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European Status Update: No Progress

Tyler Durden's picture




 

The math of the European bailout (using the EFSF or otherwise) is so easy even a cave-EUReaucrat can do it: It doesn't work. But leave it to Europe's financial ministers to figure this out in the literally last minute. As Bloomberg reports, "A 10-hour meeting in Brussels failed to yield a blueprint for banks’ role in a revamped Greek rescue as European finance ministers haggled over what they called a “credible firewall” against fallout from deeper writedowns." And now it's 5 start dinner time: "The ministers’ meeting broke up at about 7 p.m. after reaching agreement that European banks may need about 100 billion euros ($139 billion) in capital after marking their sovereign-debt holdings to market values, according to a person familiar with the discussions. This amount is needed to reach a core tier 1 capital level of 9 percent based on a European Banking Authority test, said the person, who declined to be identified because discussions are private." No, it's not, it's a joke. The number, once again for those who dare to approach "stuff" mathematically is anywhere between €400 billion and €1 trillion. But we give the EUReaucrats another 2 months before they comprehend this simple fact. Which means that tomorrow's summit which was supposed to be the "come to God" meeting which was expected to resolve all of Europe's problems, much to our, and every other non-momo's relentless snickering, will be a complete and total disaster. But fear not: because Europe has another 3 whopping days after that until Summit #2, when everything will be fixed. For realz.

Or not:

The struggle to get an accord on bank capital was just one piece of solving the two-year-old financial crisis. Governments also are pushing for deeper writedowns on banks’ holdings of Greek debt, a step the investors are resisting.

 

“Discussions are making progress, albeit limited,” Charles Dallara, managing director of the Institute of International Finance, the umbrella group for 450 of the world’s biggest financial companies, said in a statement late today.

No, Chuck. They are not. But keep saying that. Next thing you know Greek debt-to-GDP will be back to 100% because Europe willed it to.

 
The negotiations were part of a six-day stretch of talks aimed at stopping contagion spreading to Spain and Italy as the turmoil pushes Greece closer to default, roils global markets and dents confidence in the survival of the 17-nation currency. Finance ministers now yield the conference tables after two days of talks to leaders, who meet tomorrow and on Oct. 26. 

 

Negotiations among finance ministers from the 27-member European Union, including U.K. Chancellor of the Exchequer George Osborne, were repeatedly extended and the plenary discussion eventually broke off into small groups focused on particular issues after 4 p.m. Brussels time.

"Peak Lies"

“We’ve had a 10-hour meeting, but we have made real progress and we have come to important decisions on strengthening European banks,” Osborne said. “That is just one part of the package and obviously there’s more work to do.”

 

Well, you have had a 10 hour meeting, that's right. But you haven't made any progress: the €100 billion number was floated a week ago, and has already been ridiculed by everyone with an HP-12C.  Speaking of, in addition to printer cartridges from Hewlett Packard, can the firm with the rotating CEO please send some god damn calculators to Brussels? For god's sake!

THe BS continues:

Plans now being considered involve an exchange with a 50 percent reduction in net present value, or upfront bond exchanges into either AAA rated bonds from the European Financial Stability Facility or new 30-year Greek government debt, according to people familiar with the matter. Upfront exchanges could involve a 50 percent discount off face value.

 

“We remain open to explore options on a voluntary approach built on a realistic outlook for the Greek economy and restoration of Greece’s market access,” Dallara said.

Realistic outlook - like the 2013 Greek debt to GDP forecast mysteriously surging from 150% to 190% in... oh... 16 months ? And as we explained earlier to the 5 year old idiots who are in charge of Europe, a 50% haircut on Greek debt means that within 1 month or less, every other European country's debt situation will mysteriously deteriorate as first Ireland, then Portugal, then Italy, then Spain will all demand the same treatment! And if Europe thinks that its €100 billion recap of French banks (to call a spade a spâdé) will be sufficient once every PIIG lines up at the German taxpayer fund trough, we can't wait to quote this article in mid-Novemeber and copy and paste this line: "no, you pathological liars, it is not enough - total exposure to the PIIGS is trillions and trillions. A 50% haircut on Italian debt alone will push every bank on the continent into bankruptcy."

But, hey who are we to predict the future. After all we have career politicians (advised by JP Morgan none the less) and well-paid Economic Ph.D. out there coming up with far more "credible" solutions with every passing day.

 

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Sat, 10/22/2011 - 16:05 | 1800341 GeneMarchbanks
GeneMarchbanks's picture

Simple arithmetic be damned, they will get this done!

Sat, 10/22/2011 - 16:18 | 1800360 SilverDoctors
SilverDoctors's picture

Couldn't agree more GeneMarchbanks- a failure to bail and print will instantly bring the credit derivative crisis to a head and bring an instant worldwide depression.  Why do you think The Fed moved $75 Trillion of Bank of America's worthless derivatives from BOA's Merrill investment unit to its depository arm this week- SO IT CAN BE BAILED BY THE TAXPAYERS!!
QE will continue to Infinity...AND BEYOND!!!

http://silverdoctors.blogspot.com/

Sat, 10/22/2011 - 16:27 | 1800378 GeneMarchbanks
GeneMarchbanks's picture

A couple things, the derivative unwind has to happen no matter what measures/bailouts/extensions the Eurocratz propose. The only question is the trigger event(s) and timing.

The BAC figure is 53t last I checked not 75t.

Sat, 10/22/2011 - 17:05 | 1800416 Quixotic_Not
Quixotic_Not's picture

 

Lech Walesa Not Attending #OccupyWallStreet in New York After Discovering Hard-Left Organizers

The Polish champion of freedom and liberty, founder of Solidarity, winner of the 1984 Nobel Peace Prize, and first President of modern Poland Lech Walesa had been rumored to possibly be traveling to New York to stand with Occupy Wall Street protesters.

Based on our discussion and intervention, President Walesa is not going to get involved with the OWS.  He is not comfortable with the “organizations” behind the movement.

This spring, when President Obama visited Poland, President Walesa refused to meet with him.

America is a center-right country politically.  The Occupy movement, at its core, is a hard-left movement. If successful, America would cease to be governed on our founding principles of freedom and liberty. Thus, we react to the news that Lech Walesa will not support the OWS movement with much thankfulness.

http://biggovernment.com/aandrzejewsk/2011/10/21/lech-walesa-not-attendi...

 

Sat, 10/22/2011 - 17:14 | 1800441 ZeroPower
ZeroPower's picture

After the well-received Solidarity movement in Poland, the country is a million x better off than before. Walesa, while not the most diplomatic at times, certainly always had his country in mind when starting the uprising, so id think he knows a thing or 2 about such type of events.

Im assuming if he'd go to NYC itd would be to ridicule the hipster socialist teenagers living off their parents buck. Rightfully so.

Sat, 10/22/2011 - 17:45 | 1800463 macholatte
macholatte's picture

He also knows a thing or two about Marxism and Communism and the Soros-Clinton machine that the sheeple don't.

Sat, 10/22/2011 - 19:49 | 1800718 AldousHuxley
AldousHuxley's picture

You are confusing Rubin with Soros. Soros doesn't approve Obama. Clinton's Jewish son-in-law works for Goldman sachs.

 

EuroPEONS are taking a while though on this bailout business unlike Hank Paulson's 1 pager for no recourse $700,000,000,000 he asked from US CONgress.

 

Sat, 10/22/2011 - 18:57 | 1800590 Use of Weapons
Use of Weapons's picture

You can copy/paste that a few more times, it doesn't stop the source being... a little bit biased.

Ex- Communist Secret Police... nice source!

"On 15 April 2010, during a civil trial brought by Wa??sa against former fellow activist Krzysztof Wyszkowski over the collaboration allegations, a retired MO and S?u?ba Bezpiecze?stwa officer appeared in court and confirmed the fact of Wa??sa's collaboration in a sworn testimony.[46] The officer, Janusz Stachowiak, was in charge of keeping documentation on Wa??sa from December 1970 to 1974 (which shows these documents were not fabricated later), although never met him in person. He stated that Wa??sa was convinced to cooperate by SB Capt. Henryk Rapczy?ski and SB Capt. Edward Graczyk, after a two-hour interrogation, albeit without the use of threats, and signed an agreement to keep his cooperation with SB in secret.[47] The officers asked him to "calm down" the atmosphere in the shipyard after protests were bloodily suppressed. Wa??sa kept meeting regularly with the secret police, reportedly receiving substantial sums of money,[47] but after about 4 months he started to "withdraw" (although it was not until June 1976 when he was unregistered, because of his "reluctance to cooperate").

Previously, in 2008, Capt. Edward Graczyk (long thought to be deceased and as such not summoned to testify in the 2000 trial) was interrogated by the IPN about his contacts with Wa??sa[48] and subsequently interviewed by Gazeta Wyborcza.[49] In the interview, which somewhat contradicts his earlier testimony, Graczyk recounted Wa??sa's cooperation, but denied his own actions had been "recruitment" of an agent. He also denied giving money to Wa??sa. The other of the two officers, Capt. Henryk Rapczy?ski, was never interrogated.

In February 2011, in an interview with Monika Olejnik about the Smolensk disaster, Wa??sa finally admitted that he had signed a "commitment to cooperation" with the secret police S?u?ba Bezpiecze?stwa in 1970,[50][51][52] simultaneously downplaying the importance of the fact. Although marking a significant change of tone compared to Wa??sa's previous statements, the declaration went relatively unnoticed, and did not receive international media coverage."

 

 

Surprised he isn't supporting OWS? I'm not. 

 

Hint: the ex-soviet informant stuff is hardly a revelation for the times, but I'd check who was paying his fees for the last decade before using him as a pawn in this game.

Sat, 10/22/2011 - 18:57 | 1800596 Quixotic_Not
Quixotic_Not's picture

OWS: The Perestroika Deception Develops a Face

In recent weeks, every American has watched with morbid curiosity as swarms of hate-filled, sputtering communist loons and Hippie-wannabees have taken to the streets, shutting down cities and leaving a path of destruction wherever they go.  Although many Americans disagree with the stated agenda of these radicals, most think them harmless, dismissing their acts as pathetic attempts to resurrect the failed social movements of the sixties.

But this group of determined radicals is not to be laughed at.  Lisa Fithian, the primary OWS organizer, is an unrepentant communist and proponent of government and economic destabilization as a means of achieving totalitarian centralization along communist lines.  Writing for a socialist rag, Fithian once stated, “I have no issue with property destruction…We’re in a society where property is idolized, so a lot of people don’t get it yet that it doesn’t really matter.”

While this should shock Americans (and would, if the facts were being reported) this is nothing new.  This is just the latest tactic in a long-term strategy that has been quietly moving forward for decades.  I am speaking of a high-level strategy designed to thwart American resistance to communist infiltration known as “Perestroika.”

http://patriotstatesman.com/2011/10/ows-the-perestroika-deception-develo...

Sat, 10/22/2011 - 19:06 | 1800613 Use of Weapons
Use of Weapons's picture

Ok.. you're trolling, right?

If you're serious, then we can dance. For one, "communist loons and Hippies" is about three decades out of date, and totally rubbished by data from the protests themselves. Or when was the last time you spoke to any high level Russian government source?

 

I'm guessing never. Shit... Snake got old, and he got fucking stupid. Or he's a paid shill. Let's dance.

Sat, 10/22/2011 - 19:58 | 1800735 AldousHuxley
AldousHuxley's picture

Hippies are wrong on shower frequency, but they were right on Vietnam. Waste of lives and tax payer money.

 

Now hippies can get a tiedyed t-shirt made in vietnam and get their nails done by their US supporting comrads.

 

Vietnam is actually trying to open the country up for tourism to attract boomer vets.

 

Check out Google in Vietnam

http://3.bp.blogspot.com/_AYwY74fDryU/SwfW9cmoWVI/AAAAAAAAYUU/XWY_BazCHM...

Sat, 10/22/2011 - 20:29 | 1800783 Use of Weapons
Use of Weapons's picture

We're aware of the trade in faked dog-tags.

 

Aldous, you're an interesting poster, but please assume I'm an alpha when you post, I think our interactions will be a lot more sparky if we both just went full out. I'm apparently in the 1% - fluid & crystallised g architect INTP that is. And even then, I get fucking annoyed and blast the bandwidth with noise - a week of 20+ units / day is a tool, a la Nietzche. I'm waiting for a solitary voice to calm my storm.

 

'High-hearted son of Tydeus, why ask of my generation?
As is the generation of leaves, so is that of humanity.
The wind scatters the leaves on the ground, but the live timber
burgeons with leaves again in the season of spring returning.
So one generation of men will grow while another dies

Sat, 10/22/2011 - 20:47 | 1800831 45north
45north's picture

Although many Americans disagree with the stated agenda of these radicals, most think them harmless, dismissing their acts as pathetic attempts to resurrect the failed social movements of the sixties.

I don't think that the Communists ever really gave up.  They have seen the Soviet Union dissolved and the boundaries moved eastward by a 1000 km.  An organization cannot survive a hiatus of 20 years but a movement can.

Sat, 10/22/2011 - 18:22 | 1800529 YesWeKahn
YesWeKahn's picture

Even 500 billion is too much, how can tax payers be able to cover 53 trillion?

Why they can't slowly unwind all that ?

Sat, 10/22/2011 - 16:41 | 1800403 oogs66
oogs66's picture

stop with the credit derivative hype....cds is small...the banks are actually short credit through cds as a whole...the problem is too much debt

 

Sat, 10/22/2011 - 17:06 | 1800427 ZeroPower
ZeroPower's picture

Wait, you mean CDS are NOT the work of the devil? Surely you must kill babies and hate gold too.

Sat, 10/22/2011 - 18:02 | 1800491 knukles
knukles's picture

Word has it that oogie eats babies, Hilary's cooch and gold bars.
Survivalist type :).

Sun, 10/23/2011 - 00:29 | 1801239 Buck Johnson
Buck Johnson's picture

And hyperstagflation will come into being first hyperinflation adding in stagflation.  Eventually you can't print enough money to bailout the planet.  And if you don't think that we won't see this on our shores, your in for a major shock.  The US is doing what can't be done and never has worked.  To print themselves out of a problem is bad enough, but to get the rest of the world or western europe out of the problems isn't possible.  This is going to end in tears for the Western banking system and our economies.

Sat, 10/22/2011 - 18:20 | 1800523 Unprepared
Unprepared's picture

"Lie to me, and tell me everything is alright"

http://www.youtube.com/watch?v=3tigVYfHVmQ&ob=av2e

Sat, 10/22/2011 - 20:05 | 1800742 AldousHuxley
AldousHuxley's picture

Just turn on the TV.

Sat, 10/22/2011 - 16:05 | 1800342 X.inf.capt
X.inf.capt's picture

BYE, BYE...

EURO.....

Sat, 10/22/2011 - 16:06 | 1800343 RobotTrader
RobotTrader's picture

These guys are not stupid.

They know what is at stake.

Some kind of deal will be reached eventually.

Heh, maybe they call up the BoJ, PBoC, Russian Oligarchs, etc. for some "external assistance" to stop "one way markets"...

LOL....

Sat, 10/22/2011 - 16:13 | 1800352 ZippyDooDah
ZippyDooDah's picture

Uh, yeah, 'cause...anyone with any capital at all is just dying to ship it off to the Euro black hole.  At some point black holes do fill up, right?

Sat, 10/22/2011 - 16:15 | 1800356 binky
binky's picture

A good brain surgeon can get himself out of trouble. A really good brain surgeon does not get into trouble in the first place. 

 

These guys are not brain surgeons. They are stupid.

Sat, 10/22/2011 - 16:41 | 1800396 FinHits
FinHits's picture

Pfft, I rate this one merely SNAFU

 

from Urban Dictionary

  SNAFU
  One of a progression of military situational indicators: 

1. SNAFU - Situation Normal, All Fucked Up - Thing are running normally. 
2. TARFUN - Things Are Really Fucked Up Now - Houston, we have a problem. 
3. FUBAR - Fucked Up Beyond All Recognition - Burn it to the ground and start over from scratch; it's totally destroyed. This day started out SNAFU, but then my machine went all TARFUN. The place was totally FUBAR after that.

Sat, 10/22/2011 - 17:21 | 1800445 X.inf.capt
X.inf.capt's picture

and one were used to...

BOHICA

Bend Over Here It Comes Again...

Sat, 10/22/2011 - 20:07 | 1800743 AldousHuxley
AldousHuxley's picture

even the best brain surgeon cannot operate on oneself.

 

IMF can't help Europeons. 

Sat, 10/22/2011 - 16:18 | 1800363 dasein211
dasein211's picture

Thats like sayin i make 15k a year but me and the ferrari guy are gonna make a deal for me to get that car!!! Just keep tellin her that... She'll figure out your full of shit sooner or later no matter how many times you tell her its in the way.

Sat, 10/22/2011 - 16:39 | 1800400 Earl of Chiswick
Earl of Chiswick's picture

Agree with Robo, they are not stupid so the question is, what is the endgame.

Sat, 10/22/2011 - 16:51 | 1800415 DeadFred
DeadFred's picture

Everyone is failing to use good logic. "The number, once again for those who dare to approach "stuff" mathematically is anywhere between €400 billion and €1 trillion."

Logic says they can only afford 100B so therefore they don't need 400+B they only need 100B. Euro-logic at its finest.

Sat, 10/22/2011 - 16:53 | 1800419 jcaz
jcaz's picture

Of course they're not stupid.    But they're dishonest and disingenuous, and they've been operating with a kick-the-can-down-the-road mentality;

Problem is, that road comes to an end eventually, and usually exponentially.

There ya go, here we are.

Sat, 10/22/2011 - 17:08 | 1800432 Eally Ucked
Eally Ucked's picture

The only solutions available for Europe and US are: 1. Default now, 2. Print like crazy - inflate, with 20x leverage they know how much they have to print, 3. Print partially - kick the can down the road, then they will come to the same point in the future when 1.&2.&3. will have to be considered again. That's all, there are no miracles!

Sat, 10/22/2011 - 17:54 | 1800473 macholatte
macholatte's picture

I say #3 is where they're at.

 

Alliance - in international politics, the union of two thieves who have their hands so deeply inserted in each other's pockets that they cannot separately plunder a third.
Ambrose Bierce

Sat, 10/22/2011 - 18:10 | 1800500 knukles
knukles's picture

With respect to all the above here, I beg to differ.
They are stupid.

No sane rational intelligent folk would let the situation get so fucking far out of control and pretend it's normal....
Well, other than practicing alkies and addicts just before (their final crash and burn, perpendicular to the earth, 110% full military power afterburners full, options none...) reaching bottom.

Oh fuck me, now there's a comforting thought.
No, they're stupid.... 

Sat, 10/22/2011 - 17:39 | 1800455 Return2Sanity
Return2Sanity's picture

It's not so much stupidity as it is fear. In the 2008 crisis, we learned that the big banks had tied themselves together to such an extent that if one went under, they all went under. The global debt bubble has been allowed to run far too long and get far too big. European leaders are very afraid that Greece will be the first domino in a very long line of dominoes. Nonetheless, a Greek default is inevitable.

Sat, 10/22/2011 - 18:13 | 1800508 YesWeKahn
YesWeKahn's picture

I don't see any good ending except a massive printing a la Bernanke. Inflation is the best friend of debt.

Sat, 10/22/2011 - 17:30 | 1800449 slaughterer
slaughterer's picture

Sarkozy: "From now until Wednesday we must find a solution...a structural solution, an ambitious solution, a definitive solution. There is no other choice."  Does that sound market friendly?

Sat, 10/22/2011 - 19:15 | 1800632 CrashisOptimistic
CrashisOptimistic's picture

There is a fundamental possibility that even ZH may not embrace.

There may be no solution.  Ever.  It many not be a matter of "these guys are smart and realize what is at stake and will get it done."

It may not be doable.  Math tends to be like that.

Sat, 10/22/2011 - 21:03 | 1800862 technovelist
technovelist's picture

I think almost everyone here knows that there is no solution. Why do you think we don't get that?

Sat, 10/22/2011 - 19:34 | 1800681 Everybodys All ...
Everybodys All American's picture

These brilliant people you speak of have been dealing with the "solution" for months and are no closer to the details of filling this deficient capital hole.

Sat, 10/22/2011 - 16:07 | 1800345 Ray745
Ray745's picture

According to the 2nd stress test, the one Dexia passed with flying colors, the 90 banks looked at would need 196 billion Euros to all reach a 9% tier 1 ratio, and that is WITHOUT haircuts on ANY of the debt, so where they are getting 100 billion is beyond me.  I read they were being allowed to mark their German/UK/US debt at market values also to offset the marking of PIIGS debt, so that would be the answer I suppose, getting to mark all the other sov debt they have at 120 is useful, until it comes time when they all need to sell that debt and watch the prices go bye bye.

Sat, 10/22/2011 - 16:28 | 1800380 FinHits
FinHits's picture

I bet EU is kicking itself for ever doing the 2011 EBA stress test the way they did it. They had "adverse market scenario" built in there, which replicated past losses by bank (5 year average), but they did *not* do sovereign writeoffs of any kind.

Now people are playing around with the Reuters EBA stress test bank calculator, which throws the past losses *and* the PIIGS writeoffs on the same pot, and there are some further negative adjustments on top of that.

Now it is hard to go back to realistic scenarios e.g. "all Greece government bonds -60%" and claim that is enough for Tier 1 hurdle of 9%.

 

It will be amusing to see British and US banks potentially being caught to the stress test, though! That might calm down David Cameron shouting for "put up big bazookas yo Eupeans and do some remorseless financial integration, pronto" and not contributing a single Pound to the loss-pot.

Sat, 10/22/2011 - 17:53 | 1800471 scatterbrains
scatterbrains's picture

I always thought these stress tests were just designed to give the "banksters" the chance to  get a handle on who's cds to buy/sell.  Once they get a look at the books they announce "all is wonderful" and maybe even sell a small amount of cds to get the trend tighter before loading up on the buy. Maybe it's time to have a look at everyone's poker hand so they can lay their bets again. 

Sat, 10/22/2011 - 16:07 | 1800347 Stuart
Stuart's picture

Washington can dither around the debt ceiling, Europe can dither on their own mess...  No need for any US smugness. 

Sat, 10/22/2011 - 16:33 | 1800388 malikai
malikai's picture

Reality will meet them both.

Sat, 10/22/2011 - 16:14 | 1800354 prophet
prophet's picture

http://graphics.thomsonreuters.com/11/07/BV_STRSTST0711_VF.html

Euro zone bank stress test calculator

Use the Reuters Breakingviews stress test calculator to calculate how the Target core Tier 1 capital ratio and sovereign haircut levels affect the amount of capital banks need to pass the stress test

Sat, 10/22/2011 - 16:15 | 1800355 EZT
EZT's picture

The only thing that can save them is if they put on a masive short position, and then let the shit hit the fan!

Sat, 10/22/2011 - 16:34 | 1800390 ZackLo
ZackLo's picture

Who will take the counterparty risk? Who wi9ll bail them out if they do? The great ponzi is imploding I just wish it would move faster...

Sat, 10/22/2011 - 16:16 | 1800358 kaiserhoff
kaiserhoff's picture

Merkel understands that a 50% hair cut is a good deal, and before the ink is dry, there will be a long line of other beggers/buggers who want the same deal or better.  After all, they don't smell as bad as Greece.

But she also wants to keep the Euro, more or less as it is, foreveh.

As Dear Old Dad liked to say, "people in hell want ice water."  Time to grow up Angela.

Sat, 10/22/2011 - 16:18 | 1800364 slaughterer
slaughterer's picture

The argument for buying gold has taken on a new, infallible hyper-correctness today.  

Sat, 10/22/2011 - 16:55 | 1800422 Nate H
Nate H's picture

As it has for past few weeks, yet its down (ie net argument for selling has outweighed net arguments for buying)

Sat, 10/22/2011 - 16:20 | 1800367 Manthong
Manthong's picture

..but from the toilet paper of record, the NYT:

"two options were under consideration.

Both options involve plans to insure against a portion of losses on Italian or Spanish bonds. Under one version this insurance would be offered by the bailout fund.

The other would form an agency to buy bonds, perhaps attracting new investors like sovereign wealth funds. This would buy bonds on the primary and secondary markets using insurance offered by the bailout fund, said one official briefed on discussions but not authorized to speak publicly.

One advantage of this plan might be that it could force clearer conditions for reform on countries whose bonds are bought."

-In other words..

They will start a new hedge fund  consisting of debtor countries who can’t pay their bills to buy toxic bonds that won’t be repaid using guarantees that will never be adequately funded in order get promises of austerity that are politically impossible.

Sweet.


http://www.nytimes.com/2011/10/23/business/global/european-finance-ministers-shaping-greek-rescue-and-effort-to-aid-banks.html

 

 

Sat, 10/22/2011 - 19:34 | 1800679 loudoungroup
loudoungroup's picture

Give that man a lottery ticket!  Well said.

Sat, 10/22/2011 - 21:05 | 1800868 technovelist
technovelist's picture

What could possibly go wrong with a plan like that?

Sat, 10/22/2011 - 16:21 | 1800368 oogs66
oogs66's picture

the banks are negotiating their own haircuts still?  yes, i will take a bond with principal to be repaid by EFSF and higher coupons that the bond i currently hold and call it a 50% reduction and not even have to book a loss on my books :)

Sat, 10/22/2011 - 17:19 | 1800446 ZeroPower
ZeroPower's picture

True, but i believe the notion of losses ties into circular logic.

In the sense that, if banks do take the haircut, bailouts will be required. THe people dont want anymore bailouts (rightfully so), and the banks dont want to ask - though they might have to in order to escape a systemic event like 2008.

So the question lies - what else is there?

Haircuts of a modest amount? Again impossible to say what amount would be considered doable. X and Z bank might be ok w/ 50%, but because they have $xMM notional with counterparty Y, and counterparty Ys exposure might be greater than X and Z, therein lies the problem. Save them all, or save none.

Sat, 10/22/2011 - 18:21 | 1800527 Piranhanoia
Piranhanoia's picture

You hit it. It isn't possible. Like in any settlement, the small share holder is going to get the smallest fraction of the smallest piece of the pie. 150 million might choose not to take a haircut in North America.  It will become interesting when they decide they don't want to.  At that point the wishes of the bank/government will become irrelevant.

Sat, 10/22/2011 - 16:21 | 1800370 Al Gorerhythm
Al Gorerhythm's picture

I'm going over there to have these guys measure my dick so that I can report back to my woman that she is in for a suprise.. 

Sat, 10/22/2011 - 16:22 | 1800372 Mark123
Mark123's picture

I love it....we are making progress - on the one thing that we already decided on prior to our meeting (and even that is a joke).

 

default or print.  Simple choice but nobody wants to admit to either so they hope to secretly do one or the other without anyone noticing.

 

ps - did anyone notice that PMI Group was seized today and will only pay out 50% on claims now (private mortgage insurance)....another fine example of insurance that is not really backed up by anything other than confidence it will never have to be paid out.

Sat, 10/22/2011 - 16:23 | 1800373 Belarus
Belarus's picture

The realty is just so simple: the monster Debt Dam is merely held together with bank-aids. As each bank-aid begins to come undone, with all attempts a mere spit and slack it back on attempt, it becomes obvious know matter how hard the powers that be try there will only be one end result: a massive debt restructuring is coming. Plan accordingly. 

Sat, 10/22/2011 - 17:58 | 1800481 OneEyedJack
OneEyedJack's picture

they shoulda used debt-tape

Sat, 10/22/2011 - 16:27 | 1800377 Hephasteus
Hephasteus's picture

The bailout meeting.

Are the ninja's who are supposed to throw smoke balls while we convert bonds to gold done training yet?

Not yet. People have smoke detoctors and when they all start beeping at once they can find us with echo location.

Sat, 10/22/2011 - 16:28 | 1800381 TradingJoe
TradingJoe's picture

Me went short Friday will short some more Monday Tuesday and Wednesday I'll watch for " the beginning of the great destruction"!!!

Sat, 10/22/2011 - 16:33 | 1800389 jarboejl
jarboejl's picture

No progress?  There's a shocker.  I think the markets will be very disappointed with the outcome of these two meetings.  15.3% up on the S&P in less than 3 weeks?!?!  The market has priced in euphoria. 

Sat, 10/22/2011 - 17:12 | 1800438 Nate H
Nate H's picture

the stock mkt that is.  credit telling different story (euro-wise)

Sat, 10/22/2011 - 17:32 | 1800451 DeadFred
DeadFred's picture

The market has priced in the EURUSD, that is all it ever prices in. With the shorts stilll in the forex market don't surprised to see 1.40 or 1.42 soon. New multiyear highs on the Nasdaq and the 200 dma on the S&P. After that reality may set in, or not. The bulls in the stock market are all like Robotrader. He knows it's an insane system but the money you can make trading the ranges is as real as any fiat can be. Trading the ranges will work until it doesn't.

Sat, 10/22/2011 - 17:52 | 1800470 melanie
melanie's picture

I don't agree. I believe the market is news-driven at the moment.

Sat, 10/22/2011 - 21:09 | 1800877 DeadFred
DeadFred's picture

I would say the EURUSD is news driven and the market tags along. I would also say in light of the follow up reports that the likelihood of one of those black swans landing in the punch bowl may be greater than I thought. Here's to S&P 1000!

Sat, 10/22/2011 - 16:34 | 1800391 Hansel
Hansel's picture

World leaders don't care about the math, they just want control of the people.

Sat, 10/22/2011 - 16:37 | 1800395 Yellowhoard
Yellowhoard's picture

There are three kinds of people in this world:

Dicks. Pussies. And Assholes.

The Germans are Dicks and will fuck whoever they choose.

The French are Pussies and will eventually get fucked.

And the Greeks are, of course, Assholes. They're just shitting all over Europe.

http://www.youtube.com/watch?v=2cV_q-mVAAA

Sat, 10/22/2011 - 16:39 | 1800397 LookingWithAmazement
LookingWithAmazement's picture

The euro will be saved. Banks will get support, they will raise interest rates so lots of savers will be drawn and the PMs go down. New boom-bust cycle will start. Really, in a week, you will laugh at this whole mess. No crisis, no Armageddon, no collapse, no meltdown. Merry Halloween, Christmas and New Year. Boring world we live in.

Sat, 10/22/2011 - 19:04 | 1800609 markar
markar's picture

idiots like you contribute to the boredom

Sat, 10/22/2011 - 22:20 | 1801041 LookingWithAmazement
LookingWithAmazement's picture

Merry Christmas.

Sat, 10/22/2011 - 16:39 | 1800398 Schmuck Raker
Schmuck Raker's picture

Maybe we could bring all of this to a head much sooner if Tyler just started translating these stories into German, and posting them on a new European-targeted site.

ZeroHedge.de anyone?

Sat, 10/22/2011 - 16:46 | 1800408 NoClueSneaker
NoClueSneaker's picture

Hm, simple question:

how big r all the freakin' EU debts concernig 16 Tr. $ of Bernank's  fake money printed since 2008 ?

Deutsche Bank begged out 534 Bn. $ just to short everyone ( GS-Style ).

Actually, the sheeple should start with some american style lynching here - but no fuckin'  EU paper ever mentions the Ultimative Fed Scam.

 

Waht is this shit all about????

GAME OVER for the whole freakin' world just to cash Lloyd & Jamie wankers ???

I owe much to ZH. But I'm really on the end of the food chain.

 

 

 

 

 

Sat, 10/22/2011 - 16:46 | 1800410 QEsucks
QEsucks's picture

America, F**k Yeah!

Sat, 10/22/2011 - 16:47 | 1800411 falak pema
falak pema's picture

square peg round hole

Sat, 10/22/2011 - 17:00 | 1800424 Epicurus
Epicurus's picture

The market seems to believe that the 440bn ESF is funded and will receive additional funding or leveraging.

I believe the market (excl ZH readers) does not understand that the 440bn ESF is about guarantees/promises as this money needs to be raised through bonds. A process which is not going well at all. How can you leverage that?

http://www.guardian.co.uk/business/nils-pratley-on-finance/2011/oct/11/does-efsf-have-design-fault

 

The EFSF facts.

Its subscribed share capital was minimal - less than €29 million not billion, as can be checked on page 4 of the Articles of Incorporation (Chapter 2 on Capital):

http://www.efsf.europa.eu/about/legal-documents/index.htm

So far it has borrowed a total of €13 billion through three bond issues as detailed here:

http://www.efsf.europa.eu/investor_relations/issues/index.htm

and it has disbursed a total of €9.5 billion as detailed here:

http://www.efsf.europa.eu/about/operations/index.htm

on which basis it will presently have less than €3.5 billion available.

Sun, 10/23/2011 - 10:24 | 1801647 lano1106
lano1106's picture

very good point. They are going to sollicite the same private bond holders for up to 440B while at the same time attempt to impose them a 50% haircut on their previous purchase. This is pure  (insane?)  genius!

Sat, 10/22/2011 - 17:03 | 1800426 melanie
melanie's picture

Some news regarding Dexia. The French banking regulator investigated Dexia in summer of 2010. Report was sent to Dexia together with warning to put the bank "under special supervision". After that, silence.

The French newspaper 'Liberation' obtained now a copy of the buried report.

The link is in French: http://www.liberation.fr/politiques/01012366925-dexia-un-rapport-lucide-...

 

Sat, 10/22/2011 - 17:07 | 1800428 The Swedish Chef
The Swedish Chef's picture

How nice to banter with likeminded people but... What´s the market going to say on monday? All that matters, the rest is fluff.

Sat, 10/22/2011 - 18:08 | 1800495 Hohum
Hohum's picture

Why the down arrow on The Swedish Chef?  You ZHers aren't very smart if you don't realize that, for whatever insights occasionally come up, it is an ideological echo chamber most of the time.

Sat, 10/22/2011 - 19:18 | 1800637 Hansel
Hansel's picture

Congratulations, you just described every blog and news outlet in existence.  Chef essentially stated blog comments are worthless in a blog comment.  Lastly, the market does not dictate life, so what the market does on Monday is not "all that matters."

Sun, 10/23/2011 - 11:48 | 1801866 malikai
malikai's picture

You come to a blog to find out what the market's going to say on Monday.. LOL

Sat, 10/22/2011 - 17:08 | 1800434 Troy Ounce
Sat, 10/22/2011 - 17:11 | 1800436 melanie
melanie's picture

Interesting article from The Telegraph (8:48PM BST 22 Oct 2011): Single EU Treasury Plan proposed as senior sources at the International Monetary Fund indicated privately that it is not willing to further bail out Greece, whose economy has an outstanding debt of about £232 billion.

http://www.telegraph.co.uk/news/worldnews/europe/8843785/New-euro-empire...

Sat, 10/22/2011 - 18:18 | 1800517 A Man without Q...
A Man without Qualities's picture

and this one

http://www.telegraph.co.uk/news/worldnews/europe/belgium/8843652/Eurozon...

 

"Schaeuble is a man who does not mince his words, whose reputation for harshness and arrogance is well earned. He was, frankly, unbearable," said one diplomat.

 


 

"A row between the pair (Merkel and Sarkozy) in Frankfurt on Wednesday overshadowed leaving-do celebrations to mark the end of Jean-Claude Trichet's nine years as the head of the ECB.

"Their shouting could be heard down the corridor in the concert hall where an orchestra was about to play the EU's anthem, Ode to Joy," said an incredulous EU official."

 

 

Sat, 10/22/2011 - 19:03 | 1800607 Use of Weapons
Use of Weapons's picture

Damn, Telegraph just played the 'Clockwork Orange' card.

Osbourne hinting that he was deeply worried about Europe seems to be being signaled loud n clear.

 

http://www.youtube.com/watch?v=fuohJDyYnlE&feature=related

Sat, 10/22/2011 - 17:21 | 1800444 smiler03
smiler03's picture

I'm constantly struggling to comprehend these numbers but I have finally found a solution. 

A free downloadable calculator that can handle a 10000 digit number. It can easily handle the known number of atoms in the universe. But can it cope with the worldwide debt? 

http://gc3.net84.net/bcalc.htm

Sat, 10/22/2011 - 17:55 | 1800474 Village Idiot
Village Idiot's picture

And it all comes down to...the perennial HP-12C.  nuff said...lol

Sat, 10/22/2011 - 17:56 | 1800477 sabra1
sabra1's picture

just imagine if all americans, all at once, call it quits. close all storefronts, leave cars in driveway, stop all bill payments. see how fast things would change. instead, whenever the TOTUS gives a speech, you've got these happy, slappy, brainless twits clapping and smiling, whilst getting fisted! oh well!

Sat, 10/22/2011 - 18:10 | 1800499 Hohum
Hohum's picture

Happy, slappy brainless twits seem to belong to both parties.  But, sabra1, sure things would change if people stopped their lives.  Why do you think it would be so great, though?

Sat, 10/22/2011 - 17:57 | 1800479 drand02
drand02's picture

We are still printing money like there is know tomorrow, which will continue fueling inflation, especially in food and energy. Unemployment is not getting better but worse. With no mark to market in place the banks are still lying. Borrowing more money to just pay the vig is going to bring all mature developed countries to the bottom. I hate this is happening, but until we all stop going further into debt, demolish the existing debt thru bankruptcies and write offs, this will not stop.

Of course violence and war would do the trick, but who the hell wants that.

Sat, 10/22/2011 - 17:58 | 1800483 Sam_Slayer
Sam_Slayer's picture

Maybe we should start a pool on how long before FT publishes the next EU bailout rumor. That ought to take EURUSD to 1.40. Thow in another well timed rumor about the rumor, and we can make 1.42.

Sat, 10/22/2011 - 18:10 | 1800501 Piranhanoia
Piranhanoia's picture

I think Mr. D is on to something.  The 99% would probably get more information about the people trying to screw them out of what remains of their savings by seeing how these pigs go to trough.  If we got a report from waiters about what oinkette and oinkor dined on after breaking up their meeting,  we might get an insight into how out of touch these things are,  and how unlikely anything they do will have anything to do with the lesser class except enhanced austerity as they engorge on the carcass of humanity.  They may try to stab it with their steely knives, but they just can't kill the beast.

The menu, tab, and the names and the discussions.  It will help later with the trials.

Sat, 10/22/2011 - 18:14 | 1800511 mhoughgr
mhoughgr's picture

 

Did you pick up on this in the telegraph yet ...

"The plan comes as European governments desperately trying to save the euro from collapse last night faced a new bombshell, with sources at the International Monetary Fund saying it would not pay for a second Greek bail-out."

 

source ..

http://www.telegraph.co.uk/news/worldnews/europe/8843785/New-euro-empire-plot-by-Brussels.html

 

Sat, 10/22/2011 - 18:14 | 1800512 YesWeKahn
YesWeKahn's picture

Why there is a "Obama needs your help" ads there? I need his help to get this country back on track, why does he need my help.

Sat, 10/22/2011 - 18:17 | 1800515 mhoughgr
mhoughgr's picture

doh .. im too lazy to read prior posts :(

Sat, 10/22/2011 - 18:28 | 1800539 TooRichtoCare
TooRichtoCare's picture

can't we all fill out some kind of petition or something to try to get Gordon Brown back, so he can save the world all over again? He did it before, surely he can do it again?

 

Sat, 10/22/2011 - 18:32 | 1800549 merchantratereview
merchantratereview's picture

EUR broke. No taxpayers left.

USD broke. No jobs or taxpayers left.

JPY broke. Radioactive.

AUS, NZD, GBP, CHF. Too small.

BRIC. Corrupt.

Can these fools finally do a Jubilee?

 

And PLEASE, let's NOT have implantable one world money as the solution.

 

 

Sat, 10/22/2011 - 18:47 | 1800574 maxw3st
maxw3st's picture

And, no doubt, the Euro continues to soar in value. I'll still be there to short it at 1.50.

Sat, 10/22/2011 - 19:29 | 1800667 DosZap
DosZap's picture

Quixotic_Not

Fithian once stated, “I have no issue with property destructionWe’re in a society where property is idolized, so a lot of people don’t get it yet that it doesn’t really matter.”

I think it's Fithian that doesn't get it, start property destruction of individuals private property  here, and you will become lawn fertilizer,and food for the ravens.

This AIN'T yo Daddy's Russia.

 

Sat, 10/22/2011 - 19:42 | 1800706 Use of Weapons
Use of Weapons's picture

Ravens... last moment I saw a Raven, it was boning1 and devouring a seagull corpse. Hrafn (not a f sound there).

 

Yes, they're carnivores. And yes, most Americans have no idea about modern (post 1989) Russia. Oh well... back to Rambo films.

  • 1. Please... butcher's term
Sat, 10/22/2011 - 19:44 | 1800711 Mr. White
Mr. White's picture

I can't believe that part of the proposed solution to the crisis is ban rating agencies from rating sovereign debt. They might as well impose censorship of the business sections of news papers and the internet as well. I mean, is this the back plan for avoiding default -- not allowing anyone to write it in a public forum? I'm long on S&P declaring Greece in default this year, so I have some interest in this ... but I had no idea I might  lose because of a new law making S&P's ratings illegal. I'm starting to better understand the more conspiratorial posters here...

Sat, 10/22/2011 - 20:02 | 1800738 kito
kito's picture

europe wants to set up a fund for private investors to burn money on troubled european nation. thanks, but id rather invest in the subprime market

 

http://www.bloomberg.com/news/2011-10-22/eu-weighs-new-fund-to-attract-outside-money-to-fight-crisis.html

Sat, 10/22/2011 - 23:21 | 1801161 slewie the pi-rat
slewie the pi-rat's picture

international press:  do you want to be the person responsible for the EU breaking apart?

tyler:  sure, wtf, why not? 

Sun, 10/23/2011 - 01:34 | 1801202 ricocyb13
ricocyb13's picture

GREAT post Tyler !

if stocks are a zero-sum-game, why isn't debt a zero-sum-game?

 

Sun, 10/23/2011 - 01:17 | 1801315 Grand Supercycle
Grand Supercycle's picture

SP500 weekly chart shows megaphone wedge and looks bullish.

Market consensus became clearer on Friday so back to the original bullish analysis and SP500 weekly chart reverts to bullish/neutral.

More info:
http://stockmarket618.wordpress.com

Sun, 10/23/2011 - 05:53 | 1801461 Dens
Dens's picture

An avalanche of bearish news coming through and the market makes new highs. Just about every retailer trying to short the market these days it seems. And staying in cause 'we're gonna crash any moment now'. Gotta love it.

So I second your thoughts; i see we got a big ugly looking but very strong inverted head n shoulders on the daily and 4 HR SPX. Looking to end the year in style or something.

Haven't been around for long in the markets, but if this is a shakeout, it must be the mother of all shakeouts imho. Looks more like the mother of all short squeezes is coming/going.

Sun, 10/23/2011 - 02:52 | 1801376 RoadKill
RoadKill's picture

Even Economist said E100bbn was minimum for just Greece haircut. E300-E400 bbn for 9% capital ASSUMING no haircuts for PIIS.

Ignore UBS, CSFB and Goldman at your own risk. Butif the Economist calls you out for being undercapitalized = potential bank run.

But E100bbn is all France will agree to. ESFS will be used to buy/gauranteed all PIIS issuance and be Euro-FDIC. This will last at least mid-way through 2012. So no blow up till then.

Just like Twist and scared mkts are funding 100% of US issuance and euro bank / FCB disgorgement.

Euro recession in H1. US recession by H2. High risk of final blow up I'n summer/fall 2012.

I've given you the map. Now follow it. We may hit 1,350 1st. But 1,000 is coming with 50% odds of much lower on new crisis.

Do NOT follow this link or you will be banned from the site!