Credit Suisse The Sequel: "Probability Of The Largest Disorderly Default Loss In History On March 20 Has Increased"
A week ago we presented an excerpt from Credit Suisse's most excellent piece "The Flaw" - merely the latest in one of the best overviews of the neverending Greek soap opera by William Porter. Yet every soap opera eventually ends. Although when it comes to Nielsen ratings, the denouement is usually a whimper. In the case of Greece, it will be anything but. Yet listening to the daily cacafony of din from Europe's leaders, who are likely more clueless than the average reader as to what is really going on, one may be left with the impression that there is a simple solution to the problem, and Greece may be "saved... in hours." It can't. In fact, as of today, Porter's s conclusion is: "we are left with a sense that the probability of delivering the largest default loss in history in a disorderly way on or before 20 March has increased relative to doing so in an orderly way."
As a reminder, Credit Suisse was the one smart enough bank which chose to completely ignore day to day newsflow out of Greece as it is literally noise with absolutely no signal. Wish we could say the same for FX traders. As such, CS' "view remains that, in any case, the chance of a disorderly outcome after 20 March is high, so to that extent the immediate events are not really central to our view, but of course are fascinating." Quite fascinating indeed, because they show to what extent an unravelling financial system will go to pretend that the number one unfixable problem in Europe - the lack of money good assets, available to either be sold, repoed, pledged, equitized, or otherwise monetized. As we have observed previously, at this point it doesn't matter for Greece- even if the country gets the second bailout, which will be used almost exclusively to recycle cash into the banking system, Europe will have a first lien on nearly 150% of its GDP. At that point the country is both a de facto and de jure colony of the Troika. The longer the bang, or whimper, is delayed, the fewer assets will remain in Greek possession, and the poorer the population will be for the inevitable fresh start, with or without the Euro.
So meandering regurgitations aside, because all this has been said one hundred times already, here is Credit Suisse's latest attempt at a fresh take on events.
We are cautious about reports of the exchange “running out of time”: the 20 March binding constraint is a GGB maturity. Greece is sovereign and has run out of money; it can choose the timetable. The case might be different if the maturity were an English law bond (but perhaps not much.)
The real issue remains the ECB’s exposure to the BoG, in our view. Protecting that (i.e., ensuring that Greece does not systematically default via introducing a new currency) becomes the bottom line, as the latest Flash explored.
Since our objection to ‘leaving EMU’ is that its corollary is systematic default, bank nationalization and the like, once the latter problems are a given, a situation towards which we seem to be heading rapidly in Greece, then the cost of the incremental step of introducing a new currency become less. Our view remains that the economy would subsequently euro-ize but potentially at a different cost level. The effect of the delay would have been to transfer the cost from Greek citizens (who have now moved substantial sums out of the country, providing in fact a source of subsequent BoP financing that makes the equation even more attractive) to the ECB. The core has a very serious problem and again should swerve, but the probability of a ‘crash’ is rising.
We remain very cautious about the long-term sustainability of the debt after restructuring, and it is just possible (not our core case) that the troika takes the rational decision that it is cheaper to let Greece default and reimburse the ECB for its approx. €30bn of GGB losses than to pay the rising but nominally €130bn. Yet it was only on 14 February (two days before writing) that the ECB was confidently talking of distributing its GGB profits, so we are cautious about second-guessing the analytical framework being used.
Overall, we are left with a sense that the probability of delivering the largest default loss in history in a disorderly way on or before 20 March has increased relative to doing so in an orderly way. (Our view remains that, in any case, the chance of a disorderly outcome after 20 March is high, so to that extent the immediate events are not really central to our view, but of course are fascinating).
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3/23/12
indeed. and why do they so strenuously avoid the orderly default? oh that's right. for the same reason oedipus fucked up. hubris.
For the love of GOD let's get this over with already....
Get what over with ? Is there something going on? Did I miss something ?
Nigel Farage latest. Someone alert the media. for the threadjack
http://www.youtube.com/watch?v=qtwWkE2rHNk
I have a man crush on Nigel.
http://www.youtube.com/watch?v=96j0A7IXQKo&feature=related
Nigel is a HOTTY!
I agree!
Man Crush!
we should kidnap him and bring him to America or Fight Club at the least!
Why default when paper is FREE?! If we had a gold standard then I could understand a default, but why risk a banking crisis when it could all be taken care of with more cotton rags - I mean more pretty holographic crisp bank notes from the ECB?
I have watched many video's on youtube of Farange and am dissapointed that a mere 4000 or 3000 have watched the clip. he's probably like Ron Paul where the msm won't give hime coverage
I just watched the video and YOUTUBE is reporting only 303 views. Let's fact it, YOUTUBE, GOOGLE and the rest of these mega entities have been co-opted into being yet one more arm of the gov't propaganda machine. There is no friggin way only 303 people viewed this video.
Nigel is a stud. If we had someone like him running for President, he'd win by a landslide. What cahones!
Wake up. How are you going to win elections with all MSM ignoring you?
Great grab! Thanks for Sharing IndicaTive ! YOU! ROCK!!
Bring Nigel to America! PLEASE!! Pretty Please! wiff sugga on top! we will make his half toasted? toast and tea! whatever it takes! just get him here! Trade Obama or whoever the English want!
JWnFL 1 second ago
You guys already have Ron Paul, stop being so greedy.
Yeah, I mean it's not like the citizenship requirement is a hangup anymore. Now that we have the Adobe amendment to the Constitution the whole world is eligible.
Wonder why the Amadeus Amadeus tune starts up in my head every time I hear Puppet Papademos...
you really love this darling of the City of London?
I find it strange indeed
Nonsense!
Merkel said in 2011 that it will be in 2013
and she's had her way so far and so she will in the future...
They will let this bail-out pass and at the same time
the EU prepares the ground for the exit of Greece in 2013.
That is a logical fallacy.
or an axiomatic assertion, depending which nipple i'm dealing with...
speaking of which, who is that individual below his name (which escapes me now)?
our ace in the hole? they really, truly, for sure and without a doubt, are insolvent.
and they are not just the greeks. or the european banks. or their insurers. counterparties. derivative customers. ouch.
the fed isn't able to be insolvent, or so it says. what would you guess its net equity is now, now that they've sold off the good stuff?
The Fed had good stuff? What was it, Afghanistan heroin? They weren't suppose to lose that until next year.
For the sake of truth, is this an official denial?
@Dr. Engali
For GOD SAKES man, Whitney Houston is STILL dead!
Shit that too?! Well get this. I was on another thread and apparently Greece is about to default ........ Any year now.
LOL, good one. I get it.
Like anyone would be stupid enough to lend money to Greece.
Heh-heh, Tyler said 'cacafony'! Literal translation: shit-talkin'
Morning coffee's got my guts growling, off to BoG!
Short OxyContin
Short OxyContin
For the love of Nothing let's get this over with already...
If we have a deflationary collapse does that mean the price for hookers will go down?
"For the love of God, Montressor!" "Yes, for the love of God." The Casque of Amontillado, 1846, Edgar Allen Poe.
this default will take till our next war....and fuck your CDS unless you are a primary dealer, they get the gold first remember...
and the customers' money.
http://jessescrossroadscafe.blogspot.com/2012/02/ritholz-has-main-theme-...
Not hubris.
Swaps.
It's all priced in, along with defaults of the rest of PIIGS+France+UK+US+Japan.
Bullish.
What's plan "B"?
Panic.
Why 3/23? I thought it was the 20th?
Look, the historians after 3/23 (once we get back to having paper) will certainly question why this day and how the profit "Booboo the Wise" was albe to predict the "Great Reckoning & Subsequent Fall" with such clarity.
The people will listen to "The Sayer" tell the old fable, "Thee shall say arhhhhhh and thee shall pay homage to and worship the great "Booboo" and hope for his return for he will once more speak again, provide infinite wisdom and steadfast clarity for the 99. The Vilage "Sayer" will then instruct the people to charnt!
"3.23 or thereabout, with QE3, it's roundabout"
"3.23 or thereabout! with QE4, it's roundabout"
"3.23 or thereabout! with QE5, it's roundabout" etc... for a few hours
I'm so over this.... I hope we are not hearing the same shit this time next year.
In all seriousness, should i buy food and take out cash from my credit union in advance of this? Maybe buy more ammo?
Just asking if this might be the d-day
You should have done this long ago. The writing has been on the wall and to say well it hasn't happened yet so you made the right choice.
Hindsight is 20x20
Stock up on gasoline, I have 1250 gallons in my garage so far.
dude i live in an apartment. If the shtf, im getting in my car and going to naples. Gimme wide open spaces and nato rounds.
Um, hopefully all your shit is in a flammable liquid cabinet?
There is no threat to the ECB. They print money, alright? This is a big nothing burger.
A disorderly default from a disorderly economy. Just what should happen!
whose going to cover the cds... no one...
What I wonder is if NBG will be nationalized or recapitalized.
This is Sean's call. Over at Forex Live. I'm calling it ) You know the #.s SEAN! You Farm BoY!
3/23/12 CNBC Headline "Futures Rise on Greek Default Hopes". You just know they are going to spin this shit as if it were somehow positive...
There is nothing that will tank this market. If Ben has to print enough money to buy up every company out there he will. What ever it takes to keep this market afloat.
Wish you were wrong, but you're not. I expect more no volume, no volatility trading in the market until it tanks again, then its print to infinity time...
Regardless of market direction, the volatility index will double within the next 30-45 days.
Waiting for something to blow up in or around Iran very shortly otherwise a Kardascian may have an accident
I am hearing that Iran, after a decade spent developing their nuclear program and trying to build DaBomb, just now when they are fully aware USA is on the verge of attack, simply couldn't resist the urge to give The Great Satan a perfect excuse to go ahead. So they decided to kill a random Israeli diplomat or two. MSM says they have sent a bunch of nincompoops to Thailand who were going around blowing bombs in their own house, throwing granades at taxi drivers and at themselves blowing their own legs off in the process. Thank God all were quickly caught and confessed on the very same day.
How absurd a lie can you swallow? Open wide!
This is the video of the Thai bomber without legs - warning extremely NSFW / NSFL
You will note the location of his body... it's a bus stop, he didn't make anywhere sensitive, and his bag is intact (and a random pair of trousers are in a tree). Suicide bombers usually detonate around the chest / in the bag, for reference.
Guess he must have been one of those shoe bombers....
BOOM!
Get all your fireworks well in advance of July 4th....
Largest default for now. Then comes Italy, Spain, etc.. right up to the U.S.A.?
The race to the bottom will result with everyone at the bottom.
The lowest common denominator reigns supreme.
I'm with Farage, if Italy (TBTF) goes so do the rest.
Like your moniker, the wave will radiate from the epicenter.
I've heard that when the Euro goes tits up, you've got 2 weeks to get what you need and into hard assets. If you're lucky.
You heard? Atleast inform the audience that your source is Lindsey Williams. I am not saying he is wrong, but you should be open about it.
He ain't the only one saying that.
I listen to a lot of stuff from a lot of sources, and get the lay of the land that way.
S effin ( SHORT)!
All this can kicking was to prep the other banks/ countries to lessen the effect. Greece will hurt but not as much as the second country to default. Whoever the second country turns out to be will be the oh shit moment.
this is all bull shit, the market is marching torwards all time high.
Isn't that what they said in '29, '87, '99 and 2007?
DOW 15,000!
Same folks who called Bear Stearns and lehman a buy just weeks beofre they nearly took down the entire banking system...
Weren't they the same ones calling the bottom in housing 500 times since 2008?
lol
goggle this book: "Dow, 30,000 by 2008" Why It's Different This Time - Second Printing"
F*cking hilarious.
from the Amazon review:s
"I want my money back.
At least I'm reassured by the fact that this guy's probably now living in a cardboard box under an overpass, and sleeping in a polyester leisure suit that he ripped off from the Salvation Army."
hahahahahahaahahaah oh f*ck i love it.
Nope. Most people who make predictions are usually broke as a joke or just playing with other peoples' money. The rest of us just trade without wasting time on "predictions".
We need perma-bear to keep shorting a clearly uptrend move for the market to continue the rise. The more people short, the merrier.
The root of all economic problems is simply a worldwide declining labor wage and labor glut. The West (US/EU) pay $25/hour w benefits while China/India workers get $25/day or less w/o benefits. Foxconn workers live in 3000 room dorms, 20 per room wo cable or internet or smart phones (hell!!!). So the West buys peace w entitlements funded w deficits. Even w trillions in deficit spending EU has gone into a recession and the US has marginal growth. Imagine how profits w fall when the debt spiral slows much less stops or declines. There is no solution to the fundamental, root problems.
Right on ----------
Like what did the banks use to buy the Greek & other sovereiign debt with? Somebody's savings? Nope, some "money" created out of thin air. The same thing the fed bought all those MBS's & treasury's with. The same thing the us guvmunt is using to pay it's high paid dead head employees with . The same thing used to ramp the markets. Money created out of thin air.
The only real question is how does this delusional game last.
When does the game end? MIT prof's count cards and FX guys have systems, HFT bots rule the market and not one of you ultrasmart guys can gvie us any timing calls? But of course not as each of your models needs a constant of some sort and without rule of law, man rules.. It's a pretty mess we find ourselves in.
Abolish minimum wage and cancel entitlements BAM! Problem solved!
Of course there is a solution: war. A big one. Let that sink in for a while.
Sovereign bonds kafuckingboom, more default and bank failures double kafuckingboom and the dominos start to fall!
Is anybody out there trading Credit Event Binary Options on Greece?
http://www.zerohedge.com/article/prepare-trading-revolution-here-come-cds-retail-investors
I'm sure I can help you.
How much would you like to 'invest'?
Are you a cop? You have to tell me, if you are.
You look like a cop. Are you a cop?
Lmao ;)
Are you a cop?
http://www.youtube.com/watch?v=WzRduCCz2tU
Are we on cops?
http://www.youtube.com/watch?v=mJZBKYi4FLU
This shit is pathetic. I'll reload on The mid 1.065 area. I'm cutting my trades and staying FLAT!
i feel better, already!
3/23 - the mother of all short squeeze begins.