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As First Greek CDS "Anstalt" Appears, A Question Emerges: Did Banks Not Square Off Margins?

Tyler Durden's picture


The irony is not lost on us that Bloomberg is reporting that KA Finanz, an Austrian bad-bank supported by the Austrian government, faces as much as a €1 billion need for funding to cover its exposures to Greek CDS (coughcreditanstaltcough). In a statement this morning, which we noted in a tweet, the bank noted "activation of the CDS with an assumed loss ratio of about 80% would mean an additional provisioning charge of EUR 423.6 million". KA Finanz's total amount of Greek CDS exposure is around EUR1bn. What is shocking and should be of great concern is that we have been led to believe that very little net cash will change hands on the basis of the $3.2bn net aggregate market exposure. This was based on the now false premise that variation margin was maintained and transferred throughout the process (as we note below from recent IMF filings). What appears to have happened is that dealer to dealer variation margin has been, let's say, less rigorous as perhaps all collateral was netted up across all exposures (or simply ignored on the basis of government backstops). The far bigger question then is: are banks simply marking ALL sovereign CDS at par, and not paying off cash to other dealers? Remember it only takes one counterparty in the chain to turn net into gross and quality collateral seems tied up a little right now at the ECB (or with margin calls).

And then this from KA Finanz' 2011 Interim Statement:

Supplementary to the measures already taken by the European Union and the IMF (International Monetary Fund), the measures now initiated are expected to permit a sustainable stabilisation of the Greek budgetary situation. Moreover, statements made by the International Swaps and Derivatives Association (ISDA) suggest that the measures described above will not trigger a credit event of credit default swap (CDS) portfolios. In view of these circumstances and given the measures already taken and now extended by the European Union, KF does not expect – from today’s point of view – a default of loans and advances to the Republic of Greece.


KF’s total direct exposure to the Greek state amounts to EUR 818.6 million; moreover, the bank holds government-guaranteed bonds of EUR 164.6 million and government bonds of EUR 636.2 million. The issue of programme participation only arises for securities maturing by 2020. As of 30 June 2011, this portfolio represents a book value of EUR 311.5 million, of which EUR 303.1 million is, however, locked in until maturity in repo-type TRS (total return swap) funding positions. Under civil law, these positions have been sold to third parties against inflow of liquidity; the underlying risk remains with KF through a CDS structure.

So it does. And surprise, Surprise: so until the bank assumed there would be no CDS, it decided not to daily variation margin its exposure. And only now it has to? But, but, ISDA said "what was decided today was anticipated and had been decided for quite a while." Did KA not get the memo to pay its counteparties when it had to at the end of trading every single day?

Surely KA is all alone in flagrantly circumventing the primary requirement in posting cash shortfall margin.


Oh, and congratulations Austrian taxpayers, you are the latest ones on the hook to pay US hedge funds and banks for the privilege of Greece defaulting.



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Fri, 03/09/2012 - 16:27 | 2241066 Mark Carney
Mark Carney's picture

Something smells fishy.......

Fri, 03/09/2012 - 16:32 | 2241094 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

The arrogance of banksters astonishes me. It seems like anyone who is indoctrinated and gets a "position" overlooks many of the obvious things as long as others suffer. That is until the day they bring their own house down.

Fri, 03/09/2012 - 16:36 | 2241107 hedgeless_horseman
hedgeless_horseman's picture



The far bigger question then is: are banks simply marking ALL sovereign CDS at par, and not paying off cash to other dealers?

So, are we good?

Yeah, we're good.

Great, see you and Randi at Skip's tomorrow night.  I'm bringing a case of Cristal.

Fri, 03/09/2012 - 16:36 | 2241133 GeneMarchbanks
GeneMarchbanks's picture

That's fine, but are only banks on the inside holding?

Fri, 03/09/2012 - 16:38 | 2241139 hedgeless_horseman
hedgeless_horseman's picture



Most likely, yes.

Fri, 03/09/2012 - 16:40 | 2241158 brewing
brewing's picture

nothing to see here kid, move along...

Fri, 03/09/2012 - 16:55 | 2241252 JPM Hater001
JPM Hater001's picture

We really shouldnt piss off Austria here.  It ended very badly last time.

Fri, 03/09/2012 - 17:09 | 2241311 brewing
brewing's picture

Embarrassing bounced check from greece taped up at imf headquarters

Fri, 03/09/2012 - 17:19 | 2241350 Manthong
Manthong's picture

Mamma Thong always said "The devil is in the details".

Fri, 03/09/2012 - 17:21 | 2241368 Ahmeexnal
Ahmeexnal's picture

  • 4:07p ISDA: most Greek CDS exposure is collateralized
  • Greece will hand over gold reserves
  • Fri, 03/09/2012 - 17:43 | 2241481 resurger
    resurger's picture

    That was the entire purpose of this whole Farce


    Fri, 03/09/2012 - 19:29 | 2241766 trav7777
    trav7777's picture

    all the doomers with their canned hams and silver bars hiding under their porches must be sorely disappointed that the world hasn't ended.  Everything is still running

    Fri, 03/09/2012 - 20:43 | 2241939 UP Forester
    UP Forester's picture

    I don't have a porch, and I don't hide or eat canned ham.

    Remember, trav, just because the water's moving faster and there's a sound that's getting louder, it doesn't mean there's Victoria Falls ahead.

    It might be just Niagra.

    Fri, 03/09/2012 - 23:49 | 2242410 jeff montanye
    jeff montanye's picture

    or the iguazu falls.

    wonder if some of the truly "bad banks" will try a corzine to pay the, unexpected, cds that are net until they're really gross.

    Sat, 03/10/2012 - 02:40 | 2242686 MsCreant
    MsCreant's picture

    Beautiful. I googled images and it was a real treat.

    Fri, 03/09/2012 - 19:08 | 2241710 MrSteve
    MrSteve's picture

    KA Finanz as in KreditAnstalt and KA-BOOM Finanz. In the 1930s, all the countries east of the Rhine River defaulted on their bonds. It was called the Rhine Syndrome. Who knows what the next global depression will cause the sovereign bond defaults to be called? The Grecian Formula?

    Sat, 03/10/2012 - 04:01 | 2242754 jackbooted gauleiter
    jackbooted gauleiter's picture

    Denmark, Sweden... they're east of the Rhein... did they default?

    Fri, 03/09/2012 - 16:39 | 2241150 SilverTree
    SilverTree's picture


    Fri, 03/09/2012 - 17:30 | 2241426 Dr. Kenneth Noi...
    Dr. Kenneth Noisewater's picture

    Default, dear Brutus, lies not in our stars, but in ourselves..

    Fri, 03/09/2012 - 16:43 | 2241179 resurger
    resurger's picture

    March 9th marks new events and stuff yet to come

    Fri, 03/09/2012 - 20:43 | 2241942 UP Forester
    UP Forester's picture

    Can't wait for the Ides....

    Fri, 03/09/2012 - 18:05 | 2241550 Cadavre
    Cadavre's picture

    The far far triple far bigger question is "What ECB collateral?"

    Remember it only takes one counterparty in the chain to turn net into gross and quality collateral seems tied up a little right now at the ECB.

    The ECB's only collateral, and correct if wrong, in this whole pig n a poke, like the wad of Greek bonds laying under a street lamp bound to a string that leads into the shadow .., is the full faith and credit of the ECB. The ECB is making loans to member banks so they can buy Greek bonds. The only thing underlying the loans made to ECB member banks is the word "Guaranteed by the ECB" stamped on the confirms.

    Ya can't buy a Big Mac Double Fry with an ECB promissory note - so has the benchmark for "quality collateral" been redefined to include an empty cash drawer with only an ECB Guaranteed IOU?

    The geeky vixen mc-ing RT's Capital Accounts just cited ZH. (btw - RT is included with a Dish Network subscription - no mas Freedom Watch and the obviousness of the Rat Rattigans pandered news speak leaves the boob tube spectrum pretty darn lean these days.

    Sat, 03/10/2012 - 00:04 | 2242435 jeff montanye
    jeff montanye's picture

    these times will sorely test faith, full and less so.  

    as for credit, it's getting to be a matter faith too, really.

    Sat, 03/10/2012 - 04:04 | 2242756 Cadavre
    Cadavre's picture

    Gold traded in a 40$ range today. As of post, the 24/Hr spot just ticked it's highest. It's low, of course, was around this morning's FTSE close, and, despite a strong USD demand relative the EUR for most of Friday's market.

    The manipulation and market rigging by central bank printing is in plain view - they're not even making an attempt to hide it.

    Change with extreme prejudice is the only option for change the MIB will accept - they ain't gonna go easy. They think themselves invincible.

    It would be cool if a national boycott, for example, cable TV would stir their survival instincts. General Strike harder to do. Anything nonviolent to shutdown the flows would work. How to get the 99% percent to go along with it is the problem.



    Sat, 03/10/2012 - 05:32 | 2242797 StychoKiller
    StychoKiller's picture

    Tell'em American Idol was moved to UHF channel 84...

    Fri, 03/09/2012 - 17:53 | 2241522 Future Tense
    Future Tense's picture

    Just wait for the $100 trillion in bailouts needed to cover the rest of Europe's CDS.  Only political will is going to bring this house down.

    Fri, 03/09/2012 - 18:00 | 2241540 GeorgeHayduke
    GeorgeHayduke's picture

    " It seems like anyone who is indoctrinated and gets a "position" overlooks many of the obvious things as long as others suffer. That is until the day they bring their own house down."

    This method you describe has been the standard operating procedure for much of the "economy" for years now. No wonder it's falling apart.

    Fri, 03/09/2012 - 18:01 | 2241543 Eisenhorn
    Eisenhorn's picture

    "Spain says there has been some misunderstanding with Brussels on budget

    - expects statement on Monday from Euro-Area finance ministers"



    LOL...they didn't even wait for the corpse to get cold over in the Aegean....


    Sat, 03/10/2012 - 05:54 | 2242800 Buck Johnson
    Buck Johnson's picture

    I tootally didn't know about this one, so if they werent paying the daily then almost all the rest may have also.

    Fri, 03/09/2012 - 16:33 | 2241109 GenX Investor
    GenX Investor's picture

    That's my fish sandwich for Lent.  Sorry!

    Fri, 03/09/2012 - 16:35 | 2241122 POpatriot
    POpatriot's picture

    So who made the AIG CDS mistake...?

    Fri, 03/09/2012 - 17:12 | 2241322 tgatliff
    tgatliff's picture

    No mistake.   Once the bank cartel realized that AIG was being protected by the FED, it became a feeding frenzy.  Notice that it is the Austrian taxpayer who is footing the bill for the CDS exposure and not the bank cartel.   I mean if Goldman had to payout, I am quite sure that the Geithner would be on his way to congress right now talkinga about a potential Mad Max outcome.  

    Fri, 03/09/2012 - 18:51 | 2241672 The Paucity of Hope
    The Paucity of Hope's picture

    I don"t think he has to. Aren't all the banks derivatives backed up by the assets of their insured depositors' accounts?

    Fri, 03/09/2012 - 19:34 | 2241776 Withdrawn Sanction
    Withdrawn Sanction's picture

    The old Bank of American switcheroo?  Sure, what could possibly go wrong there?  

    Let's see, there's $200T plus in derivatives at the 5 biggest/incestuous US banks against $9.8T in total bank dep at ALL 7,000+ US banks.  Even on a NET basis, that turd wont flush even if they stole every last dime of depositor money....which they just might.  Jig's up boyz.

    Fri, 03/09/2012 - 16:36 | 2241132 Ahmeexnal
    Ahmeexnal's picture

    Something smells fishy.......

    *cough* vagisil *cough*

    Fri, 03/09/2012 - 16:41 | 2241166 The trend is yo...
    The trend is your friend's picture

    Even the Algo's haven't been programed to make heads or tails out of this info.  The market is like a deer in headlights 

    Fri, 03/09/2012 - 16:56 | 2241258 JPM Hater001
    JPM Hater001's picture

    Market just dropped negative.

    Fri, 03/09/2012 - 16:57 | 2241266 JPM Hater001
    JPM Hater001's picture

    And this my going to be a very long weekend.

    Fri, 03/09/2012 - 17:04 | 2241293 SheepDog-One
    SheepDog-One's picture

    Remember 2009 was all 'high drama over the weekends' where the weeks emergencies got done behind locked doors when the markets were closed? Back to that shit again I guess.

    Sat, 03/10/2012 - 01:28 | 2242594 JPM Hater001
    JPM Hater001's picture

    I wasn't awake yet.  I think I was celebrating the 28th anniversary of losing my...well, you know.

    Sat, 03/10/2012 - 04:05 | 2242758 jackbooted gauleiter
    jackbooted gauleiter's picture

    Wallet? You'll be losing more than that this weekend.

    Fri, 03/09/2012 - 17:34 | 2241448 French Frog
    French Frog's picture

    Doubt it; sorry to say but so far it feels like the non-event of the week/month/2012....

    Fri, 03/09/2012 - 17:40 | 2241472 SheepDog-One
    SheepDog-One's picture

    SURE what we were told was 'the worst possible scenario' Greek default goes down, and suddenly never was a big deal at all, not even a mosquito bite....ok then media can fuck off with all their news from here on out then if everything is irrelevant.

    Fri, 03/09/2012 - 16:43 | 2241181 battle axe
    battle axe's picture

    I guarantee one of the major US Banks (B of A/Citi I am talking to you) Screwed the pooch on this. I will bet money that they are on the wrong side of this trade.

    Fri, 03/09/2012 - 16:52 | 2241222 stirners_ghost
    stirners_ghost's picture

    You may be right. I took a flyer on FAZ just in case; it seems pretty cheap at the moment, all things considered.

    Sat, 03/10/2012 - 03:15 | 2242723 Nobody For President
    Nobody For President's picture

    Yeah, I did as well. The uncertainty itself might be enough to push it upwards a bit to sneak a stop in and wait for the bill to become due. Some of those bankers may even have to work this weekend...

    Fri, 03/09/2012 - 17:16 | 2241336 tgatliff
    tgatliff's picture

    I think you made a couple grammatical errors on your post... I can fix it, though... "Screwed the tax payer on this.  I will bet money that taxpayers are on the wrong side of this trade."

    Fixed... And yes, I agree with you..


    Fri, 03/09/2012 - 19:37 | 2241784 Withdrawn Sanction
    Withdrawn Sanction's picture

    What will they do now, since there is no Gold?

    They could offer to send them the Statue of Liberty.  It's not gold, but it is copper...and hell, we're not using it anymore.  

    Fri, 03/09/2012 - 17:08 | 2241310 LongSoupLine
    LongSoupLine's picture

    Cue the next Nigel Farage explosion video...

    Fri, 03/09/2012 - 18:07 | 2241555 automato
    automato's picture

    Would someone please correct me if I am wrong. It is my understanding that you do not actually need to own underlying assets (i.e. greek bonds) to purchase derivatives or CDS or other gambling type contracts to bet that the 'default' would occur. Isn't that how a LOT of so-called genius types made billions in the subprime collapse? Again it was my understanding that many of the derivatives that paid off during the subprime collapse were in essence 'naked' short bets. Again it is my understanding that it may be weeks before the system unravels what bets were placed where and that the total could easily be several TRILLION dollars!? Any clarification?

    Fri, 03/09/2012 - 16:27 | 2241069 Gubbmint Cheese
    Gubbmint Cheese's picture

    Oh snap!

    Fri, 03/09/2012 - 16:27 | 2241071 markmotive
    Fri, 03/09/2012 - 16:29 | 2241078 DavidC
    DavidC's picture

    Tyler, I don't know how you guys do what you do, but thank you.


    Fri, 03/09/2012 - 16:49 | 2241216 PhattyBuoy
    PhattyBuoy's picture

    TD called this spot on last night ... or was it a year ago?

    Fri, 03/09/2012 - 16:53 | 2241241 Unprepared
    Unprepared's picture

    The personified manifestation of fragments of shattered collective schizophrenic conscience.

    Fri, 03/09/2012 - 17:08 | 2241304 mayhem_korner
    mayhem_korner's picture



    That should be a Wheel of Fortune puzzle...would like to see Vanna White try to turn the letters on that pup.

    Fri, 03/09/2012 - 16:30 | 2241083 Jlmadyson
    Jlmadyson's picture


    Fri, 03/09/2012 - 16:33 | 2241111 duncecap rack
    duncecap rack's picture

    Don't shout, I have a headache.

    Fri, 03/09/2012 - 16:55 | 2241247 Scalaris
    Scalaris's picture



    Fri, 03/09/2012 - 16:29 | 2241084 Moneyswirth
    Moneyswirth's picture

    Sounds like a massive transfer of treasure to oligarch douchebags---private investors and citizens livelihoods flushed down the proverbial toilet

    Fri, 03/09/2012 - 16:53 | 2241235 duo
    duo's picture

    I'm going to transfer what is left in my BofA account to my neighborhood bank before COB.  Gotta go.

    Fri, 03/09/2012 - 17:43 | 2241482 dwayne elizando
    dwayne elizando's picture

    BofA? You must be a gambler!

    Fri, 03/09/2012 - 16:31 | 2241092 Piranhanoia
    Piranhanoia's picture

    Do you think Greeceman Socrates resorted to paradiddle to the banks and countries and investors?   They dare not?  

    Fri, 03/09/2012 - 16:31 | 2241095 DavidC
    DavidC's picture

    Looking at the way prices are moving (or not) in the stock indices following the ISDA announcement, it feels (given the ramp earlier) that banks are DESPERATE to hold the current levels - they know, if they don't, the flood gates are open.


    Fri, 03/09/2012 - 17:00 | 2241274 nevadan
    nevadan's picture

    I'll definitely be watching the Asian open Sunday evening....

    Fri, 03/09/2012 - 16:31 | 2241096 kito
    kito's picture

    why are we all still here? i dont get it? my internet and lights still work...hold on...let me check my window....traffic lights still working, people seem calm........what just happened? all this time....and nothing?????

    Fri, 03/09/2012 - 16:41 | 2241167 Comay Mierda
    Comay Mierda's picture

    ask that same question in about 6 months.  greece is just the prologue.  PIGS are left

    Fri, 03/09/2012 - 16:49 | 2241215 kito
    kito's picture

    no shit...or should i say was sarcasm.....

    Fri, 03/09/2012 - 16:52 | 2241234 mayhem_korner
    mayhem_korner's picture



    i think your sarcasm defaulted on that one

    Fri, 03/09/2012 - 17:08 | 2241306 kito
    kito's picture

    my sarcasm could never default, just look at the fine print.....

    Fri, 03/09/2012 - 17:15 | 2241334 Comay Mierda
    Comay Mierda's picture

    suck on a CAC

    Fri, 03/09/2012 - 17:15 | 2241338 resurger
    resurger's picture


    Fri, 03/09/2012 - 16:57 | 2241262 resurger
    resurger's picture

    put /s :)

    Fri, 03/09/2012 - 17:13 | 2241324 Transformer
    Transformer's picture

    Or don't.  It's a test to see how clever we ZHers are.

    Fri, 03/09/2012 - 16:45 | 2241190 Schmuck Raker
    Schmuck Raker's picture

    Is your refrigerator running?

    Fri, 03/09/2012 - 18:15 | 2241577 Mysteerious Roo...
    Mysteerious Rooshian Vooman's picture

    Yes. AND I have King Edward in a box.


    I AM Mysteerious Rooshian Vooman.

    Fri, 03/09/2012 - 17:01 | 2241279 JPM Hater001
    JPM Hater001's picture

    "people seem calm........what just happened? all this time....and nothing?????"

    You remember in Jumanji when they rolled and thought nothing went wrong and then slowly a rumble started to build until a stampeed overwhelmed the house and then the city?  We will call that EVENT X.

    This is: EVENT X1000

    You may not hear a rumble but I do.

    Fri, 03/09/2012 - 17:07 | 2241302 SheepDog-One
    SheepDog-One's picture

    You can feel the shit clinging to the air now, its the eye of Shiticane, wait till the Shitwall lands on shore next! Whole lot of folks going to be swept out by the undershit of this shitnami.

    Fri, 03/09/2012 - 17:20 | 2241365 JPM Hater001
    JPM Hater001's picture

    Yeah, we have gotten too complacent with the word Billion much less all in one tiny peripheral bank.  That is a huge freaking number.  I could make 1000 Millionaires.  They are short what?  About 500 of them?

    Fri, 03/09/2012 - 17:42 | 2241480 SheepDog-One
    SheepDog-One's picture

    Yep and its 'only billions, a tiny number really' only when theyre talking about free money printed up in theiry out of thin air....let banks have to pay out actual billions and suddenly its FAR more than a little tiny insignificant deal!

    Fri, 03/09/2012 - 17:35 | 2241451 CrazyCooter
    CrazyCooter's picture

    I am at work, so I can not link the youtube ... its classic ... someone please do!



    Fri, 03/09/2012 - 17:15 | 2241335 YC2
    YC2's picture

    love a good jumanji reference!

    Fri, 03/09/2012 - 17:19 | 2241356 kito
    kito's picture

    i have always said the fun doesnt begin until all eyes are on the the Underfunded States of America............

    Fri, 03/09/2012 - 17:31 | 2241433 SheepDog-One
    SheepDog-One's picture

    Kito just watched a reply of Max Keiser when he said right after Greek defaults, US is goin down.

    Fri, 03/09/2012 - 16:32 | 2241098 GeneMarchbanks
    GeneMarchbanks's picture

    (or simply ignored on the basis of government backstops).

    Didn't one default just now?

    Fri, 03/09/2012 - 16:33 | 2241104 JailBank
    JailBank's picture

    Somehow and I don't know what they are going to do, I get a feeling like this is going to suck for us and things are going to march on. I wish I was not so nervous about getting butt-hammered by the FED.

    Fri, 03/09/2012 - 16:33 | 2241106 carbonmutant
    carbonmutant's picture

    They're gonna need a bigger rug...

    Fri, 03/09/2012 - 16:41 | 2241163 hedgeless_horseman
    hedgeless_horseman's picture



    ...and who makes big rugs?  Iranians!

    Fri, 03/09/2012 - 16:56 | 2241254 Unprepared
    Unprepared's picture

    And expert gravediggaz

    Fri, 03/09/2012 - 16:33 | 2241108 LongSoupLine
    LongSoupLine's picture

    gasp...those exposed aren't solvent?

    Fri, 03/09/2012 - 16:45 | 2241192 Al Huxley
    Al Huxley's picture

    Are you suggesting that those with exposure to these swaps might not have the money to pay out?  Oh my, what a horrible, and totally unexpected surprise.  I wonder where the money will come from to keep the whole thing from collapsing?

    Fri, 03/09/2012 - 18:02 | 2241546 dwayne elizando
    dwayne elizando's picture

    You are the insurer! Now hand over your pay check!

    Sat, 03/10/2012 - 04:20 | 2242769 ZeroIQ
    ZeroIQ's picture

    The funny thing about this is, that all those CDS buyers probably bought CDS insurance on the CDS issuers as well. At least that is what I would do.. This is total rubbish IMO. CDS issuers issues insurance and the object of insurance does not disclose how much CDS exposure they have in their balance sheets.

    I don't see how this could go wrong! :D

    Fri, 03/09/2012 - 16:33 | 2241110 PicassoInActions
    PicassoInActions's picture

    so far the effect seems to be limited, is ECB the PPT now?

    I wonder if it takes few days to realise what just happened. I went short euro and lets hope i get something right for the past 2 weeks

    every call on euro i made in last 2 weeks was wrong. yaks... time to apply for welfare.

    Fri, 03/09/2012 - 17:08 | 2241309 SheepDog-One
    SheepDog-One's picture

    I saw it from 2 hours ago when FT headline came across....looked like they just hit the market 'Master Off' switch.

    Fri, 03/09/2012 - 17:23 | 2241381 JPM Hater001
    JPM Hater001's picture

    Although the number of holders is finite the number of morons holding the bonds is almost infinite.  There is someone else out there that did the same thing and it's going to be a long weekend for that person too.

    Fri, 03/09/2012 - 16:34 | 2241114 Josh Randall
    Josh Randall's picture

    So I should just sit and wait until my auction on Monday then ?

    Fri, 03/09/2012 - 16:36 | 2241117 SillySalesmanQu...
    SillySalesmanQuestion's picture

    Thou shall not short any trade

    Thou shall not call a default a default

    Thou shall not pay off on any CDS

    These are just a few of the new commandments from our central planning and banking committtes.


    Fri, 03/09/2012 - 21:43 | 2242104 luna_man
    luna_man's picture





    DON'T BE SILLY...Only two options, SHORT or CASH!


    What goes up, must come down!...Patience.



    Fri, 03/09/2012 - 16:34 | 2241118 falga
    falga's picture

    Eurocrat mess on its way....

    Fri, 03/09/2012 - 16:35 | 2241127 duncecap rack
    duncecap rack's picture

    Does anyone know If BOA has a position In Greek CDSs?

    Fri, 03/09/2012 - 16:39 | 2241149 mayhem_korner
    mayhem_korner's picture



    I thought only Barney Frank could use "boa", "position", and "Greek" in the same sentence.

    Fri, 03/09/2012 - 16:43 | 2241176 duncecap rack
    duncecap rack's picture

    +10 for the inventiveness.-1.000,000 for the mental image

    Fri, 03/09/2012 - 16:46 | 2241194 Al Huxley
    Al Huxley's picture

    Yes, my thoughts exactly.

    Fri, 03/09/2012 - 17:37 | 2241459 CrazyCooter
    CrazyCooter's picture

    Well played sir, well played!



    Fri, 03/09/2012 - 16:36 | 2241130 Peter K
    Peter K's picture


    Fri, 03/09/2012 - 16:38 | 2241134 Rob Jones
    Rob Jones's picture

    What is "variation margin"?  Does it mean establishing a position one price level and an offsetting position at another price level so that my net position might be zero, but I still make or lose money if the price crosses through the range?

    Fri, 03/09/2012 - 16:44 | 2241183 mayhem_korner
    mayhem_korner's picture



    Variation margin is the (incremental) collateral that needs to be posted to reduce the exposure caused by an adverse movement in an existing position. 

    Fri, 03/09/2012 - 17:05 | 2241296 CrashisOptimistic
    CrashisOptimistic's picture

    Well done, mayhem, and in this case the question is the frequency of re-evaluation, and how they report it on their filings.

    This would be another way for the ring fence to be breached.  If TPTB were given bad data by banks trying to conceal things . . . .

    Fri, 03/09/2012 - 17:11 | 2241320 mayhem_korner
    mayhem_korner's picture



    frequency?  you mean there's a monitor aspect to risk control?  you mean we gotta watch this stuff?  what's my delta tau name?

    Fri, 03/09/2012 - 17:24 | 2241386 earnulf
    earnulf's picture

    Your (and everyone elses) Delta Tau Names is.....Sucker

    Fri, 03/09/2012 - 17:09 | 2241299 hedgeless_horseman
    hedgeless_horseman's picture



    And is it also the amount you pay on margin call if you are too stupid to close out the position?  See throwing good money after bad.

    Fri, 03/09/2012 - 17:13 | 2241326 mayhem_korner
    mayhem_korner's picture

    See throwing good money after bad.


    what happened to "fix it by doubling down"...?

    Fri, 03/09/2012 - 17:23 | 2241376 hedgeless_horseman
    hedgeless_horseman's picture



    As I have said here before, I have a very low pain tolerance.  Down 10% and I am gone with the wind.  Always.  Period.  No exceptions.

    Fri, 03/09/2012 - 17:28 | 2241411 mayhem_korner
    mayhem_korner's picture



    I'm with you - I don't even trade.  Can't be bothered.  I just accumulate.  But for a living I do reconstructive surgery on risk controls gone bad.  So I hear stuff like "double down" every now & then.

    Fri, 03/09/2012 - 17:34 | 2241447 SheepDog-One
    SheepDog-One's picture you really DO want the whole $200 dollars worth! 

    Fri, 03/09/2012 - 17:50 | 2241507 tekhneek
    tekhneek's picture

    Sometimes you've gotta lose 10% to make 50, or 100, or 300% though..

    Fri, 03/09/2012 - 17:53 | 2241523 hedgeless_horseman
    hedgeless_horseman's picture



    No, I do not.

    Fri, 03/09/2012 - 18:01 | 2241544 mayhem_korner
    mayhem_korner's picture



    As Taleb says, It's not the frequency with which you are correct, but the cumulative effect of your losses that matters.

    Fri, 03/09/2012 - 22:45 | 2242261 tom a taxpayer
    tom a taxpayer's picture

    Amen, mayhem. I wish I had learned that lesson a long time ago. I still haven't learned it.

    Fri, 03/09/2012 - 16:36 | 2241135 dick cheneys ghost
    dick cheneys ghost's picture

    I want the truth........

    Fri, 03/09/2012 - 16:51 | 2241226 MsCreant
    MsCreant's picture

    You need a new paradigm. That whole looking for the truth thing will kill you...

    Fri, 03/09/2012 - 16:58 | 2241267 carbonmutant
    carbonmutant's picture

    ...or get you killed

    Fri, 03/09/2012 - 17:53 | 2241527 LookingForTruth
    LookingForTruth's picture

    Hmmm, Should I be worried?

    Fri, 03/09/2012 - 18:10 | 2241568 MsCreant
    MsCreant's picture

    I think you are, in fact, the accused...

    Fri, 03/09/2012 - 16:37 | 2241137 mayhem_korner
    mayhem_korner's picture



    Collateral exchanged is for time and companionship only.  Any CDS settling that occurs is a matter between consenting bankers.

    Fri, 03/09/2012 - 16:37 | 2241141 CvlDobd
    CvlDobd's picture

    I can tell you we are topping this weekend and here is why. I need motorcycle parts. Any time I dump money on parts and maintenance the market tops and I plan to spend around $300 this weekend.


    Purchased a Buell XB12 9/11/2007
    Purchased tires and exhaust 4/23/2010
    Purchased Yamaha R1 3/4/2011
    Bought an exhaust for it and a Zuma scooter on 7/8/2011.

    I'm getting this crap this weekend. I'm buying SH today and parts tomorrow. You have been warned.

    Fri, 03/09/2012 - 17:03 | 2241285 brooklynlou
    brooklynlou's picture

    I know the feeling. Everytime my sister leaves the country on vacation something stupid happens (9/11, Blackout, Nor'Easter, Blizzard, Hurricane, Earthquake).

    She's boarding a flight to India tonight.

    You are all warned ...

    Fri, 03/09/2012 - 17:13 | 2241327 miltiadis
    miltiadis's picture


    Fri, 03/09/2012 - 17:17 | 2241342 Transformer
    Transformer's picture

    Bet rid of the Buell and the R1.  Stick with the Zuma.  coool.

    Sat, 03/10/2012 - 02:14 | 2242651 CvlDobd
    CvlDobd's picture

    Ya, people that know what I have give me shit for riding the Zuma more than the others but I swear it is 2x as fun around town than the big bikes.

    The back roads are another story but in town the Zuma is untouchable.

    Fri, 03/09/2012 - 17:23 | 2241379 a growing concern
    a growing concern's picture

    I just capitulated to the bulls and threw my entire life savings into FAS.  Definitely a top.  You have been warned.

    Fri, 03/09/2012 - 18:09 | 2241565 IndicaTive
    IndicaTive's picture

    No worries bro. You're hedged. I held off on throwing 50k into an S&P index fund today. Should be good for a pop of couple of percent up in S&P over the next few days.

    Fri, 03/09/2012 - 16:42 | 2241169 _ConanTheLibert...
    _ConanTheLibertarian_'s picture

    We are in a dense field of dominos. It doesn't really matter anymore which could fall. It will cascade anyway.

    Expect it to start from some unexpected corner.

    Fri, 03/09/2012 - 17:40 | 2241475 CrazyCooter
    CrazyCooter's picture

    "... dense field of dominos ..."

    I like this phrase very much! It has been officially commited to my bag of witty stuff.



    Fri, 03/09/2012 - 16:43 | 2241180 Rathmullan
    Rathmullan's picture

    Very interesting and funny. The cracks shall soon appear. We will look back on MF as being the first warning sign of credit crisis redux. Never understood that 3.2 billion net figure. Does that include any naked exposures?

    Fri, 03/09/2012 - 17:01 | 2241280 Dr. Engali
    Dr. Engali's picture

    Speaking of MF Global. It's nice to know they will be getting paid bonuses for ripping off 1.2 billion.


    Fri, 03/09/2012 - 17:04 | 2241291 MsCreant
    MsCreant's picture

    I feel so stupid for being shocked by this, but I am. There is no sherrif, they will do as they please. 

    Fri, 03/09/2012 - 17:42 | 2241477 CrazyCooter
    CrazyCooter's picture

    I think nature is the sheriff on this one before its all said and done ... and she can't be fooled or cheated.



    Fri, 03/09/2012 - 17:47 | 2241493 MsCreant
    MsCreant's picture

    I hope and pray you are correct.

    Fri, 03/09/2012 - 19:26 | 2241754 old naughty
    old naughty's picture

    Nature, you mean fractals?

    But they repeat...

    Fri, 03/09/2012 - 22:39 | 2242245 Dave Thomas
    Dave Thomas's picture

    By Louie Freeh of all people!



    Fri, 03/09/2012 - 16:43 | 2241182 valley chick
    valley chick's picture


    so until the bank assumed there would be no CDS, it decided not to daily variation margin its exposure. And only now it has to?

    Surely KA is all alone in flagrantly circumventing the primary requirement in posting cash shortfall margin


    So what happens now?

    Fri, 03/09/2012 - 16:47 | 2241202 surf0766
    surf0766's picture

    It took them 2 years to try and sweep one country under the rug with no negative effects of the default.

    Fri, 03/09/2012 - 16:50 | 2241219 MonsterZero
    MonsterZero's picture

    mission accomplished

    Fri, 03/09/2012 - 16:54 | 2241244 surf0766
    surf0766's picture

    That remains to be seen.

    Fri, 03/09/2012 - 16:50 | 2241220 MonsterZero
    MonsterZero's picture

    mission accomplished

    Fri, 03/09/2012 - 17:11 | 2241321 SheepDog-One
    SheepDog-One's picture

    Yea 2 years for Greece, now only about 40 more countries to go.

    Fri, 03/09/2012 - 17:20 | 2241360 surf0766
    surf0766's picture

    Can we get some new math to make it quicker?

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