This page has been archived and commenting is disabled.

FT Rumor Time: Stress Test III: The Search For Spock (Or Optimal Greek Haircuts)

Tyler Durden's picture




 

In line with what Merkel hinted at early and appropriately early for the US close, the FT has just put out a headline with regard to a new set of stress tests (yes those ever-so-trustworthy self-inspected exams) to better understand the impact of a larger than expected Greek haircut. This makes sense given the market trading massively below prior stress test or PSI levels but perhaps the craziest thing is what this is supposed to achieve - remember its not so much Greece per se as the message that a restructuring sends to any and all indebted European nation...cue EUR at week's high levels?

From the FT: EU Banks face new 'Greek' stress test

European Union finance ministers have asked the bloc’s leading bank regulator to test the strength of Europe’s banks on the assumption of a big writedown on Greek sovereign debt.

 

The move, a tacit admission that the European Banking Authority’s two previous rounds of bank stress tests were not sufficiently robust, came as Angela Merkel, the German chancellor, said she was prepared to recapitalise her country’s banks if necessary. She suggested she wanted to discuss joint EU-wide bank support efforts at an EU summit in two weeks.

 

“We’re under the pressure of time and I think we need to take a decision quickly,” Ms Merkel said after meetings with the European Commission in Brussels.

 

According to senior officials involved in the process, the EBA has been instructed to provide a country-by-country breakdown of how much new capital banks would need in the event that Greece’s bonds were written down.

And so on.

This time the Stress Test will work, and Spock will be found, damn it Jim!

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 10/05/2011 - 14:27 | 1742181 TradingJoe
TradingJoe's picture

Anything, no matter how stupid, that buys time si more then welcome! Right?!?! Yet, time, time for what? More looting? Guess YES! The only way to get tihis fixed it to kill the rich, which saint happening at least not voluntarily :)))!

Hair cuts my ass! I have yet to see a rich fuck take a write down on his "investment" voluntarily!

Wed, 10/05/2011 - 14:48 | 1742254 TruthInSunshine
TruthInSunshine's picture

 

 

Michael Lewis (and especially Kyle Bass) are predicting either Germany is leaving the EU, essentially wiping out the EUR, or that Germany is going to impose its total will on EU bondholders (massive haircuts) after pounding PIIGS+France into complete austerity and financial reformation (good luck with that); either way, it's not a pretty picture that the future has in store for the global, and especially European, economies:

How The Financial Crisis Created A 'New Third World' 

After adopting the euro, Lewis says, Greece borrowed huge sums of money to do things like run the world's most unprofitable railroad and pay people not to show up to their jobs.

 

"It's a corrupt enterprise," he says. "When a party came to power, they'd give away lots of goodies. You talk to, for example, Greek tax collectors and they say, 'Our job is to be bad at our jobs. If you're too good at trying to collect taxes from Greeks, you get fired.' You talk to people who work for the government, and people are pretty clear that they regard these jobs as basically sinecures. It's a horribly inefficient society, and the inefficiency has been encouraged by the financial markets."

 

And Greece wasn't the only country that hid its true financial state, Lewis says.

 

"This was not a one-off situation," he says. "You look at the financial crisis in Europe, and the fingerprints of American investment bankers are everywhere. The financial collapse encouraged the worst sort of behavior. At the same time they were making bad loans in the United States, they were encouraging the same sort of behavior at the government level in Europe. The basic problem was, historically the role of the financier was to vet risk and make sure risk was evaluated. That got perverted in recent times, and instead the financier helped disguise risk."

Wed, 10/05/2011 - 14:51 | 1742271 strannick
strannick's picture

You self-obsessed pompous bastards should take a minute every so often and give a cyber-five to Tyler for the funny shit he writes. 'Stress-test III:The Search for Spock'. I snotted all over my keyboard when I read that...

Wed, 10/05/2011 - 15:02 | 1742279 TruthInSunshine
TruthInSunshine's picture

The Tylers' wit is evident to all (and probably taken for granted by many at this point, admittedly).

MICHAEL LEWIS: Greece Is A Society In Total Moral Collapse 

Must see interview with Lewis on how grave the EU situation really is (two short videos)

Chorus: How grave is it?

It's pretty damn grave.

Watch these two videos interviews of Lewis on the EU crisis, and because they lay out the crisis in such easy to understand ways, try and think of a scenario where PIIGS+France+UK does not ultimately become Lehman*500 (or 1,000).

http://www.thedailyshow.com/watch/tue-october-4-2011/exclusive---michael...

http://www.thedailyshow.com/watch/tue-october-4-2011/exclusive---michael...

Wed, 10/05/2011 - 15:31 | 1742408 Pladizow
Pladizow's picture

Reverse "Chicken Little"!

We have the solution, ok today we have it, ok now we have it, verbally kicking the can down the road!

Wed, 10/05/2011 - 15:16 | 1742348 Joshua Falken
Joshua Falken's picture

Why does everyone keep beleiving these pronouncements and buying stocks because its all gonna be fine now.

WE HAVE THE BIGGEST DEBT IN ALL HISTORY AND IT WILL NEVER BE PAID BACK.

This is just the start, and until politicians start letting mismanaged banks go bust and press reset we will throw good money after bad just like Japan has for the past 22 years.

We need Argentinian economic resolution, not Japanese, Austrian or Keynyan.

Wed, 10/05/2011 - 14:27 | 1742186 lizzy36
lizzy36's picture

Lets see Dexia passed the test conducted 4 months ago.

Allied Irish Bank passed the test conducted 4 months before it defaulted.

Color me skeptical on EU "goal seek" stress tests.

Oh yes and since after the last round banks were supposed to raise $2.3B (a tad shy of the $200B the IMF said they need and really shy of the $1T goldman said they needed) and haven't raised a penny, someone remind me what the point of the "Stress Tests" are.

Wed, 10/05/2011 - 14:44 | 1742253 Belarus
Belarus's picture

someone remind me what the point of the "Stress Tests" are.

I know, I know: So Goldman can call its clients and get them to pour capital into European banks that will all have naturally passed with flying fucking colors? And to move the ponzi market higher, if only but for another day?

Wed, 10/05/2011 - 14:46 | 1742264 TheFourthStooge-ing
TheFourthStooge-ing's picture

Someone remind me what the point of the "Stress Tests" are.

BTFD - Bury the Feces Deep

 

Wed, 10/05/2011 - 14:57 | 1742291 slewie the pi-rat
slewie the pi-rat's picture

hey, lizzy!

perhaps it is pelosiism for "do something"? 

Wed, 10/05/2011 - 14:27 | 1742187 Fips_OnTheSpot
Fips_OnTheSpot's picture

If they dont hurry up, this stress test will just be overthrown by reality... anyway the result of Test3.0 is irrelevant.

Wed, 10/05/2011 - 14:28 | 1742194 HelluvaEngineer
HelluvaEngineer's picture

whiskey tango foxtrot

Wed, 10/05/2011 - 14:41 | 1742245 SheepDog-One
SheepDog-One's picture

When all else fails, order another round of BS!

Wed, 10/05/2011 - 15:35 | 1742427 Falcon15
Falcon15's picture

Sierra November Alpha Foxtrot Uniform.

Foxtrot Uniform Bravo Alpha Romeo.

(Translation for those of you who may not understand or be slightly inebriated - SNAFU - Situation Normal All Fucked Up - Fubar - Fucked Up Beyond All Recognition.)

Wed, 10/05/2011 - 14:28 | 1742195 pods
pods's picture

Now do you think if they got Baghdad Bob to announce the results it would make them more credible?

pods

Wed, 10/05/2011 - 14:50 | 1742270 TheFourthStooge-ing
TheFourthStooge-ing's picture

Even Baghdad Bob would tell them to fuck off. Lies of this magnitude are below his minimum acceptable credibility threshold.

 

Wed, 10/05/2011 - 14:28 | 1742199 PicassoInActions
PicassoInActions's picture

should we go EURO long?

Wed, 10/05/2011 - 14:29 | 1742203 slewie the pi-rat
slewie the pi-rat's picture

'Merkel, the German chancellor, said she was prepared to recapitalise her country’s banks if necessary.'

Hahaha!  next thing ya know, they'll be inviting timmah back for new ideas!

Wed, 10/05/2011 - 14:57 | 1742289 TheFourthStooge-ing
TheFourthStooge-ing's picture

'Merkel, the German chancellor, said she was prepared to recapitalise her country’s banks if necessary.'

My theory is that something was lost in the translation of recapitalize, thusly:

re - to do again

capita - head

lies - deliberate untruths and deceptions

I think what she really meant was, "we, the heads (of governments, ECB, EU, etc.), are prepared to lie repeatedly until we're believed."

 

Wed, 10/05/2011 - 15:11 | 1742331 slewie the pi-rat
slewie the pi-rat's picture

Haha!  gd1, 4th_S_ing!

so they will be inviting timmah back!

is it only me?  i?  moi?  the NWO seems to be searching for a very compelling story to switch the narrative from its present "we are fuked" to a new level of "you are fuked"? 

Let Them Fail!  [accept no substitutes!]  they are fuking banks, not immortal mythic heroes/gods to whom we must sacrifice everything for generations, for ponzi pete's sake! 

 

 

Wed, 10/05/2011 - 14:33 | 1742213 Dick Darlington
Dick Darlington's picture

Btw, Greece's "statistical office" made a small little revisions to their GDP for years 2005-2010. Wonder what the new deficit figures will look like... Press release can be found on their website.

http://www.statistics.gr/

Wed, 10/05/2011 - 14:40 | 1742216 TruthInSunshine
TruthInSunshine's picture

Sorry for the Off Topic on the Greece Farce, Rumors, Lies & Innuendos (deja vu), but Robert Reich (whether one does or does not like him) has written an outstanding summary of the whos, whats, whys and others s's of the reason a bail out of Eurozone PIIGS+France+U.K. slop is really a bailout of....

....ta da!!!!! Wall Street!

The essential and quintessential guide to the what's really driving the EUROSLOPPIIGSFUK bailout (hint: Governments & citizens have almost no exposure to defaults; banks and investment firms like MS have MASSIVE exposure):

ROBERT REICH: Behind Europe's Debt Crisis Lurks Another Giant Bailout of Wall Street

Wed, 10/05/2011 - 14:34 | 1742219 papaswamp
papaswamp's picture

Check out the greek riot cop cold cocking the photojournalist in the face...pow!

http://www.reuters.com/article/2011/10/05/us-greece-strike-idUSTRE79449L...

Wed, 10/05/2011 - 14:34 | 1742220 jdelano
jdelano's picture

Modernized SATs:

"There's no place like home, there's no place like home, there's no place like home" is to "This is not 2008, this is not 2008, this is not 2008" as:

a: unicorn queefs are to leprechaun farts

b: expelliiarmus is to stupify

c: 'yes we can' is to 'you must pass this bill' 

Wed, 10/05/2011 - 14:37 | 1742227 RobotTrader
RobotTrader's picture

Any and all rumors about Europe have a direct and immediate impact on:

Gold, ES, AUD, EUR, Crude, as if they were all wrapped and tied together with velcro tape.

Wed, 10/05/2011 - 14:37 | 1742229 kengland
kengland's picture

I don't think this bullshit is working anymore. A lot of smart money is shorting credit on every uptick. Considering the possibility of a bazooka, that's impressive. Is it on and it can't be turned off?

Wed, 10/05/2011 - 14:38 | 1742235 jdelano
jdelano's picture

go read Hussman's piece and you'll see why.  He makes a pretty case for why a Bazooka is damn near impossible.  

Wed, 10/05/2011 - 14:39 | 1742237 SheepDog-One
SheepDog-One's picture

Damn! Star Trek was FRUITY! 

Wed, 10/05/2011 - 14:44 | 1742255 Alvaro de Esteban
Alvaro de Esteban's picture

Greek minister Haris Kastanidis in Parliament said calling a Referendum about the crisis.

End game closer

http://www.eleconomista.es/flash/noticias/3428870/10/11/El-Gobierno-griego-planea-convocar-un-referendo-popular-sobre-la-crisis.html

Wed, 10/05/2011 - 14:46 | 1742260 Fips_OnTheSpot
Fips_OnTheSpot's picture

+40oz delivery

Wed, 10/05/2011 - 14:50 | 1742272 Pancho Villa
Pancho Villa's picture

In other words: What happens if we cut Greece loose?

Of course, these stress tests will assume that the bigger haircuts for Greek debt will have no effect on any of the other PIIGS.

Wed, 10/05/2011 - 14:58 | 1742296 Dick Darlington
Dick Darlington's picture

Of course. Just like IMF's Borges said today, Spain and Italy are totally solvent. They are only victims of "market's risk aversion". And yes, he is a PhD.

Wed, 10/05/2011 - 15:19 | 1742365 fuu
fuu's picture

<golf clap> on that headline.

Wed, 10/05/2011 - 15:21 | 1742373 Bill Lumbergh
Bill Lumbergh's picture

Forget Star Trek, look to the Dukes of Hazzard with Boss Hogg and his ingenious ways of enriching himself at the expense of everyone else:

http://www.youtube.com/watch?v=iO4gPCpws60&feature=related

Wed, 10/05/2011 - 16:15 | 1742645 Georgesblog
Georgesblog's picture

Why does this smell like the Versailles Treaty, in reverse?The history of Europe is one country trying to pound the rest into the dirt. This has more split ends than a bad hairdo.

http://georgesblogforum.wordpress.com/2011/10/05/war-under-heaven-the-world-at-commerce-update-10052011/

Wed, 10/05/2011 - 16:20 | 1742674 Scalaris
Scalaris's picture


 

 

 

"remember its not so much Greece per se as the message that a restructuring sends to any and all indebted European nation.."


While I do agree, I can't help but wonder about what would happen if the European bankers work in an even more perfect unison with the Greek administration in order to impose even more inconceivably absurd austerity measures.

Because even if I do feel sorry for the investors who commited their capital in the most high-risk investments while maintaining their own non-risk environment attitude, I think that they can squeeze some more juice out of the completely dismantled and pillaged, to the point of totality, Greek corpse of a society. 

Because I hear that some families can still afford bread and perhaps the ability of food refrigeration, and that the faint scent of a Democratic instituion still has a miniscule probability of resuscitation.

And of course all that gambling/speculation-derived wealth losses shant regenerate themselves.

so.. yeah.. 

Sincerely

Wed, 10/05/2011 - 17:39 | 1743003 TheArmageddonTrader
TheArmageddonTrader's picture


Here's my latest blog on a similar topic: the renegotiation of Greece's bailout plan and bond swap.


http://how-to-trade-armageddon.com/2011/10/05/watch-the-isda/

"I still doubt, as I wrote in my Sept. 28 blog post, “Germany nudges Greece towards default”, that the ISDA could get away with calling the 50% haircut that is being discussed “voluntary”. That just strikes me as absurd, and what’s more, potentially devastating to CDS markets. CDS would come out looking like the Monty Python insurance salesman’s “never pay” policy."

Thu, 10/06/2011 - 01:46 | 1744382 Peter K
Peter K's picture

Mr. Market, "how can you let this go on?"

 

Wed, 10/12/2011 - 11:35 | 1765914 karmete
karmete's picture

Well done! Thank you very much for professional templates and community edition sesli chat sesli sohbet

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