Former Goldman, JP Morgan Banker Warns Hedge Funds To Accept Coercive Greek Exchange Or Else
In the neverending saga that is the Greek exchange offer we have a new and very important player: the head of the Greek debt management agency, Petros Christodoulou, who is now actively threatening any Greek hold out hedge funds against doing what is in their LPs' best interests (suing Greece and the EU and holding out for par recoveries - as discussed here), by using not only the now trite and idiotic Mutual Assured Destruction clause which only those stuck in 2008 believe is remotely credible, but by advising hedge funds (which are actively forming ad hoc hold out committees as we speak, just as we predicted 6 weeks ago) that "there is just no money for holdouts...We are prepared for legal challenges but the risk here is that people are trying to be too smart." Oh, so now if one does what is in their interest, and dare hold out against collectivist fascist interests, they are "trying to be smart." We wonder if Mr. Christodoulou learned such brute force negotiating tactics at one of his former employers: JP Morgan or Goldman That's right - as we wrote over two years ago, the man who is now negotiating for Greece's and Europe's life (because a failed PSI will not only trigger CDS, more importantly it will result in an out of control default of Greece and likely its exist from the Euro and the Eurozone - two things that Germany would be delighted to see) is a former employee of the two companies that just so happens are the co-chairmen of the US Treasury Borriwng Advisory Committee, or as we have also called it before, "The Supercommittee That Really Runs America." Is the pattern finally emerging?
Mr. Christodoulou declined to comment on whether the clause would be activated but he did underline that the consequences of a failed deal are dire not just for Greece but for bondholders too.
The alternative, he said, “is too dire to contemplate.” He added that if this deal failed, the next offer bond holders would get would be far inferior, lacking the incentives that the current offer has.
Mr. Christodoulou said that it was too early to get a sense of what the participation rate would be but that he said he was confident that at the end of the day enough investors would agree to the deal to reach the target.
“We are targetting near universal participation,” he said. “We have spent a lot of time on this — now we are ready to implement it.
Also as said here countless times before, the hedge funds certainly have the upper hand in the standoff with Greece, if only they successfully collectivize and form a hold out stake. Guess what: that's precisely what they are doing, using Bingham McCutchen (if any readers have a Greek bond stashed somewhere, whether it is Greek or UK-law, and wish to prevent this travesty from happening, reach out to Bingham and join the hold out group).
Nevertheless numerous hedge funds have been accumulating a range of Greek bonds that are governed by foreign law in the hopes of of making a legal challenge. These securities range from bonds issued by Greece’s near bankrupt railway firm to so-called pharma bonds — bonds issued by the Greek government and paid to cash-starved Greek pharmaceutical companies in place of cash
Law firms like Bingham McCutchen have been soliciting hedge funds, asking that they form a consortium to challenge Greece by accumulating enough of these types of bonds so that they might be able to block the deal and perhaps receive near full payment from the Greek government.
The rationale being that Greece would rather pay off these investors as opposed to having to fight them in court.
Needless to say, the TBAC crony is not happy at the prospect of an out of control default collapse of the system unless the hedge fund hold outs aren't bribed to comply.
Mr. Christodoulou sees little chance of this happening.
“We feel we need to honor the long term investors who will participate in the deal,” he said. “It is not in anyone’s interest to see them take a 70 percent haircut while others get par.”
Uh sorry Pet, it's not about what seems fair to your crony accomplices. It's what makes the most money. And the best strategy right now is for hedge funds to build up pair trades (buy CDS and bonds) going into the PSI and just say no, knowing very well that they have all the power in the world if more than 25% of hedge funds announce they refuse to participate in the coercive PSI.
Just as we have been saying for months.
And incidentally, here is a modest suggestion for Germany: if you want to hate someone, hate Goldman Sachs. After all, Goldman is the firm that spawned not only Mario Draghi who as we wrote yesterday is now the most hated man in Germany, but also this Greek pawn whose only job now is to do everything in his power to keep Greece part of the Union - something that well over 60% of Germans do not want. And as a reminder, it was also Goldman who allowed Greece to reach to its catastrophic debt load in the first place by coming up with clever ways to disguise its debt. Yup: if there is anyone who can play not both, but all three side of the game (including be the referee) it's Goldman.
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Or else.....or eslse.....or else you will be subjected to Plan B! And you don't even want to know what that is!!
Also, Greece has been downgraded by most (all?) credit ratings to the lowest rating on the scale, so why have the CDSes not been triggered?
Can you say, "Overleveraged TBTF revolving door circle-jerk"?
I knew you could.
Not to worry, Tyler. Rhetoric being a very powerful thing, in the end the value of CDS [or not] will speak much louder than words.
An offer they can't refuse..., sounds like good business sense to me.
You guys just don't get it.... It will be an offer they can refuse, but even if they refuse, in the end they will claim they got 75% approval. It will get tied up for years in court while the ECB funds them with German labor.
To those who think Greece is OK
The end could be here any day
You bought into lies
And now for your prize
Your wealth will be taken away
Wealth? Do they have fractional ownership in the " Parthenon?
I'm thinking of it from a global market perspective...not that there's any real wealth involved from that perspective either....
Isn't the so called " Global banking system" funding Greece. BiS ECB Fed IMF ect... ( Tier2 BoJ BoC PboC BoI ). I'm not picking fights here, and I mostly agree with you. I guess that junk was deserved?
Fuck off, vampire squid.
I am tired of parasitic assholes who think they own the Universe. They could not survive a day without the laboring of humanity.
Workers of the world, it is time to strike. We have nothing to lose but our chains.
pooga pooga, or death...
There may be some wealth involved here....can the troika plunder Greece's gold stash immediately, or do they have to wait for a successful PSI?
If some hedge fund dude could step up as the leader of the hold outs and go all Leonidas on the Goldman PSI Persians, he could cement a place for himself in history.
The only thing that is legitimate and righteous is for the terms and consequences of bonds and CDS agreements to be upheld. Consequences for default and failure are required for the system to be considered legitimate. Anything else is evil.
The only thing he will cement for himself is a pair of cement shoes.
Old doulou can go fuck himself.
Then he would be like most heros.Very few hero's get to ride off into the sunset like a Western movie hero. Lay-down the Robber Barons then ride off into the sunset, leaving the towns folk to determine their own future in peace. Only happens in fiction. (Probably why Hollywood doesn't make Cowboy Films anymore). TPTB worried that fiction may inspire reality?
Real life hero's have flaws and defects they also don't get to ride off into the sunset. Instead they get a bullet in the head on a sunny day in Dallas if they mess with the elite's right ...
Yeah.. It didn't work out too well for Leonidas either, but without heroes or a righteous stance, the only alternative for the kids is a blue pill or a hole in the ground.
The heroes will come out eventually.. it's only a matter of time and how much subjugation, pain and evil happens first.
Better idea: let's take all the ECB criminals, along with Geithner and the Bernank, as WELL as the hedge fund criminals holding onto sovereign debt credit default swaps, after making a killing on housing CDS, and now looking to buy ANOTHER house in the Hamptons or maybe one of the Greek islands- let's take all of them and line them up against a wall for target practice.
I disagree, in the absence of regulation forbidding CDS's, CDS buyers getting anally violated is the best alternative ... it would kill the market, which is a good thing.
More like taxpayer butakke...
Not that i know anything about porn, but it is bukakke isnt it?
C'mon now Hugo seen vids of you rolling around in gold bullion fresh off the plane while tearing pages out of Wealth of Nations..
Because Goldman, JPM and friends are running the ISDA, which is the entity that has to trigger it. :)
They are down to threatening financial institutions that don't voluntarily take massive cuts to their holdings. This is getting worse and worse. They are really scared of the counterparties to these bonds. Because those aren't known and if a credit event is done it could ripple through the derivative market like a tsunami and we see trillions in CDS's needing paid out.
in the case of the general motors deal the lawyers and the bond holders were threatened the same way and they had a priority position they eventually relinquished
You know it's a fucked up world when you would sympathize with Hedge Funds as the "lesser evil".
However, how credible is the threat by Greece to call an outright default (zero recovery) on hedge funds?
“We feel we need to honor the long term investors who will participate in the deal,” he said. “It is not in anyone’s interest to see them take a 70 percent haircut while others get par.”
Uhhhh.....you mean like the ECB and IMF????
Socialism is for for the people, not the Socialist.
Exactly.
"need to honor the long term investors who will participate in the deal"
OMG.. there are no words adequate to describe the enormity of the hypocrisy.
“It is not in anyone’s interest to see them take a 70 percent haircut while others get par.”
Odd thing to say. Isn't it in the interest of the guys who get par?
mafia style...gonna make you an offer you can't refuse
Recall how McCain's economic advisor Phil Gramm said during the 2008 election campaign:
“You’ve heard of mental depression; this is a mental recession,” he said.We may have a recession; we haven’t had one yet.”
“We have sort of become a nation of whiners,” he said. “You just hear this constant whining, complaining about a loss of competitiveness, America in decline” despite a major export boom that is the primary reason that growth continues in the economy, he said.
http://www.washingtontimes.com/news/2008/jul/09/mccain-adviser-addresses...
Now re. Europe:
The leaders have many reasons to engage in happy talk about the euro zone turning the corner: Mr Sarkozy is campaigning for re-election, so wants to take the credit for saving the euro; Mrs Merkel wants to get the world to stop asking for more money; Mr Monti wants to break the Franco-German duumvirate by building alliances with northern liberals on the issue of the single market; Ireland and Portugal want to distance themselves from Greece; and many want to avoid structural reforms that may be even harder than cutting budgets.
Above all, they all hope they can change perceptions. “This is a psychological crisis,” says one senior source, “It is a matter of confidence. The consumer has abdicated. When you keep hearing talk of Greek default and the end of the euro, you will save your money rather than spend it.”
http://www.economist.com/blogs/charlemagne/2012/03/european-summit
Lest we forget...it was Sen Phil Gramm who sponsored and introduced the bill to repeal the Glass-Steagall Act which gave us mortgage CDOs. He also was responsible for keeping the derivatives mkt unregulated because his wife sat on the board of ENRON. That is all you will ever need to know about that asshole.
Actually, several pieces of legislation related to Fannie and Freddie as well as the Commodities Futures Modernization Act of 2000 were more important in creating the environment that made the fraudulent CDO market explode. But, you are right. Gramm is a douchebag.
Repeal of Glass Steagal was Rubin and Weill, with Bubba guaranteed $5M M in book sales after he left office.
Anything after that was just a detail...
That reads like the "God Father", Part IV. Bring Caan and Pacino out of retirement ASAP!
Hey Tyler, with a name like Petros Christodoulou is there any chance he's playing 4 sides? Greece too?
Or else ill drink another beer!! Big threat there lmao.
the picture of the vampire squid that banzai7 came up w/ comes to mind right now.
Is there any place that the squid isn't? Frightening...
Pearly Gates?
The Squids Boss' Boss' Boss has been trying to take them since he was kicked out.
Never going to happen!
Europe on the edge of the abyss and this is the best they can come up with.
It's funny how socialism always ends with same song.
Folks the fat lady is taking the stage.
and whom might that be? Merkel?
Ah, yes. The old ways are the best ways for gangsta bankstas and their homeboys.
This story reminds me of JP Morgue allegedly telling Corzine: get the money or we'll blow your f'ing head off.
Reminds me of the U.S. Treasury Secretary allegedly telling BoA: take the money or else.
Note: ex-Goldman Sachs man Draghi quit as European chair of The Trilateral Commission after he was appointed the new dictator...err leader...of his native country to which he owes no loyalty at all. Check out the members list and aims of the Trilateral Commission, the founders of the New World Order of corporate fascists who believe a 'technocratic age' needs to be led by the globalist central bank cartel, and their appointed political pets, aided and abetted by an 'intelligentsia' in education, government/bureaucracy, and law...with no loyalties to any nation's 'traditions'.
The Trilateral Commission, founded by the Rothschilds and their lackey Rockefellers et al. The latest Greek Pet is just following orders...
PS The Trilateral Commission which also runs the Bilderberg Group has infiltrated the upper echelons of Europe, Britain, the U.S. and Japan - and that was always its goal. Phase I complete. Phase II is underway, with the connivance of central banksters in the rest of the world.
I would like to see the hedge funds kick some ass now.
your words inspire me to continue to never buy another anything retail ever again.. and to pay as little tax as is humanly possible on anything else. I completely and totaly reject anything that trickles up to the corprofacist rulers.
Where does Kyle Bass stand on this?
When Kyle Bass speaks you bitchez better listen!
He's probably rolling his eyes and thinking of sarcastic comments to say. I'd like to know his position on Greek CDS though.
“It is not in anyone’s interest to see them take a 70 percent haircut while others get par.”
Mr. Anyone is a neighbor of mine and he said he doesn't give a shit--go ahead.
Go Go Go Goldman!!!
With apologies to Animal House.....
[ Christodoulou Dean Wormer's plotting to get rid of PSI holdouts Delta House]
Bingham McCutchen Greg Marmalard: But PSI Holdouts Delta's are already on probation.
Christodoulou Dean Vernon Wormer: They are? Well, as of this moment, they're on DOUBLE SECRET PROBATION!
Everyone takes a haircut or we sue! FOAD ECB!!!
Rumor has it, the deal is Greek default in return for JPM turning the Parthenon into corporate offices and a bank.
how about when this whole fucker burns down, we take over the Colosseum, fill the stands with us peasants armed to the gills, and put the piece of shit bankers and cocksucking politicians in the middle....
i would give at least an oz of my stash to be there
Here's a way to help pay for some their debts...Lets have all the bankers and politicians in the colluseum with starving lions. We can put it on pay per view at $1000 per view. Debt resolved
Caviar Emptor,
The EU/euro is a construct of the Trilateral Commission which hides in plain sight. Decades ago, Britain's James Goldsmith and America's Barry Goldwater tried to raise the alarm, but their warnings were largely ignored, and today's EUSSR is the result.
@ newengland.
I wish more people new of this Trilateral Commission you speak of.
They are evil fuckers....ALL of them.
The Council on Foriegn Relations(CFR) is a mix of many of the same SCUM that sit on the boards of directors,etc..
The CFR and the Trilateral Commission need EXPOSED to evryone for what thet are and who they represent.
Heads up...it's not me and you.
With apologies to Animal House.....
[ Christodoulou Dean Wormer's plotting to get rid of PSI holdouts Delta House]
Bingham McCutchen Greg Marmalard: But PSI Holdouts Delta's are already on probation.
Christodoulou Dean Vernon Wormer: They are? Well, as of this moment, they're on DOUBLE SECRET PROBATION!
Don't look now bondholders, but he's got a gun under the table pointed right at your jimmies.
Moody's just downgraded Greece to "stinky horseshit"
I'd call that an upgrade. Horse manure has value, ya know!
http://www.cnbc.com/id/15839285/
Moody's Downgrades Greece to Lowest Rating on Scale
Published: Friday, 2 Mar 2012 | 6:37 PM ET
-------------------------------------------------------------------
Always on Friday afternoon after 4pm ET...
Yes, and remember S&P just Monday:
http://www.cnbc.com/id/46547209
At this point, I have to ask, how long can the ISDA remain relevant?
Bankers are losing their minds alltogether. The Morgan Stanley Bond Writing Chief, William Jennings, stabbed a cab driver over a $204 cab ride. http://mobile.bloomberg.com/news/2012-03-02/morgan-stanley-executive-jen...
Call them by their names: thugs, thieves, tyrants, etc.
Poor Taxi driver probably had no idea he was dealing with a Banker or he would have been more cautious.
Very lucky he didn't fight back. He would have been in very deep shit.
an offer you can't refuse bitchez!!!!
I can't help but wonder how much Goldman is betting with the hedge funds. That would be their style -- play both sides of the table at the same time.
This whole thing also sounds like the (faux) Jooze getting the last laugh (and euro) at the Germans' expense.
If you don't know who the patsy is, it's you. Well never mind, it's you anyway.
hedge funds: the last bastion of the free markets.
Flirtin With Disaster
http://www.youtube.com/watch?v=rhhtRxqSrys
How do you relate the Treasury Borrowing Advisory Committee to the Greek tragedy? There is no big conspiracy except in the minds of those who ratioanlize trading losses. Get a grip and figure out the next trade. At times those wo populate the comments section here are the financial market equivalent of the front row at a wrestling match. There is no big conspiracy even though the collective here has been postulating one for four years.
aztec,
The House always wins, but you can have a little of your money back sometimes, just for being good enough to play the game...and lose gracefully over time. You won't feel a thing. Keep making those bets, and let the House stack the cards against you. Enjoy the show. You're paying for it.
All Greece has to do is announce it is cancelling all defense purchases and contracts.
The French and Germans will pay the holdouts.
Why would someone have bought this CDS protection when they knew the counterparty cannot pay?
Is there so much cash just slushing around that some one is willing to buy greek bonds or CDS insurance?
Better odds in vegas, worst case you get your knees broke. or win. atleast the drinks are free.
what do you get if you buy CDS?
what do you get if you buy CDS?
Non Payment............................
Christodolou is a former employee of SquidMorgue. He has little in common with it now. /sarc
Christodoulou: Greece is making you "an offer you can't refuse". Accept it or you may find a horse's head in your bed.
“We feel we need to honor the long term investors who will participate in the deal,” he said. “It is not in anyone’s interest to see them take a 70 percent haircut while others get par.”
Yet the Central Banks would take no haircut on the bonds. Just private investors who aren't European national banks and couldn't dump their bonds on the ECB for LTRO Euros at par.
What an ass.
And the Subordination of PSI and other large overseas Investors. The ECB will keep rates on hold next week. Earnings are winding down, and we all know this quarter was front run hard.
The global ponzi is all in . Sure, why not use thuggish mafia coercion too? Next comes sanctioned hits on all dissidents.
not funny. not funny at all.
Who was making a joke?
When is the next TBAC meeting? Sure seems like a group of individuals concerned taxpayers may wish to have a chat with...
CHAIRMAN
Matthew E. Zames
Managing Director
JP Morgan Chase
383 Madison Avenue
New York, NY 10179
VICE CHAIRMAN
Ashok Varadhan
Managing Director
Goldman, Sachs & Co.
200 West Street
New York, NY 10282
Curtis Arledge
Vice Chairman, CEO, Asset Mgmt.
BNY Mellon
One Wall Street
New York, NY 10286
Richard A. Axilrod
Managing Director
Moore Capital Management, Inc.
1251 Avenue of the Americas
New York, NY 10020
Ian G. Banwell
CEO & CIO
Round Table IMC
214 North Tryon Street
Charlotte, NC 28202
Jason Cummins
Managing Director
Brevan Howard
1776 I Street NW
Washington, DC 20006
Dana Emery
Co President & Direcotro of Fixed Income
Dodge & Cox
555 California Street
San Francisco, CA 94104
Walter J. Muller III
Chief Investment Officer
Bank of America
600 Peachtree Street
Atlanta, GA 30308
Ruth Porat
Executive VP, CFO
Morgan Stanley
1585 Broadway
New York, NY 10036
Stephen Rodosky
Managing Director
PIMCO
840 Newport Center Drive
Newport Beach, CA 92660
Stuart Spodek
Managing Director
BlackRock
55 East 52nd Street
New York, NY 10055
Richard Tang
Head of Fixed Income Sales, Americas
RBS
600 Washington Boulevard
Stamford, CT 06901
Stephen A. Walsh
Chief Investment Officer
Western Asset Mgmt. Co.
385 East Colorado Blvd.
Pasadena, CA 91101
I don't think buying CDS on Greek debt at today's prices along with the cost of buying Greek debt is a winning strategy. But buying a blocking interest in Greek debt along with CDS on the sovereign debt of say Portugal, Italy and Spain would make sense.
all the ducks (formally known as piigs) lined up in a row !
which way will this go ?
the future of the world hangs in the balance,,,,,, I VOTE FOR FREEDOM !!!!!!!
<-+--the banksters via > sovereigns
<-+--the hedgies via > "courts"
who's gonna win?
apparently hedge funds are no longer part of picture after this week!
i sure hope their "investors&partners" don't mind!
munchmunchmunch
apparently, this wealth will hafta be "transferred" to "save the 'economic' system"
but this will, of course, serve the "greater good" and "avert disaster"
where "disaster" = CDS payouts
and to think i was wondering, here, last week, why these 800 banks would take a buncha LTR0 3-yr EUR and then pay off this insurance with the "money"?
why tf would a bankster do that?
would the ISDA be forced to reconsider after a "blocking vote"?
what will the "supercommittee" do?
stay tooned...
The English Law CDS will be triggered, regardless. There is " NO" way London will tolerate that. GB derives 44% of it's GDP from financial transactions.
Nice to read your posts Slewie. Have a good weekend.
hey, Y/C, you too!
it would seems so regarding London, but the CDS are not "triggered" by a failed PSI, are they?
the ISDA must vote
most of the charts i have seen were of the greek cac's
if london/GB has jusrisdiction over the bonds, they have an appeal process if the ISDA doesn't vote their "way" so, yes i would agree with you, there, but who knows what these "judges" will "tolerate" as long as CDS are "not triggered"?
but the greek-law bonds are ~~70%
i'm learning about this stuff, here
so i will just stay tooned
but i am starting to wonder if these "credit events" are gonna be judged by the ISDA to not be credit defaults because a "sovereign" is involved; hey! maybe even in london, too...
shall i ring up the oldeBailey and see what rrr-rumpole thinks?