymore thus shutting down the whole CDS game in its entirety, thus shutting off the flow of needed income to the sovereign debt countries and entities, thus shutting off the flow of needed money to continue unending spending, entitlement programs, public pension obligations etc..etc...IMO

Wed, 10/26/2011 - 23:49 | 1815892 kengland
kengland's picture

" of its members"


You just gave them an out

Wed, 10/26/2011 - 23:24 | 1815790 qussl3
qussl3's picture

Cant remember the guest's name, but someone on CNBC made an observation that this was the portfolio insurance debacle redux.

If your hedges dont work you dump the crap.


Wed, 10/26/2011 - 23:24 | 1815791 SGS
SGS's picture

Feta.  Hands down.

Sun, 03/18/2012 - 12:00 | 2267119 haibop
Wed, 10/26/2011 - 23:26 | 1815800 Big Ben
Big Ben's picture

If this is determined NOT to be a credit event, then what about all the banks (like MS) that claim to have their European exposure hedged?

Just wondering...

Thu, 10/27/2011 - 00:32 | 1816008 flacon
flacon's picture

They will say "The hedges are there for a catastrophie, obviously this situation is TRANSITORY.". Move along! Move along!

Wed, 10/26/2011 - 23:27 | 1815803 Unprepared
Unprepared's picture

ISDA isda boss ... do not argue

Wed, 10/26/2011 - 23:27 | 1815805 kito
kito's picture

last one to file a federal class action lawsuit against the isda is a rotten egg!!!!!

Wed, 10/26/2011 - 23:36 | 1815842 Oh regional Indian
Oh regional Indian's picture

Though, DUMPtyesque, they'll feel more like a broken egg.

Must be tough, trying to drink from a firehose.


Thu, 10/27/2011 - 01:53 | 1816161 StychoKiller
StychoKiller's picture

Hmm, 40% pregnant or 60% pregnant -- something very wrong with the EU math here...

Wed, 10/26/2011 - 23:33 | 1815809 Mactheknife
Mactheknife's picture

>What do you know: a Greek!

Priceless...literally. Like good ole Uncle Warren said, "When the tide goes out, you get to see who was swimming in the CDS ocean, naked or not." (Close enough for government work.)

Wed, 10/26/2011 - 23:44 | 1815873 Harlequin001
Harlequin001's picture

'(Close enough for government work.)' - Now, where have I heard that saying before? The military, perhaps...

Wed, 10/26/2011 - 23:46 | 1815884 dark pools of soros
dark pools of soros's picture

they do still use hand

Wed, 10/26/2011 - 23:59 | 1815931 Harlequin001
Harlequin001's picture

I thought it was all done with cruise missiles these days...

hand grenades are so... yesterday...

Thu, 10/27/2011 - 00:01 | 1815936 Oh regional Indian
Oh regional Indian's picture

It's Predators Droning on now actually. Cruise misslies are so yesterday, nein?


Thu, 10/27/2011 - 00:21 | 1815981 Harlequin001
Harlequin001's picture

I thought the only thing 'droning on' these days was the ECB.

On the subject of Predators, I was thinking of building myself a model aeroplane and going to war with a few small countries myself...

Thu, 10/27/2011 - 00:28 | 1816000 UP Forester
UP Forester's picture

Anyone know what it'd take to scramble a Predator uplink?

Just for educational purposes, of course.

Thu, 10/27/2011 - 00:47 | 1816044 Harlequin001
Harlequin001's picture

Yep. A Browning 9 mil at the back of the head and a 'Hand over your password or I shoot your dog...'

Thu, 10/27/2011 - 01:31 | 1816124 UP Forester
UP Forester's picture

Damn.  I'm way too far away from Nevada to do that, I guess I'll have to figure out how to build an EMP device.

For educational purposes, of course.

Sun, 02/26/2012 - 00:04 | 2196968 haibop
Thu, 10/27/2011 - 07:03 | 1816448 Mitzibitzi
Mitzibitzi's picture

Basically, you can't, absent a pretty powerful broad-spectrum jamming suite, which would simply make you a peachy target for an anti-radiation missile.And even that wouldn't work very well if the link is tight line-of-sight.

It's frequency agile and encrypted a bunch of ways. I know more or less how that kinda shit works (I worked on similar stuff when I was in the RAF) and I'm pretty sure (99+% sure, in fact) I couldn't do it, even with schematics of all the hardware and copies of all the code. Nor would I want to! You start messing with systems like that and innocent people are gonna get killed if it goes out of control and crashes somewhere. A couple of Hellfire warheads and a bunch of fuel would make one hell of a mess in a residential area.

I imagine they'd be pretty well shielded against EMP, too. Certainly would be if I'd designed the thing. Which leaves you the 'go up there in your Cessna and shoot it down' option. And they can shoot back, ya know.

The only hope against most modern military weapons is that the operators may refuse to employ them against domestic civilians, no matter what 'terrorist' bullshit reason they're given for doing it.

Also bear in mind that if it ever comes to military action against a domestic population in open insurrection, the dust will be wiped off all those cluster bombs, FAE bombs and hyperbaric weapons we're too civilised to use against foreigners (when the media might be watching, anyway!). Civil wars are almost always far more brutal than the foreign ones.


Thu, 10/27/2011 - 05:46 | 1816361 prophet
prophet's picture

Reapers.  Behind the times.


Tue, 03/13/2012 - 22:38 | 2252824 haibop
haibop's picture

may not be that effective. incline treadmill

Wed, 10/26/2011 - 23:29 | 1815817 maxw3st
maxw3st's picture

"...the only bridge in the chasm between Mark to Unicorn and reality..." Pay no attention to the man behind the curtain. But CDS holders will be looking for theirs. And rightfully so.

Wed, 10/26/2011 - 23:32 | 1815830 tekhneek
tekhneek's picture

"Do you see what happens Larry? When you fuck a stranger in the ass? DO YOU SEE WHAT HAPPENS?!"

Wed, 10/26/2011 - 23:32 | 1815831 Dr. No
Dr. No's picture

The selective write down on selective bonds is Sarc killing off his political enemies. Business as usual in politics. Just dust off your 2008 Fed playbook to see who was on the side of the Fed shareholders and who wasn't. Same goes with Europe. If you look to see who got a haircut, you will quickly find the list of Sarc's foes.

Wed, 10/26/2011 - 23:36 | 1815840 kito
kito's picture

from reuters:

"The debt is absolutely sustainable now," Papandreou told a news conference after a meeting of euro zone leaders, which reached agreement with private investors on the 50 percent writedown.

Papandreou added a promise that Greece would produce no more primary budget deficits from next year.


Mon, 11/14/2011 - 21:07 | 1877728 haibop
haibop's picture

this could be serious... power4home pro

Wed, 10/26/2011 - 23:36 | 1815843 BillyBoy22
BillyBoy22's picture

You guys will tell me when its time to start stockpiling weapons right

Thu, 10/27/2011 - 00:29 | 1816004 UP Forester
UP Forester's picture

About 3 years ago....

Thu, 10/27/2011 - 01:31 | 1816122 DoChenRollingBearing
DoChenRollingBearing's picture

BB22, UP is correct.

Old Chinese saying (really, no joke):

"The best time to plant a tree was 20 years ago.  The second best time to plant a tree is NOW."

Wed, 10/26/2011 - 23:36 | 1815844 AndrewJackson
AndrewJackson's picture

What was morgan stanley saying again about european sovereign risk net of hedging?

Wed, 10/26/2011 - 23:40 | 1815864 Sequitur
Sequitur's picture


Wed, 10/26/2011 - 23:53 | 1815876 Dr. No
Dr. No's picture

I believe morgan transferred all those risk assets to the parent, BOA. In that way, the losses would be dumped onto FDIC rather than the FED when BAC goes bankrupt in the near future.

EDIT: my error. I was thinking merrill lynch, not Morgan. BAC own Merrill.

Wed, 10/26/2011 - 23:53 | 1815908 azusgm
azusgm's picture

No, Dr. No. That was Merrill.

Not to worry. It is hard to tell the fraudsters apart.

Wed, 10/26/2011 - 23:54 | 1815916 Dr. No
Dr. No's picture

Yes. I added edit note same time as you replied. Thanks for watching post accuracy.

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