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European Black Swan Sighted

Tyler Durden's picture


While everyone's attention was focused intently on peripheral European bond spreads last week and the incessant call for ECB intervention, a dramatic (and contagiously panic-worthy) move occurred in the European Investment Bank (EIB) bonds.

For those unfamiliar, the EIB is the EU's IMF-equivalent and is the largest international non-sovereign lender and borrower. Technically, it is defined as "the European Union's long-term lending institution established in 1958 under the Treaty of Rome. It supports the EU’s priority objectives, especially European integration and the development of economically weak regions."

5Y Euro-denominated AAA-rated EIB bond spreads crashed wider, blowing past the 2009 record highs and clearly indicating that European capital flight is in full swing.

The IMF-like entity, supported by a small capital base of deposits backed by promises of huge capital injections by sovereign nations, has massive exposure across Europe (and elsewhere). EUR382.4bn of senior unsecured debt and (according to Bloomberg - chart below), EUR2.5bn of deposits (admittedly backed by supposed promises to make whole loan commitments) does not make for a sound AAA-rated firm in our humble opinion.

Clearly investors think the same this week and are starting to worry about the same self-referencing, self-supporting house-of-cards that caused the EFSF to be written off as unworkable.

It is clear that the contagion is spreading as Bund yields start to underperform (no capital flight to safety within the Euro-zone) and furthermore, as the chart above shows, the stress on the EFSF has now spread to the EIB's publicly tradable debt.

It is no wonder given the size of their loan portfolio and who it is being lent to:

Spain, Italy, France, Portugal, and Greece all in the Top 10 with simply enormous outstanding debts relative to the capital in-house to cover potential losses (let alone any MtM or economic risk budgeting).

The debts outstanding, much as with any major investment bank, are denominated in multiple currencies and the yield curves below show the differentiation of those curves by major currency.

The next few months/quarters/years has huge supply from the EIB as it rolls its major debt load and while it maintains its AAA-rating - and therefore appears very attractive from a carry-per-regulatory-risk-capital perspective, we suspect the professionals are already unwinding their exposure very rapidly.

The next few months have over EUR20bn in maturities (and EUR6bn in interest payments) and so we will get plenty of opportunities to judge how new issue premiums will adjust secondary markets.

The following chart (of the USD-denominated EIB debt yields) should be enough to prove that both systemically (yield curve shift higher) and idiosyncratically (potentially speculative-driven negative bets as bear flattening is occurring) the AAA-rated EIB is facing some significant stress and should it need to make capital calls (to maintain its AAA-rating), is Spain, Italy, France, and Greece going to step up to their promises...

There are no CDS trading on this reference entity (yet) but given the still-relatively-tight nature of the bond spreads, we suspect specialness is not an issue and borrow is possible. The 2s5s bear-flattener looks the lowest vol trade but at such low costs of carry, outright is perhaps just as attractive on a reduced size trade. The compression in the EFSF-EIB trade also looks attractive.

Charts: Bloomberg


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Sun, 11/20/2011 - 15:53 | 1896204 CalibratedConfidence
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Sun, 11/20/2011 - 16:57 | 1896345 Chris Jusset
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"5Y Euro-denominated AAA-rated EIB bond spreads crashed wider, blowing past the 2009 record highs and clearly indicating that European capital flight is in full swing."

This is potentially WORSE than the Post-Lehman collapse ... which itself was worse than any post-Depression collapse.

Buckle-up.  Have popcorn handy.

Sun, 11/20/2011 - 17:20 | 1896434 ratso
ratso's picture

Not really. 

Is this just another version of THE SKY IS FALLING?  Yeah,  I'll have another beer.

Sun, 11/20/2011 - 18:11 | 1896544 masterinchancery
masterinchancery's picture

If  you don't think this stuff is real, you should be out buying up euro bonds--right?

Sun, 11/20/2011 - 18:43 | 1896637 ratso
ratso's picture

There's a real difference between making a dumb investment and believing that the world is coming to an end.  These days there are way too many people looking for evidence that the world is ending and finding it even when it isn't there. 

When every one is running to one side of the boat they are most likely wrong so it is usually more prudent to be on the other side - That does not, however, translate into buying euro bonds.

Sun, 11/20/2011 - 18:47 | 1896658 LowProfile
LowProfile's picture


I mean, what could go wrong with 152.96:1 leverage?

Besides the fact it's going to infinity:1, I mean...

Sun, 11/20/2011 - 19:07 | 1896712 Carlyle Groupie
Carlyle Groupie's picture

Yea but do we always have to refer to it as a black swan? I mean that shit is racist man!

That guy Taleb is a bitter little racist with lots of fuck you money.

Sun, 11/20/2011 - 19:58 | 1896923 CClarity
CClarity's picture for an interactive map that shows which countries owe what to other countries, how much that translates to on a per person basis, and what percentage of GDP it is.  What a mess.  

Sun, 11/20/2011 - 20:28 | 1897009 TruthInSunshine
TruthInSunshine's picture

JP Morgan, the Squid, et al., and most importantly, their unseen bosses (no, not Jamie or Lloyd), have to eat - and eat very well, no matter what.

That means that no matter what the outcome of this 'crisis,' you can rest assured that many more of us in the US and EU (not to mention China & Japan), will be on a budget; as in an every night Ramen Noodle budget.

More of the earth's valuable are belong to them, bitchez.

Eisenhower warns


Sun, 11/20/2011 - 23:34 | 1897482 redpill
redpill's picture

The NFL is FIXED!  From now on I'm only rooting for teams if their name ends in S!

--Lloyd Blankfein

Mon, 11/21/2011 - 02:24 | 1897732 Michael
Michael's picture

Did you hear the Chinese housing bubble bust is accelerating. 17 of 70 major cities prices down in September and 34 of 70 major cities prices down in October or something close to that. Once a mega housing bubble starts to burst, there's no stopping it. Trust me.

Mon, 11/21/2011 - 02:35 | 1897747 Chris Jusset
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Well, it HAD TO HAPPEN, we just didn't realize that it would crash this soon.  Looks like the Chinese miracle is hollow after all.

Mon, 11/21/2011 - 03:04 | 1897759 Oh regional Indian
Oh regional Indian's picture

The Great wall is crumbling (literally), the BRICS are crumbling (figuratively).

And it definitely is not THE balck swan if you saw it coming.

Watch Spain. I think PIIGS is SGIPI. Italy will fall last. No doubt. 

The Circle of circles is Italy, France, Germany, UK and the US. The rest are ALL expendable. Populations of said circle are expendable last.

Ponzi kabuki delusional drachmas.



Mon, 11/21/2011 - 03:29 | 1897774 Chris Jusset
Chris Jusset's picture

Spain is at the brink... 22% unemployment ... banks have to write-off 50% of real estate ... Spain's CDS are climbing ... interest rates are above 6% ... huge national debt ...

Mon, 11/21/2011 - 03:48 | 1897797 Oh regional Indian
Oh regional Indian's picture

I think it was all kept on the hush hush for Spain so that the "right" leaders of their newly elected, right wing govt. could be firmly in place.

Give it a week or so at most. Question is, is Spain's underbelly soft like Ireland's or will they strike, literally and figuratively.  

I think El Torro is going to get the sword betwen the shoulder-blades, rather mercilessly.

What goes around, comes around and all that sort of thing.


Mon, 11/21/2011 - 04:00 | 1897790 TruthInSunshine
TruthInSunshine's picture

When (not if) this reaches France, it will already be over, and the decision to either turn on the CERN ECB printing machine will have been made (bailouts for bagholders of PIIGS+France+UK sovereign and EU Zone banking debt - resulting in maximum pain for taxpayers in solvent EU Member states as well as ALL consumers in Europe using the to purchase the necessities of life, who will see at least a 40% and as much as a 70% devaluation in their purchasing power over 5 short years), or the decision to not turn on the CERN ECB printing machine will have been declined (EU breakup, with maybe a core block remaining, in either a somewhat orderly or totally chaotic fashion, but where the brunt of the pain is imposed on investors who took risks in buying EU Member Sovereign debt and the debt of EU Zone banks and financials, and all assets bearing such investment risks).

I didn't even mention CDS/CDO.

That's the absolute beauty of what is cold, sterile mathematics: It doesn't lie.

Just like one can't have their cake and be able to eat it, too, the EU Debtapocalypse won't allow for Europeans to be able to do what is absolutely necessary (print € to infinity and beyond, in an amount that will make The Bernank look tame by comparison) to hold the EU, in even what roughly resembles its current form, together, without Europeans getting absolutely crushed in terms of their purchasing power and far higher tax rates (than what are already extremely high tax rates in the few solvent EU Member States).

Mon, 11/21/2011 - 04:09 | 1897805 Chris Jusset
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It seems that EVERYONE except for the EU knows and realizes that it's OVER for the Eurozone.

Mon, 11/21/2011 - 05:42 | 1897852 Gavrikon
Gavrikon's picture

Black swans are not rare at all in Eastern Europe.  I actually saw a mob of them on my last vacation there.  Of course, they were mugging an elderly white swan at the time . . .

Sun, 11/20/2011 - 18:49 | 1896665 Dr Paul Krugman
Dr Paul Krugman's picture

The bond yields might be moving north, but this does present an opportunity for debt holders.  Like the article said, these bonds will be rolled over.  This will give the debt holders the opportunity to get better rates, while getting the face value of their bonds back.  This is a great buying opportunity for them.

Sun, 11/20/2011 - 19:46 | 1896869 knukles
knukles's picture

And so, Wise Herr Docktor Krugman, how many have you purchased for yourself?  Which issue at what price and when?  Those who follow your advice wish to know, please.

Thank you.

Sun, 11/20/2011 - 19:56 | 1896906 Dr Paul Krugman
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I think these bonds are at a great price, as long as Europe acts coercively.  How is Italy, the third biggest bond issuer, going to go belly up?  It is not going to happen.  Especially while T-Bills are so low. 

The most important factor though, and I think it will happen, is that Europe commits to acting on their debt obligations.  They have tried to do this with the EFSF, but that has been put on hold.  Italian banks are doing the right thing and buying Italian debt.  You don't think Spanish banks will buy Spanish debt?  French banks?  And all the while they collect high yield, buy low, and in 30 years when everyone forgets this recession they will be cashing them in at face value.

Yes, I will be a buyer of European debt.

Sun, 11/20/2011 - 22:04 | 1897282 BoNeSxxx
BoNeSxxx's picture

Just so I have this right,... the banks are going to purchase sovereign debt that the issuing nations can't afford to service and the euro nations are going to issue more debt to bail out the banks after they take the necessary haircuts on the bonds.  Rinse and repeat.  Problem solved. Sounds reasonable to me.

I guess I should write a check to my wife for $1,000,000 and have her write me a check for $1,000,000.  Hey, why not?  All the cool kids are doing it.  Heck, I'll even form a corporation and issue bonds on the side to build up my office and hire a few staff to execute the check kiting while I sit on the beach -- apparently you will buy them.

Sun, 11/20/2011 - 22:22 | 1897313 Dr Paul Krugman
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So what you fail to understand is that inbetween the movements of the cyclical nature of the economy, people will spend.  What matters is how much they spend.  So if we increase the amount we can spend, then people spend more.

For example, if you write you wife a check or a million dollars, she will buy groceries, go out to dinner, have a spa, buy some jewelry, a new car, maybe a house.  So when she pays you back, even with interest, spending has increased.

Sun, 11/20/2011 - 23:13 | 1897433 Dr. No
Dr. No's picture

You won a Nobel Prize for that?  That is the most flawed argument I have read on ZH and showes your stupidity.  Every man knows a wife will NEVER pay back owed funds.

Sun, 11/20/2011 - 23:17 | 1897439 BoNeSxxx
BoNeSxxx's picture

Million$Bonus?  Is that you?

Sun, 11/20/2011 - 23:50 | 1897494 Vagabond
Vagabond's picture

Clearly a psychopath.

Mon, 11/21/2011 - 00:18 | 1897566 GenX Investor
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What matters is that all debts must be repaid, just look at the Franco Prussian War that set up the 20th century of destruction.  You can't confiscate and expect everyone to be cool with that.  Taxes ("legalized" confiscation) for things that serve no purpose or go to redistribute to less productive members of society can only go on so long before change occurs.  Now that is "Change we can belive in."

Mon, 11/21/2011 - 02:28 | 1897741 The Big Ching-aso
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"All debts must be repaid........."


Correction:    "All debts must be repaid unless the payer says 'Go fuck yourself and the horse you rode in on' and also happens to be holding a nuke against your head."

Then all of a sudden the debt will be 'forgiven' whether you think this is fair or not.    This unique event is known as 'An offer you can't refuse'.


Mon, 11/21/2011 - 04:18 | 1897804 TruthInSunshine
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"All debts must be repaid........."

Let the record reflect that we're here to discuss the outstanding loan XYZ made by ABC to DCE that is the subject of this hearing/meeting/conference.

Have the creditors been able to come to mutual agreement as to the concessions that they will make in order to execute legal satisfaction of this debt?



a)  All debts must be repaid, but in this case, there will be an exception (see many examples in history where it sucked to be the creditor where these exceptions were made, for whatever reason, whether the debtor was a sovereign, corporation or individual).

b)  All debts must be repaid, but you're not going to like the purchasing power of the fiat you're going to receive in satisfaction of that repayments. Thanks for that loan way back when, and here's our final payoff of our balance, so go out and try not to spend it all in one place. Thanks.

c)  All debts must be repaid. Just give us some time, and let us decide how our children and grandchildren and great-grandchildren will repay this, because we care about them and all that, but we really need to get what we were promised by the politicians that we voted for, damnit. So give us some space. We're (or they're) good for it.

d)  All debt must be repaid. The check is in the mail, bitchez.

e) All debt must be repaid, except in circumstances were a con, a ruse, a deception, a mistatement of material fact, a fraud in the inducement in the giving of the loan or the explanation of the terms of repayment(s) was made by the creditor, and we're declaring the loan repayment obligation null and void (in fact, void ab initio), bitchez.

f) All debt must be repaid, but we're about to launch a war on your sorry asses, so excuse us while we shell your cities, bitchez.

Mon, 11/21/2011 - 03:20 | 1897766 Oh regional Indian
Oh regional Indian's picture

I wish I could reprint the absolute CRAP this man or his real life altered EGO write in Indian Newspapers.

He (PK) is the great champion (maybe should be called Double Jowled CHOMPion) of GloBULLization.

A joke Mr. PK, you and your ilk. I hope this is you and you read it and knwo that even in India, those that know, mock you and your Infosys buddies.


Sun, 11/20/2011 - 22:48 | 1897373 masterinchancery
masterinchancery's picture

Doubt it, any more than Leo bought Greek debt after we satirized his silly defense of it.

Sun, 11/20/2011 - 23:19 | 1897444 aldante
aldante's picture

I can appreciate that you are willing to get your paper money back. However, my observation is that it will not be in $ but in some other currency that simply will have no relation to our current valuations.

Mon, 11/21/2011 - 01:20 | 1897671 thunderchief
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In your world, Dr. Krugman, Debt never dies, as we keep expanding the debt cycle and we never stop growing.  The world is an elastic balloon.  European debt is always a bargain as it is always serviced, never defaulted on, and always rolled out to some far point on the horizon.  Why don't you just say money printing as save everyone some reading?

I think that leads to hyperinflation.

Sun, 11/20/2011 - 20:15 | 1896980 Chuck Walla
Chuck Walla's picture

I think Dr. Paul forgot the /sarc flag on his post.

Sun, 11/20/2011 - 21:39 | 1897215 knukles
knukles's picture

So ding has ass again.

Sun, 11/20/2011 - 20:25 | 1897005 francis_the_won...
francis_the_wonder_hamster's picture

If that's really you Paul.......f*ck off.


Sun, 11/20/2011 - 19:59 | 1896715 Zero Govt
Zero Govt's picture

i think i've spotted another Black Swan... it's €3 Trillion of debt that has slipped ever so quietly under the radar and there's 26 of them (Black Swan countries) 

well it's a 'surprise' to the EC/EU/ECB

the other 'surprise' is the botched together in a hurry European Financial Suicide Fund didn't go down too well with creditors 

...the EC/EU/ECB really are getting smacked in the face with all these surprising Black Swan events, it's almost like they haven't a freekin clue what they're doing (which would explain the surprise)

Mon, 11/21/2011 - 00:08 | 1897543 mkkby
mkkby's picture

Sheesh.  How many of these semi/non governmental organizations does the EU have?  Does everybody over there work for one? 

No wonder their economies are in the crapper.  The Germans make a few cars and tools.  Everybody else is either on a committe that has endless shrimp fests, or lends money to each other based on their own taxes.

Sun, 11/20/2011 - 15:59 | 1896225 Ethics Gradient
Ethics Gradient's picture

Indeed. Let the monster die. Then we can all get on with our lives rather than standing around waiting to see where the pieces are going to fall.

Sun, 11/20/2011 - 16:20 | 1896261 TruthInSunshine
TruthInSunshine's picture

I hereby declare 'Black Swans' to be known as 'Fractional Reserve Bankster Intentionally Induced Parasitic Shock So As To Allow Their Masters To Scalp A Bountiful Harvest Events.'

It's raelly long, and not nearly as catchy, and it certainly doesn't flow off the tongue as Taleb's 'Black Swan' does, but it's so much more informative and reflecting of life meeting reality.

(I am still convinced that the 'Black Swan' Taleb references, instead of being a freak of genetic mutation, was simply doused with hot tar as a depraved and psychotic attempt at staving off boredom by a bored Rothschild descendant)


**Instead of a Hank 'Tanks in the Streets & Martial Law' Paulson scary speech in 2008 to wrest a blank and apparently endless check from taxpayers, it would appear something far larger is afoot, with the pain, criminality and draining of global taxpayer blood being far more dramatic this time around. They're going to bring Bela Lugosi back for the upcoming warnings and public speeches.

***Jamie Dimon told his daughter, as he reiterated it to CONgress, that when she asked him what a financial crisis was, he replied "something that happens every 7 or 8 years, princess." He may have to amend that to "every 3 or 4 years, princess."

Sun, 11/20/2011 - 16:22 | 1896284 americanspirit
americanspirit's picture

Actually TIS that particular swan was indeed a Rothschild, but was not covered in tar - it was turned into a black thing by an angry wizard.

Sun, 11/20/2011 - 18:26 | 1896593 Use of Weapons
Use of Weapons's picture



Junked for a Disney snark. Wow... here be trolls.

Sun, 11/20/2011 - 17:13 | 1896420 Pain Train
Pain Train's picture

I'll say it again...the term "black swan" is being misapplied on Zerohedge. It is NOT simply any big, bad event with huge ramifications. Rather, it's an event that was COMPLETELY UNFORSEEN AND UNEXPECTED. An example of a black swan event would be, say, a Russian military move to seize the Straights of Hormuz this week.

And before some smarty says, "well, you just conceived it, so by your definition, it's not a black swan," keep in mind that being able to imagine something does not equate to giving it a statistically significant chance of actually happening. 

Sun, 11/20/2011 - 17:23 | 1896437 LetThemEatRand
LetThemEatRand's picture

I believe that ZH is actually making the point that professional pundits and mainstream advisors all will claim that no one could have seen it coming, thus the use of the term.    

Sun, 11/20/2011 - 17:48 | 1896496 Pain Train
Pain Train's picture

Good point.

Sun, 11/20/2011 - 18:00 | 1896518 kill switch
kill switch's picture

Dust off the Fat Lady and put her on standby!!

Sun, 11/20/2011 - 19:47 | 1896871 knukles
knukles's picture

Dude, she already sang.

Sun, 11/20/2011 - 20:59 | 1897105 Hugh_Jorgan
Hugh_Jorgan's picture

She is singing right now but she can't be heard over din from Jersey Shore, John Stewart, and the OWS puppets claiming the Banksters are the root of the problem.

Bread and circuses, bitchez....

Sun, 11/20/2011 - 21:41 | 1897222 knukles
knukles's picture

The Doppler Effect.

Mon, 11/21/2011 - 05:54 | 1897854 GenXer
GenXer's picture

The movie Margin Call showed a good example of what the market saw as a Black Swan event, which was actually pre meditated by the firm.

Sun, 11/20/2011 - 17:43 | 1896486 Tao 4 the Show
Tao 4 the Show's picture

Taleb coined a catchy phrase, but the whole thing is a bit hokey to those who actually understand the math. The definition you give is good and useful for discussing events, but defined as being outside of a current system of thinking it is by this definition not amenable to any statistical description.

Sun, 11/20/2011 - 18:14 | 1896558 masterinchancery
masterinchancery's picture

No, a Black Swan can also be an event that is known, such as a large meteor hitting the earth, or a tremendous solar storm, but that is sufficiently unlikely that humans don't ever expect it to happen in their lifetime. 

Sun, 11/20/2011 - 22:45 | 1897365 hannah
hannah's picture

nassim's event is known but ignored 'because it can never happen'......

Mon, 11/21/2011 - 03:20 | 1897765 TruthInSunshine
TruthInSunshine's picture

I believe the mate above was correct; it's not that it can't ever happen, it's more that it happens so infrequently, that humans have difficulty anticipating it, and many may insist (mistakenly) that it's not possible...

...or maybe even more accurately, it's a happening/occurrence of such a rarity, maybe never having been seen by man before (not to say that it can't be postulated about, like many things involving astrophysics are), that few take the time or effort to account for the possibility, let alone the likelihood, that they'll ever have to deal with the consequences of the event - ever.


"...a genetic mutation that has less than a one-in-a-million chance of occurring."



Sun, 11/20/2011 - 18:21 | 1896578 Nnthnt1
Nnthnt1's picture

Nope, quoting Taleb Nassim in "On Robustness": A black swan event is dependent on the observer. The "turkeys" in his book being slaughtered are a black swan event to the turkeys, not to the slaughterer.

Sun, 11/20/2011 - 19:15 | 1896758 Carlyle Groupie
Carlyle Groupie's picture

"a Russian military move to seize the Straights of Hormuz this week."

That is NOT an unforeseen event. Even Taleb's example of the turkey and the farmer is not a pure black swan event because the fucking farmer planned the event!

A pure black swan is when a comet from outerspace strikes the turkey dead and the farmer eats it for thanksgiving. And don't even bother spewing your god bullshit about that being planned. ok? thx.

Sun, 11/20/2011 - 22:33 | 1897335 geekgrrl
geekgrrl's picture

I've always interpreted "black swan" events as those with a low probability of occuring but if it does happen, it has profound consequences. Taleb's point, if I understand him correctly, is that it is not so much that the event is unplanned, but that the risk is typically trivialized and minimized, and the event itself considered so unlikely (according to conventional wisdom) that the risk is assumed to be zero, and therefore no contingency plans are considered necessary.

For all intensive purposes, this is where the US is at vis-a-vis nuclear reactors, and brings to mind the completely imaginable events that could result in a US Fukushima. Did I say completely imaginable? These kind of events are, un-mitigatable, if there is such a word. What is done cannot be undone.

Under these assumptions, when the unlikely event does happen, it exposes the fallacy of the assumption that a very small risk can be approximated by zero risk. And if you can't ignore tail risks, what does that say about the legitimacy of such a system?

Mon, 11/21/2011 - 02:38 | 1897750 Tao 4 the Show
Tao 4 the Show's picture

A+ for good exposition. Some other comments above were also helpful. I didn't want to write a long post on this to describe all the nuance. Applying statistics to macro scale situations is fraught with error. The Black Swan concept is good to communicate the point that there is a bigger world than imagined by stupidly applied statistics (e.g. safety in Black-Scholes, etc). But then people go on to try to pretend that the Black Swan event fits into some other statistics. It's too tempting to resist, and even Taleb is trying to make money using a flawed version of the flawed thinking he pointed out.

Sorry folks, risk can not be eliminated by using risk models. Life is risky any way you look at it, and there are "unknown unknowns" (a phrase Rumsfeld only parroted from others). The good news is that the same applies to TPTB. They like to project omnipotence, but it's only another of this same type of sham.

Tue, 11/22/2011 - 01:06 | 1901509 geekgrrl
geekgrrl's picture

Thanks. I think we are of similar mind. I was going to make a much longer post, but like you, didn't want to get into the nuance of applied statistics and risk assessment. At the same time, I've looked at the models in great detail and they are completely unworkable. A sham it is!

Mon, 11/21/2011 - 00:10 | 1897548 mkkby
mkkby's picture

Careful buddy.  Us black swans can bite and leave a welt.

I dream that everyone goes out and torches a bank branch.  The whole thing would end in one day.  Dare to dream.

Mon, 11/21/2011 - 01:36 | 1897684 oldman
oldman's picture


No one has to torch anything.

Just not use their credit cards again will be enough of a 'black swan'. As for me, I believe all of this is so unlikely that I will begin picking up the few odd shares of those European banks that I like.

Too many looking at the same thing for too long a time---what did Mesmer call it?  Oldmen have bad memories---I can't remember---I can't remember---I can't-----I              om

Sun, 11/20/2011 - 16:22 | 1896285 Catflappo
Catflappo's picture

Well, "get on with our lives" until the focus then rightly and clearly comes on to the US's outrageous debt problem.    And then "get on wih our lives" until the same thing happens with Japan.    And then actually get on with our lives.

Sun, 11/20/2011 - 23:11 | 1897427 MarkTwain00
MarkTwain00's picture

"I just don't think a lot of people have really thought that(EFSF) through"


Sun, 11/20/2011 - 16:10 | 1896250 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

IMF meet your future.

Sun, 11/20/2011 - 16:34 | 1896315 Ropingdown
Ropingdown's picture

Despite the article's quote, "the EIB is the EU's IMF-equivalent,"  it seems to me the EIB is more analogous to  the World Bank, not the IMF, and both the World Bank and EIB are misnamed.

Sun, 11/20/2011 - 16:38 | 1896321 He_Who Carried ...
He_Who Carried The Sun's picture

Relax: Another day, another dollar ;-)


Never heard of a "pre-announced" Black Swan.

Wild swings in confidence are just called volatility. :-D

Bankers are trembling, Governments are shaken. That's all very good for future reforms. In the meantime: hold your breath, fasten seatbelts and enjoy getting ready for buying real cheap.  ;-)

Sun, 11/20/2011 - 18:16 | 1896564 masterinchancery
masterinchancery's picture

Every bond crash in history has been foreseen by some investors, since there are always indications of weakness before the event.  Most investors simply disregard them, and therefore lose.

Sun, 11/20/2011 - 20:43 | 1897057 He_Who Carried ...
He_Who Carried The Sun's picture

Those who still  I N V E S T  in this kind of market are either reckless or they bought really cheap a while ago. I will meet you at the bottom ;-)

Mon, 11/21/2011 - 00:39 | 1897598 aldante
aldante's picture

I did not read your post just like the t....that's why you got green.

Sun, 11/20/2011 - 20:42 | 1897053 mac768
mac768's picture

... a relatively small black swan can lead to a big event in the end ...

once the sheeple recognize it...

Sun, 11/20/2011 - 21:26 | 1897179 SHEEPFUKKER

Once you go "black" swan, you never go back. 

Sun, 11/20/2011 - 16:01 | 1896228 jcaz
jcaz's picture

Bonds never lie.....

Sun, 11/20/2011 - 16:21 | 1896280 Cdad
Cdad's picture

LOL...tell that to a US T Bill.

Sun, 11/20/2011 - 16:45 | 1896339 TruthInSunshine
TruthInSunshine's picture

Federal Reserve Notes, aka BernankBux, are prolific and compuslive liars of the worst order, and the same can be said of all fiat worldwide now, as all of it is conjured from thin air, backed by nothing of any inherent value (just empty platitudes such as "full faith & credit" at no cost to the central merry banksters & then loaned at interest, leveraged many dozens of times over, and then either repaid with interest - or better yet - defaulted on, allowing the masters of the Merry Central Bankster Puppets to Harvest the real assets that have actual, inherent wealth, that were pledged to securitize said loans (think homes, land, farms, natural resources in the case of alleged sovereign nations, etc.).

Even if a huge percentage of unsecuritized loans are defaulted upon, it's no skin of the Money Masters sacks, as they basis of the loan was conjured from thin air, with zero cost of production, and any loans that perform are pure gravy.

Bonds are, for the most part, securitized by fiat such as EuroWipes or BernanBux.

It's such a brilliant racket that they're running.

Sun, 11/20/2011 - 16:53 | 1896361 BoNeSxxx
BoNeSxxx's picture

He speaks the truth... as his name implies.


Same racket TIS.  IMF and World Bank have been doing it since their inception.  Loan with easy credit to developing nations, let them default, re-finance with collateralized loans, default again, take the hard assets from the host nation for pennies on the dollar.

Rockefeller owns something like 90% of Guatemala's land mass... acquired through said process.  Look it up.

Sun, 11/20/2011 - 17:55 | 1896509 AldousHuxley
AldousHuxley's picture

It is not Rockefeller's fault for developing nations accepting IMF loans. It is the fault of greedy new to capitalism's material wealth leaders of said countries. Divide and conquer. Bribe the leaders with money to sell out their populace by selling state assets.

African slaves were sold out to European and Arab slave traders by African kings.


But there is another way to play this game. Get easy credit, party hard, default, then not provide any collateral, get easy credit again....USA is good at this. and they get away because they have the big guns.


In the end, big guns win.

Sun, 11/20/2011 - 18:22 | 1896580 buckethead
buckethead's picture

I sooo want to junk this post, but truth is truth.

Sun, 11/20/2011 - 18:51 | 1896673 LowProfile
LowProfile's picture

You guys really, really need to read/watch "Confessions of an Economic Hit Man".

Sun, 11/20/2011 - 19:21 | 1896779 Carlyle Groupie
Sun, 11/20/2011 - 19:49 | 1896882 El Viejo
El Viejo's picture

Thanx for the link, but:

I think one has to ask oneself which was worse, the installation of a false religion (communism) by violent means or surrepticiously opposing it by debt tyranny? Communism slaughtered millions(pol pot and stalin) and where is it today? I have to consider the times (the 70s) The fear of communism was rampant. I was young and naive. When I was going to be drafted I didn't go to Canada I joined up. I also got out 4 years later. As the song goes I've seen it from both sides. It's unfortunate that people tend towards the extreme Left or Right. That's what is going on in Washington right now and our troops are fighting extremists over seas. Amazin. People do not want to hear opposing points of view. They want to be confortable. They do not want to do the effort. They don't want to think. They enjoy being automatons. It relieves them of the responsibility. They build their idols to their false gods and go through the motions.

You really have to actively pursue and investigate the opposite of your assumptions or you become part of the problem.

Sun, 11/20/2011 - 20:22 | 1896996 Carlyle Groupie
Carlyle Groupie's picture

"Thanx for the link"

U R welcome.

Sun, 11/20/2011 - 18:17 | 1896567 q99x2
q99x2's picture

Then some Guatamalans need to take their country and their property back from those that stole it. Crooks, as Shemp stooge says, "that would steal the flies from a blind spider."

Sun, 11/20/2011 - 19:35 | 1896816 BoNeSxxx
BoNeSxxx's picture

They tried and almost did. Leaders who endeavor to reclaim what the bankers steal (or in deference to Al Hux had given to them by a previous ruler) have a funny way of winding up dead.

Mon, 11/21/2011 - 00:54 | 1897627 q99x2
q99x2's picture

Family Motto from the 11th century: Better Dead Than a Slave. We are still around.

Sun, 11/20/2011 - 19:35 | 1896819 fnordfnordfnord
fnordfnordfnord's picture

Then we can call them Cuba, or maybe Venezuela.

Sun, 11/20/2011 - 17:51 | 1896500 Tao 4 the Show
Tao 4 the Show's picture

And to add insult to injury, all the actual money (e.g. Basis for the leverage) is siphoned off in bonuses, etc to the bankers. Then important obligations like pensions are tied to the loans so the society is held hostage to the banks. All the good will of so many in working and saving for their families, retirements, etc... all tied to nothing.

Sun, 11/20/2011 - 17:58 | 1896514 CatoTheElder
CatoTheElder's picture

BernackBux have have no "full faith and credit" backing since 1971. Their only inherent value is that they are good for payment of taxes and for satisfaction of contractural requirements denominated in BernackBux.

Mon, 11/21/2011 - 00:15 | 1897554 mkkby
mkkby's picture

Yep.  Having the reserve currency is quite a racket.  The oil and goods producers are starting to wise up though.  They were willing to play the game until we began devaluaing at a rapid pace.  It'll all be over when they figure out how to free themselves.

Sun, 11/20/2011 - 16:01 | 1896231 GeneMarchbanks
GeneMarchbanks's picture

'5Y Euro-denominated AAA-rated EIB bond spreads crashed wider, blowing past the 2009 record highs and clearly indicating that European capital flight is in full swing.'

Flight to safety I presume? As in UST bonds?


Sun, 11/20/2011 - 16:05 | 1896240 vxpatel
vxpatel's picture

Flight to safety...cans of SPAM and powdered milk...


Mon, 11/21/2011 - 00:42 | 1897610 aldante
aldante's picture

Don't forget the water.

Sun, 11/20/2011 - 20:48 | 1896246 Bansters-in-my-...
Bansters-in-my- feces's picture

Black Golden Goose... Come in Golden Goose....Do you read... Yes Black Swan.... I read,and I am ready.....for take off.

Sun, 11/20/2011 - 16:09 | 1896248 Franken_Stein
Franken_Stein's picture

Mayor Bloomberg is denying American protesters their constitutionally assured 1st amendment rights of free speech and free assembly, citing phony fire hazard concerns as a reason to clear Zuccotti park with his NYPD stormtroopers.


I always knew that this clown is a 100% Wallstreet Nazi.

After all, he made his 14 billion $ fortune with one product only: Selling his Bloomberg financial news terminal to Wallstreet traders.


But when I criticized him here half a year ago I was booed: How dare you to insult our nice mayor !


Yeah right, how did that play out for ya ?!


Did you know that Bloombergs daughter also is working for a private company that together with major Wallstreet banks and NYPD is running a network of spy-cams in Lower Manhattan to surveill and counter any looming threat /protest ?


Talk of a nazi police state coming to your town in the not too distant future. 

Law & Order my arse !

Sun, 11/20/2011 - 16:18 | 1896269 Long-John-Silver
Long-John-Silver's picture

All of them were happy with the OWS protestors until polls showed a majority of citizens disapproved of them. After a meeting of Mayors and Washington D.C. leaders Police Departments nation wide started a crack down on all OWS protests on the very same day.

Sun, 11/20/2011 - 16:28 | 1896292 LawsofPhysics
LawsofPhysics's picture

"Talk of a nazi police state coming to your town in the not too distant future. "


And you are surprised?  Just wait until enough of the higher pay grade folks start losing their jobs and showing up the "Bloomberg's" summer homes.  This is all about seeing how much pain and fleecing the American public is willing to take.  Is the U.S. Iceland or Ireland?  The NWO and TPTB see real signs that certain states would say "fuck-it, we supply most of the soldiers anyway and have resources (hello Texas and Alaska) so why should we continue to support these other bankrupt states."  How much is posturing, I don't know but I also think TPTB are trying to figure out what the best way to disarm the American public will be.  Some states (Utah/Texas) already allowing silver/gold/copper/platinum transactions.  The central bankers can not be happy about that and one thing the U.S. has been good at is breeding violent pigheaded folks that are willing to fight bloody civil wars over their beliefs no matter how right or wrong they are.  I guess all one can do is hedge accordingly.

Sun, 11/20/2011 - 16:43 | 1896337 High Plains Drifter
High Plains Drifter's picture

the nazi party was national socialist. we won't have that here, believe me........

Sun, 11/20/2011 - 16:54 | 1896364 LawsofPhysics
LawsofPhysics's picture

national socialist, christian conservative, potato, potaato.  Conservatives support bailouts (especially when their stock is involved), up is now down, left is right, ignorance is strength, knowledge is power, war is peace...

The label you give what is coming will be irrelevant.

Sun, 11/20/2011 - 16:57 | 1896367 bank guy in Brussels
bank guy in Brussels's picture

There is a story that in they asked famous progressive American 1920s - 1930s politician Huey Long of Louisiana, if America could possibly become fascist.

His reply is said to have been, Sure, except that in the US it will be called 'anti-fascism' (or 'Americanism', in some versions of the story).

Sun, 11/20/2011 - 17:34 | 1896469 Iwanttoknow
Iwanttoknow's picture

Thank you for quoting Huey long,a great patriot.As you know that he was killed by a Khazar physician.

Sun, 11/20/2011 - 17:05 | 1896393 Socratic Dog
Socratic Dog's picture

We've had it for about 75 years now, some would say.

Sun, 11/20/2011 - 18:26 | 1896592 AldousHuxley
AldousHuxley's picture

This is what your government thinks about your constitutional rights of free speech: NYPD knee on your neck.


If you want a picture of the future, imagine a boot stamping on a human face — forever. - George Orwell.


This is what your government with thumbs up from supreme court thinks about your civil rights as an American citizen: they put your wife and children in concentration camps while you are in the US military fighting for the elites.

Sun, 11/20/2011 - 20:16 | 1896889 Carlyle Groupie
Carlyle Groupie's picture

"showing up the "Bloomberg's" summer homes"

Hummmm. How should I accessorize my evening wear darling? Oh yes, I chose you! (bloomberg edition)

Sun, 11/20/2011 - 16:27 | 1896301 Dr. No
Dr. No's picture

I believe Zuccotti Park is privatly owned.  If this is the case, and the owners allowed the protesting, then the police overstepped their bounds.  If the owners felt the protesters were trespessing, then the protesters should be thrown out.  Free speech does not apply here.  It is about property rights.

Sun, 11/20/2011 - 17:20 | 1896433 Hansel
Hansel's picture

Zucotti Park is a "privately-owned public space."  From wikipedia:

The park, formerly called Liberty Plaza Park, was created in 1968 by Pittsburgh based United States Steel in return for a height bonus for an adjacent building at the time of its construction.

It's not exactly a private park.

Sun, 11/20/2011 - 17:58 | 1896508 bob_dabolina
bob_dabolina's picture

Zucotti Park is owned by Brookfield Properties

Who was just hired as an attorney for Brookfield Properties? Joe Bidens Son

Who sits on the board of Brookfield Properties? Michael Bloombergs live in girlfriend

Now guess what company just received some of the last Obama stimulus $$$? Thaaattt''sss right Brookfield Properties

Sun, 11/20/2011 - 20:08 | 1896962 Carlyle Groupie
Carlyle Groupie's picture

Whois Brookfield Properties? (basically Goldman Sachs)

Richard B Clark President and CEO of Brookfield Properties
Board Member [ +1 ]
John E Zuccotti Real estate lawyer at Weil, Gotshal, Manges LLP
Chairman ('97?)
William T Cahill
Board Member
Gordon E Arnell
Board Member ('00?)
Diana Taylor Director at Citigroup; Longtime partner of Michael Bloomberg
Dennis H Friedrich President and Chief Executive Officer, U.S. Commercial...
President and Chief Executive Officer, U.S. Commercial Operations
Jack L Cockwell Group Chairman of Brookfield Asset Management since 2002;...
Director ('99?)
Roderick D Fraser president emeritus of the University of Alberta; board member of...
Board Member
Ralph Blasi director of security, Brookfield Properties
director of security
Samuel P S Pollock
Director (past)
The Partnership for New York City Nonprofit membership organization comprised...
partner company
Brookfield Asset Management Inc A global asset management company focused on...
major shareholder ? 249.4 million shares *
RBC Global Asset Management (U.S.) Inc. Part of the asset management division...
Institutional investor ? 28.6 million shares
CBRE Clarion Securities, LLC CBRE Clarion is a division of CB Richard Ellis...
Owner ('11?) ? 13.2 million shares
BlackRock Institutional Trust Company, N.A. A privately owned investment...
Institutional investor ? 12.0 million shares
Bank of Nova Scotia
Institutional investor ? 8.5 million shares
FMR LLC The financial services conglomerate, better known as Fidelity Investments
Institutional investor ? 10.1 million shares
Trizec Corporation Ltd. A leading Canadian property development company
Stake owner ? 40% stake
KBR, Inc. Construction, engineering, logistics support
tenant ('10?) *
Societe Generale A large European Bank and a major Financial Services company
tenant ('10?)
Target Corp. retail company
tenant ('10?)
BHP Billiton Limited A diversified natural resources company based in Australia
tenant ('12?)
MSA Security private security firm
security service provider
tenant ('12?)

Sun, 11/20/2011 - 17:23 | 1896438 piceridu
piceridu's picture

This was posted by another ZH poster not sure who:


Whaaaaaaaaaaaat a coincidence!

Hey, this is great! Imagine the odds of this happening.

Do you know the park in NYC that the Wall Street protesters are occupying?

It's Zuccotti Park.

Did you know this park is not owned by the city of New York?

It is owned by Brookfield Properties.

Who was just hired by Brookfield Properties as an attorney?

Vice President Joe Biden's son.


Who sits on the board of Brookfield Properties?

Well non other than Mayor Bloomberg's live in girlfriend.

Now, guess what company just received some of the last of the Obama Stimulus $$$$$$$.

Thaaaaaaaaaaaat's right, Brookfield Properties.

Isn't life great in America!


Now, guess what, on a completely unrelated note, Wisconsin is shaping up to be the swing state in the 2012 presidential elections. Not Florida. Not Ohio. But Wisconsin.

Now, guess who owns the company that will be tabulating the electronic votes in Wisconsin.

Thaaaaaaaaaaaat's right, the biggest contributor to Obama, the puppeteer George Soros. Whaaaaaaaaaaaat a coincidence!

Now remember what Stalin said. "He who votes does not have the power. He who counts the votes has the power".

Sun, 11/20/2011 - 21:00 | 1897106 silver4me
silver4me's picture

Im from Canada and all our protests are being broken up too. The Toronto Sun (news paper) is trying to put a spin on, that the protesters are smelly, dirty, and rude. Makes me angry reading the article. To top it off the reporter had an night vision camera and was looking into all the tents. These reporters need to be beaten. Article has me worked right up. They make it look like protesters are a bunch of bums they just don't want to work.

Clock is one minute to twelve MF's.

Sun, 11/20/2011 - 16:28 | 1896305 topcallingtroll
topcallingtroll's picture

Bloomberg did OWS a huge favor.

Instead of having sex, shitting on police cars, and engaging in drum circles in a central location they are now disbursed, hatching all sorts of plans to get the squid and others, and blending in.

No one with any brains will be hanging out in a Manhattan bar or restaurant bragging about working for Goldman.

That is called a "target of opportunity."

Maybe someone is going to get rich inventing a body fluids detector. If you are an employee of goldman it might behoove you to carry one around when you go out for food and drink. Oh, and get immunized against hepatitis A and B.

I tried to stop those naughty kids, but no one listens to a troll.

Now it is too late to put the geni back in the bottle.

Sun, 11/20/2011 - 17:35 | 1896471 sabra1
sabra1's picture

ditto for the families of Goldmanites!

Sun, 11/20/2011 - 18:53 | 1896678 Dasa Slooofoot
Dasa Slooofoot's picture

Did you know that Bloombergs daughter also is working for a private company that together with major Wallstreet banks and NYPD is running a network of spy-cams in Lower Manhattan to surveill and counter any looming threat /protest ?


Yes.  60 Minutes did a piece celebrating it.  

Sun, 11/20/2011 - 20:19 | 1896986 Carlyle Groupie
Carlyle Groupie's picture

Fully funded by the squid. He had nothing else to do with his TARP funds.

Sun, 11/20/2011 - 23:43 | 1897495 Non Passaran
Non Passaran's picture

They must be an equal opportunity employer!

BTW folks there's another interesting "it's gonna blow" story on Bloomberg - Taunus Holding. Check it out.

Sun, 11/20/2011 - 19:57 | 1896911 DosZap
DosZap's picture


My heart goes out to you, as one of only twenty conservatives in NY.

NY has always been a fascist haven.And a Nazi jack boot state. Jersey is as bad , and Kali all rank in the top 5.

Get rid of the welfare(able to work,4th Gens) recips there, and in Kali, and we could save a Trillion easy a year.

Sun, 11/20/2011 - 16:09 | 1896249 rambler6421
rambler6421's picture

More Money Printing Bitchez!

Sun, 11/20/2011 - 16:11 | 1896251 Bansters-in-my-...
Bansters-in-my- feces's picture

Unsecured debt....

Thats not too risky,is it ?

Sun, 11/20/2011 - 16:12 | 1896256 JPM Hater001
JPM Hater001's picture

I have December 17 S&P 970's so if this is going to happen please be soon.  I am down a small fortune.

Not to worry though...I bought June 2012 1200 and I am pretty sure the can can't get kicked that far.

But come on Crash!

This is sad.  It's almost Christmas.

Sun, 11/20/2011 - 17:11 | 1896415 traderjoe
traderjoe's picture

You understand all of this stuff and still trade - options no less?

Sun, 11/20/2011 - 17:27 | 1896445 razorthin
razorthin's picture

And right before the holidays.  You sir/mada'am have gonads of steel.

Sun, 11/20/2011 - 18:12 | 1896548 css1971
css1971's picture

Um. You do realise they don't play fair?

Treasuries, Hang Seng, Copper, Aluminium, CAC, DAX, EuroStoxx etc all down 30-40% on October 4th. Only the US & UK stock markets were not.

FTSE, DOW, S&P all protected. US stock markets are charmed.

A 40% drop from May would have put the S&P at ~800...

Sun, 11/20/2011 - 22:54 | 1897384 FMR Bankster
FMR Bankster's picture

Strange sh*t happens when your trading. Fall of 2008 the market went up 15% from friday until 10:00 am tuesday. Look it up. Of course it fell apart by March 2009. You can double your money on either black or red but I wouldn't try it in this market. Too much manipulation. But have fun if your up to it.

Sun, 11/20/2011 - 22:55 | 1897387 Comay Mierda
Comay Mierda's picture

are you planning on holding them to maturity?  Sell on the next big down move.  you'll get your day in the next two weeks.  very bearish patterns in the major stocks and spx. btw, i hope you are using money that you dont mind losing

Sun, 11/20/2011 - 16:15 | 1896263 LawsofPhysics
LawsofPhysics's picture

How is this not bullish for American treasuries and gold, at least short term?

Sun, 11/20/2011 - 16:21 | 1896281 Jump The Shark
Jump The Shark's picture

Thought the same thing 2 weeks ago.

Sun, 11/20/2011 - 16:38 | 1896323 bob_dabolina
bob_dabolina's picture

Don't compare Treasuries to gold around here, that shit could get you killed

Sun, 11/20/2011 - 16:51 | 1896356 LawsofPhysics
LawsofPhysics's picture

Hey, just saying, the liquidity in the treasury market could certainly buy a lot of gold, for now.

Sun, 11/20/2011 - 17:18 | 1896429 seek
seek's picture

Watching the market lately, bullish treasuries and ever-so-slightly bearish on gold denominated in USD. The last few hiccups have sent the USD up, resulting in gold (measured in USD) going down slightly, I don't expect this go round to be much different until Europe really breaks, when we'll see both launch. And then of course when the USD breaks, gold will be heading for an orbit somewhere near Jupiter, again priced in USD.

I was a bit surprised that gold went down the last episode, but hey, more buying opportunities. I ran out of dry powder back at $1400, so not for me, unfortunately.


Mon, 11/21/2011 - 01:19 | 1897669 DoChenRollingBearing
DoChenRollingBearing's picture


seek, you did just fine running out of black powder at $1400.  Good move & timing.  You can always buy more gold if more black powder comes in.  It's something that a Bearing would do...

I completely agree with you that if (when) Europe breaks, both the US$ and gold will soar.

Sun, 11/20/2011 - 16:19 | 1896272 knukles
knukles's picture

The EIB is another canary in the coal mine as evidenced by its very existence as a nonsensical defunct no longer rational lost its purpose swollen unelected bureaucracy sucking the very life blood out of the last and final teat of the entire European continent after the rest of the miscreants.
Sucking hind tit. 
Why then, was it ignored? 
Because until the yield spreads began to widen, nobody except those working at the EIB, their immeidiate family members, relatives acquaintances, mistresses, pimps, whores and crack and cocaine dealers, neighbors and a few yet to be recognized let alone counted revolutionaries who have questioned why it still remains in existence, have even heard of the EIB within the last 20 years.
As a matter of fact, most bond managers alive today heve never even heard of the fucking thing before in their entire life until today, for it has never delivered upon a promise, let alone a fucking Christmas present. 
In fact, it was once rumored that Lucas van Praag once a rising Investment Banking Chief to Be at Goldman, once assigned to cover the venerable institution was relegated to Official Squid Tentacle Interpreter in Chief out of pity when Lloyd forud him scrounging in the dumpster behind the corporate Maxim's take-out cafe at 300 Water Street.
Out of pity or kindness, I suppose. 
That's how bad it is being at the EIB.
And now of all things to have your spread widening as you get older and less relevant.
Sad but entirely true.
When is the world (oh excuse me the NYT now mentioned it) gonna figure out this is all a fucking Very Costly Charade? 

Sun, 11/20/2011 - 16:21 | 1896283 oogs66
oogs66's picture

another 3 letter entity filled with useless, but connected people that has far too much power

Sun, 11/20/2011 - 17:03 | 1896390 Lord Welligton
Lord Welligton's picture

And it has pension liabilities of €1.3bn.

€1,000,000 for every employee.

Sun, 11/20/2011 - 16:20 | 1896278 oogs66
oogs66's picture

How are KFW and IBRD trading?  Maybe this is why the ECB has to lend to IMF, because IMF can't collect from its members and can't issue paper?

Sun, 11/20/2011 - 16:23 | 1896287 wandstrasse
wandstrasse's picture

There are no CDS trading on this reference entity (yet)

computer, define 'CDS credit event'

computer: buy cheap CDS, online pharmacy xyz...


computer, define 'EIB CDS credit event'

computer: #devision by zero# error 3334zhe33kj3h3kddzz do you want to report that error?

Sun, 11/20/2011 - 16:24 | 1896288 insidious
insidious's picture

How (from where) does the EIB get the money to lend to listed countries? Looks like magic to me, maybe black magic.

"The total subscribed capital of the Bank as of end-2009 was EUR 232 billion, of which EUR 11.6 were actually paid-in.[2] The capital of the EIB was increased through a decision of the EIB's Board of Governors in 2009. The subscribed capital of the EIB was thus virtually doubled between 2007 and 2009."

Let me get this straight.

The EIB is backed by the promises of the governments it lends to. By decree it's board of governors increases its capital when ever the mood strikes it. At present it has 2.5 billion euros on deposit and outstanding unsecured loans of 382 billion euros (from one of the diagrams above). Does that imply a leverage of 152 to 1?

Why should anyone worry the credit worthiness of EIB bonds? What could possibly go wrong?

Sun, 11/20/2011 - 16:31 | 1896312 Lord Welligton
Lord Welligton's picture

Greece, Ireland, Portugal and Italy are ready and able to meet there commitments in the morning.



Sun, 11/20/2011 - 16:59 | 1896375 css1971
css1971's picture

It has 230 billion in capital...

Promised.... LOL. But only 11 billion paid in. Promises, promises everywhere. The bondholder's money just passes straight through to the needful it seems. This is approximately how banking should work BTW. You don't deposit money, you buy bonds. No fractional reserve.

Y'know this is going to be backstopped by the ECB as well. Wake me when the yields hit double digits.

Sun, 11/20/2011 - 19:39 | 1896836 Schmuck Raker
Schmuck Raker's picture

Why so glum, chum?

It's been working fine for the EIB for 60 years.

It will work for the EFSF.  It will work for the ESM.

What could possibly go wrong?

Sun, 11/20/2011 - 16:27 | 1896302 falak pema
falak pema's picture

only one new black swan?

Sun, 11/20/2011 - 16:30 | 1896304 mt paul
mt paul's picture

don't over cook

your thanksgiving black swan... 

40 minetes per pound 

Sun, 11/20/2011 - 16:28 | 1896306 Lord Welligton
Lord Welligton's picture

Question ..... Perhaps someone knows the answer.

Are Sovereign liabilities due to the EIB included in Sovereign debt?


Sun, 11/20/2011 - 23:51 | 1897511 Non Passaran
Non Passaran's picture

Don't know but I would expect it should be the same as with ECB and IMF commitments that haven't been paid, no?

Sun, 11/20/2011 - 16:34 | 1896314 pleseus
pleseus's picture

Not sure what it all means.  I just hope Gold can go to $ 1,300.00 oz and Silver to 25.00 oz so I can buy more.

Sun, 11/20/2011 - 16:44 | 1896340 BidnessMan
BidnessMan's picture

Buy quick before gold goes to $13,000 oz. and silver to $1,000 oz. in fiat paper....

Sun, 11/20/2011 - 16:40 | 1896324 bob_dabolina
bob_dabolina's picture

I heard Larry Summers has sex with black swans and breeds little Larry Summers black swan babies

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