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Founder Of $30 Billion Hedge Fund BlueCrest Says Most Euro Banks Are Insolvent; Euro Situation Much "Worse Than 2008"

Tyler Durden's picture





 

The Founder of one of the world's largest asset managers, the $30 billion hedge fund BlueCrest, Michael Platt, spoke to Bloomberg TV and cut right to the chase, saying most of the banks in Europe are insolvent and the situation in the region is "completely unstable." On how he approaches market risk: ""I do not take any exposure to banks at all if I can avoid it.  All the money at BlueCrest Capital Management is in Two-Year U.S. government debt, Two-Year German debt, we have segregated accounts with all of our counterparties.  We are absolutely concerned about the credit quality of the counterparties." On investing in illiquid assets, Platt said he "would not touch them with a barge pole" and that "the major opportunities will come post-blowout." Something tells us Russia and China know this all too well, and realize that the best time to "invest" in Europe is after the single (or multiple) bankruptcy. Which incidentally, as Kyle Bass said yesterday, after the "blowout" is when the ECB will finally step in as well, at which point the entire world will go all in on that now infamous 2-7 offsuit. And his view on how that bluff will end: 'In my opinion, what's going on now is significantly worse than 2008."

Platt on Europe's sovereign debt crisis:

"The level of concern of what we have about what is going on in Europe is absolutely huge.  When you evidence all over the markets that they are pricing for the potential of the eurozone break up, it is contrary to what everything is set by policy makers and by central bankers. We distill it down essential fact that we continue to focus on at BlueCrest Capital Management - if you look at the debt of Italy at 120% of GDP, which is increasing at a real rate of 5%, and if you look at the GDP, which now is forecast next year to be declining, arithmetically their debt is going to blow up.  And we don't see anything happening at the policy level that gives us any indication that there's anything that's going to convert this situation from where it is now to a much more substantial and real crisis in the future."

On whether a blow up of Italy will force a breakup of the Eurozone:

"We need much more radical measures to prevent this from happening.  If Italy and Spain are forced to roll their debt over, if they have to pay rates between 5 and 7% for this, then the situation in Europe is unsustainable.  We're not going to have any euro bonds, we're not going to have a full political and fiscal union where the transfers will take place.  It seems what we're going to have is an attempt to control the European situation through continued austerity, which is pro-cyclical.  As the economy slows down, we end up with more austerity which creates more slowdown.  We also have a requirement for banks to increase capital, therefore we're looking at a 3 trillion euro takedown in European balance sheets.  There's basically nowhere I can see where we can get any growth from."

On whether cultural and political divides between nations in Europe have played a role in the crisis:

"Absolutely, it's about the cultural and political divide.  The reality is that there is no willingness within the Eurozone to share wealth.  In the United States, if California is having a really difficult time, the rest of the United States will send money to California.  This is not the case in Europe.  There is no willingness to transfer money across boundaries in a long-term and sustainable way."

"The market prices the probability of a euro breakup to be distinctly non-zero, despite what the politicians say.  I believe that the eventuality of a European breakup is so awful, that more and more drastic measures will take place as time goes by.  The ECB is probably the only institution that can tackle this problem, but it doesn't have a mandate to do so…As time goes by, my view of what's required is a radical change of policy from the ECB to tackle this problem."

More on Europe's problems:

"The probability that the market is putting on a Eurozone breakup, in my opinion from evidence I'm seeing from option pricing across the different markets, is steadily rising…We're going into 2012, and in our opinion, it's only going to get worse."

"There is a sensible argument you should not price and the whole loan in response to where the government trades because the government has the ability to remove assets and put them on their own balance sheets."

"The problem with Europe is that almost every part of it has gone wrong now.  The banks are undercapitalized…If banks were hedge funds, and you mark them to market properly, I would say that probably most of them are insolvent.  [Most of the banks in Europe are insolvent right now] if they were marked like I am at a hedge fund, yes."

On whether BlueCrest's relationship with banks has changed:

"I do not take any exposure to banks at all if I can avoid it.  All the money at BlueCrest Capital Management is in Two-Year U.S. government debt, Two-Year German debt, we have segregated accounts with all of our counterparties.  We are absolutely concerned about the credit quality of the counterparties."

On whether he's afraid of taking risk right now:

"Absolutely.  The main thing that's driving our decision about where to lend money or where to place our funds under management, the vast majority is dollars which we keep in two-year notes.  We have a chunk of euros, which we keep in German two-year paper.  We're not interested in taking any peripheral debt risk at all and we're not interested in taking any bank credit risk right now."

On the United States and Germany:

"I think they're the best of the bunch.  I feel pretty good about the United States.  I don't really have an issue because I think the complete control that the authorities have, particularly the Fed and its bond buying program, we do not have issues about having money in Two-Year securities in the United States.  In Europe, you've got to put your euros somewhere.  It is a much more difficult place to make a decision.  Two-year German notes seem like a reasonably safe bet right now, certainly compared to anything else."

On making money in a crisis:

"The most important thing to remember about crises is you do not make your money going into the crisis.  When you go into a crisis such as 2008, markets trade against positions. People have positions on and people need to get risk off.  All the things that people thought were a good idea start going into reverse.  The big money you make in trading is more in the aftermath of the crisis.  In 2009 we made 60% with no down months on our master fund."

On whether BlueCrest is looking at illiquid investments:

"I would not touch an illiquid product with a barge pole, to be honest. We're going into an environment where banks need to delever.  Illiquid assets will be coming on to the streets everywhere.  The price of liquidity in my opinion will go up.  I don't want to own any illiquid assets whatsoever. The strategy at BlueCrest is to be in super liquid products, things that can be turned around in a day."

"It would have been the end of my business in 2008 had I done such a thing.  Anyone who had an illiquid position within their hedge funds, there were runs on those hedge funds because people wanted to get the cash out and not be side pocketed with the illiquids.  In 2008 I paid out $9.5 billion to the street because I was the only hedge fund that was up a lot and completely liquid.

On whether we'll see a repeat of the 2008 credit crunch and whether those that hold illiquid assets will get crushed:

"That's what I think, yes.  I think so.  In my opinion, what's going on now is significantly worse than 2008…The European debt situation is fundamentally completely unstable.  The process of refinancing your debt with a real rate of 5 when you have negative GDP growth, and we are heading into a recession in Europe, arithmetically can turn all of the countries in Europe, given enough time, into Greece."

On how closely tied America's futures and the potential for investment are to Europe's debt crisis:

"Clearly it would be a huge drag on the U.S. economy.  We're talking about in Europe is a situation of instability driven by pro cyclical policy, removing the ability of banks to invest in sovereign debt.  We're talking about pro-cyclical policy of governments not being able to deficit spend by law. We're talking about existing deficits that need to be closed. We're talking about an increase in the amounts that governments will have to find when they're
Forced to refinance their rolling over paper this year at real rates of interest, which are way beyond anything they will ever be able to achieve in terms of growth."

On how BlueCrest continues to make money through the slowdown:

"Because we are traders and do not take any credit risk and we're super liquid.  In the time that BlueCrest has been around, we have made $17 billion of trading profits for our investors…so in an environment like this where we are a very secure trading strategy, taking no credit risk, not buying anything illiquid, that is the kind of thing investors frankly really want to hear from someone like me."

On where he's seeing investment opportunities:

"I think the major opportunities will come post the blow up.  I think for the time being you want to keep it quite simple.  You do not want to take any credit risk.  I think volatility in certain markets is very underpriced compared to what's potentially about to happen.  I think if we go into a crisis scenario, things like German bunds could be more expensive than they are right now.  And I think as the crisis intensifies through the process of governments refinancing and deficits becoming more unstable and growth deteriorating in particular, I think those kinds of trades will play out in the market and be profitable."

On moving BlueCrest from London to Geneva:

"I did not really want to be exposed to the Eurozone. I don’t want to be exposed to regulation coming out of the Eurozone.  Most of my clients come from the United States.  I am not really marketing to the Eurozone anyway.  So it didn't make much sense for me to be in the Eurozone as a business."

 


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Thu, 12/15/2011 - 13:24 | Link to Comment doomandbloom
doomandbloom's picture

collapse, female dogz

Thu, 12/15/2011 - 13:34 | Link to Comment trav7777
trav7777's picture

this guy has "segregated accounts"...ROTFL, that sounds safe

Thu, 12/15/2011 - 13:52 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

All of your monies have been rehypothecated!

Thu, 12/15/2011 - 13:56 | Link to Comment RickyBobby
RickyBobby's picture

Funny, a Goldman Sachs ad intro to the video.

Thu, 12/15/2011 - 14:19 | Link to Comment Pladizow
Pladizow's picture

Bass, Hendry and this guy - vs.- Kramer, Gartman, and Kass!

Choose wisely!

Thu, 12/15/2011 - 14:24 | Link to Comment kito
kito's picture

this guy sees printing as the solution to europe, which side is he on again?

Thu, 12/15/2011 - 14:28 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Actually, printing would liberate the world from the shackles of fiat. Let the euro hyperinflate into oblivion. The USD would follow within 3-6 months.
It clear he's a goldbug.

Thu, 12/15/2011 - 14:52 | Link to Comment kito
kito's picture

hey ahmeexnal, hope your property search in ecuador is working out for you. whatever printing is done by the ecb, which i still doubt will happen, would be offset by massive deleveraging and currency destruction. highly unlikely printing would lead to hyperinflation.   i dont see 600 billion euros of printing doing much except extending the day of reckoning another year or so..............

Sat, 12/17/2011 - 17:58 | Link to Comment Mauibrad
Mauibrad's picture


Check it out Tyler, officially a new word, de-hypothecation

http://www.urbandictionary.com/define.php?term=de-hypothecation

Thu, 12/15/2011 - 15:12 | Link to Comment fonzanoon
fonzanoon's picture

He is hiding in treasuries.....enough said.

Thu, 12/15/2011 - 18:27 | Link to Comment tooktheredpill
tooktheredpill's picture

He certainly made quite an impression on the female host.

No mention of shorts. Guess he is not allowed to short the best ones.

Thx for posting Tyler.

Fri, 12/16/2011 - 05:10 | Link to Comment snowlywhite
snowlywhite's picture

dude, he's 30bln... How many things vaguely safe and liquid enough for 30bln do you know?

 

or you expect him to get a truck and park all his money in it?

Thu, 12/15/2011 - 14:00 | Link to Comment Jay Gould Esq.
Jay Gould Esq.'s picture

 "In the United States, if California is having a really difficult time, the rest of the United States will send money to California."

"Send" money -- that is, taxed -- and unwillingly, on the part of the American Taxpayer. Frankly, if Kaaleefornya ever did go into some form of default, I submit that the majority of Americans would say to Hell with Kaaleefornya -- Kaaleefornians voted themselves the profligate government they desired, and thus deserve...let them clean up the mess.


Thu, 12/15/2011 - 14:24 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

In the United States, if California is having a really difficult time, the Federal Government will simply print more money to send to California.  Most Americans are blissfully unaware of the inflation tax, and are therefore none the wiser.  In Europe, however, the populace is very much aware of the inflation tax.  That is why you hear the Germans (that are not bankers or exporters) saying, "Nein!" to transfering wealth to other areas.  It is not that the Americans are more generous, it is simply that the Europeans are better educated on this matter. 

Thu, 12/15/2011 - 14:31 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Actually, Ahnuld started printing his very own notgeld in the last years of his reign. Expect every state to follow this practice as the downward spiral enters the next phase of complete social breakdown.

Thu, 12/15/2011 - 15:22 | Link to Comment toadold
toadold's picture

Well their are some  states (Texas, Georgia and about three others) that are prepared for a State gold backed or basket commodity money if the USD goes splat. 

Thu, 12/15/2011 - 14:34 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

+1

I'd also add that we've had many different generations live through hyperinflation. See: Weimar, Hungary, Yugoslavia.

Thu, 12/15/2011 - 15:00 | Link to Comment JW n FL
JW n FL's picture

 

 

offshore internal repo's to get that JP Morgan 60 to 1 Leverage BITCHEZ!!!

Yes I agree! segregated accounts make everyone wayyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy more trust worthy!

Thu, 12/15/2011 - 13:57 | Link to Comment ndotken
ndotken's picture

sounds like someone is upside down and needs a win on a huge short to balance his books ....

Thu, 12/15/2011 - 14:21 | Link to Comment Pladizow
Pladizow's picture

Did'nt he say he is 10% gross YTD?

Thu, 12/15/2011 - 15:06 | Link to Comment ndotken
ndotken's picture

good point ... hedge fund managers never lie /sarc

Thu, 12/15/2011 - 14:14 | Link to Comment Ahmeexnal
Ahmeexnal's picture

so why would Putin buy eurobonds?
the time to buy them is when there is blood in the streets.

Thu, 12/15/2011 - 13:25 | Link to Comment Quintus
Quintus's picture

Umm.  I think upon closer examination he would find that most European, US, Chinese, Japanese banks and basically all banks everywhere are pretty much insolvent to a greater or lesser degree.

This isn't really news.

Let's do away with Mark-to-Unicorn asset valuations and see who's really swimming naked, to borrow from Uncle Warren's phrase.

Thu, 12/15/2011 - 13:32 | Link to Comment LawsofPhysics
LawsofPhysics's picture

I agree.  The paper-pushing fucknuts are simply getting nervous and trying to take position that they think will get them out of the line for the guillotine in the future.

Thu, 12/15/2011 - 13:36 | Link to Comment trav7777
trav7777's picture

the SYSTEM is fucking insolvent.  Is that so hard for people to grasp?

Thu, 12/15/2011 - 13:43 | Link to Comment tmosley
tmosley's picture

Yeah, so hold dollars, lol.

Thu, 12/15/2011 - 14:24 | Link to Comment Pladizow
Pladizow's picture

And what ever you do, Trany7777, dont buy gold?!?!

Thu, 12/15/2011 - 13:45 | Link to Comment youLilQuantFuker
youLilQuantFuker's picture

Unless you own the physical black gold. Ergo, war female dogs!

Thu, 12/15/2011 - 13:47 | Link to Comment blu
blu's picture

How can it be insolvent if they still have cheques/checks?

Thu, 12/15/2011 - 15:29 | Link to Comment Spastica Rex
Spastica Rex's picture

Logic for the masses.

Thu, 12/15/2011 - 13:24 | Link to Comment Ralph Spoilsport
Ralph Spoilsport's picture

Shorts on for barge poles bitchez!

Thu, 12/15/2011 - 13:25 | Link to Comment CPL
CPL's picture

And out of the left field...wasn't he was talking about Greece.

Thu, 12/15/2011 - 13:26 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

On moving BlueCrest from London to Geneva:

"I did not really want to be exposed to the Eurozone. I don’t want to be exposed to regulation coming out of the Eurozone.  Most of my clients come from the United States.  I am not really marketing to the Eurozone anyway.  So it didn't make much sense for me to be in the Eurozone as a business."

Hedge funds: a dying model.

London is in doo-doo.

Thu, 12/15/2011 - 13:57 | Link to Comment narnia
narnia's picture

I agree.  This guy is a wanker investing a bunch of other people's money based on central wanker actions...  then goes on national TV lobbying for central wanker action.  

Thu, 12/15/2011 - 19:50 | Link to Comment twotraps
twotraps's picture

hate when those wankers manage 30B....hmm, how much is that in management fees?  Yeah, he's pretty fucking stupid.

Thu, 12/15/2011 - 13:29 | Link to Comment Cdad
Cdad's picture

Huh...Larry Fink must not be a follower of Michael Platt. 

Thu, 12/15/2011 - 13:32 | Link to Comment HappyMan
HappyMan's picture

Hello everyone! My first post. Just wanted to say hi. I knew someone who worked at BlueCrest. They don't anymore. LOL.

Thu, 12/15/2011 - 13:45 | Link to Comment blu
blu's picture

First post? Then allow me the honor of being the first to call you a fucking moron sheeple troll in response.

Wow that felt great! And I still respect you.

Thu, 12/15/2011 - 14:26 | Link to Comment Pladizow
Pladizow's picture

Fuck You, virgin poster!

Thu, 12/15/2011 - 15:02 | Link to Comment quasimodo
quasimodo's picture

So much for THAT cherry staying intact

Thu, 12/15/2011 - 17:59 | Link to Comment GOSPLAN HERO
GOSPLAN HERO's picture

I never had a virgin.

Thu, 12/15/2011 - 13:51 | Link to Comment Jim in MN
Jim in MN's picture

We will wipe that smile offa you face in time...in time.

(actually, welcome to the madhouse, enjoy)

Thu, 12/15/2011 - 13:54 | Link to Comment fuu
fuu's picture

Your smile makes me want to break something beautiful.

Thu, 12/15/2011 - 14:03 | Link to Comment NotApplicable
NotApplicable's picture

Welcome. We'll see just how long you remain happy.

Thu, 12/15/2011 - 14:05 | Link to Comment Bonesetter Brown
Bonesetter Brown's picture

Welcome!  Don't let the harsh responses dampen your chipper mood.

Please contact your friend and get a run-down of his time at BlueCrest, then post your full findings here.

Thu, 12/15/2011 - 14:26 | Link to Comment Don Birnam
Don Birnam's picture

"Thank you sir ! May I have another ?"

Thu, 12/15/2011 - 13:34 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Print baby, print. It solves all the problems at the expense of the plebs.

No problemo.

Thu, 12/15/2011 - 13:57 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

We don't call it "printing" any longer.  It's now "rehypothecation of insolvency".

Thu, 12/15/2011 - 13:38 | Link to Comment Zero Govt
Zero Govt's picture

I thought Trichet sorted this out?

I'm confused, he said he'd returned staaabiiility to the Euro banking system... fuking brilliant those stress-tests, work of genius

 

Thu, 12/15/2011 - 13:36 | Link to Comment Dr. Horrible
Dr. Horrible's picture

If all banks had to mark to market......

I wish this rule was changed and we could see the real state of the banks.

 

Thu, 12/15/2011 - 13:37 | Link to Comment DormRoom
DormRoom's picture

It's like 2008.

 

sell first to survive. buy after the collapse.

Thu, 12/15/2011 - 13:37 | Link to Comment pods
pods's picture

Shhhh, you're going to wake the sheep.

pods

Thu, 12/15/2011 - 13:39 | Link to Comment youngman
youngman's picture

All his money in Tbills...in the two years he will be paid in dollars and Marks...but worth about one third of what it is today....because as it crashes and he is waiting for the "deal"...they will have printed trillions...maybe hundreds of trillions....I wonder if this guy ever heard of gold and silver as a safe haven

Thu, 12/15/2011 - 13:40 | Link to Comment ch25061
ch25061's picture

30 billion under management and no physical gold???  How is that a low-risk positioning?

Thu, 12/15/2011 - 13:41 | Link to Comment blu
blu's picture

2-year Treasuries? Seg accounts? Firewalls? What is this, the guy invests like a pussy.  Maybe he should run a hotdog stand.

/s

Thu, 12/15/2011 - 13:41 | Link to Comment G_T_A_44
G_T_A_44's picture

Let's not dismiss/neglect the fact that both the US and UK Money Centers are and remain insolvent.

The US was the 'carrier' that infected the globe, thus, the global financial structure remains bedridden in the I.C.U. ward despite egregious monetary/debt doses of morphine; radiation and chemo treatments that have failed miserably.

The return of the Boomerang from across the pond awaits.

Thu, 12/15/2011 - 13:43 | Link to Comment RobD
RobD's picture

Could someone give examples of "illiquid investments"?

Thu, 12/15/2011 - 13:47 | Link to Comment Iriestx
Iriestx's picture

Beanie Babies and collector's edition NASCAR plates.

Thu, 12/15/2011 - 13:50 | Link to Comment blu
blu's picture

LOL! nice 1

Thu, 12/15/2011 - 14:12 | Link to Comment flattrader
flattrader's picture

Most real estate and related derivatives with the exception of productive farmland.

Thu, 12/15/2011 - 14:20 | Link to Comment yabyum
yabyum's picture

ROBERT KINCAID PAINTINGS.

Thu, 12/15/2011 - 14:58 | Link to Comment machineh
machineh's picture

But they told me those paintings are 'limited editions'!

Rich people make millions collecting Old Masters. Now you're telling me that Thomas Kincade, the Painter of Light, is not the greatest ever?

Thanks for ruining my day!!!

 

Thu, 12/15/2011 - 17:42 | Link to Comment ceilidh_trail
ceilidh_trail's picture

WOW! The painter of light!?!

Thu, 12/15/2011 - 13:50 | Link to Comment bnbdnb
bnbdnb's picture

LSA's, businesses, MBS, etc...

Thu, 12/15/2011 - 14:06 | Link to Comment Bonesetter Brown
Bonesetter Brown's picture

venture capital, private equity, your house (assuming you own one)

Thu, 12/15/2011 - 14:09 | Link to Comment youngman
youngman's picture

a condo....anywhere.....a house in Detroit

Thu, 12/15/2011 - 15:15 | Link to Comment Lmo Mutton
Lmo Mutton's picture

Gold RobD. Clearly a solid investment. No pun intended.

Thu, 12/15/2011 - 13:45 | Link to Comment ebworthen
ebworthen's picture

"Arithmetically, their debt is going to blow up." = No translation needed

"Euro breakup a non-zero probability" = Euro's going down! (bichez)!

"Most of our 30 billion is in 2 year bonds." = money fleeing Europe & Record auctions and rates for 2 and 10 year bonds

"Europe is Greece" = and the U.S. will be too

 

Thu, 12/15/2011 - 13:48 | Link to Comment the grateful un...
the grateful unemployed's picture

yes but physical gold is illiquid, farm land is illiquid, seems as though he's making the case that by staying in highly liquid trades he is never going to make money buying at the bottom. it seems to me you want to be the guy selling something and taking gold or land in payment. i'll bet this guy has paper gold GLD up the wazoo because its liquid. when the worlds fiat currencies collapse he is going to have lots of it?

Thu, 12/15/2011 - 14:17 | Link to Comment ddtuttle
ddtuttle's picture

His definition of liquid was being able to sell it in a day, not a millisecond.   Physical gold is highly liquid as long as it's in a vault where ownership can change hands without the gold actually moving.  Anything more than a few coins should be held in vault, not a shoebox under your bed.  Vaulting companies do not re-hyopthecate anything, so there are vastly less ownership risks there.  

Farm land is illliquid, but that's not why you own it.  The production of the farm is liquid in any scenario.  You can always eat by bartering your farm's production. When trasnportation becomes too expensive, food will be local.

Thu, 12/15/2011 - 13:49 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

As with Peyton Manning, the sidelines can be good for your health these days.

Thu, 12/15/2011 - 13:50 | Link to Comment sabra1
sabra1's picture

he lost my confidence when he made this point:

" I feel pretty good about the United States. I don't really have an issue because I think the complete control that the authorities have, particularly the Fed and its bond buying program."

Thu, 12/15/2011 - 13:56 | Link to Comment RobD
RobD's picture

I threw up a little in my mouth when I read that.

Thu, 12/15/2011 - 13:59 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Did it have hints of spam?

Thu, 12/15/2011 - 14:13 | Link to Comment NotApplicable
NotApplicable's picture

Luckily, I quit before I got that far, as I knew there'd be nothing worth reading after I saw this.

"I believe that the eventuality of a European breakup is so awful, that more and more drastic measures will take place as time goes by.  The ECB is probably the only institution that can tackle this problem, but it doesn't have a mandate to do so…As time goes by, my view of what's required is a radical change of policy from the ECB to tackle this problem."

He is just another water-boy for the fiscal union that can only happen in the face of total disaster. More pain required now in order to legitimize the need for the extreme pain of their desired choke-hold later. And they will destroy everything to ensure it happens.

"They say that breaking up is...

hard to do."

Thu, 12/15/2011 - 13:50 | Link to Comment longjohnshorts
longjohnshorts's picture

2 and 20 to invest in 2-year bills.  Wow, I could do that for half the price!

Thu, 12/15/2011 - 14:15 | Link to Comment NotApplicable
NotApplicable's picture

Well, with interest rates what they are, half would be a 1 and Done.

Thu, 12/15/2011 - 13:53 | Link to Comment Jim in MN
Jim in MN's picture

Russia and China know that if you buy in now, you have a seat at the table.  Then when the toilet flushes they will lay down the law. 

Ownership/control or no mas dinero.

Eurasia has always been at war with Eurasia.

Thu, 12/15/2011 - 13:53 | Link to Comment JustObserving
JustObserving's picture

If most European banks are bankrupt then so are almost all US banks.  There are $707 trillion of unregulated derivatives now.  If a European bank blows up, several US banks follow.

We are all Europeans now. 

Thu, 12/15/2011 - 13:54 | Link to Comment SwingForce
SwingForce's picture

Oh dear, I thought "procyclical" was a positive thing. I like "Merry-Go-Round to Hell", as phrased by the late Sir James Goldsmith.

Thu, 12/15/2011 - 13:54 | Link to Comment SDRII
SDRII's picture

much mor interesting

Russian Prime Minister Vladimir Putin on Thursday accused the U.S. Special Forces of being involved in the killing of deposed Libyan dictator Muammar Qaddafi. “Who did this?” Putin said in his annual televised phone-in with Russians. “Drones, including American ones. They attacked his column. Then ? through the Special Forces, who should not have been there ? they brought in the so-called opposition and fighters, and killed him without court or investigation.” Putin also lashed out at U.S. Senator John McCain, a former presidential candidate and frequent Putin critic who warned in a message on Twitter this month that an “Arab Spring” may soon be coming to Russia. “I know Mr McCain,” said Putin, adding that he would prefer not to refer to him as a “friend.” “This was not addressed in my direction. This was said about Russia. Some people want to move Russia aside somewhere in a corner, so it does not intervene ? so that it does not intervene in the ruling of the world,” said Putin. “They still fear our nuclear capabilities,” he said in reference to the West. “That is why we are such an irritant. We have our own opinion and are conducting our own independent foreign policy ... And it clearly bothers someone.”

Thu, 12/15/2011 - 14:50 | Link to Comment Magnix
Magnix's picture

Pfttt!! Bring it on, Putin!

Thu, 12/15/2011 - 13:54 | Link to Comment Bob Bercy
Bob Bercy's picture

On moving BlueCrest from London to Geneva:

"I did not really want to be exposed to the Eurozone. I don’t want to be exposed to regulation coming out of the Eurozone.  Most of my clients come from the United States.  I am not really marketing to the Eurozone anyway.  So it didn't make much sense for me to be in the Eurozone as a business."

Err...since when was London in the Eurozone Mike?

 

Thu, 12/15/2011 - 14:21 | Link to Comment ddtuttle
ddtuttle's picture

I wondered about that.  Perhaps he was considering moving to an EMU country, or he just meant EU.  The regulations of the EU will applied in England, until they leave.

Thu, 12/15/2011 - 15:05 | Link to Comment machineh
machineh's picture

Relax ... the Eurozone is a state of mind.

Just close your eyes, forget your problems, and you're there in the bilnk of an eye.

'EZ', so to speak ...

Thu, 12/15/2011 - 13:55 | Link to Comment roccman
roccman's picture

why the fuck is she grinning ?!

Thu, 12/15/2011 - 14:01 | Link to Comment ebworthen
ebworthen's picture

Fear, indignation, disbelief.

Thu, 12/15/2011 - 14:48 | Link to Comment Roy T
Roy T's picture

 

She always has some confused or other strange look on her face.

Fri, 12/16/2011 - 03:22 | Link to Comment mophead
mophead's picture

"why the fuck is she grinning ?!"

Because she has a big vibrator between her legs.

Thu, 12/15/2011 - 13:59 | Link to Comment Lord Welligton
Lord Welligton's picture

the entire world will go all in on that now infamous 2-7 offsuit

Does this mean the worst possible choice?

 

 

 

Thu, 12/15/2011 - 14:09 | Link to Comment Bonesetter Brown
Bonesetter Brown's picture

Not at all and quite the opposite, assuming it was hi-lo splits the pot

Thu, 12/15/2011 - 14:01 | Link to Comment meatball
meatball's picture

Money printing will fix everything. US did it, Europe will do it. Buy now!

Thu, 12/15/2011 - 14:02 | Link to Comment spekulatn
spekulatn's picture

Great great stuff today (and every fuckin day) here on ZH!

Thu, 12/15/2011 - 14:03 | Link to Comment SDRII
SDRII's picture

"Absolutely, it's about the cultural and political divide.  The reality is that there is no willingness within the Eurozone to share wealth.  In the United States, if California is having a really difficult time, the rest of the United States will send money to California.  This is not the case in Europe.  There is no willingness to transfer money across boundaries in a long-term and sustainable way."

 

simply not true. the us issues debt to ROW and then redistributes the free lunch. See how well that works when the largess goes away

Thu, 12/15/2011 - 14:04 | Link to Comment amanfromMars
amanfromMars's picture

Who do you think this arrangement has been made for ...... http://www.guardian.co.uk/world/2011/dec/15/americans-face-guantanamo-de... ...... and why, if things are so great at home with the dollar and America's economy.

Methinks, ladies and gentlemen, you need to consider that you are not being told the truth about anything which is going on in the markets which y'all here know, are rigged to support a great ponzi game. 

You can surely not deny that simple global truth. 

 

 

 

 

Thu, 12/15/2011 - 14:04 | Link to Comment dtdsmh
dtdsmh's picture

Who cares about hearing what Michael is saying -  STEPHANIE IS TOO HOT! 

Thu, 12/15/2011 - 14:44 | Link to Comment Nigh Eve
Nigh Eve's picture

Stephanie Ruhle mentioned Zero Hedge this morning at about 7:27 AM.  I missed the first part of her comment, but the part that I caught was something like ... "Come on Zero Hedge.  Don't bring out the snark."

Did anybody see the earlier part of that conversion?

Question: What was the topic being discussed? and What did she mean by "the snark"?

She sounded as if she actually likes Zero Hedge, but simply wanted to offer ZH some "stylistic" advice.

Thu, 12/15/2011 - 14:05 | Link to Comment PaperBear
PaperBear's picture
CNBC: Gold Sheds ‘Can’t Lose’ Status: Now, No One Wants It

“We expect the selloff in gold to gain momentum into 2012? ?
What the f**king hell are they talking about ?

Thu, 12/15/2011 - 14:06 | Link to Comment Jim in MN
Jim in MN's picture

They are talking about a buying opportunity, only they are stupid.

Thu, 12/15/2011 - 14:07 | Link to Comment Iriestx
Iriestx's picture

CNBC: Trade your one ounce bars in NOW for 1 share of Groupon or Netflix, while you still can!  

Thu, 12/15/2011 - 14:15 | Link to Comment PaperBear
PaperBear's picture

“surest sign of a bubble” ?

Are there copious amounts of advertisements for offering gold in every newspaper ? Are there shops selling gold on every street corner ? Are there lines of people around the block into these gold selling shops ?

What the f**king hell are they talking about ?

Thu, 12/15/2011 - 14:07 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Time to grab a chair on the slowly sinking Titanic.

Mother Russia repositioning investments:  to move $20 billion from USTs to make Euro Zone loans.

Russia Pledges to Support Euro Zone:

http://online.wsj.com/article/SB10001424052970203893404577100033828566606.html

Thu, 12/15/2011 - 14:08 | Link to Comment tahoebumsmith
tahoebumsmith's picture

"If Italy and Spain are forced to roll their debt over, if they have to pay rates between 5 and 7% for this, then the situation in Europe is unsustainable.  We're not going to have any euro bonds, we're not going to have a full political and fiscal union where the transfers will take place.  It seems what we're going to have is an attempt to control the European situation through continued austerity, which is pro-cyclical.  As the economy slows down, we end up with more austerity which creates more slowdown.  We also have a requirement for banks to increase capital, therefore we're looking at a 3 trillion euro takedown in European balance sheets.  There's basically nowhere I can see where we can get any growth from."

BRAVI!... This is the road they have chosen and as the gap between the GDP and the ability to borrow to cover this gap increases so does any chance for survival... Ka.. Fricken.. Boom Bitchez..

Thu, 12/15/2011 - 14:13 | Link to Comment wawawiwaa
wawawiwaa's picture

Super bearish and long two year debt............... HUH??????

That is not how Paulson made money kids. He was BALLS short every subprime mortgage bond he could find...

So basically... this very smart and prepared man has just said he has no opinion and he is just parked in cash and that's it.

 

 

Thu, 12/15/2011 - 14:21 | Link to Comment delivered
delivered's picture

His point on the players waiting for the next opportunity looks reasonable. I would guess that the large holders of USDs and USTs (including China, Petrodollar countries, Russia, and others) are very encouraged if not down right estatic at this point as the coming holiday sale after the European implossion will be a once in a lift time event. So run from the Euro my friends and into the largest asset we hold, USDs and USTs and while you're doing this, we're already front running everyone on the coming collapse. Bid up our assets that we figured a good solid haircut was coming and we'll gladly exchange them (over the course of the next 12 to 24 months) for real assets which we need to strenghten our military, feed and support our populations, secure reliable energy sources, and buy whatever else we want.

In the end, this represents the final stage of the redistribution of real wealth. The Western economies (primarily Europe and the US) over spent and didn't save for a rainy day. And with the unmanagable debt load final coming home to roost, the punishment will be felt through devaluated currencies and selling off the best assets to repay debt. Greece was just a prelude to Italy which is a prelude to Europe which is a prelude to the US. The real trick and game moving forward is when to pull the trigger on moving out of USDs and USTs and into real assets as you clearly don't want to be the last one left holding these assets when the run starts. I would guess that some of the smart money that is really looking for long-term assets of value have already "Left the House".

As for the US, just watch what is happening to the funding rates across Europe and the costs of rolling old debt at 3 to 4% to new debt with yields approaching twice this amount. With the US average funding debt rate close to 1.5% or less (just an estimated based on how much debt is front loaded into short term treasury bills), just imagine when the US will have to pay market rates of at least twice this amount. So on $15 trillion of debt with another 2%, that results in $300 billion of added interest (so much for any budget cuts as they will be eaten up by higher interest costs). You may argue the Japanese case in that rates have stayed low for years and years but remember, 90% of the Japanese debt is held internally whereas the US has a much larger exposure to external debt holders. Not sure if these external holders have quite the leverage they need yet but if they wanted to create some real problems for the US and were willing to take some haircuts, the debt markets could really be roiled by these parties dumping large amounts of USDs and USTs in a coordinated effort.

Finally, it will be just a matter of time and pressure before the ECB and FED have to step-in when the pressure becomes unbearable. If there's one thing that is certain in this environment, soverign debt levels continue to increase every day, every week, and every month. The US alone has added what, something like $4 to $5 trillion since 2007 with no end in sight. Again and what has been stated over and over thousands of time, there's just too much debt and not enough assets to generate cash flows to service the debt. So inflate or default its time to pick your poison.

Thu, 12/15/2011 - 15:15 | Link to Comment machineh
machineh's picture

'The debt markets could really be roiled by these parties dumping large amounts of USDs and USTs in a coordinated effort.'

Yes. And the most likely place for this dumping to begin is in the Fed's $3.5 trillion custody account, whose growth rate has slowed recently.

No way in hell should the Fed be running the world's largest, off-balance sheet, unreserved, self-regulated deposit account. It's unauthorized, and it's reckless.

The custody account's former double-digit growth manifested a Ponzi process. As the music slows then stops, there's gonna be a run on the Fed.

Thu, 12/15/2011 - 14:31 | Link to Comment Luke 21
Luke 21's picture

Thanks for posting. I think this guy is dead on.

Thu, 12/15/2011 - 15:01 | Link to Comment machineh
machineh's picture

Me too.

Move over, Roubini: Michael Platt is the new Dr. Doom.

Thu, 12/15/2011 - 14:36 | Link to Comment docdudetheman
docdudetheman's picture

the funny thing about all these hedge fund managers and private sector guys talking about the woes of the euro zone and the problems of government finances in the developed world and how to fix them is that they forget that eventually, governments will just take the it from them. michael platt said it at some point, though in a different context: "governments can transfer assets from private to public  balance sheets" and they will eventually shift their misguided policies of taking bad assets on their balance sheets to one in which they just take the good assets. it will come via inflation or plain and simple expropriation.  once the shit breaks loose in this crisis which is an economic crisis after all, even the most foolish  tea baggers will eventually realize that corporate and wealth taxes will increase to levels private bankers do not even imagine in their worst nightmares...i am sure that even all those smooth talking and smiling people like kyle bass, platt and the likes will stop smiling at some point...governments are stronger in the end.

Thu, 12/15/2011 - 14:40 | Link to Comment Spigot
Spigot's picture

Gold seems to be stabilizing at 1575 for now.

I appreciate a good dose of doom from guys who run billions. Much better than people like Buffet, Bernanke, et al.

This guy is levered. You don't make 10% on bond trading in a year like this scalping bips.

Notice as a Hedgie he wanted to keep the "counter party risk" focus NOT on his firm, right?

IMO, albeit not so humble, these "traders" can't get out. They have to trade because there is no place to run that much money except in these markets. They will be in the theater as it burns to the ground. Just like Taleb's Turkey...gained weight each day until a fateful day in November.

I like Anne Barnhardt better. Straight shooter. Knows its all gonna blow, said so, returned the money. Stated: "Get out, NOW!"

Thu, 12/15/2011 - 14:40 | Link to Comment PulauHantu29
PulauHantu29's picture

No QE3 = 25% unemployment

Better prepare for 80 Million on food stamps.

Thu, 12/15/2011 - 14:55 | Link to Comment stopthenewworldorder
stopthenewworldorder's picture

that female talking head was jso thinking about another kind of head, she couldnt get enough of mr douchebag jpmorgan-alumni

at the end it looks like she actually jumps him if you watch carefully -  eeuuyuck

Thu, 12/15/2011 - 15:06 | Link to Comment quasimodo
quasimodo's picture

So, will we be having these SAME fucking discussions another 4 years from now? Many said this was it back in '08, and yet here we are, having the SAME fucking dicussions about all these SHTF scenarios. I am starting to wonder if this great reset will even happen in my lifetime-if ever

Thu, 12/15/2011 - 15:12 | Link to Comment youngandhealthy
youngandhealthy's picture

One thing is for sure...I WILL NOT INVEST IN THIS MORONS HEDGE FUND...

Thu, 12/15/2011 - 15:37 | Link to Comment the grateful un...
the grateful unemployed's picture

this guy reminds me of the trader who got all that press on the BBC interview, he is looking forward to the collapse. this is the buzz right now, and really ZH hasn't quite tapped into this line, but several high profile players/ institutions are positioning for a 2008 style selloff, (Citi says DOW 9300?) followed by the ECB starting up the printing press, (they have promised to print AFTER the market adjusts, not before) and Bernanke would follow them because you have to coordinate these things, but there will be no PREEMPTIVE move to stall off the collapse. the major players and the banks all know this, and are currently positioning themselves. best guess is that the banks which have the most exposure are putting on shorts and derivatives that will allow them to hedge a large downward move in the stock markets. remember in a short sale assets do not simply disappear, one parties losses are another parties gains. short sales are essentially third party bets. so there is the person holding the asset (read individual investor and pension funds) then the banks who have the paper on loan and the counterparties, which is often themselves. anyway those two wash each others hands, and the individual gets his ass reamed if he doesn't read the tea leaves. this is what happened in 87', when most stocks were back to their precrash levels within a year, but joe six pack was wiped out.  and knowing what you know about Obamas record of defending the little guy figure that he will give Bernanke the keys to do all of this. (recall Reagan was in charge in 87 and GHW Bush went down to the floor of the NYSE on about day three and pledged (that's the basic definition of HYPOTHECATE by the way, US TAXPAYER funds to provide liquidity to the market. we have been on the hook ever since and their greatest moment is about to come, will it come now or next fall just as Bush crashed the economy in hopes he could poison the ground ahead of the election. so stand by, hard down, hard up, you'll never know what hit you.

Thu, 12/15/2011 - 15:37 | Link to Comment cathrynm
cathrynm's picture

So I guess he's saying go 'all cash' right now.  Hmm. 

Thu, 12/15/2011 - 15:40 | Link to Comment Heyoka Bianco
Heyoka Bianco's picture

"In the United States, if California is having a really difficult time, the rest of the United States will send money to California." I call, no, I scream Bullshit! on that. The rest of the US doesn't give a tin shit about California. The Congressional cunts might send 'em a little dosh to keep them from completely crumbling, but the rest of the country actually gives them the middle finger. Just like the rest of the US gives Alabama or Mississippi or Arkansas the finger (two fingers up for West Memphis).

Thu, 12/15/2011 - 15:54 | Link to Comment the grateful un...
the grateful unemployed's picture

ultimately the Fed is going to print money, and it will go to states with the most need. and after the stock market is crashed and CalPers has to tap into the Ca state budget, the state of CA will have a great need for that new cash.and I would expect a GOP president to be as accomodating as any, because he can buy the voters of that state for a pile of fiat currency, which costs him nothing.

 

Thu, 12/15/2011 - 16:04 | Link to Comment Winston Smith 2009
Winston Smith 2009's picture

Another one of the rare hedge fund managers as aware of what's going on as is Kyle Bass.

Thu, 12/15/2011 - 17:30 | Link to Comment Snakeeyes
Snakeeyes's picture

This came up in the House Oversight hearing today on the Euro zone. I said that if you mark large US and Eurozone banks to market (sov debt, MBS, ABS, etc), they are ALL insolvent. Josh Rosner said the same thing.

"What the Euro Crisis Means for Taxpayers and the U.S. Economy, Pt. I"

http://confoundedinterest.wordpress.com

 

Thu, 12/15/2011 - 17:49 | Link to Comment I am a Man I am...
I am a Man I am Forty's picture

Doing the exact opposite as Jon Corzine.

This guy is actually trying to keep his client's money safe and not hit a home run right now.

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