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The Eight Hundred Pound Greek Gorilla Enters The Room
From Mark J Grant, author of Out of the Box and onto Wall Street
The Eight Hundred Pound Greek Gorilla Enters The Room
“After an increase of only 3% in the second half of 2010, total notional amounts outstanding of over-the-counter (OTC) derivatives rose by 18% in the first half of 2011, reaching $708 trillion by the end of June 2011. Notional amounts outstanding of credit default swaps (CDS) grew by 8%, while outstanding equity-linked contracts went up by 21%.”
-The Bank for International Settlements, Nov. 2011
The Rub
We all have been staring at the Greek sovereign debt and then the Greek CDS contracts. It was 1/13/10 when I first predicted that Greece would default and what a long and winding road it has been; similar to some hallucinogenic experience manufactured by Timothy Leary. Sometime soon, given what has taken place, I expect the ratings agencies to place Greece in “Default” and with their banks following. The markets are “Ho-Humming” and the conversations revolves around “Net” CDS exposure and the write-downs that have already taken place at the European banks. Please recall AIG and what happened with Lehman and what do we find this morning; KA Finanz, the Austrian bad bank, faces $1.32 billion in losses due to their exposure to the Greek CDS contracts according to a Bloomberg article. So now we will wait and see who else is on the hook, who may be seriously impaired, because the Gross number of about $79 billion for Greek CDS is about to enter center stage.
It Gets Far Worse
I hold up my hand, “One moment please” as I introduce you to the 800 pound Greek Gorilla that is about to enter the room. Allow me to now present to you the “OTHER” Greek debt that is outstanding and will have to be accounted for as the country defaults. Detailed below are some of the “OTHER” sovereign obligations of the Greek government which have now been submitted to the ISDA and I list some of them below. You will note that there are bank bonds, Hellenic Railway bonds, Urban Transportation bonds et al that are guaranteed by Greece. You will also note that there are bonds tied to Inflation, Floating Rate Notes, Asset-Backed securities and a whole mélange of other structured products with a Greek sovereign guarantee. What we all thought was fact is now clearly fiction and default will now bring “Acceleration” one could reasonably bet in all kinds of these securitizations and in all kinds of currencies. This could come from the ratings agencies placing Greece in “Default” or it could come from the CDS contracts being triggered depending upon each indenture and you will also note that a great many of these off balance sheet securitizations are governed by English Law and not Greek Law. You may also wish to consider the fallout to the banking system as the lead managers of all of these deals could find themselves behind the eight ball as various clauses trigger and as the holders of these securitizations line up at the judicial bench [ZH note: there is a reason why Allen & Overy is getting paid $1500 an hour to indemnify ISDA with a plethora of exculpation clauses - they know what is coming] The ISDN numbers are on all of these securities and the lead managers may be found on Bloomberg or other sources as well as the holders of the debt. The curtain just lifted and the show is about to get way too interesting!
The full ISDA list may be found here:
http://www2.isda.org/preliminary-greek-obligations/
One example of the problems forthcoming I present from a deal done by Goldman Sachs ISDN XS0292467775 $1.6 Billion Hellenic Republic 2.085 7/15/57 (Offering Memorandum)
“2. STATUS OF THE NOTES AND NEGATIVE PLEDGE
The Notes constitute direct, general, unconditional, unsubordinated and, subject to this Condition, unsecured obligations of the Republic. The Notes rank pari passu with all other unsecured and unsubordinated obligations of the Republic outstanding on 30 March 2007 or issued thereafter without any preference granted by the Republic to one above the other by reason of priority of date of issue, currency of payment, or otherwise. The due and punctual payment of the Notes and the performance of the obligations of the Republic with respect thereto is backed by the full faith and credit of the Republic. So long as any Note remains outstanding, the Republic shall not create or permit to subsist any mortgage, pledge, lien or charge upon any of its present or future revenues, properties or assets to secure any External Indebtedness, unless the Notes shall also be secured by such mortgage, pledge, lien or charge equally and rateably with such External Indebtedness or by such other security as may be approved by an Extraordinary Resolution of the Noteholders (as described in Condition 10).”
I ask; how does this square away with the ECB and the EIB securing for themselves a senior position to other Greek bondholders?
“EVENTS OF DEFAULT
If any of the following events (each an “Event of Default”) occurs:
(a) the Republic defaults in any payment of interest in respect of any of the Notes or Coupons and such default is not cured by payment thereof within 30 days from the due date for such payment; or
(b) the Republic is in default in the performance of any other covenant, condition or provision set out in the Notes and continues to be in default for 30 days after written notice thereof shall have been given to the Republic by the holder of any Note; or (c) in respect of any other External Indebtedness in an amount equal to or exceeding U.S.$25,000,000 (or its equivalent), (i) such indebtedness is accelerated so that it becomes due and payable prior to the stated maturity thereof as a result of a default thereunder and such acceleration has not been rescinded or annulled or (ii) any payment obligation under such indebtedness is not paid as and when due and the applicable grace period, if any, has lapsed and such non-payment has not been cured;
or
(d) a general moratorium is declared by the Republic or the Bank of Greece in respect of its External Indebtedness or the Republic or the Bank of Greece announces its inability to pay its External Indebtedness as it matures; or
(e) any government order, decree or enactment shall be made whereby the Republic is prevented from observing and performing in full its obligations contained in the Notes, then the holders for the time being of at least 25 per cent. of the aggregate principal amount of the outstanding Notes may (i) give notice in writing to the Republic and to the Agent in accordance with Condition 11 that such Notes are immediately due and payable at their principal amount together with accrued interest (if any) or (ii) decide at a meeting that such Notes are immediately due and payable, whereupon such Notes shall become immediately due and payable at their principal amount together with accrued interest (if any) and/or (iii) decide at a meeting that, if the case may be, litigation be instituted. The holders of at least 66 2/3 per cent. of the aggregate principal amount of the Notes (at the time being outstanding) may rescind (i) such notice of acceleration (ii) such decision to accelerate or (iii) such decision to institute litigation if the event or events of default giving rise to the declaration or to the decisions have been cured or waived. Such rescission shall be made by giving notice in writing to the Republic and to the Agent whereupon such declaration or decision shall be rescinded and have no further effect. No such rescission shall affect any other or any subsequent Event of Default or any right of any Noteholder in relation thereto. Such rescission will be conclusive and binding on all holders of the Notes.”
You will note that by not paying the full amount to the Greek bondholders that a “general moratorium was declared” and that these “Notes shall become immediately due and payable at their principal amount together with accrued interest”
USD 5,000,000,000 Euro Medium
Term Note Programme
The Hellenic
Republic English Law
(a) Information Memorandum dated 6 November 1995
(b) Information Memorandum Addendum dated 6 November 1995
(c) Information Memorandum Addendum dated 2 May 1996
(d) Pricing Supplement dated 3 July 1997
X - Pricing Supplement n/a Pricing Supplement unsigned
68 08 August 2017 XS0079012166
JPY 50,000,000,000 3.80 per cent.
Notes due 2017 issued pursuant to
the USD 10,000,000,000 Euro
Medium Term Note Programme
The Hellenic Republic English Law
(a) Information Memorandum dated 5 August 1997
(b) Information Memorandum Addendum dated 5
August 1997
(c) Pricing Supplement dated 7 August 1997
X - Pricing
Supplement n/a Pricing Supplement
unsigned
and so on... see blow. Full list:
»
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Thanks Tsar! :)
MSM 4eva?
there are different degrees of "default"?
this one was
the finiminis R meeting in brussels and they just realsed $35 Bil EUR to greece
"Allow me to now present to you the “OTHER” Greek debt that is outstanding.."
What even more good news?
Looking (really?!) good
and there may be british-law cases to come, fast, here, as well as possible default on some greek-law R-Road bonds
but i imagine some of the banksters have run the numbers
when they take the screws offa the "markets" we'll get a better sense of which corpo-fascist bet/backed what, where
PrudentBear
covers the fall-out pretty well, from the systemic overview, which any sane person would hafta note is probably continuing to weaken
but the casino will continure to pay off the bets
altho piigs debt is now being "marked down" in its ability to contol chips and chits
and some of the chits and markers aren't buying as much as they used to in some categories, while being "more valuable" in others
the social scientist do not seem eager to evaluate such "cost of governance" to the governed, but, offhand, it looks pretty fuking outrageously astronomically high, to this myopic pirate
Oh, come on guys, does the CDS trigger and the contingent default of other Greek institutions come as a surprise to anyone?? Perhaps Rumplestiltskin, wiping the sleep from his eyes or the guy over there who just arrived from Mars. This debt is the hands of public institutions and distresed debt specialists and the bond market and anyone who reads the newspapers has been preparing for this event for two years. I know ZH is always keen to find the catalyst that is going to plunge us into the next dark age, but this just isn't it. Better luck next time.
http://www.merriam-webster.com/dictionary/vaporize
The Debt/Crisis zero sum game mode is being played in small increments. They realize the game of Jenga is over. Debt saturation has arrived to its final end road.
Meh. At most it'll be a few hundred billion... nothing the ECB/FED/IMF can't print.
Sad but true
Hitler wanted to come back to life and help settle this mess. I asked him, "what are you going to do, swear at them? You got no f'n army dude." He replied death needs no army. I have a loan that they can't refuse.
Is that an art joke?
Hitler: "I'll be back...and next time no more Mr. Nice."
Too bad Dian Fossey isn't still with us - she'd know how to deal with this.
And Fay Wray.
our mission:
our method: pseudonymous speech...
anonymity is a shield from the tyranny of the majority. it thus exemplifies the purpose behind the bill of rights, and of the first amendment in particular: to protect unpopular individuals from retaliation-- and their ideas from suppression-- at the hand of an intolerant society.
Ona long enough timeline.....
BULLSHIT WILL DIE!
Bombastus Theophrastis von Hohenheim
paracelsus. faust
who made a deal with The Devil . . .
NAME IT! you mouthy motherfucker
A question:
The Greek authorities published two numbers:
1. The total amount of debt they considered was in issue (subdivided by governing law); and
2. The total amount of debt that had been tendered for conversion (also subdivided by governing law).
Does anyone know, at this point, the total amount of debt whose details have been submitted to ISDA?
And how that figure compares to either of the first two numbers above?
Watson
I think 2 is bigger, because some things that could be " cheapest to deliver" weren't part of the psi effort - possibly an oversight
If so, won't this produce strange effects during the auction process?
I ask that you watch these two informative pieces. It will be worth your time, promise you.
Collapse of Complex Societies by Dr. Joseph Tainter
Richard Douthwaite - Money Supply in an Energy Scarce World <<<---- Best one, but watch both links
Just for clarification, I don’t believe in Peak oil. In fact, own several gas guzzling vehicle’s. The point of links is to provide information to show you how you’re getting fucked up the ass thru bullshit illusions. Enjoy!
peak oil is not a belief ...it's a fact - do you think oil is a renewable resource?
and peak oil is currently being defined by ecomonic collapse
guess you don't "believe" in OVERSHOOT
care telling the class where William Catton was wrong in his 1986 book "Overshoot"?
Sorry Roccoman, the fact is science has not even proven how oil is created or where the process occurs. The fact is it could be made by the earth itself. Scientists simply do not know. Therefore, peak oil is an assertion, not a fact.
As for Willaim Catton, he must have written one hell of a fact filled and powerful book to be so well known by the public at large....
you REALLY should spend some time here;
www.theoildrum.com
Please watch video's, then we can debate in a intellectual manner.
+roc+
great link
As enough bail-out and negotation-rope is played out, you realize that, while the damage is the losses, the fatality is the governments trying to maintain the whole rotten edifice with real money from the taxpayers.
Greece, with its crappy government and pretend accounting, makes a nice morality play. But the real future for Europe is Ireland, where the government unaccountably guarantees the debts of the banks and so blows the economic legs out from the citizenry as well.
And Iceland, where the debt-holder government(s) attempt to force other governments to share the pain, and are rebuffed. You think the French might launch a a punitive expedition into, for example, Euro-free Helsinki?
Greece is a desaster.
Italy is the apocalypse.
Italy is rolling over around 400 billion of debt this year. April will be interesting to watch.
At what point will lenders simply say, "fuck it"? If anything the Greek desaster added to the uncertainty and if it can happen to Greek debt, it most certainly will happen to any PIIGS debt and most likely to any other sovereign debt out there.
But they don't want a complete reset or jubilee because it would wipe out their electronic wealth and destroy their paper empires. Instead they all agree to some sort of downgrade, some haircut which doesn't hurt the elite really and lots and lots of austerity to repeal some 60 years of general welfare and social fabric.
The End Of The World As We Knew It has already started.
You lost me....I'm still trying to figure out desaster.
Greece is the test bed I suspect.
Mr. Grant confuses law with that which enforces law.
The ECB already ignored the law, and there was no Jeffersonian uprising.
So, Mr. Grant's numbers and reading of the law may be correct, but he might as well be in a medieval dungeon...because that is where his thoughts have been literally been relegated.
No shit other Greec debt is gonna be a problem. As Dutch bank ABN-AMRO reported on friday: "Underlying net profit of 2011 suffered from EUR 880 million pre-tax impairments on Greek Government-Guaranteed Corporate Exposures."
A piece of paper can only be folded 11 times [it must be a very large piece of paper]. How many damn times can they run these ponzi schemes before they crumble?
Global Debt Crisis
The greatest private fraud of human history.
Who are the great fraudsters who are becoming the murderers of the human kind?
How does the economy "illness" threaten Democracy and the freedom of people?
http://eamb-ydrohoos.blogspot.com/2012/01/global-debt-crisis.html
World War III - The First Private War in History
http://eamb-ydrohoos.blogspot.com/2012/02/world-war-iii.html
Authored by Panagiotis TRAIANOU.
PANAGIOTIS TRAIANOU
the ?????? ????????? . . . ? [edit: failed trans. "heroic task"]
facilis descensus averno
. . . day and night the gate stands open: but to rise and climb into the outer air, this indeed is a task.
full appreciation for your work here, brother
* * * * *
http://eamb-ydrohoos.blogspot.com/2012/01/global-debt-crisis.html
Any Greek politician who signs the sale of public land is a criminal who has to be punished with death. Public land is not for sale ...we cannot sell it ...it does not belong to us so that we act like its owners. Our father obtained it by giving their blood, so that they could donate it to our children ...previous generations of Greeks obtained it just to donate it to the Greek of the future ...the dead obtained it to donate it to those still unborn. We, the living ones, can just exploit it ...we borrow it from its owners with the engagement to hand it back as a whole ...who can sell something that does not belong to him/her?
http://eamb-ydrohoos.blogspot.com/2012/02/world-war-iii.html
* * * * *
will continue reading two essays above, and look forward to more of your work in future
for now, would just like to acknowledge exertion. your labor. clarity. to instruct, your good countrymen
The Great Helene . . . many will be joining her next: take out your traitors, brother, and fuckin take out their hearts . . . example, so that we may follow
Zoion Politikon
swimming the hellespont
More texts will be published in English soon, always authored by Panagiotis TRAIANOU.
If ancient Greeks won the battle against the barbarity of the East in favour of Europe, then modern Greeks are those who are meant to win the battle against the barbarity of both Eastern and Western world in favour of the human kind. The world has become a little “village” and in this “village” everyone knows what the character of the others is.
If you liked the two aforementioned links, feel free to check out this one as well:
http://eamb-ydrohoos.blogspot.com/2012/02/germany-disgrace-of-europe.html
i thought this whole deal with Greece smelled funny. How could one country just wrap up all its debt, throw it in the garbage and bring our a newly wrapped gift of new debt so smoothly. There had to be other rats in the rat hole. Maybe Monday the markets will finally wake up and start to understand the Tsunami that is starting to roll our way.
The euro zone is fast becoming too expensive for the American and German taxpayers to keep it in place. It eventually arrives at a place where it costs more than it’s worth. It’s been valuable to German industry and less valuable, of course, to the German people who have to shoulder the costs. But, now, as the other marginal problems emerge, such as Spain and Italy, with their substantially larger economic problems, it will become unsustainable and counterproductive… with the costs outwaying the benefits.
the trick is to turn the cost into a benefit. no?
print !
Meanwhile back @ the ranch: Bush got the party going with a house & mortgage for everyone, then Obama followed with 2 cars in every garage and taxpayer-sponsored mortgage reductions; but the bernanke will outdo them both with a printing press in every basement...well at least the basements of his bankster collaborators!!
Buy physical gold and silver today!
An Eight Hundred Pound Greek Gorilla?! There's a crowbar joke in there, somewhere...
an eight hundred pound Hellenic gorilla walks into a bar
with a crow on his shoulder and says ...
" bartender, i'll have a whisky and an ouzo
for the crow."
the bartender asks, " how are you going to pay
for the drinks? "
the crow says " .....
the crow says ...
" pay for the drinks? i thought this
was a crowbar?"
That girl on CNBC with the big tits and ugly face missed these when she declared suckess
So, the thesis is that any and all greek government backed/garranteed debt are now triggered as immediately payable in full...
Which amounts to much, much more than the paltry $107 billion write-off...
hmmmm
Considering the utter lack of any meaningful amounts of collateral (leverag eto infinity, n-tupley rehypothicated bonds, ect) that can be sold to meet these payments means...
does anyone catch a wiff of smoke from the control room?
There will be no smoke from the control room, as it is underwater, too. Have you not seen the ECB's balance sheet?
After reading the complexity of the bond descriptions I can easily see why,
"neither a borrower nor lender be" needs to be followed and both individuals and governments.
But TPTB can simply retroactively change any of these rules, right?
E.g., they can rule that CDS are only valid for holders of corresponding debt named in the contract. Any number of other rulings can be applied. Sure they risk no demand for future debt issues, but they'll cross that bridge when they get there, and find more poor saps desperate for returns at that time.
But TPTB can simply retroactively change any of these rules, right?
E.g., they can rule that CDS are only valid for holders of corresponding debt named in the contract. Any number of other rulings can be applied. Sure they risk no demand for future debt issues, but they'll cross that bridge when they get there, and find more poor saps desperate for returns at that time.
i look forward to an oz of gold being worth $1 million , not so keen on a litre of milk costing $1000 tho.
A thousand monkeys on a thousand typewriters will eventually hammer out enough legalese to make you go crazy.
This looks. Interesting.
Something serious should have taken place, so that the “Superpower" owes 14.5 trillion dollars. Such a "broke superpower" has never been before. The world has never seen before "World rulers" who surrender to pain because cancer medication costs. World rulers, who, when they lose their jobs, go straight to the “garbage”, have never existed not even in the years of Genghis Khan. There should be a problem somewhere and that’s what we are seeking. It’s not possible for someone to eat night and day and to risk dying of malnutrition. It is obviously that this person is severely “ill" and that’s what threatens him with death. This is the case in USA. They take advantage the resources of the whole planet and they have “managed" to be threatened today with bankruptcy. They are doing something wrong. Something is wrong in their “organism”. Some internal "cancerous" agent "sucks" all their inflow and lets them crawl to "death".
Global Debt Crisis
http://eamb-ydrohoos.blogspot.com/2012/01/global-debt-crisis.html
World War III - The first private War in history
http://eamb-ydrohoos.blogspot.com/2012/02/world-war-iii.html
Authored by Panagiotis TRAIANOU.