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Greece Issues Statement On PSI, Says €172 Billion Of Bonds Tendered In Swap, Will Enact CACs, ISDA To Meet At 1pm To Find If CDS Trigger

Tyler Durden's picture


The biggest sovereign debt restructuring in history is now, well, history. The headlines are finally come in:


We learn that €152 of the €177 billion in Greek law bonds have tendered, which is 85.8%. This means that €25 billion in Greek law bonds have not - these are the hedge funds that could not be Steven Rattnered into participating, and will now sue Greece for par recoveries.This is also the number that ISDA will look at today to determine if, in conjunction with the CAC, means a credit event has occurred.

And yes, the CACs are coming, as is the Credit Event finding:


As a reminder from February 24:

Finally, as we have said all along, it is the UK-law bonds that are the fulcrum security here:


And here is Veni:

«On behalf of the Republic, I wish to express my appreciation to all of our creditors who have supported our ambitious program of reform and adjustment and who have shared the sacrifices of the Greek people in this historic endeavour. With the support of our official sector and private creditors, Greece will continue implementing the measures needed to achieve the fiscal adjustments and structural reforms to which it has committed, and that will return Greece to a path of sustainable growth. Our invitations to offer to exchange, and submit consents with respect to, foreign law governed will remain open until 23 March 2012, after which there will be no further opportunity for creditors holding those instruments to benefit from the package of EFSF notes, co-financing and GDP linked securities which form an important and integral part of our invitations.»

Full release:



And ISDA is not wasting any time: it will meet at 1pm GMT to "discuss the question and to determine whether a credit event has occurred."



Finally, as a reminder, the ISDA vote today will be made by the following dealers and non-dealers. It will be up to them to decide if they wish to destroy the last trace of "integrity" of the CDS market and in effect commit institutional suicide. Because if they do in fact find that there has been no trigger event, then watch CDS bases go negative across the board, as any last pretense of CDS as a hedging instrument is thrown overboard, and the only "hedging" instrument left is to sell.


Voting Dealers
Bank of America / Merrill Lynch
BNP Paribas
Credit Suisse
Deutsche Bank
Goldman Sachs
JPMorgan Chase Bank, N.A.
Morgan Stanley
Societe Generale

Consultative Dealers
The Royal Bank of Scotland

Voting Non-dealers
BlueMountain Capital (Second Term Non-dealer)
Citadel LLC(First Term Non-dealer)
D.E. Shaw Group (First Term Non-dealer)
Elliott Management Corporation (Third Term Non-dealer)
Pacific Investment Management Co., LLC (Second Term Non-dealer)



...And finally, congratulations to all Greek pensioners. You have now all been Corzined. Further instructions will be mailed in your next monthly pension statement.


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Fri, 03/09/2012 - 02:07 | 2238659 Harlequin001
Harlequin001's picture

My gold's just gone down by...nothing...

Fri, 03/09/2012 - 02:10 | 2238669 HedgeAccordingly
HedgeAccordingly's picture

run for he Hills -

Fri, 03/09/2012 - 02:11 | 2238672 Harlequin001
Harlequin001's picture

Nope... Still desperately trying to give a shit and... er... no.

Fri, 03/09/2012 - 02:42 | 2238768 AbruptlyKawaii
AbruptlyKawaii's picture


how about we JSUT SAY FUCKALL CREDIT DEFAULT SWAPS ....just for fun and lkess see whahpenzz...... i mean at this point  ugootta thorw sum fiking darts


Fri, 03/09/2012 - 03:00 | 2238818 Hober Mallow
Hober Mallow's picture

If this ain't default I'm Tarzan once again


Fri, 03/09/2012 - 06:47 | 2239003 French Frog
French Frog's picture

In plain english please, what is likely to happen to stocks if ... and why:

1)if cds are triggered

2)if cds aren't triggered

Thanks in advance for any input

Fri, 03/09/2012 - 07:04 | 2239008 GetZeeGold
GetZeeGold's picture



Dammit Jim......I'm a doctor, not a financial psychiatrist.



Fri, 03/09/2012 - 07:14 | 2239018 Comay Mierda
Comay Mierda's picture

I'd rather bet on a one legged marathon runner than bet the isda will rule this a credit event. All cds are going to become worthless, and bonds rates are about to skyrocket

There is zero hedge now

Fri, 03/09/2012 - 07:16 | 2239025 economics1996
economics1996's picture

This event will destroy any cheap money the US government gets.  The US government will default.  This is why ZH is looking at the CDS so closely.  This is the "Black Swan" event.

Fri, 03/09/2012 - 07:33 | 2239038 smlbizman
smlbizman's picture

so basically they have emptied out most their bucket so they can start filling it again...

debt is cut so they can borrow more....

Fri, 03/09/2012 - 07:36 | 2239043 GetZeeGold
GetZeeGold's picture



Rinse and came out of left field.


Who wudda thunk it?



Fri, 03/09/2012 - 10:40 | 2239441 Hard1
Hard1's picture

Tyler, did any of the English law bonds lived to tell?  It would be nice to get paid in full while everybody else volutarily got screwed just to prove how rotten the system has become!

Fri, 03/09/2012 - 11:02 | 2239462 Harlequin001
Harlequin001's picture

Why doesn'y everybody just say' To hell with these pension funds, I'm not putting any more in?" Oh they can't, can they, 'cos it's tha law isn't it...

Everybody needs a 'Stakeholder' pension I say, 'cos that way everybody has a 'stake' in the future of the country, no matter how deep in shit it is, or how short lived it might be...

Fri, 03/09/2012 - 07:35 | 2239040 Comay Mierda
Comay Mierda's picture

ding ding ding

US govt default is the gigantic, ugly, smelly, elephant in the room that is eating its own shit, and NO ONE in the press is acknowledging it.

Fri, 03/09/2012 - 07:35 | 2239041 Comay Mierda
Comay Mierda's picture

ding ding ding

US govt default is the gigantic, ugly, smelly, elephant in the room that is eating its own shit, and NO ONE in the press is acknowledging it.

Fri, 03/09/2012 - 07:47 | 2239058 Pumpkin
Pumpkin's picture

They can print it for the cost of ink and paper, or go the economical route of hitting a few keystrokes.

Fri, 03/09/2012 - 10:58 | 2239485 ElvisDog
ElvisDog's picture

True, they can do that - once. And it will work - for a little while. And then the whole system collapses. Our whole debt-based system is dependent not only on issuing new debt but on rolling over existing debt. If the Fed/Govt really starts to go down the road of printing unsterilized currency they will almost immediately have to roll over the entire debt because there won't be any more private or foreign buyers.

Fri, 03/09/2012 - 07:06 | 2239011 economics1996
economics1996's picture

"It will be up to them to decide if they wish to destroy the last trace of "integrity" of the CDS market and in effect commit institutional suicide. Because if they do in fact find that there has been no trigger event, then watch CDS bases go negative across the board, as any last pretense of CDS as a hedging instrument is thrown overboard, and the only "hedging" instrument left is to sell."


The key word "sell" meaning the big boys will be making a run for the exits in any paper.  This is sometimes referred to as a bond market crash.

Fri, 03/09/2012 - 07:43 | 2239050 Mentaliusanything
Mentaliusanything's picture

But is only 15% that are holding out, lets make a law that says "there will be no hold outs, hold outs will not be tolerated,

After all you gave us one Euro and your getting 30% back and if you wait 30years we will give it to you, the whole 30%- promise. And for the steak knives we offer you a special dividend in any year Greece has a euro to spare.

Whats not to like- lower interest (which we will borrow) longer terms and special dividends when we are an economic power house and earn a surplus in goat meat and olive oil trades.

Banks - can't live with them and can't live without them - but they just got bailed out again

Reminds me of my EX wife. Loved me when I had it left me when I didn't and sued me for what didn't exist .............


Fri, 03/09/2012 - 10:38 | 2239432 sessinpo
sessinpo's picture

It will be up to them to decide if they wish to destroy the last trace of "integrity" of the CDS market and in effect commit institutional suicide. Because if they do in fact find that there has been no trigger event, then watch CDS bases go negative across the board, as any last pretense of CDS as a hedging instrument is thrown overboard, and the only "hedging" instrument left is to sell."



The key word "sell" meaning the big boys will be making a run for the exits in any paper.  This is sometimes referred to as a bond market crash.


This is correct. The question is always of timing - when. The CDS market is destroying itself. If ISDA does not say an event is triggered, eventually, participants will abandon this market because it is worthless and corrupt - but the question is when. If an event is triggered, then the CDS will collapse the banking system.


This is the same way debt is structured. CDS is simply a derivative of debt.

Fri, 03/09/2012 - 07:38 | 2239045 bdc63
bdc63's picture

French Frogs:  "... what is likely to happen to stocks if cds's are triggered"

Bank stocks would fall as investors tried to figure out who is most exposed and where the contagion might be.  Everyone will be trying to figure out who the weak link banks are, and the vultures will come flying in to tear them apart -- leading likely to more QE.  I would also expect a general "risk off" trade until investors see where the chips fall.

But you know all that LTRO2 money that the banks took and then immediately turned around and redeposited it with the ECB ... well, that's likely to go to zero in short order.

Fri, 03/09/2012 - 10:51 | 2239471 Harlequin001
Harlequin001's picture

No, only 172 Billion or so...

The rest will balloon to trillions very soon...

Fri, 03/09/2012 - 08:29 | 2239103 blu
blu's picture

ISDA will not find an event of default (CDS issuers cannot afford to pay out) but this will have no impact on CDS markets because institutional investors will buy CDS as a hedge just as they always did, and for the very same reason --  because it is the right thing to do to protect investors.

You think there is a disconnect? There is no disconnect. This is a Ponzi operation, top to bottom, everyone has to play along in order to be paid. They are getting rich, they don't give two shits if their logic seems insane to anyone else.

Fri, 03/09/2012 - 11:57 | 2239692 French Frog
French Frog's picture

Thanks to all for the various and varied points of view

Fri, 03/09/2012 - 02:18 | 2238701 Silver Bug
Silver Bug's picture

Greece will default in the end. There is no other end result.

Fri, 03/09/2012 - 02:28 | 2238726 number cruncher
number cruncher's picture

"If the consents to theproposed amendments to the Republic’s Greek law bonds are accepted, the sum of the faceamount of those bonds that will be exchanged and of the other bonds subject to theinvitations for which the Republic has received tenders for exchange and consents to theproposed amendments will total approximately €197 billion, or 95.7% of the total face amountof the bonds subject to the invitations"

This is the biggest horseshitsquared statement made by the Greek government yet. It assumes the hold outs on the non greek legislated bonds willl agree to the terms of the CaC (which can't be applied to the to the non greek legislated bonds anyway so why the feck would they agree) and they have until March 23 to think about it. FFS.. They then include the 95% figure so the 5% hold outs on the greek legislated bonds can't collect on their CDS as no Cacs will be implemented IF all the non greek legislated bonds agree to the terms of the CaC... are they for fucking real?

Fri, 03/09/2012 - 02:32 | 2238743 LowProfile
LowProfile's picture


This is the biggest horseshitsquared

+10^2 LOL

Fri, 03/09/2012 - 02:39 | 2238764 number cruncher
number cruncher's picture

The ISDA willno doubt say they are waiting until March 23 to see if the extra 5% of the non greek legislated boindholders can push the active participation of the PSI over 90% which does not define a credit event.


I hope the CDS and bond markets goes apeshit in the meantime to send a clear message DON'T FUCK WITH THE RULES



Fri, 03/09/2012 - 03:00 | 2238821 number cruncher
number cruncher's picture

Markit Group and Creditex Group said credit default swaps traders established initial recovery values of Northern Rock Asset Management bonds at 99.25% and 98.5%, depending on the maturity. Northern Rock triggered a restructuring credit event last year when it repurchased subordinated debt.©id=CB109B63-C24A-4F07-A4CB-359D611F87E5

Fri, 03/09/2012 - 06:12 | 2238977 resurger
resurger's picture

its already at 95%


Fri, 03/09/2012 - 07:28 | 2239036 oogs66
oogs66's picture

Using the CAC is a credit Event

Fri, 03/09/2012 - 04:47 | 2238926 resurger
resurger's picture


Fri, 03/09/2012 - 02:46 | 2238786 sodbuster
sodbuster's picture

Knowing that the bankers, MSM, and the Greek government are all involved spinning the info in the best possible light, I expect more than 100% participation. And those airheads on CNBS will be totally  serious when they break the "good news"!!!

Fri, 03/09/2012 - 02:30 | 2238735 Michael
Michael's picture

How much Greek debt is being discharged in this deal? In billions please.

Fri, 03/09/2012 - 03:32 | 2238864 vast-dom
vast-dom's picture

greece defaulted a long time ago -- they are just postponing that reality in banking delusions and profit-taking vampirism.

Fri, 03/09/2012 - 06:47 | 2239004 KickIce
KickIce's picture

Same as the US.  We are among the living only due to our reserve currency status, otherwise we'd have gone Weimar long ago.

Fri, 03/09/2012 - 04:41 | 2238917 Buck Johnson
Buck Johnson's picture

Yea no kidding, wait until the pensioners see that their pension payment for next month is cut in half.  If they don't call this a credit event, then everything is a joke.

Fri, 03/09/2012 - 02:07 | 2238661 LiquidityandLunacy
LiquidityandLunacy's picture


Fri, 03/09/2012 - 02:17 | 2238693 Harlequin001
Harlequin001's picture

Not just yet thanks but maybe some other time...

Fri, 03/09/2012 - 02:07 | 2238662 Central Bankster
Central Bankster's picture

Bullish right?

Fri, 03/09/2012 - 02:10 | 2238665 jonjon831983
jonjon831983's picture

I stayed up for this like waiting for Santa Claus....


Wow... So... what now?

Fri, 03/09/2012 - 02:14 | 2238687 Cdad
Cdad's picture

What now?  Just about every last subordinated bond holder in Europe is looking to get CAC proof right quick.

Fri, 03/09/2012 - 03:00 | 2238820 Yen Cross
Yen Cross's picture

Pay back Time!

Fri, 03/09/2012 - 11:03 | 2239493 Harlequin001
Harlequin001's picture

No, I don't think they're going to get paid back...

Fri, 03/09/2012 - 02:27 | 2238721 Big Slick
Big Slick's picture

"I stayed up for this like waiting for Santa Claus...."

Did you leave out cookies and milk?  What did your letter say?

Fri, 03/09/2012 - 03:47 | 2238876 OldPhart
OldPhart's picture

He left me coal (sigh).


At least I'll have something to burn in the fireplace at the end of March.

Fri, 03/09/2012 - 07:37 | 2239044 fnord88
fnord88's picture

already swapped your FRN's for gold eh?

Fri, 03/09/2012 - 11:42 | 2239634 OldPhart
OldPhart's picture

No,'s too pricey for me.

Fri, 03/09/2012 - 02:09 | 2238666 youngman
youngman's picture they and who they are I have no idea...but they got it done.....why I do not know...boy the bankers have unlimited powers it seems...

Fri, 03/09/2012 - 02:10 | 2238670 Zgangsta
Zgangsta's picture

Twas nothing that certain items changing hands under tables couldn't overcome.

Fri, 03/09/2012 - 07:28 | 2239035 disabledvet
disabledvet's picture

more like "government excluding Greece." talk about a "cramdown provision"!

Fri, 03/09/2012 - 02:11 | 2238671 youngman
youngman's picture

To CDS or not....I think it will be called a non CDS event...

Fri, 03/09/2012 - 02:21 | 2238710 JLee2027
JLee2027's picture

Oh absolutely. And trumpets will sound declaring the crisis has passed. Again.

Fri, 03/09/2012 - 04:04 | 2238891 The Man in Room Five
The Man in Room Five's picture

But then what happens to all the other CDS's in the world? Wouldn't they instantly become (even more) worthless?

Fri, 03/09/2012 - 06:24 | 2238987 toothpicker
toothpicker's picture

ass trumpets

Fri, 03/09/2012 - 02:37 | 2238760 Andrew G
Andrew G's picture

I think it will be called a credit event horizon

Fri, 03/09/2012 - 04:47 | 2238924 resurger
resurger's picture

100% PSI soon!

 this ponzi will not end well.

Fri, 03/09/2012 - 02:12 | 2238673 Yen Cross
Yen Cross's picture

 I have read every " dog gone" Tyler post on this topic!  One conclusion comes to mind! Tyler was right from week 1, and the Credit default Swaps are going to be Triggered. 

  More Importantly, this is a wake -up notice.   Welcome to European Politics. Better yet, welcome to a more socialist France. That scenario is UGLY!

Fri, 03/09/2012 - 02:43 | 2238777 Missiondweller
Missiondweller's picture

I seem to recal Tyler said the CDS would not be triggered as the ISDA is made up of the same banksters that sold the CDS.

Fri, 03/09/2012 - 02:56 | 2238813 Tyler Durden
Tyler Durden's picture

"Keep in mind, as criminal as this appears, and as damaging to the CDS market, the real trigger will be what ISDA does determines following the end of the PSI process[ i.e. now]. If there is no credit event then either, especially when the CACs are triggered as expected - an event which will certifiably be a trigger event under Section 4.7, then ISDA is truly hell bent on blowing up the CDS market as a hedging vehicle in its entirety."

Source "ISDA Unanimous - No Payout On Greek CDS", March 1

Fri, 03/09/2012 - 03:16 | 2238838 you enjoy myself
you enjoy myself's picture

i'm wondering how (in the event of an ISDA non-event ruling) this affects claims of net notional CDS positions then.  everyone knows that gross is ballpark $700T, an unfathomable sum, but the shock of that number is mollified by assertions that the exposure is almost prefectly hedged.  as ZH has mentioned repeatedly, that claim is already absurd because of counterparty risk.  but what happens when >50% haircuts can be deemed "voluntary"?  $700T is only hedged but for the grace of ISDA?  

Fri, 03/09/2012 - 07:15 | 2239022 MeanReversion
MeanReversion's picture

No, the notional of CDS is NOT $700 trillion.  The vast majority of swaps are plain vanilla interest rate and other similar type swaps, not CDS.  The notional of all CDS is still very large but nowhere near $700 trillion.

Fri, 03/09/2012 - 06:05 | 2238971 ambrosiac
ambrosiac's picture

CACs voted in

Intention to trigger CACs announced

...but CACs haven't actually been triggered yet

Quit jumping the gun. It ain't over until the fat V lady sings "Endless Foreplay"

["Careless Whispers"]

Fri, 03/09/2012 - 08:03 | 2239071 Dr.Engineer
Dr.Engineer's picture

This looks to be a black swan because it is a dambed if you and don't scenario.  Damned if it is a credit event because it triggers CDS.  Damned if you don't because it blows up the CDS market.


So how will they change the rules to get out of this?

Fri, 03/09/2012 - 08:43 | 2239127 graymnzrc
graymnzrc's picture

Hear me out. Suppose I am a CDS issuer and a voting member of the ISDA, in the end it is all about money, not reputation, not what is right, just numbers. If I declare no credit event what is the worse that can happen? The CDS market blows up, I will concede that. However if I already collected the proceeds at issuance the only thing I am losing is the future proceeds of new CDS issuance. Since I don't have reserves set aside to cover the CDS anyway that may  be the most pallatable decision, give up the CDS market. The secondary market takes the hit.

However, if the CDS issuer is also holding counterparty CDS as an accounting gimmick to offset enourmous risky portfolio exposure, what happens to their balance sheet when they need to re-value those CDS hedges? Oh I forgot, 'assets' are no longer required to be marked to current value, they still win.

Fri, 03/09/2012 - 02:12 | 2238674 SeverinSlade
SeverinSlade's picture

Time to see if CNBS was right about CDS being irrelevant and how good that firewall truly is.

Lehman 2.0 mother fuckers.

Fri, 03/09/2012 - 02:12 | 2238675 youngman
youngman's picture

I agree...I bet there are many under the table deals.....guarantees for the pensions that when that bailout money comes...they get it back...amongst others....

Fri, 03/09/2012 - 02:12 | 2238676 non_anon
non_anon's picture

WTF does all this mean?

Fri, 03/09/2012 - 02:16 | 2238691 Harlequin001
Harlequin001's picture

It means that we have to wait AGAIN for the ISDA to tell us it's not a credit event AGAIN...

otherwise they lose their jobs...

Fri, 03/09/2012 - 02:27 | 2238719 non_anon
non_anon's picture

thanks, time for blues clues

Fri, 03/09/2012 - 06:03 | 2238884 Harlequin001
Harlequin001's picture


Fri, 03/09/2012 - 04:09 | 2238897 The Man in Room Five
The Man in Room Five's picture

But as Tyler pointed out, "If there is no credit event then either, especially when the CACs are triggered as expected - an event which will certifiably be a trigger event under Section 4.7, then ISDA is truly hell bent on blowing up the CDS market as a hedging vehicle in its entirety."

...So what happens if the CDS market is destroyed as a hedging vehicle? Someone else pointed out there's 700T of gross CDS out there... what would it mean if it's impossible for a CDS to ever be triggered?

Fri, 03/09/2012 - 04:45 | 2238922 williambanzai7
williambanzai7's picture

It means a primary driver of the TBTF business model would be shot to hell.

Fri, 03/09/2012 - 05:41 | 2238962 jeff montanye
jeff montanye's picture

if not a credit event does isda get sued?  with trillions in value one assumes somebody paid something and thought they were getting more than life insurance which said oh but you're not dead nor will you ever be dead.

Fri, 03/09/2012 - 07:34 | 2239039 Bendromeda Strain
Bendromeda Strain's picture

Someone else was also corrected, in that the majority of the notional derivative total is from Interest Rate Swaps (JP Morgan heavy), not CDS.

Fri, 03/09/2012 - 07:46 | 2239057 Rathmullan
Rathmullan's picture
Choose You Poison: Despite the hype and the intentional "mis-reporting", the bottom line on my math is that only 80.5% of the private sector holders of Greek bonds have committed to the swap.   The ISDA meets later today to determine if the result constitute a credit event. If so, we will have our first major triggering of credit default swaps since the collapse of Lehman Bros. If not, the credit default swap market for soveriegn debt will be obliterated with a corresponding increase in the risk premium for all sovereign debt. Neither outcome is good.
Fri, 03/09/2012 - 08:15 | 2239087 Esso
Esso's picture

So, does this mean I'm supposed to buy AAPL or IBM or what?

There's never a RoboTarder around when you need one.

Fri, 03/09/2012 - 12:21 | 2239798 nope-1004
nope-1004's picture



Fri, 03/09/2012 - 02:13 | 2238680 whatsinaname
whatsinaname's picture

good for crude oil I guess ?

Fri, 03/09/2012 - 02:13 | 2238681 YesWeKahn
YesWeKahn's picture

CNN still has this article "nearly 95% of bond holders accepted the swap" ...

Fri, 03/09/2012 - 02:14 | 2238682 bigkahuna
bigkahuna's picture

Well, I believe there may be egg in my eye in a financial sense here...

Oh well, if I bought the line I can do the time.

Fri, 03/09/2012 - 02:14 | 2238685 BigMike
BigMike's picture

It's like that double rainbow video:



Fri, 03/09/2012 - 02:15 | 2238688 FischerBlack
FischerBlack's picture

CNBC has been running a story all day about the 95% private creditor participation rate, no CACs no CDS. What's up with that? Futures dont seem to mind any of it at the moment.

Fri, 03/09/2012 - 02:15 | 2238689 youngman
youngman's picture

"The Republic has decided to extend the invitation period in respect of each series of itsbonds issued under laws other than Greek law until 9:00 p.m. (C.E.T.) on 23 March 2012, toallow holders of those bonds who have not yet tendered them for exchange or submittedconsents to do so."

They are extending it.....hmmmmmm...wierd

Fri, 03/09/2012 - 02:16 | 2238692 nbsharma
nbsharma's picture

surprised to see that bonds under foreign-law jurisdictions got invitation extensions until march 23, 2012. most CDS holders were probably in this camp, so the CDS might not trigger until then. am i missing something?

Fri, 03/09/2012 - 02:17 | 2238698 youngman
youngman's picture

I think you are right...but we all are MISSING a lot.....

Fri, 03/09/2012 - 02:52 | 2238803 Missiondweller
Missiondweller's picture

Maybe that's what ISDA will argue tomorrow.

Fri, 03/09/2012 - 02:17 | 2238695 ch25061
ch25061's picture

You expected Teotwawki again for the umpteenth time?
One time you might be right and thankfully
face Judgement immaculately unencumbered
by worldly possessions.

Fri, 03/09/2012 - 02:17 | 2238696 LiquidityandLunacy
LiquidityandLunacy's picture

Doesnt look like CDS will trigger. Guess that means i have to go to work tomorrow

Fri, 03/09/2012 - 02:19 | 2238700 bob_dabolina
bob_dabolina's picture


Waga Waga

Fri, 03/09/2012 - 02:19 | 2238703 Zgangsta
Zgangsta's picture

Sell the news?

Fri, 03/09/2012 - 02:21 | 2238708 cnhedge
cnhedge's picture


cds will be triggered, what now?

Fri, 03/09/2012 - 02:26 | 2238718 thedrickster
thedrickster's picture

It's net nothing, honest, FT said so.

Fri, 03/09/2012 - 02:21 | 2238709 Big Slick
Big Slick's picture

Can someone fill me in on the mindset of an investor in Greek sovereign debt?  It occurs to me that you have two flavors of sovereign bond buyers: those with aversion to risk (e.g. buyers of short-term US) and those who expect default (e.g. buyers of Greece).  With the yield where it is, why is it necessary (or suprising) that this circus act starts up when such news comes out?  Seriously, I'd be interested in constructive insight.

Fri, 03/09/2012 - 02:29 | 2238731 HD
Fri, 03/09/2012 - 14:46 | 2240430 Big Slick
Big Slick's picture

Thanks for the link HD.  While reading it occurred to me that while GS can totally screw an unknowing novice like Greece, it takes a much bigger smokescreen to screw "more sophisticated" govts like UK and US.  Either that or the leaders of those govts need to be totally in bed with the banks themselves.  That couldn't be the case... could it???  [sarc]

Fri, 03/09/2012 - 14:41 | 2240431 Big Slick
Big Slick's picture

Thanks for the link HD.  While reading it occurred to me that while GS can totally screw an unknowing novice like Greece, it takes a much bigger smokescreen to screw "more sophisticated" govts like UK and US.  Either that or the leaders of those govts need to be totally in bed with the banks themselves.  That couldn't be the case... could it???  [sarc]

Fri, 03/09/2012 - 02:22 | 2238711 Mongo
Mongo's picture

ISDA - Safe and Efficient market ... BITCHEZ!

Fri, 03/09/2012 - 02:23 | 2238713 Yen Cross
Yen Cross's picture

So much for trailing stops?/sarc

Fri, 03/09/2012 - 02:23 | 2238714 HD
HD's picture

They will never under any circumstances call it a credit event - they can't. The only thing worth less than endless fiat are CDS contracts.

Fri, 03/09/2012 - 03:45 | 2238874 The Man in Room Five
The Man in Room Five's picture

But wouldn't not calling it a credit event result in an implosion in all other CDS contracts? Who would buy a CDS if a clear default isn't called a credit event? (Then again, who would buy one now?)

Fri, 03/09/2012 - 04:19 | 2238903 HD
HD's picture

CDS is a cancer plain and simple. This entire crisis was centered around the now worthless CDS. When you deregulate bankers this is what you get - an orgy of greed that brings the world the brink.

CDS will be unwound on an ocean of fiat and inflation. They have to destroy the CDS market.

Fri, 03/09/2012 - 04:45 | 2238923 The Man in Room Five
The Man in Room Five's picture

Deregulation isn't a problem if you let failures fail, or let people voluntarily choose their medium of exchange.

Fri, 03/09/2012 - 07:23 | 2239032 Mitzibitzi
Mitzibitzi's picture

I agree. What we have now is effectively the power given to the bankers to fuck with the currency(s) pretty much any way with they like, in order to extract the wealth of us peasants, without possibility of taking a real loss if they get it wrong... and we are forced to use that currency to the exclusion of all others.

Fri, 03/09/2012 - 08:07 | 2239077 MinnesotaMD
MinnesotaMD's picture


Fri, 03/09/2012 - 07:13 | 2239019 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Yep, that's why I love this situation. This can only result in a financial implosion no matter what happens. It's almost game over for Ponzi.

Fri, 03/09/2012 - 09:44 | 2239254 Mitzibitzi
Mitzibitzi's picture

It is. But, after the dust settles, they'll only replace it with a new one. Sure, we might get a sorta-kinda-gold standard type arrangement, backed by real commodities, for a few years first. But in the end, they'll restart the Ponzi. They have to; it's the only way they can compete with the rest of us. On a level playing field, the super rich's wealth would erode over a few generations as smarter people soak up the money, since intelligence and talent will always rise to the top of any profession if the game is played honestly (which naturally can never be allowed to happen in the real world; not in finance, business, education... nowhere!) - they aren't the best and brightest mankind has to offer.. and they know it perfectly well!

Fri, 03/09/2012 - 02:24 | 2238715 Hopium Dealer
Hopium Dealer's picture

Anytime I hear about Credit Default Swaps being activated; I get nervous..

Fri, 03/09/2012 - 06:07 | 2238975 Better_late_tha...
Better_late_than_never's picture

I just count my stack again. It helps me calm down.

Fri, 03/09/2012 - 02:25 | 2238716 barliman
barliman's picture



CNBC Europe talking heads are looking for a reason the FX markets (dollar suddenly stronger) and U.S. futures turned negative on news.


You don't suppose somebody inside knows something ????


Fri, 03/09/2012 - 02:29 | 2238733 barliman
barliman's picture


Desperation sweat time in Europe

CNBC Europe talking heads entertaining idea this headline is meaningless ...

(Our producers are screaming in our ears because the talking putz just asked a guest why her firm declined to participate.)

Very quick cut to commercial - second commercial break in five minutes.


Fri, 03/09/2012 - 02:31 | 2238738 Cdad
Cdad's picture

Know something?  You mean like the fact that Greece is going to nix 25 billion in bonds with a few line outs on contracts?  And furthermore, do you suppose people know that this will have an effect on other PIIGS debt folk try to get as CAC proof as possible?  You mean know stuff like that?

Fri, 03/09/2012 - 02:39 | 2238763 barliman
barliman's picture


No offense ... but no

More like "the Greek bastards are lying about the numbers and somebody in Germany just let the word out on the back channel"


Fri, 03/09/2012 - 02:43 | 2238778 Cdad
Cdad's picture

Ah...I a second derivative conspiracy theory.  Got it.

I'm going to stick with my angle...that of other European yields rising.

Fri, 03/09/2012 - 05:55 | 2238967 reload
reload's picture

I am with you on that - up go the yields.

And frankly I hope the CDS market is dead and burried.

For simpletons like me they have made the bond markets untradeable. Any market where the price of a derivative (with a comitee determining its legitamacy) has become more important than the price of the underlying is bad news. Bring back markets where `discount to yield` & `cheapest to deliver` calculations are sufficient to determine price and then we will see in plain daylight where the underlying does trade.

Except Ben and Mario will just buy everything anyway. R.I.P price discovery & efficient allocation of capital, we miss you.

Fri, 03/09/2012 - 02:45 | 2238781 barliman
barliman's picture



The blonde and the albino just pointed out those items

Other chap just pointed out that there are huge bets being made that Spain, Ireland, Portugal, Greece etc etc can be turned around in 18 months and that is NOT going to happen.

European cynicism breaking through


Fri, 03/09/2012 - 02:51 | 2238801 Cdad
Cdad's picture

The blonde and the Albino?

Fri, 03/09/2012 - 03:00 | 2238822 barliman
barliman's picture



Chunky blonde with stringy looking hair and Italian accent (Anna Armstrong) and OK, the "albino" doesn't have pink eyes but he couldn't be ANY whiter, I missed his name and he's from some German bank, I think ...  They have now been excused.


Fri, 03/09/2012 - 03:51 | 2238882 Yen Cross
Yen Cross's picture

Jeesus? String-ey Hair?  I'm not taking sides. Southern BUSH PIG?

Fri, 03/09/2012 - 02:27 | 2238720 Yen Cross
Yen Cross's picture

Leave your short trades open. Don't T/P. This is going to be a slow melt down.

Fri, 03/09/2012 - 02:31 | 2238739 HD
HD's picture

From your mouth to the markets ears...

Fri, 03/09/2012 - 03:07 | 2238825 Yen Cross
Yen Cross's picture

HD you are Obviously well versed. Why waste your time with my posts?

Fri, 03/09/2012 - 03:12 | 2238831 HD
HD's picture

I agree with the idea of a slow melt down. I think the market is less likely to suddenly implode as it is to slowly bleed to death...

Fri, 03/09/2012 - 03:41 | 2238871 Yen Cross
Yen Cross's picture

 Thank You. Have a Great Week End.

Fri, 03/09/2012 - 02:27 | 2238722 hangemhigh77
hangemhigh77's picture

ISDA, just a big circle jerk.

Fri, 03/09/2012 - 02:27 | 2238723 CrashisOptimistic
CrashisOptimistic's picture

The meanings of this are several.

One is that a sovereign government can default, offer you some return greater than zero (which is what you get in default), and if you take that non zero return (which is much lower than what you were owed in your holdings), this constitutes "agreement" and "consensual refinancing" and doesn't trigger swaps.

This means sovereign swaps really have no value at all.  Countries will ALWAYS do this.  They will always offer something less than you are owed, but something more than zero, and the holder facing a zero return will always take the offer -- which looks consensual and thus not a swap trigger.

This HAS to remove swaps as a viable sovereign hedge tool.  Unhedged, no one will want to own these bonds.  

Rates are going to go up.

Fri, 03/09/2012 - 03:48 | 2238877 The Man in Room Five
The Man in Room Five's picture

Thank you, that was the clearest explanation I've read so far.

Fri, 03/09/2012 - 08:38 | 2239117 Implicit simplicit
Implicit simplicit's picture

Good points, but the banks will continue to buy the bonds because they must to keep the game going.

Its like writing a software program for a virtual reality matrix world. There are no real rules that can't be broken by writing another program to temporarily fix the glitch. The hard drive eventually failing from lack of capacity is another issue is another issue. As long as the real world can be locked into the fantasy program long enough for them to be looted, the banker programmers will rule the machine.

Fri, 03/09/2012 - 11:28 | 2239585 Winston Churchill
Winston Churchill's picture

Very soon !

Fri, 03/09/2012 - 02:28 | 2238728 PR Guy
PR Guy's picture

They will claim that 85 percent is not a reason to trigger CDS

The world is full of BS and this situation is at the top of a very smelly pile of it

Fri, 03/09/2012 - 03:51 | 2238881 12ToothAssassin
12ToothAssassin's picture

I would bet that they already have ISDA buy-in and promise that no CDS will be triggered even before they got the deal done.

Fri, 03/09/2012 - 02:28 | 2238730 hangemhigh77
hangemhigh77's picture

what will the call it?  A credit event? or A fish fry?  Do you want tarter sauce on your irradited Fukashima fish?

Fri, 03/09/2012 - 02:31 | 2238736 roadlust
roadlust's picture

Gap down Friday? 

We're overdue.

Fri, 03/09/2012 - 02:31 | 2238740 hangemhigh77
hangemhigh77's picture

the real question is can the Greek protestors ignite the Parliment building?  And hopefully if they can the building will be full.

Fri, 03/09/2012 - 02:32 | 2238741 barliman
barliman's picture



Back from commercial ... focus on drop in China CPI

("Anything but Greece, FX & Futures you fecking idiots!!!")


Fri, 03/09/2012 - 02:32 | 2238744 Yen Cross
Yen Cross's picture

 It doesn't matter. The English bonds are going to be the trigger! Relax and enjoy the call spreads! You people are commanding the "U' Boat!

Fri, 03/09/2012 - 02:33 | 2238745 hangemhigh77
hangemhigh77's picture

How many Greeks does it take to screw in a lightbulb?  None, there's no electricity anymore.  

Fri, 03/09/2012 - 02:33 | 2238747 upb
upb's picture

swap this, swap that... man its all meaningless for the stock market...

greece now, portugal, ireland, the cards have been shown.  They are next but the central banks will print as much as necessary to back stop the system.    Stocks the place to be, CDS event... who cares.  Debt swap... who cares.   Central banks across the globe furiously printing money???  Buy stocks..

Fri, 03/09/2012 - 02:44 | 2238782 Dasa Slooofoot
Dasa Slooofoot's picture

+1 for the Vicky Vette av

Fri, 03/09/2012 - 02:33 | 2238748 cherry picker
cherry picker's picture

What started this other than fiscal mismangement was the God Worker Bank helping Greece hide its true liabilities in order to gain acceptance into the Euro.

When people cover up the true facts in a contract that is usually a deception called fraud in a criminal court.

Why Goldman Sachs isn't being pursued by the criminal courts is beyond me.  After all the counterparty Greeks probably had no clue what they were signing, they were just told it was legitimat and would fix their balance sheet for a little while.



Fri, 03/09/2012 - 02:36 | 2238757 hangemhigh77
hangemhigh77's picture

GS OWNS the courts.  Hell, they got rid of two elected clowns, even though they were clowns, and put in two bankster pencil neck thugs liyerally taking over countries in a coup de ta and no one said a word.  And you think they are going to be prosecuted? By who?

Fri, 03/09/2012 - 02:42 | 2238773 Yen Cross
Yen Cross's picture

GS owns nothing! I have dealt with their Minions. Relax, and hold your position.

Fri, 03/09/2012 - 07:49 | 2239062 i-dog
i-dog's picture

Correction: The courts are owned by the same people that own Goldman.

Omnes viae Romam ducunt.

Fri, 03/09/2012 - 02:33 | 2238749 BlackholeDivestment
BlackholeDivestment's picture

...I do not see ''independence'', I see Wardens and punk'd out pathetic pushovers. Come on Greeks!!! Who are you? Really! Are you Greek? ...or are you something ''other''?

Fri, 03/09/2012 - 02:33 | 2238750 chindit13
chindit13's picture

Now that it is official that sovereign bondholders have no rights and that contracts can be unilaterally abrogated, only hedge funds (whose 2 and 20 don't care if haircuts were voluntary or not) will avoid sovereign paper.  Banks, whose bond desks are playing with OPM and who get bonused for accounting gains but suffer nothing for real losses, will continue to buy as if nothing happened.

And whither Greek pensions, who just accepted an effective wipeout?  Might as well liquidate the fund, which means cash out and buy Ouzo for those who no longer have a retirement.

Finally, extend and pretend has now gone to 23 March, which allows time for at least half a dozen new "Greek progress" rumor rallies in UK Law-issued bonds.  Will UK Law follow the Greek road and alter CAC terms to a pre-2004 and pre-2003 69%?

Fri, 03/09/2012 - 02:36 | 2238751 John Wilmot
John Wilmot's picture

If CDS aren't triggered, I'd like to know which stupid muth fuggas are still buying CDS...what's the point? They don't pay on a default, maybe they pay on a super duper collapse of the global financial system type default...wait, well, maybe they pay in beans or something.

Fri, 03/09/2012 - 02:38 | 2238762 hangemhigh77
hangemhigh77's picture

MAGIC beans at that.

Fri, 03/09/2012 - 02:41 | 2238769 John Wilmot
John Wilmot's picture

Vanishing beans *POOF*...but Mr. Corzine's on the case.

Fri, 03/09/2012 - 04:30 | 2238907 McNoob
McNoob's picture

I'll tell you EXACTLY which stupid mother fuggas are still buying CDS...

Pension funds, Superannuation Funds and Insurance Companies with peripheral eurozone sovereign debt who continue to value the worthless paper at historical cost.

Their balance sheets have giant black holes in them, covered up with the accounting alchemy of bond insurance.

These sovereign CDS are not even brought to be triggered... just to perpetuate the accounting fraud on their own customers/policyholders.


Fri, 03/09/2012 - 05:06 | 2238940 jomama
jomama's picture

lack of an alternative.

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