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Farce Is Complete As ISDA Finds 50% "Haircut" Is Not A Credit Event
And, as expected, here is ISDA with the most farcical of decisions. From Reuters: "A new voluntary deal for holders of Greek debt to accept deeper losses is unlikely to trigger a 'credit event' that would cause a payout on default insurance, said a top lawyer at the International Swaps and Derivatives Association. Greek bondholders face losses of 50 percent under a plan to lower the country's debt burden and contain the euro zone's long-running debt crisis. The aim is to complete negotiations on the package by the end of the year. But because participation in the deal is voluntary rather than forced, it would typically not trigger payment on CDS contracts. "As far we can see it's still a voluntary arrangement and therefore we are in the same position as we were with the 21 percent when that was agreed," said David Geen, general counsel at derivatives body ISDA, referring to an original deal proposed in July that involved smaller bondholder losses. "The percentage (of losses), as far as the analysis for CDS purposes goes, doesn't change things. typically a voluntary arrangement won't trigger the CDS." Geen said the final decision on whether a credit event has occurred rested with the ISDA determinations committee, which would consider the issue when requested to do so by a CDS market participant." The fact that the decision is "voluntary" under duress from an entire political system which realizes its ponzi structure is collapsing is seemingly irrelevant. Luckily, the market is not all that stupid and the preliminary reaction is as expected, and to paraphrase Willem Buiter, "Failure to trigger Greek sovereign CDS when economic logic indicates this ought to occur would likely be detrimental to financial stability." But that's irrelevant. The EU has kicked the can down the road. Now it is literally a race for the fade to discover who is first to realize that as Zero Hedge and now RBS chimes in, "the EFSF is still too small to restore investor confidence."
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Green bitchez. Bwahahahaha
Brothers,
It may seem like a joke. But it's a start.
How much of a haircut did Goldman have to take?
Angie Merkal has balls.
Let's see where this leads before we shit on her head.
http://geraldcelente.proboards.com
The Farce is strong with this one.
what the hell is taking the greeks so long to realize they just got royally PHUCKED?
Pretty amazing PR campaign to make this a market positive. Weeks and months of no solution, then suddenly, "We Have A Deal!" and everyone cheers. Had it been something like weeks and months of no solution and then "Greek Bondholders Forced to Accept 50% Losses!" maybe the market reacts differently.
I think this will be the last pop to this rally. The ripple effects are yet to be felt, and when the hopium wears off, we get the next leg down, and it will be a doozy. It will be interesting to see just how much higher the markets will rise, and for how long. My bet is this initial pop will be most of the rise and it buys maybe another two weeks before the markets roll over. But that's just me. I got off the hopium a couple of years ago.
Probably the fact that they were just forgiven 50% of their government debt. Sweet!
definitely it is!
agree how to
The only way this determination was made was if dealers were in on the joke and had a short basis trade on.
None of these guys lost a $%#@ dime. Except guess who.
Well, according to an earlier post the only losers are the Greek pension funds, and I have no problem whatsoever with that...
Now let's see how long these pension funds take to refuse to eat this 50% loss unless everyone else does or at least takes some, and throw the whole lot into turmoil again. Until we then have an actual default...
Either that or I can see one or two Greek pension fund managers running around in fear of their lives...
Yeah is this a case of the politicians getting together and agreeing that all the bondholders will 'voluntarily' agree to the haircut, without having actually had any of the bondholders voluntarily agree to anything? I really can't imagine that did a poll of anyone that holds greek debt to find out how they all felt about it...
Also, aren't we talking major moral hazard here now? If you're portugal, or Italy or Ireland, Spain etc... Wouldn't you be sitting up saying "Party on wayne, if our debt gets out of control we'll just get everyone to volunteer to cut it in half!!". For that matter, who the FFFFFF would buy EU government debt now?!
What I don't get is that the same people that want EU banks to boost tier 1 capital by <who knows how much in euro terms> are the same people that seem instrumental in destroying their hedge book. Much more, they have introduced huge moral hazard into all european government debt.
This is more than stupid. More than "Trichet stupid". This is stupid on a whole new level.
I'm just not following...
Supposedly it's voluntary. Why would anyone that holds the bonds, plus CDS, volunteer on a 50% haircut with no credit event? I could see why someone without insurance might volunteer for the haircut (vs complete default) but even that's a stretch.
The 'volunteer' aspect of it all just doesn't seem to make any sense. Or is this similar to the way we all volunteer to have our balls groped when going through airport security?
ISDA Sorry....you don't get to trigger the default until there is a 99.9% loss.....NEW RULE!! Sucks to be you!!
this is no funny! memory foam mattress
Insurers denied home owners in Australia flood damage payouts, because the damage was caused by rising waters downstream, not from torrential rainfall in their area.
Insurance is a gyp. They make the rules up on the fly to suit their bottom line. In this case it seems that the banks will take a 50% haircut on their bonds and be paid for the losses by the ESSF, that prints the money and taxes the masses through inflationary dilution.
What I don't get; where does a group of bankrupt nations get the money to pay themselves. If euros don't emanate from the ECB, then where do they come from? Tokens in a cornflakes box?
Your beeing a little hard on those poor girls
bloons tower defense 5
Because voluntary has been redefined as mandatory
The difference between sex and rape...
oooh right! walk in freezer
Is it truly "mandatory"? I mean... If I am a bond holder and I don't tender, do I get my coupon and principal.
A question of procedure.
Ask Obummer and see what he says!
"If I am a bond holder and I don't tender, do I get my coupon and principal. "?
That is a good question. Consider though that the banks willingly taking a 50% haircut have now just set the new market value for the bonds you hold. No problem if you are a bank - just mark to model (holding to maturity and being made whole). Not so good if your portfolio has to mark-to-market.
Also, since the bank holders of the Greek bonds voluntarily took the haircut (so they can get cash infusions from the EFSF), the CDS covering those bonds have not been triggered. Truly buggered, those who are holding Greek bonds and not a European banking institution!
Pretty good joke.
So you think it's funny, eh? Why you little............
http://www.youtube.com/watch?v=ekxn5KLv9XQ&NR=1
joke?
smart... Inteligator
Hilarious - so who buys EFSF-CDS in such environments then?
nobody with two brain cells
BAN CDS (Again)
Oh right.. CDS are evil and banned. Dummy I am.. thanks for pointing that out. Now pass it to Merkozy :)
Oh, right, what a nonsense, MegaBanks work in your interest by improving on the economy with exciting financial innovations.
Your sarcasm is reaching for some target I simply don't see, explain, please...
meanwhile BAN CDS, not only naked CDS, just for starters...
Amen.
But who could survive the "true" rates of interest.
you mean the ones where I get a reasonable rate for the risk of lending my money?
I said it yesterday. No law will be followed civil, contractual or criminal. No national custom or sovreignity will be allowed to stand in the way of this ponzi the only trigger is hunger, trade and prepare accordingly.
+1000
smart move. get your wife back
exactly surveys4income
exactly Inteligator
Sorry.. well: They ban CDS (naked for now) - but "invent" EFSF-CDS at the same time. Wasnt clear or '</sarc>' clearly. *picking my nose*
So... Buy government debt and face a potential 50% capital loss WITHOUT the possibility of hedging against it. Government bond sell off imminent.
"Remember that insurance policy you bought? Well we are ruling that you are not allowed to collect on it. We pick the winners and losers any time we like because we are your government. Thanks for playing though. Tee hee."
Put these people in children's clothes and let them play board games with each other, they are a menace for the rest of us.
These spoiled brats just make the situation for Italy and Spain much worse. They are essentially legitimizing capital loss with no means of protection, and then they will turn around and whine when spreads begin to widen like crazy. Government bonds were considered a safe haven in times of uncertainty. This decision just makes them risk asset number one. Lets face it, you have to be an extremely crappy stock/commodity picker to suffer a 50% loss with no possibility of recovery. At this point bonds have almost the same risk as derivatives trading.
'They are essentially legitimizing capital loss with no means of protection, and then they will turn around and whine when spreads begin to widen like crazy.'
http://www.youtube.com/watch?v=l8jIIPocqUU
good idea... french door refrigerator
Of course it isn't a default. That would have been bad. Bad is not good. Only good can happen...and happen it has. Hopium is powerful stuff.
I am surprised they wer able to levitate at these levels with the EFSF woefully inadequate.
I drink your milkshake.
http://www.youtube.com/watch?v=5nQ9YQt7N8s
No refills.
Abiogenic government debt. It naturally refills the coffers......which explains that constant sucking sound.
http://en.wikipedia.org/wiki/Abiogenic_petroleum_origin
"the EFSF is still too small to restore investor confidence"
the blasted EFSF is just there so that the EUR can continue to be the second ugliest currency in the contest
if the structure of the EFSF is of ugliness, it's mainly because it's modeled after the MegaBanks and holds them a mirror...
Stabeeleetee!
And now you know: there is no SHTF insurance. That bet never pays out.
Oh, and those of you holding on to the CDSs as a proxy hedge to other debt, you're no longer hedged.
Not sure why the CDS market on sovereigns doesn't collapse on something like this.
It probably will.
No CDS default, sell bonds.
Refuse to support ALL GOVERNMENTS, sell bonds.
may be not so fast - for your own benefit. tw
Here is an idea: Buy a Greek Bond and don't volunteeer for the haircut. When Greece goes to default on your bond state that you're willing to let the EFSF buy it for full face value and not a penny less.
Somebody, somewhere has got to be working this angle. (Caveat: I don't really understand all the nuances of bond trading but this idea is the first thing that came to mind when I read the story.)
If greece and the banks quietly buy up the remaining bonds, or even the CDS, then they can default on the rest, no problem.
ridiculous. the size of Greek CDS is deminimus. This is all about the "linkages" between European banks and the connections thereof to their respective "leaders." This truly is "kick the can down the road" as it solves absolutely nothing...although it does appear to represent a direct transfer of wealth from Europe to New York...at least today. If I were a European i'd be buying gold...provided i had a job/money/whatever. That's just the generic take to me. I think an interesting sidebar is "why does Europe export gasoline to the United States?" That's always seemed odd given that gasoline is WAY more expensive over there than it is over here--and the USA certainly doesn't have a shortage.
So, in other words, they, the banks, the fed, the treasury, the IMF, and rest of the BIG SWINGING DICKS can do WHATEVER THE FUCK THEY WANT TO DO. And you and I can't do a fucking thing about it.
Surely you didnt just now figure that out?
It has never been any more blatent.
True. But look on the bright side. At least they can't shoot rubber bullets at your face through the internet...yet.
Ahhhh, the silver lining. Thanks!
You can buy gold.
True, and they can confiscate it in exchange for notes.
"And you and I can't do a fucking thing about it."
Yes we can. Do something about it, that is. Just say NO to purchasing government debt - of all flavors. No more sovereign bonds, no more munis, no more GSE or other agency debt either. Look carefully at all of your investment vehicles - if they use government debt as a form of offset against more volatile components of their portfolio, dump them now. Force the PD's and CB's to buy that stuff. In fact, with the IASD showing their true colors, you might even want to reconsider any bonds in your portfolio - especially if they need CDS to offset any part of their value. Once the bond market tanks and commercial paper is infected, then you will see more thought given to what these clowns have just done.
Interesting to see what happens to debtholders who refuse to participate.
I bet greece is willing to trigger small, selective defaults.
GM
Unbelievable, in a "of course they fucked more responsible banks" sort of way.
Yet more confirmation gold is the only true safe repository of value. Can't trust currencies, can't trust GAAP accounting by corporates, can't trust any banks (see Dexia), can't invest in bonds, and now you can't trust international contracts, i.e. your insurance is now totally worthless.
System is pure shit. So gold it is.
dead right when the rules are invented on the fly by the 1% no one gonna play any more... game over and stack your coins and bars.....
Occupy Gold and Silver Bitchez!
futures up 26 - hope they hold till the open, I think moments like this define sell the news
I am boggled that the 'free market' no longer counts in any manner - those who have CDS on Italy or Spanish or Portuguese debt must wonder what's the point. Any and all hedging has become moot.
Anyhow, another fun Marc Faber interview yesterday on financial entertainment TV - he has a lot zingers in this one along with the normal fare about eventual war, and confiscation of assets down the road by desperate govts.
http://www.fundmymutualfund.com/2011/10/video-marc-faber-back-to-his-normal.html
That's what you get when communists run governments. Oh that's a little harsh. I mean socialists.
I disagree, this kind of interventions are more properly fascist, European Style
Mussolini wrote a few interesting articles about how and when the gov is supposed to step into the economy, bash a few heads and get all interests in line again... (I'm not giving kudos)
in the Anglophone countries you are more used to a different style of fascism, the "neo-liberal style", for a better word, where companies are never, ever, rebuked...
Socialisim leads to Communism, dont be too hard on yourself!
So insurance is worthless. What to do....
Do not lend.100% safety.
That depends on the meaning of what "Is" is. Is is is or is is not is?. That needs to be fully defined. Let's ask ISDA to elaborate , oh, wait a minute, they have already given their opinion?
50% "Haircut" Is Not A Credit Event.Is is not is. Is isn't.
Carl Weinberg on Bloomberg Radio just now
http://www.bloomberg.com/radio/
All this is going to do is bring inflows into the CDS market to a SCREECHING HALT! And by the way, the ISDA will probably determine that the buyers of the CDS's have to continue to pay per the original contracts requirements. Wow.
Credit Default Swaps on sovereigns are totally worthless now. The fact that ISDA does not see a 50% loss as a credit event is very telling. No amount of spin can now put this one back in the bottle. If you have sovereign debt and think you are hedged guess what you are no longer.
so as a result all inflows of money into backing govt. debt end, today.
Somewhere, some rather unpleasant drug Lords are on the Phone with a clear message.....
"I want my Fucking money back With Interest you Sons of Goth bitches. I stump Up, You banked it and Now....
See you in my court you Mother Fuckers- Nobody screws with Us
Someones getting a Columbian Necktie for Christmas - blood red to match the season you limp wristed Fairy Fuckers"
+1 for avatar
AIG should get back into the business!
What happens if someone doesn't volunteer?
The sovereigns get preferential treatment, they get to make the rules up as the game progresses
I hope I don't voluntarily have a crash on my drive to work. State Farm wouldn't have to pay if I intentionally T-bone another vehicle.
Basically insurance business par excellence! You have to pay premium, and when it comes to getting something, sorry.
Just transfer this concept ot high-water insurance.
"My home just got flooded. Can I please make a claim?"
"Technically it was not a flood, as you voltarily accepted the water into your house by leaving the door open."
I wonder who was selling all those CDS?
One huge thing lost in all this is Germany got there way. No money printing. No additional commitments. No bank recaps outside their borders. Everyone gets re-elected. This whole thing just feels like a set-up to give Germany the necessary time to move to the Dmark. No sane person believes "all is fixed." Yet, sure...the can has been kicked:
Now it is literally a race for the fade to discover who is first to realize that as Zero Hedge and now RBS chimes in, "the EFSF is still too small to restore investor confidence."
The markets have proved they don't need reality, they just need hope and this plan gives it for awhile, no? The thing is while true that the plan is not nearly big enough (see Gold and Silver trading in Asia markets), no debt exchange even takes place until the end of January. Therefore, if no banks have any epic fails before then, this may just push out the reality of this "kick the can" by another 3/4 months or longer. Unless current bond holders get nervous and start to sell because it's almost impossible to get hedge exposure now, likely not much happens in EU markets until next year.
What to make of Sarkozy etc. going to China to speak to the President? Is there something up their sleeves? Like help with bank recaps so look through to France's credit doesn't take it on the chin?
Spot on! Merkel 5 - Sarkozy 1 in terms all Europeans can understand.
I'm sure she wanted to kill the CDS market which she sees as supporting risk taking behaviour in banks that ultimately hurts the rich countries that have to bail them out.
She got the haircut she was looking for months ago when Sarkozy's bank buddies got her to back down and she still hasn't agreed to any further German EFSF contributions (for which she now needs Parliamentary approval) or big-scale printing (which would involve breaching EU law).
[Dow Jones] The EU's banking package offers two surprises, says Royal Bank of Scotland. The first is that there will be potentially no cash dividends and bonuses for banks that fail the 'sovereign stress' test and their debt investors are at risk of restructuring or conversion to equity. The second is that newly issued contingent capital will count as core tier 1 subject to an EBA defined term sheet. Deutsche Bank (DBK.XE) and, to a lesser degree, Societe Generale (GLE.FR) and BNP Paribas (BNP.FR), have the most to lose if the dividend and bonus conditions are implemented, says RBS.
Logical reaction --> complete deleveraging of risks (similar to what happened in 1929) in order to mantain bonuses....
We won't see a recession, much worse....
"The first is that there will be potentially no cash dividends and bonuses for banks that fail the 'sovereign stress' test"
Stress test? You mean that annual parody of banking regulatory investigation? The one Dexia passed, not only with flying colors - but also at the top of the class? Sounds like a fresh round of bankster bonuses were already written in then!
oops forgot!
First you do a CDA on the results and then you pass the stress test, so easy to steel money from the company!
Wondering why they are talking only about EU-Banks, US-Banks pay the bigger bonuses....
Think will be a close run who deplets the capital first...
Oh my god, the markets love this shit. EURUSD up $1.14, German Dax up 279 points, French CAC (so apt) up 5.24%, Dow over 12k, S&P up over 2%
WHAT UTTER SHIT.
I'm going to bed and it just gone midday. Wake me up when this BS stops, I guess that'll be a couple of years much needed sleep.
are non-european banks holding PIGS debt also bound to accept this 50% "voluntary" haircut?
and smth else: last few days attention was skillfully drawn away from Portugal and Ireland whose bond rates started shooting up again
...ticking time-bombs much closer to catching contagious Greekinosis than Italy, Spain, and Belgium which were kept in the news
You can ban short selling or render CDS worthless but the market always finds a way...this is unsustainable and will only serve to intensify the ultimate collapse. European sovereign debt is now a closed market for private creditors, and the only bidders left are the governments themselves! Yields are never coming back down to sustainable levels. This is it.
exactly - this has made the problem worse.
what are they going to ban next - shorting government bonds?
Count on it.
Expect a sell off in credit default swaps - it seems when it comes to countries they are now worthless - but only when it's the powers that be dictate that they are. So nice to know cds hedging is now based on government whimsy.
likewise expect a possible string of interest rate risk and credit downgrades - if the market cannot hedge against sovereigns expect allot of money to leave the market - gold anyone?
Riddle me this:
A: ECB is buying PIIGS bonds.
B: An EFSF SPV is constructed to issue bonds (debt)to raise monies to buy PIIGS bonds (debt)
C: EFSF is capitalised of sovereign guarantees which include PIIGS nations guarantees
Syllogism:: IF(ABC) then alot more (A)
Question: why is the Euro strengthening?
answer: because of gravity
the stuff the EuroZone is setting up is bad, and it's still not as bad as what the US and the UK are doing
of course, you can believe what the MegaBanks are saying, i.e. that EURUSD has to go to 1.3 so that the December figures look better
"Question: why is the Euro strengthening?"
Because this new plan will recapitalize European banks holding Greek debt. The other banks worldwide are kinda' screwed now!
i wonder if china hedged against their US treasury holdings?
Sure they do with US dollars! You know, the reserve curreency! lol!!
A new product from banks needs to be invented to hedge against the ISDA declaring insolvency of sovereigns a "non-credit event". Basically you would have an insurance policy against the CDS not paying given an obvious "credit event"!
That is what derivative contract is. Now you understand how fucked up this who sham is?
PS I understand equities rallying...hell , money is being printed, but why Euro up and gold static?
Because the whole global economy is a charade of fraud and deceit led by the Wall Street GANGSTERS.
That's just how we roll in Hopiumland.
As Sheldon would say, "In what world is a 50% haircut not a Credit event trigger?" Hell, frontiersman and indians scalped for less. As someone pointed out, If it's voluntary, why would ANYONE take it? (Have you seen the barber, that sissorhands fellow). Anyone holding soverign CDS has chit for brains or as WC Fields would say, "There's one born every minute".
How the hell the stock markets could be up and folks touting this as progress is a spin that would cause most sane people to hurl thier socks, not to mention thier other unmentionables. This has epic failure written large but the neon lights are unseen by the two blind mice of europe as they hold hands and gaze into the nuclear inferno of fiscal armaggedon.
Lies, lies and damned statistics!
These things are happening because the people are allowing them to happen. It really is just that simple folks.
This is like paying for years on home insurance. Once day the gov't shows up and burns your house to the ground while preventing the insurance company from paying out.
...it's all irrelevant. Our thoughts are irrelevant. If you can print a paradigm as powerful as cash, it's all irrelevant. The paradigm must cahnge. PMs
The whole CDS market is now a complete joke.
Why now? Seems to me, its been a joke for years.
Print more money you cannot pay back, fuck with the natural events that would cleanse the system, perpetuate the Ponzi scheme and DOW 12,000. This country is a group of fucking gangsters and this fraud needs to end before there is no turning back, or, have we already reached that point. The Wall Street gangsters are entirely out of control and while I agree with the OWS message, I am ashamed that the ACORN trash could not find a more coherent group than the unemployed children they sucked into free money, drugs and sex. Leave it to camp Osama/Obama to reach a new low on a daily basis.
that point has already been reached.....now they are seeing how far they can take things
Oh come on, you know, grow the economy (without manufacturing or consumption) and all will be well. Just listen to the lunatics in charge of the USSA.
-1 from the Coherent-Sex statement. Revolution is on the heels of the system. Young and Old, 'Rich' and 'Poor' have united over corporate greed and coruption! Occupy the world Bitchez, Occupy Gold and Silver. Fuck a banker where it hurts!
there are no more rules or laws.........why do people still follow them
Anarchy with Socialism for the rich. An interesting concept!
the only way i see that this whole charade is going to work is if we get another round of circle investments: I buy sth from you if you buy sth from him and he buys sth from me (simplified here of course).
This is stunning. And that's something in today's world.
Why argue about the merits of PM's at cocktail parties? The argument makes itself now. "Yes, Buffy, but you should really consider the concept of 'counter-party risk' before investing..."
i bought some cedar bushes the other day. the salesman asked if i wanted frost damage insurance. i replied, you, you mean a cedar hedge?
how would that work? if it freezes you get new bushes or what?
What if only 50% of the bush freezes? Is that a frost event?
Isn't it voluntary freeze anyway, bc you do not live in the tropics?
from now on only the government decides if you get a hedge - are you a party member?
If I get issued a hedge, can I trim it?
This is a good time to remember, "when rich people lose, they change the rules". If you want fair capitalism, buy physical gold and wait. There is no way participation in a paper system this nutty is going to last.
Until there are physical shortages of things, or until the average person UNDERSTANDS what is happening and what it means, they can't see the crime and get pissed. Thus the amorphous nature of "Occupy Wall Street." The paper system can go on without any of us investing, we should call it government INFESTING, they will prop it up with some program or printing or intervention de jure. As insane as this feels, it will go on.
If I may, "...intervention de jure." should be " intervention du jour."
I still gave you an up arrow... I totally agree.
I think your word choice is cleaner than mine. I am on shaky ground for mine making sense, yours is not. However, take a look at the definition of de jure, from wiki.
In a legal context, de jure is also translated as "concerning law". A practice may exist de facto, where for example the people obey a contract as though there were a law enforcing it, yet there is no such law. A process known as "desuetude" may allow de facto practices to replace obsolete laws. On the other hand, practices may exist de jure and not be obeyed or observed by the people (emphasis mine).
Regarding the CDSs, you see where I am going here? But I may be out of bounds, I don't use this phrase daily.
does that mean buying cds is worthless, or the trades meaningless
Do you think the bank taking a 50% haircut on my mortgage would be considered a default event
One must feel for the ZH Sheeple; the Tyler Durdens have told you with a relentless barage of "reports" that the EU is failing and that Greece will burn. It's all over and the PIIGS will fall.
But, alas they awake to the news that Dear Leader has once again been proven wrong as the Tylers spew forth a veritable flood of excuses and whinings. No matter, the EU lives to stand another day, "farce" and all. The euro runs to highs against the greenback (still want to fight this fed?) and the market looks to rocket to 14K or better by year end.
The Sheeple can find solace in knowing that some day, something really bad will happen; it always does you know. But for the immediate future, the EU moves along, China hasn't crashed and the OWS movement begins to eat itself alive from within all while attempting to martyr some fool via suicide by cop.
Well, the rest of us are out and about, enjoying the good news. Smile ZH Sheeple; you'll live longer.
I agree that it goes on, the game is rigged for now. But why be such an arrogant self important prick about it?
Gee, you're makin' friends fast there, Mr. Mas.
You sound just a triffle pathetic? Got a few unresolved personal issues there?
He's probably just mad because gold & silver isn't going to zero like the CNBSers promised.
You will do well in Government or maybe you are the Government, either way take a blanket coz Hell is a very cold place!
Occupy Gold and Silver Bitchez!
MASdebate
so mr and mrs clever hedgie cds swap.. i can play this casino etc etc ... what have you learned today... i am sure plenty on here can tell you where the bullion dealers are....LOL
These bankers are a sinister evil on society. They are a plague of evil leeches that will suck everything dry. They wont stop their vile work until they own everything and everybody on the planet.
Pitty their isn't a virus that just affects banksters.
Farce is a good way of describing this thing. It's like the cartoon snowball rolling downhill getting bigger and bigger as it goes, except in this case the ball is rolling uphill from the bottom and instead of snow, it's money. Soon the giant moneyball will be perched on the top 0.1% of the hill, and everything below stripped bare.
So a question, since it is not a 'Credit Event' due to it being voluntary, can I choose not to accept the haircut and redeem my bonds at par upon maturation?
What can those people with CDS on greek do? Will they sue the ISDA over this?
I suspect part of this “non-event” is to send a message to people (e.g., Kyle Bass) who were long CDSs without having any position in the underlying bond. The message is you cannot buy insurance on your neighbor’s house burning down.
The other peculiarity---as if there are not enough---is that if I am heavily long some debt, I am now encouraged to write CDSs against my own position so that I can collect the premium. Then, when I am forced to take a haircut, I can call it “voluntary” so as not to invoke a credit event that would force me to pay on the CDSs I‘ve written. In this way, I limit my losses, especially if I wait until “default” looks certain (thereby maximizing the premium I receive).
Another bizarre way a profligate government could abuse CDSs is to go out of its way to appear as if it is on the brink of default, then sell CDSs---through a collaborator---on itself. With the premiums received, the government might then make payment on its debt, thereby eliminating the possibility of default.
When the going gets weird, the weird turn pro.
Mate, this could make a bloody good movie. Just love it.