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Greece - Has The Barber Retired?
Via Peter Tchir of TF Market Advisors,
There is a Bloomberg story out there stating that the debt negotiations are “complex”.
We never believed that the PSI “haircut” was going to get done as a voluntary negotiation. The IIF didn’t have the authority, and having the country take over negotiations has made it even less likely that any haircuts occur without a failure to pay to force the issue.
So long as the TROIKA keeps making the payments, the banks have no reason to reach a settlement, particularly on their shorter dated paper. €44 billion of Greek bonds come due next year. How much of that is held by banks or insurance companies that are supposed to negotiate, I don’t know.
In fact, how much debt is even held by banks? We argued right from the start that banks would shift their “basis” packages to hedge funds or other investors who wouldn’t be subject to the negotiations. The “basis” package decreased in value from about 100 prior to the PSI announcement, down to just under 90 (bonds at about 27 and CDS at 63). With CDS at 63 it is not worthless by any stretch of the imagination (The real reason the voluntary haircut is hurting sovereign debt). I suspect that banks have shifted the package off of their books (ZH: a glance at the chart we created below tells the story of a significant selling pressure on the basis package). Why would banks want to own a bond and get bogged down in the negotiations and have a CDS that might rally depending on the outcome. By selling them as a pair, they would have lost less than 10 points depending on the timing. Not good, but meaningful, and safer than getting into a situation where you have to write down your bonds and the CDS rallies on the forgiveness.
So I would guess that banks have fewer bonds on their books than back in October when the plan was announced. I would also guess that the average maturity of the debt that banks hold has decreased.
So banks are heavily incentivized to draw out the negotiations in hopes that their near term debt gets paid, but even if they agree to a haircut in the end, will it make a difference? If the banks don’t hold much paper because they have sold the packages, then even if Greece gets an agreement from the banks, it won’t have a material impact on the amount of Greek debt outstanding. Greece is ultimately going to have to negotiate with investors that the EU and ECB cannot put as much pressure on, because they don’t rely on their direct or indirect support for their daily existence.
Yes, the EU’s own policies forced the bonds out of the hands of owners that could be forced to negotiate, into the hands of true private holders who can run the basis package and are somewhat indifferent to whether they get back par because CDS triggers or because the bonds they hold against CDS mature at par. Well, actually they do care. They would rather have a default in most cases, because they would monetize the profit sooner and not have to keep the positions on the books. So more bonds are now held by investors who would prefer a quick default.
So ultimately, I don’t see a way for Greece to avoid having a failure to pay. The agreement with the banks doesn’t do enough (especially if they really have sold all of their basis) and there is no way to force a true “for profit”, “not living on government funding” investor to agree take the hit without defaulting. I am sure someone will argue that these were “unintended” consequences when what they really mean is that these are “unwanted” consequences. The consequences were quite foreseeable. It was relatively easy to map out the chain of events that has occurred, and now made the situation more difficult. It is not what they intended, and it is not what they wanted, but they should have expected the consequences. Politicians and central bankers have to stop hiding behind the “unintended” consequences phrase when the consequences were quite likely to occur as a direct result of their actions.
With the latest round of IMF money likely, this gets pushed off until sometime next year. Greece and the EU aren’t ready to contemplate a default while trying to piece together the plans for the other members. There is no way that they would take that risk until they are comfortable that they have stopped the crisis. So in the meantime, short dated bonds are likely to get paid par, and this is on the backburner, but just because it is on the backburner, doesn’t make it go away.
Sarkozy made some comments yesterday about how there wouldn’t be another default in the Eurozone other than Greece. The politicians have to be very careful, as language like that, if it came from the leaders of Greece, might be enough to try and trigger a Repudiation/Moratorium event, which would extend the maturity of near term CDS contracts. That remains unlikely, but as the rhetoric increases in an effort to cajole banks into agreeing to a plan, they run more risk of saying something that effectively invokes this clause of the CDS contract.
The daily dialogue that some sort of bailout and some sort of solution and some central bank action seems to be churning along, but the Greek haircut will ultimately have to be dealt with and I don’t see how it is accomplished without a failure to pay and involves all bond holders. Some holders may receive preferential offers (ECB and Greek Institutions) but avoiding a honest to goodness failure to pay seems impossible, and avoiding the writedowns altogether also seems impossible.
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one of the two has to blink.. dollar or euro... speaking of hair cuts - http://hedge.ly/ubOD14
Here's what was over heard at the complex conference.
10 Bondholder: Got any money?
20 Greece: Nope.
30 Bondholder: Got any money now?
40 Greece: Nope.
50 Bondholder: Want some money for the interest?
60 Greece: Sure.
70 Bondholder: Got any money?
80 Greece: Sure here you go, just the interest though.
90 GOTO Line 10.
Very funny;
i shouldn't laugh though as it's really tragic but can't help it
ON AN IMPORTANT AND RELATED NOTE:
The 'Republican Jewish Coalition' has declined to invite Ron Paul to their nationally televised debate on Dec. 7th. Apparently, Paul is 'misguided' and'extreme'. More here: http://www.infowars.com/republican-jewish-coalition-bars-ron-paul-from-d...
You can email the RJC here: rjc@rjchq.org
And you can reach their ladies' group here: Women@RJCHQ.org
Amazing, truly amazing.
so will it be only Eurobanks and Greek banks getting preferential treatment ? will the rest be asked to go to hell ? any US banks on the hook there ? is that why Uncle Ben needed to step in ?
It's a rotating "I'll gladly pay you Tuesday" Wimpy from Popeye scheme.
When Wimpy finally can't pay, Greece will default.
Wimpy will then be bought a one way ticket to Italy on the Eurorail by Goldman Sachs, where the game will begin again.
Wimpy will get his hamburger, the banks and GS will get their bonuses, and the taxpayers of the world will pay for both.
Next stop, Spain.
The central banks and investment houses are stalling for time using sovereign debt on the backs of future generations to clear their bad bets (corrupt bets, gambling).
You're showing your age, typing numbered-line BASIC like that ;-)
+1
Brings back memories of the Trash-80!
Before the age of OOPS programming. I was thinking more in line with Fortran 77. 77 character per line, break the line call the next line. Fuck it was awful.
To everyone under the age of 50, that awful coding language is the back bone of your pensions and savings on a mainframe somewhere.
Somehow though we made it all run with the junk we used. And by junk, I mean, buying parts from a guy in a basement that just finished saudering it (whatever it is) together the night before. lol Got me thinking about a display adapter I bought for $3000 in 87, stuck it in an AES 7000, it caught on fire and it burned down a very expensive word processor. Man I like tech now, it's documented, it works and it's safe.
fortran wat-5,cobal,pascal
It used to be that the procedure was to conquer the country you owed money to, take possession of the debt documents, and burn them.
Now, since multiple banks in many different countries loaned the money, that procedure cannot be executed.
The new procedure has to be:
Find a defenseless country that is completely uninvolved, but has assets. Conquer them. Take their assets, and use them to pay off the loans.
Italy should be looking at Libya right about now. The UN won't stop them.
the barber is taking a break. greece will keep sliding downhill until the politicians begin to starve.
http://expose2.wordpress.com
Greece: Like it never even happened...
'Greece and the EU aren’t ready to contemplate a default while trying to piece together the plans for the other members. There is no way that they would take that risk until they are comfortable that they have stopped the crisis.'
Default isn't something you 'contemplate'. Either you're insolvent or you're not. Greece is and has been insolvent for some time now. Waiting for 'we're going to default' announcement is moronic.
With these thieves in charge, when I hear "avoiding a honest to goodness failure to pay seems impossible, and avoiding the writedowns altogether also seems impossible" I'm sorry but I can't help thinking that these bastards will somehow find a way to either not pay up or lump their liabilities unto someone else.
Largely correct, with one nuance you did not mention.
The banks have no reason to acknowledge any decision to default on the part of Greece, or Italy. Those countries might stop making payments, but the banks can just shrug and let the paper continue to compound the debt.
If those countries ever, EVER, hold assets in some other country, the banks can show up and confiscate.
There is no bankruptcy court to make all this go away. You pay up. You can't expunge.
The people shud just start crapping in a box and mailing it into the banks as monthly mortgage payments and just tell the banks they now regard shit to be money the same way the banks have told them the shit they print is money. A few elephants could pay off the national debt in a week.
+1,000 - now all we need is a political endorsement...(like) -->I am Jon Corzine & I approve this message
Since Greeks are protesting the irresponsible government by not paying their taxes, the Greek government inserted the tax bill in the Electricity bill, so that people have to pay or have their electricity cut-off.
The shrewed Greeks bought all available generators off the selves.
Why can we not do the same thing here? Governments mis-appropriating out taxes; let them print money to finance themselves, the leaches and the paracites. (They print anyway.) We can then keep our tax money and buy gold.
shut it down! Is Southern Europe any better since the Troika came in? The 0.1% are protected, and can easily move to the North. The rest have to endure a lost decade. fcking debt slavery.
So for people, like me, not as financially savvy as Peter T., the longer this default gets delayed, the bigger and the more unforeseen the consequences. At least by the politicians. And the worse the fallout will be world wide.
THAT'S what you got out of it? All I got was blah blah blah blah blah blah blah...
The US is going the way of Greece very soon. http://djia.tv/reuters/us-morning-call-stock-futures-rise-ahead-of-jobs-...
If stocks go into another correction.
You are going to see the "Mother of All Breakouts" in TLT, TIP, and Muni-Bonds.
All investors have faith in right now is U.S. "paper"
http://www.wallstreetbear.com/board/view.php?topic=91517&post=330951
Eventually, they will turn to stocks and commodities again.
Because any and all selloffs is virtually guaranteed to get investors to flee into U.S. Fiat notes, and drive interest rates down to "Animal Spirits" lows.
You're learning son. Now , do you remember the end of the nursery rhyme i taught you?
And we'll be jolly friends
For ever mo, mo, momo momo
RobotTrader - you'll be happy to know that I picked my username in your honor.
You're comments are the most consistently off-topic and irrelevant.
Looks like it will be China who pays for the Great American Rebuilding Program.
China will invest in US infrastructure and US diplomats hope this will create enough jobs to quell the joblessness crisis.
In return I imagine China will stay in US paper for the year, not buying any less than they have, but not buying any more. This means the Direct bidder, the Federal Reserve, will need to keep the fire hose of liquidity wide open. This will keep liquidity flowing like a waterfall into the current sea of finance, which already awash with debris of failure like a shoreline after a tsunami will create an epic clusterfuck for Central Banks to manage debt positions.
Since all interest rates are tied together, the world over will be printing hand in hand. If, and this is a big if, if it spurs job growth, there will be a trickle down effect of minimal proportions, but may lead to a marginal increase in GDP. But the Debt/GDP ratio will likely increase, because productivity at this point would have to be huge to compare to debt creation.
Basically, it looks to be the last leg of the journey for Neo-Keynesian economic policy. War with Iran and Europe failing will get kicked around for another year while the US and China pretend all is well in their respective government circles.
Of course, all is not well, and even a well laid plan is set to fail since the plan is based on the foundation of the Great Fiat Ponzi. For after all, when a plan is based on lies, there is no plan at all.
Robot, I actually think you are right, but the sell off that will insure at some point in the future and who knows what the time frame will be will be fierce. This, I suggest, will be the start of the great re-set. Maybe 12 to 18 months after the inflows start???
Sorry could somebody translate it for me "Some holders may receive preferential offers (ECB and Greek Institutions) but avoiding a honest to goodness failure to pay seems impossible, and avoiding the writedowns altogether also seems impossible." Thank you
Goes in this order:
The fattest pig gets first crack at the pot of money.
Everyone else: it's coming
Everyone else: trust us it's coming
Everyone else: we promise
Everyone else: didn't we say it's coming?
Everyone else: What money?
Will this spare all of the wasted time and energy arguing over what exactly constitutes a credit event?
Do farts have lumps?
Only the really good ones.
<=== yes! i want to enroll!
<=== call me after a few more tokes and drinks, slewie
announcing: Masters Degrees In DEBT NEGOTIATION
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instant matriculation for anyone who has EVER junked Robo_T!!!
Have a great weekend:
http://www.ritholtz.com/blog/2011/12/one-big-greek-post/
Good cartoons....
I love this:
Deleted msg, sorry.Thanks for viewing.
Since the objective of the game has now been revealed to be making all so-called 'nations' just vassel states to a EuroGoldman Vampire Leviathan, it makes little difference. Wait, negotiate in long, languid sessions, and eventually Greek debt will be generously repaid, in the form of land, gold, antiquities, virgins, little boys or whatever else the elite swine desire.
How about France? Sacre Bleu!
France Sovereign Debt Downgraded – Debt to GDP Breaks 90%! (But US at 96% Debt to GDP)
http://confoundedinterest.wordpress.com/
Hey, Tyler, I wonder if anyone here, read what you posted yesterday?
"STARVE THAT BEAST"...made sense to me.
MIGHT AS WELL BE WATCHING..."dancing with the stars"!!
Why are bank stocks running so much today?
Because they printed a bunch of fiat crap and are throwing them at the banksters to insure they get bonuses. That sounds crazy but that's really what's happening.
that intervention a couple days ago to europe, was actually a bailout for US banks! DERIVATIVES PEOPLE! now these US banks are in asia!
how can you not run fast and far when you have the winds of the fed at your back?
Probably because a major low was made last week in that group.
Possible that it could be the top performing sector in 2012.
are you for real? you are so delusional as to think the banking insolvency/ soverign bankruptcy problem wont manifest itself within a year or two? good luck with that robo.
No, he has a point. Oct 4th was the bottom.
Look. The central banks blinked (again), they have basically stated the direction, a crash will not be allowed so they are going to continue to pump money in as required to save the world. The cadence of their interventions will increase until inflation takes a life of it's own and makes the existing debts proportionally irrelevant. i.e. big numbers. I'm personally picking up low P/E, high yield utilities/energy/pharma on the dips.
Stagflation. The rest of the decade is going to look like the 1970s on steroids.
banks need exercise
they're going to paint the tape today. No way the market closes red. As it drops and drops it's met with a 20 point move up in one tick. The crooks are running on WS.
Haircut..??
Think Kojac.
Yield on a 1 year Greek bond hit 343% today...
Golly Mister - anything is possible if you only believe! Now where did I put my fairy dust and unicorn smiles?
The banks are going to use the FED ejaculation to repackage the CDS's to sell to pension funds; I'd bet CALPERS is first in line.
WTI is in its own fucking world today.
How so?
It hasn't really budged as equity markets have been giving up gains. Also, there seems to be a compression trade between SPY vs USO. http://stockcharts.com/h-sc/ui?s=SPY&p=D&b=5&g=0&id=p00410510554
Well, USO is pretty far down on the list of things I use when evaluating oil related things...
I note that the Brent-WTI spread has widened, which tells me of true underlying strength....
Sorry, I should have clarified that I do not use USO to measure WTI. I just decided to see how USO and SPX correlate when I saw that. I think that ICE is actually rich.
Oh no! So all those ones and zeroes that the bankers loaned out, all that made-up, imaginary 'money' that they expected to get back in the form of 'real' money, the kind with actual value, the result of labor and innovation, doesn't seem to be returning--with interest--to their greedy little mitts? Gee, maybe they shoulda thought of that when they were leveraging the living shit out of their reserves. It's time for the banking system to start eating this huge, stinking pile of debt that they created, a direct result of pure, unbridled greed. Whatever benefit to the world that banks could have offered has devolved into nothing more than parasitic destruction on an epic scale.
What a deal: Here, I'll give you this electronic representation of money I just created on my computer with a few simple keystrokes (never mind that I only have about a tenth of that amount of actual cash in my possession--and that's not really mine cuz it belongs to our depositors--how crazy is that! Gosh that still makes me chuckle after all these years) and in return, you'll send me cold hard cash that you earned (by going to work or doing something productive) every month, plus interest, until this balance goes to zero. And if you keep your end of the bargain, you'll earn Preferred Customer status and you can come back in and do this any time you want. Oh, and just one more small thing: If you fail to meet the terms of our agreement, we'll make your life a living fucking hell, cuz even though we're bankers, we're first and foremost the spawn of Satan. Oh, and please accept this complimentary ball-point pen as a show of our appreciation.
"The banks are going to use the FED ejaculation to repackage the CDS's to sell to pension funds; I'd bet CALPERS is first in line."
Lol.
"So I would guess that banks have fewer bonds on their books than back in October when the plan was announced. "
who besides the Fed and or ECB is buying that crap. The mega banks must be buying some.
libertarian86.blogspot.com
And remember..it will all be voluntary...so no CDS problem.....
"Has the Barber Retired?"
No, he is being replaced by the executioner. Just waiting for the appropriate candidate to be selected.
Hedge accordingly.
http://reason.com/blog/2011/12/01/republican-jewish-coalition-bars-ron-pau
Republican Jewish Coalition Bars Ron Paul From Presidential Debate, Saying He's Too "misguided and extreme"
WTF!!!!!!!!
Ron Paul doesn't support the military/industrial complex, which is hell bent on staying at war in the Middle East, and making trillions off the taxpayer.
Chest thumping Republicrats who happily send their kids off to die in the Middle East to support the military/industrial complex and the simplistic notion that killing Arabs is good can't stand the thought of not having a military base in 172 countries.
Ron Paul makes too much sense for the establishment Republicans to support; they want to continue "business as usual" with the tit-for-tat get nothing done stalemate in the CONgress that has bled the middle class dry for the past 40 years.
The Jews that aren't Republican are rabid Democrats; go figure.
You give them too much credit. Pols don't send their OWN kids off to die. They send the poor, uneducated children of poor, uneducated adults off to die. When they do, in return the Pols give them a folded up American flag for their trouble.
You forgot... a folded up American flag... made in CHINA.. for their trouble.
Would it be enough for the Zionists if every last Arab was dead? I very much doubt it.
Since the red sheild is one of the families on the other side of the excessive usury at the Fed and the one world government that has run the world since 1913 (only to be strenghtened by the U.N., the IMF etc.) this should come as NO suprise to anyone. The U.S. army has been doing their bidding for over 100 years, tell us something we don't know.
The Greece issue seems to be a Goldman Sachs investment. Goldman helped Greece hide there loses from the European Union yet wrote Credit Default Swaps to probably bet against Greece's future default. It's interesting how Greece's problems were swept under the rug after the referendum didn't pass.