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The First-Loss Insurance Providing EFSF Is A Truly Unique Vehicle

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Wed, 11/02/2011 - 13:13 | 1837486 Fips_OnTheSpot
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GET THIS http://t.co/hgkSHMUr

 

The wannabe-kid in Feb/2012 after EFSF.

Wed, 11/02/2011 - 13:47 | 1837630 Strider52
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Sort-of OT, but worth reading: What the Greeks REALLY feel about Germans, from a boots-on-the-ground traveller:

From Turd Ferg's blog:

http://www.tfmetalsreport.com/comment/80405#comment-80405

Wed, 11/02/2011 - 13:14 | 1837500 Deadpool
Deadpool's picture

"The first man gets the oyster, the second man gets the shell." Andrew Carnegie

Wed, 11/02/2011 - 13:15 | 1837504 GeneMarchbanks
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Unique... for 'special' investors.

Wed, 11/02/2011 - 13:15 | 1837507 Irish66
Irish66's picture

logic again, done as well as possible

Wed, 11/02/2011 - 15:28 | 1838203 slewie the pi-rat
slewie the pi-rat's picture

i'll bet luxembourg is begging the ratings agencied for a downgrade!

Wed, 11/02/2011 - 13:20 | 1837518 SheepDog-One
SheepDog-One's picture

Rube Goldberg designed a lot of 'truly unique vehicles' as well.

2D Photography Rube Goldberg - YouTube

Wed, 11/02/2011 - 13:20 | 1837530 disabledvet
disabledvet's picture

Massive bank failure in Europe. Tomorrow.

Wed, 11/02/2011 - 13:39 | 1837611 CrimsonAvenger
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Reasoning?

Wed, 11/02/2011 - 13:20 | 1837532 LongSoupLine
LongSoupLine's picture

Empty boxes under the tree covered in "pretty paper".

Wed, 11/02/2011 - 13:27 | 1837565 Cassandra Syndrome
Cassandra Syndrome's picture

The morphine is wearing off the trading pits. Reality is a bitch, bitchez...

Wed, 11/02/2011 - 13:33 | 1837587 SheepDog-One
SheepDog-One's picture

As the clouds of Hopium waft away, the hangovers seem to be getting worse. 

Wed, 11/02/2011 - 13:29 | 1837570 agent default
agent default's picture

Financial Innovation? What a deal! Where do I sign up?

Wed, 11/02/2011 - 13:32 | 1837580 delacroix
delacroix's picture

we who have done so much, with so little, for so long, now attempt to do the impossible, with absolutely nothing

Wed, 11/02/2011 - 13:50 | 1837642 AldoHux_IV
AldoHux_IV's picture

All these short-term technical gimmicks to not trigger an event, but neglecting the whole time the model is inherently flawed as you can not solve the insolvable with more debt (even if it comes with guarantees).

In the meantime, the technical talk is good reading for those not so familiar with the CDS-esque market (like myself).

So if Greece leaves the euro zone the threat debate comes down to potentially being shunned as a pariah in Europe or being a slave to debt and giving up your sovereignty.  Doesn't seem so tough a choice, but then again I hear Stockholm syndrome is real.

Wed, 11/02/2011 - 13:53 | 1837654 kaiserhoff
kaiserhoff's picture

If I were a bond buyer, words I would never want to hear are "unique instrument" and Greece.

There will be no market for this crap.  If it proceeds at all, it will have to be forced on the banks.   Valuation?  It is to laugh.

Wed, 11/02/2011 - 14:12 | 1837722 SDRII
SDRII's picture

This entire post - imaginative/informative as it is  - misses the fundamental point that it is (was) the opaqueness that makes (made) the engine run. All the between the legs dribbling about stripping guarantees, waterfall structures etc. don't dazzle anywhere near what they did pre 2007. 

Wed, 11/02/2011 - 14:52 | 1838013 Whizbang
Whizbang's picture

I get it! All they are doing is offering to back the questionable debt with a synthetic vehicle which is composed of a combination of interest rate and default swaps from the remaining european countries. The risk is ultimately spread to france and germany, but with the support of smaller european states backing them, the odds of default theoretically diminish substantially. At the same time, it gives the appearance of of being funded by all of europe, not a bilateral action between germany and france. The problem is that you are backing a dubious promise to pay with another AAA RATED OVERLEVERAGED SYNTHETIC INSTRUMENT WHICH IS BACKED BY NO REAL CAPITAL. It's just the sovereign countries doing the same thing that Paulson, Indymac and Wachovia were doing back in 2007-2008.

 

It's probably all garbage, but it'll be interesting to see how people respond to the idea.

Wed, 11/02/2011 - 14:53 | 1838016 Whizbang
Whizbang's picture

I get it! All they are doing is offering to back the questionable debt with a synthetic vehicle which is composed of a combination of interest rate and default swaps from the remaining European countries. The risk is ultimately spread to France and Germany, but with the support of smaller European states backing them, the odds of default theoretically diminish substantially. At the same time, it gives the appearance of of being funded by all of Europe, not a bilateral action between Germany and France. The problem is that you are backing a dubious promise to pay with another AAA RATED OVERLEVERAGED SYNTHETIC INSTRUMENT WHICH IS BACKED BY NO REAL CAPITAL. It's just the sovereign countries doing the same thing that Paulson, Indymac and Wachovia were doing back in 2007-2008.

 

It's probably all garbage, but it'll be interesting to see how people respond to the idea.

Wed, 11/02/2011 - 14:53 | 1838018 Whizbang
Whizbang's picture

I get it! All they are doing is offering to back the questionable debt with a synthetic vehicle which is composed of a combination of interest rate and default swaps from the remaining European countries. The risk is ultimately spread to France and Germany, but with the support of smaller European states backing them, the odds of default theoretically diminish substantially. At the same time, it gives the appearance of of being funded by all of Europe, not a bilateral action between Germany and France. The problem is that you are backing a dubious promise to pay with another AAA RATED OVERLEVERAGED SYNTHETIC INSTRUMENT WHICH IS BACKED BY NO REAL CAPITAL. It's just the sovereign countries doing the same thing that Paulson, Indymac and Wachovia were doing back in 2007-2008.

 

It's probably all garbage, but it'll be interesting to see how people respond to the idea.

Wed, 11/02/2011 - 15:47 | 1838301 Withdrawn Sanction
Withdrawn Sanction's picture

The two big countries that the EFSF is trying to protect are both too big, default likelihood is too high, and the deep pockets just aren’t deep enough, and the fact that every country involved is highly correlated, makes any wrap or CDO solution marginal at best because it unravels at the first default.

I like the way Tchir thinks through the various permutations of these impossible dilemmas, and ultimately comes to the conclusion that...well, the quotation above sums it up.  A snowball's chance in hell.  Not quite zero, but you can smell zero from there.

Wed, 11/02/2011 - 19:39 | 1839187 Schmuck Raker
Schmuck Raker's picture

Thank you PT, for enlightening me on the nuances in understandable language.

 

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