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Completed ECB Bond Exchange Is "Biggest Screwing Of Our Lives"
A well-known bond expert just blasted the following summary of today's "market positive" and supposedly just completed ECB bond swap.
DOW JONES REPORTS THE ECB GREEK BOND SWAP IS NOW DONE. THIS MEANS THAT EACH AND EVERY EUROPEAN BOND THAT YOU OWN IS NOW SUBORDINATED TO THE ECB AND THE EUROPEAN UNION. IF THEY CAN SWAP THEIR BONDS FOR NEW BONDS WITH DIFFERENT TERMS, NO CAC CLAUSE IN THIS CASE, THEN THEY CAN SWAP THEIR BONDS FOR ANY TERMS AND CONDITIONS THEY LIKE WHILE THE BONDS OF PRIVATE HOLDERS ARE HELD TO THE ORIGINAL INDENTURE. THE EQUITY MARKETS MAY RALLY ON THIS NEWS BECAUSE THEY ARE FOCUSED ON A DEAL GETTING DONE BUT ANYONE IN FIXED INCOME SHOULD NOW CONSIDER RETCHING UNDER THEIR DESKS AS WE ALL JUST TOOK ONE OF THE BIGGEST SCREWINGS OF OUR LIVES THAT MAY WELL NOT BE A SINGULAR EVENT.
Precisely what we said yesterday (here and here) and again today.
And remember this from yesterday?
- "[it will take] algos take the required 12-48 hours to figure out what just happened today"
18 hours sounds about right...
courtesy of Peter Tchir
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So what happens when bond traders who aren't a central bank realize that sovereign credit is entirely unsecured?
"Proper fucked".
To keep it as simple as possible.......Yeah!
Real proper like.
Wye aye man
"Before Ze Germans get there"
Too late lol
How can algos digest and trip out to the upside in 1 millisecond, yet take 12-48 hours to realize its not good? Someone needs to take a firehose to the 'algobots'.
All firehoses are currently deployed against demonstrators and bank arson. That is all.
http://rt.com/news/firemen-belgium-hose-police-013/
That's FUKIN BRILLIANT!
Ma and the fuckin pikeys should head into the city center of London with shovels and bats in hand, and gather up and whack a few fuckin wankin bankers across the back of the head and then dump the cunts in the middle of Trafalgar Square so the crows can eat their fuckin eyes out!
Pigeons. There are pigeons in Trafalgar Square, not crows. (Bloody yanks)
double click FU. sorry.
No you're getting somewhere, chuck...Keep going...Work it to its conclusion.
Turd... so what you're saying is... ? DOW 15,000?
I remember the same when DOW was 14,250 or whatever the exact top was....nothing but yelling about how 15,000 was definitely already a done deal....even had a few guys with their DOW 25,000 booked and banked projections.
Now that all bets are off and any semblance of reliability and predictability has been wrung out from the system, don’t you think the private interests with the Greek bonds would start screaming at the top of their lungs for the insurance protection they have paid for?
'The conclusion' is central banksters own all the bonds, didnt pay a penny for them as they used YOUR money and said it was for your own good, 'Really, we're bankers...we're here to help'...and 1 morning theyre just gone, *POOF*, like Keiser Sossa.
I trust you will all remember this when discussing "safe" investments backed by real gold and silver. The government and banks would never conspire to subordinate your claims, confiscate the gold, or otherwise cheat you.
Nothing on paper is safe, period
Don't ask such questiions, or you might....ahm...be called "anti-european"! (and good for you)
Aw hell, it's Friday. Let's go skiing...
That's a Good Question!
So what happens to Greek Bank Debt? Has the world gotten so screwed that now Bank Debt is senior to Sovereign Debt? In ALL parts of the world? Developed and Emerging?
If the Greek banks get recapitalized without bond holder losses, then we are continuing the great bank kleptocracy of modern history. The fact that large bank debt is treated universally superior to sovereign debt is a modern invention. The days where large banks would fail have been removed by the great banking powers that be.
It is by far the largest scam on global citizens everywhere. These banks should be nationalized, debt defaulted on, and then recapilalized.
I would love if Rogoff or someone would give a side-by-side history of bank bailouts, bank defaults and sovereign defaults.
If you follow this arguments you should buy BA and Citi debt and short US treasuries.
So what happens when bond traders who aren't a central bank realize that sovereign credit is entirely unsecured?
Uhhhhhh...... don't look now, but sovereign debt has been completely unsecured since 1971.
...unless you count "full faith and credit of (whatever) government" as some sort of security.
Let's look at that phrase:
"Faith of"? What the fuck is that supposed to mean? The government has faith it will make good on the bonds? The government BELIEVES ...with all its heart... it wil make good on the bonds?
Faith is no guarantee of anything. It's worthless from a guarantee standpoint.
"Credit of"? Again, what the fuck is that supposed to mean? It just infers the government has credit available to them, i.e. they'll be able to borrow money in the future.
It says nothing about bonds they're issuing now. "Credit of" is completely unrelated to bonds they're issuing now.
So the phrase makes no guarantee regarding bonds they're issuing now, merely stating the government believes they'll make good on them.
And if they do, you're still screwed, because the money you get back is worth less than the money you paid for them, way less on long-dated bonds.
10 year bonds? Forget it. US dollar will be worthless in 10 years. You'll get toilet paper back.
"Full Faith and Credit ..." = I.R.S. jackboot.
Yea, that's my point. Sovereign lending is inherently unsecured. It's time people finally realized it!
Got vaseline? You're 'gonna need it!
I hear there's a run on Vaseline...............Get it while you can.........
CDS? What CDS? Never heard of it....
What did you expect when the fox owns the chicken coop??
retching and screwing, wow
Solution: Don't buy government bonds. One of the worst possible investments.
Well......at least I was kissed on the lips.
Kiss me... (Pacino)
http://www.youtube.com/watch?v=CYl9nNIoz8o
Wait, so bond vigilantes aren't vigilantes?!?! OHHH they're bond vaginas
Neither. They are vaga bonds.
http://en.wikipedia.org/wiki/Vagabond_(person)
This is Greece - they're bond assholes.
It remindes me of two situations:
- 2007-2008 when everybody thought that the centrallers had it all under control and then collapse in 4 weeks.
- 2011 when gold went very close to $2000 and then it collapsed by $500 in 2weeks.
It's possible only weak hands are in the market right now and plunge protection team=primary dealers may have either run out of money or not willing to buy all the market as they did in 2008, only to be bailed out by the centrallers.
Told you! Swaps are all the rage. CDS, that is funny, yep the CB's are gonna let Greece pull the world down, sure they are, because there is a contract, someone bought insurance, ha.
This only ends one way as our societies have been set up incorrectly with family being supplanted by state that is a recipe for overall disaster which we will get sooner or later.
It's the breakdown of the "rule of law." This is Moral Hazard x100. In the big scheme of things, this is very very bad.
Yes, it's a total breakdown in the rule of law where anything is possible and everything is acceptable.
We are now in game changing territory where "it can't happen to me" normalcy bias is shed by the average man and complete panic can set in at any time for any reason.
Marigolds wrapped in barbed wire sans la KY. Ouch!
They can screw anybody they want. However, every action has an opposite reaction. Most big bond buyers are institutional (some governmental), insurers and the like, who are risk averse. Well, the risk just got MUCH bigger.
This will lead to higher interest rates down the road. Not hard to figure that one out. The question is, when?
When a big insurer goes tits up, as has been posted here. Or when PIMCO says no mas !
This is the ring fencing. ECB can't afford to loose ANY cash!!
The ECB was not around last time we defaulted. Even Draghi wasn't born yet. Good luck trying to collect anything.
Greece: Natural born central bank killaz !!!
What you don't realize (or understand) is that after default, the new Greek banking system will be owned by the Germans and the Brits.
I hope so. Yet it seems all your Papas are Goldmanites...
"Greece: Natural born central bank killaz !!!"
Yes, that sort of explains why Greeks are in the mess they are right now. Zero understanding of how things work.
Let me clarify it for you: Central banks print fiat currencies costing them nothing, backed by nothing and representing nothing. They take that and lend it to you at an interest, or have some sort of shell entity like the IMF do it for them. Against the loan, which has cost them nothing to create in the first place, they demand real collateral, in terms of tangible assets. In the end, since they printed X and demand X+Y because of the interest payments, there is no way for you to repay the loan. Then they step in and strip your assets, at essentially zero cost. Case in point, lets take a look at the terms of the latest Greek bailout.
If you bother with the (not so) fine print you will realize 1) The new loans are secured on assets. 2) The agreement is under British law. 3)Jurisdiction for dispute resolution: Luxenburg, or London. And what are the odds of Greece actually repaying any of those loans? Pretty much zero.
Greece: Natural born central bank bitch !!!
Buddy, I know exactly what you're talking about, but...
Get back to me when they actually COLLECT. Not when they win the dispute. When they actually come to COLLECT. We'll see who is whose bitch then.
I do appreciate the care that you took to write up your post (honestly). You are probably living in a place where law actually gets enforced.
We were all literally raised up with the smarts to circumvent, avoid and negate the laws here. Accepting law enforcement is a voluntary thing for us. This is why we can't really start an honest business (everybody's cheating), this is why the state can't collect taxes (nobody wants to pay them), this is why we're that deep in debt (even without taxes, welfare is alive and kicking) and this is also why they won't be able to get what they want, with or without court mandates.
"We were all literally raised up with the smarts to circumvent, avoid and negate the laws here. Accepting law enforcement is a voluntary thing for us. This is why we can't really start an honest business (everybody's cheating)...."
Third world country alert.
A state that can't collect taxes is a state that is either overtaxing, or a state that has zero credibility, usually by enacting some sort of retroactive taxation from time to time, or extensive corruption at the highest echelons of government. Typical in third world countries.
As far as collecting is concerned, nobody is going to come after you or your personal assets. They will force the government to sign away exclusive mining/drilling other natural resource exploitation rights and that will be it. That's the way third world countries are treated, that's what happened in Latin America and Africa. Everything else is empty posturing.
And if you guys can't really start an honest business, how do you propose to survive? You have to rely on handouts to fulfill your basic survival needs, and those handouts will come at a price (see above). Another third world country situation.
But apart form that, yeah you have smarts, because you never enforce your laws. That usually takes a corrupt/incompetent judiciary on top of everything else to achieve. So Banana republic it is.
Banana republics end up with two sets of laws. One for their masters, and one for the natives. Nobody cares about the natives, but you can bet your ass, the ones for the masters will be enforced. Or no handouts for the locals who cannot run an honest business.
Zero understanding of how things work.
Skistroni, you haven't stated anything that the rest of the world does not know. The question you should be asking yourself is... why are events unfolding the way they are? How will they affect me?
Greece will be stepped on and burnt crisp to cauterize the hemorrhage in the European banking system. A strong hand on Greece will cause the periphery to question the wisdom of following in Greece's footsteps.
Time was bought to get various houses in order. It is clear the Greeks did nothing. If, on the other hand Germany et al put a foundation in to stop their house from falling... that may well be bad news for Greece.
Any support shown Greece from here on in is basic geopolitical posturing to ensure "they" have a seat at the table. As "they" couldn't buy their way into the "game", maybe "they" can "shame" their way into the "game".
Greece has no friends.
It is worth repeating, Greece has no friends.
Excellent summary of the true nature, intent and consequences of the world's debt based monetary system. Too bad more people don't get it.
What the fuck are you doing at a computer? Go hang someone!
Do I sound like a terrorist? If yes, I didn't mean it. I'm just a conservative family man. I wouldn't kill anyone, not yet at least.
If I was 20 years younger, I know what I would do.
You first.
The very fact that they keep intervening means that the problem is gigantic.
No solution without loss. Hence, the more they patch up, the deeper the fall.
Exactly. If this is the best "solution" they could come up with it tells us that the problem is exceptionaly large and ugly, possibly of galactic proportions.
Prepare accordingly!
Check my most recent entry where I showed a link to BAC preparing for a "market shock".
the central bank cabal rules, will the ISDA buy it; CACS up the spout, CDS down the shute, fake bonds as collateral, like swiss snow flakes, santa claus visits Schweizer land and alles-frei becomes the banksta song. Ringa ringa roses, the financial world is full of posies.
On the PSI side : will those HF make any money or are they toast. Elliot, Elliot; calling Elliot!
More like Elliot Ness!
"Will the ISDA buy it"
http://www.isda.org/membership/isdamemberslist.pdf
http://www.isda.org/membership/ben_of_primary.html
impressive, they OWN it.
Hmmm, makes those "fake bonds" just seized look like a good investment...
I wonder who the first real seller of size will be to step up and topple this clown house of cards?
China.
...unless you count Russia's quiet shhhhh-don't-tell-anybody selling.
"I have altered the deal. Pray I don't alter it any further."
Lando (greece) was already put in a dress. From here it looks like he is going to be in scenes from the most depraved pornos ever made. Some really freaky German shit.
I think that what was just done might be best described as the Dirty Sanchez!
Let the sovereign bond market slaughter begin! Time for some Jiffy Pop...
This subordination issue is not really so important right now. It may be more imporant later on when banks become solvent again. But right now EZ banks are no better than Greece and have to accept the beating down from their crack dealer.
Fuck You's world bankers.
Y0U's are terrorist,and need to be "terroristized".....
Liquidated.
Get out of sovereign bonds right now. The people who owe you the money are the ones who get to make the laws, and determine the real value of their own debt. If after all this prolonged mess you haven't figured that one out, then you deserve to get screwed. Get out of the sovereign bond market, and let their yields soar.
Look, agent default, most of the bonds are owned by big, slow, stupid money that has no place else to invest. Their holdings are too large to get out of the system. There is no place to run and hide.
Individuals can do something. Funds, pensions, insurance trusts, etc are screwed...
Oh! Wait! Am I depending on any of those to support me in my dottage?
Makes me want to do ALL I can to "prepare accordingly" with what I have control over.
Yup, a prelude to the fun. This is why our 'paper-bug' deflationist friends will end up busted. There aint't no rules when you're playing THEIR paper-world game
I don't know how well intentioned all this is, but when contractual rights are no longer enforceable, you are about to screw the pooch. Confidence can't be maintained and when your entire ponzi scheme is based on confidence, you can imagine what could happen next.
i recently read that the US Constitution recognizes three kinds of law: admiralty law, common law, and equity (contract) law. Common law was doneaway with a long time ago. Now you are saying equity law is gone. Only one left and it isn't so good for individual freedom/sovereignty.
aud/usd figured it out. It tanked a 100 pips. So much for the spx correlation today.
shhh......as long as stocks go up, the sheeple won't notice
These guys want to just sit and take their screwing, fine with me! Im watching the clownshow from the sidelines, what do I care.
Mind if I join you SheepDog? I'll bring the beer and Cheesy Poofs. (A little South Park humor.)
Where's my reach-around?
When you first looked there was a hot 25 year old cheerleader. She has now been replaced by a 55 year old lumberjack. The end result might be the same, but you're in for a great deal of pain and you might never get to use it again once its over.
how 'callous'
can someone explain me this swap exchange? sounds a lot like fraud... just swap and get some with no CAC clause?
seriously. how does this work?
'FRAUD' from the FED central banksters? How dare you sir....theyre really nice guys theyre here to make sure inflation stays low for mom and pops and all that.
Something like: You held a bond worth X amount with paperwork stating the issuer owed you a certain amount after X time.
Now they changed the paperwork without your consent. You still hold a bond worth the same amount at face value, but the value over time is no longer the same.
In today's leveraged world, banks don't write a $100 bond at face value. They write it in at redeemed value and use that cash today as leverage to invest in other things.
What happens if you thought you had $100k in the bank, so you bought a 911. Then you find out the wife blew the $100k on salons and clothes.
Greece/EZ banks have to accept their screwing. They are in no position to bargain. The only wild card will be the number of hedge funds that hold out on the PSI deal. But we will not know their number for a week or a bit longer. Until then, the "second Greek bailout" will be celebrated in world markets mindlessly. Watch and see. Wait until ES 1380 to short.
Looks, sounds, and reads like a flavor of the GM Bond deal. no?
Very good. It also reminds me of the MF Global bankruptcy where they forum shopped for a process to make the clients claims subordinate to JPM.
You won t hear that story on your usual TV news... of course. less thinking is encouraged in our society, less critical thinking all the better for the current establishment...
Critical thinking is now a terrorist act.
As is being critical.
I am with SD1 :-)
All Aboard! We're going Greek....
I wasn't really in the right state of mood this am to handle all this info. Has the DOW hit 13k yet today?
It's the 'blame game' folks.
The Deutschelanders want to pin the tail on the Greeks but there is no difference between the Greeks and the Deutschelanders. They both have the same creditors, the exact same credit system.
Greece is shot and Germany takes the bullet. No way 'round it. All this writhing is an attempt to escape the trap ... the euro has set for all of Europe.
Time to quit the blame game, time for Europe to create a fiscal entity. It would only require a room in a office building in Brussels and a computer. The EU can institute a continent-wide petroleum import fee of €5 per liter of crude. Then, they issue bonds backed by the fee to 'mop up' the no-bid national issues.
Two birds with one stone: a large reduction in petroleum consumption -- raise the fee until fuel consumption drops 50% -- and the end of the debt problem (for the time-being).
EU is going to have to 'go off' petroleum that mean exit the car/vehicle business, that's what's taking place anyway. Best to get used to it, grasp the nettle.
Yeah, it´s easy, like the US deficit...just sell California to China!
Let´s see if I can put this in tems you´ll understand: we, the people, don´t want no friggin fiscal union! Only eurokrats wants it because it expands their power base.
Unsavioury, no doubt. But if you actually held GGBs you were kinda fucked anyway, weren´t you?
But...do we have a 'DEAL DONE'? Thats all we care about, we want to hear a deal is done, nevermind the details or how big the screwing we got was...we're all morons now.
Well, isn't the plan to screw 99% of the people out of the remaining saving they have prior to starting WWIII. Then they can use the proletariat as so much cannon fodder.
That is the plan right? Move all resources to the 1% and cull the Useless Eaters.
Look like the plan's coming to fruition!
I am so sorry, but when I read this I just LMAO. Weeee ... what a fuckin ride we are on. These elites are completely and irrevocably destroying the very fabric of the economic and financial system they are supposedly "saving" ... "we must destroy the village to save the village". LMAO!
This is one sad, sad day. Brothers and Sisters, we are definitely in the twilight-zone. And fast transiting into the pitch black darkness of night.
Prepare accordingly.
Spigot.......Very well said. I honestly don't understand the inner plumbing of the bond markets.....but I don't think this is complicated. Its the easy way out because its a political decision, to satisfy the need to keep the Other major political project going...the Euro. Simple. This is not a business decision. There are winners and losers and it gets uncomfortable for some. I wonder what must be going on we don't know about to make such a deal seem like a good idea?
"I wonder what must be going on we don't know about to make such a deal seem like a good idea?"
Yeah, I hear that. One big fugly mofo with very bad breath. The politicos are, by their actions, outlining the monster and its damn big and scary.
Run, do not walk, to the nearest exits my friend!
I think this is the part of the movie where the "authorities" tell the people "we are in control and Godzilla will be destoryed...prepare for Godzilla sushi!"
But of course the ass kicking by Le Terrible is yet to come...
(sigh)
http://blogs.barrons.com/stockstowatchtoday/2012/02/17/bank-of-america-details-its-plans-for-a-market-shock-report/?mod=google_news_blog
Benny is telling us sth. There are preparations under way for a market shock. Listen people, listen.
"Well you can't say we didn't warn you."
Not sure the pitchfork crowd is going to hear that agreeably.
1 4 U
19 4 ME!
Daffy Duck as the central bankers.....
https://www.youtube.com/watch?v=rcCXnXDiKoQ
and the longer version.....
https://www.youtube.com/watch?v=PMMo_exy9LE
enjoy....
Where did the name and company of the analyst go. I want to share this but I lack credibility without a source.
Someone from southwest I think? I didn't recognize te name.
Peter Tchir
No.
Read the first line. The well respected analyst was named earlier this AM
Mark Grant from Southwest Securities
"Who cares?"
J. Corizine