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Greek "Voluntary" Restructuring On Verge Of Collapse As Hedge Fund Vega Threatens To Sue Greece For Excessive Haircut
Back in June, which now seems like a lifetime ago, we wrote an article titled: "A Few Good Hedge Funds May Have Called The ECB's Bluff, And Hold The Future Of The EUR Hostage" in which we discussed the weakest link in the Eurozone bailout and in which we warned, rather prophetically as it turns out, "that not only is Bailout #2 in jeopardy of not passing the Greek parliament, but that we may suddenly find ourselves in the biggest "activist" investor drama, in which voluntary restructuring "hold out" hedge funds will settle for Cheapest to Delivery or else demand a trillion pounds of flesh from the ECB in order to keep the eurozone afloat. In other words, the drama is about to get very, very real. And, most ironically, a tiny David is about to flip the scales on the mammoth Goliath of the ECB and hold the entire European experiment hostage..." Why prophetic? Because the FT has just reported that "One of the most prominent hedge funds holding Greek bonds has threatened legal action against officials negotiating the country’s debt restructuring if losses are too deep, raising a hurdle to eurozone leaders’ hopes of quickly reducing the country’s debt levels." Well, Vega may not be quite the David we envisioned but it will do. The bottom line is that the weakest link in the Eurozone rescue, precisely the one we predicted over six months ago, has now been exposed. We fully expect other "activist" funds to be buying up or have already bought up the debt of the other PIIGS, and hold the future of the Eurozone ransom for the princely sum of 1 million dollars.... Or realistically, much, much more. Oh, and so much for ISDA's carefully conceived plan of a "voluntary" restructuring - should Vega proceed to indeed sue Greece it is game over for the worst laid plan of mice and corrupt derivatives organizations.
More from the FT on what many has considered a ludicrous probability yet one which is now all too real: a lawsuit of a sovereign by
Madrid-based Vega Asset Management, an original member of a steering committee for bondholder negotiators, wrote to fellow investors this month to say that it would consider suing if Greece insisted on writedowns of more than half the net present value of the debt.
“Vega believes that, given the current position of the official sector, a voluntary exchange that implies a NPV loss of 50 per cent or less is not now a likely outcome,” Jesús Sáa Requejo, a senior Vega executive, wrote in the letter on December 7. “Vega needs to start considering all available legal options to refuse and challenge any exchange that implies a NPV loss of more than 50 per cent.”
Vega, which has resigned from the steering committee, declined to comment.
The Greek bond deal is the centrepiece of a €130bn second Greek bail-out negotiated at an October summit in Brussels. Bondholders agreed to take a 50 per cent “haircut” on the face value of their bonds, which officials estimated would knock about €100bn off Greece’s €350bn debt pile.
...
Vega is thought to have been upset by the negotiating approach of Greece and international lenders, including the EU and International Monetary Fund. According to one participant, at meetings Vega complained about the refusal of the European Central Bank to take any losses on its holdings or for Greek banks – in effect wards of the state – to accept write downs.
And now, past the customary several day gestation period during which the idiot market comprehends what the real risk here is, namely that of CDS triggering in serial fashion across the eurozone as the "activist sovereign investor class" emerges, it is time to hedge.
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Greece is buggered for years to come.
Maybe in the evolving language, people will say that you've been greeced.
Ever wonder why the largest sellign condom company in the world is called Trojan?
Ponder worthy. Greece is a gift that will keep on giving. It's the pin pulled from the grenade that will light Spain's powder (surprising news that Spanish bond yields are actually down and considered strong? Whut? Whutever!).
Greecing the skids on Europe since Long Ago BCE.
ori
/the-plan/
In a world where the sheeple get fleeced
By the minions like Benny the Beast
At the end of the day
Will Historians say
That the butts of the world had been Greeced
Preparations A through G were a complete failure. But now, ladies and gentlemen, we finally have a working debt solution, which we shall call... Preparation H
Plan A: Sword of Pericles hanging from a thread attached to a chad licked onto an envelope falling to the Earth
Plan B: Sword of Damocles balanced on its tip on a significant body part.
Both plans lead to Rome.
When does the Pope arrive ?
Plan C:
Create a new war to "raise aggregate demand" and appease the Gods of Krugman:
http://azizonomics.com/2011/12/21/the-new-cold-war/
NPV.. What does that stand for?
Net Present Vapor?
NPV: Nominal Phantasmal Value
Poor deputy Greek prime minister can't afford new tax...
http://goldandsilverlinings.com/?p=1797
"throw me a frickin bone!"
Dr. Evil: "...one hundred billion dollars!"
Lloyd Bankfiend: "Excuse me, sir, but we fleece our clients for that much each year for bonuses alone."
that sir, is some serious skillz. biggie had nuthin on you.
Well you threw down the gauntlet.....
When the sovereign outlook's not rosy
And the bankers and hedgies aren't cozy
When subpoenas are filed
And the lawyers get riled
What will be the response of Merkozy?
Yeah,baby,payback time from Troy,not in MI.
Well GOSPLAN HERO the real funny part is Greece is only tiny compared to other buggered European nations and the US. Lots of buggery coming, soon.
Ya, good luck in filing THAT lawsuit, let alone get any objectivity......
They're just along for the ride, and the rules change every day.....
Send in the frickin' sharks with the frickin' laser beams.
Will this do?
http://www.anthillz.net/wp-content/uploads/2011/06/Flying-Sharks.jpg
Taibbi comes out swinging and says that Obama & Geithner are "acting like Lehman or Enron executives before Lehman collapsed," and that Obama & Geithner are lying about the financial and banking sector massive fraud pandemic in order to try and maintain what's left of whatever confidence some imbeciles apparently still have in the system.
It's all a big sack of shit, and everyone and their dog knows it.
Obama and Geithner: Government, Enron-Stylelast week i witessed a panel discussion on the " mortgage mess" as they described it - at the tenament house sponsored by propublica with a representative of the ABA, Propublica investigative (a joke) reporter and Neil M. Barofsky of TARP fame - now a professor at NYU
Propublica flag has been captured by the obama adimistration - never heard so many diversionary / meaningless words in my life to describe the various forms of fraud by all of them - they were trying diligently to pin all this on the borrower as if they had the underwriting responsibility - suprisingly barofsky made general statements that recognized the damage this whole affair has done to confidence in the legal process and business practices but he would not - nor anyone else - use the word fraud - i believe Propublica works for the banks and the adminstration - they are trying diligently to white wash this whole sordid fraudulent affair
the problem is - there is momentum all around - the CDO portfolio owners are now consolidating their positions and getting to 25% critical mass - after years in the dark and the banks fending them off - which now allows them to get detailed information on ALL the documents in the CDO and it is a blockbuster since the paper is probably 40-70% not meeting the standards of the reps by the banks - if it even exists - its an avalanche coming back at them plus potential RICO filings by the states for systemic practices across the board as they start moving on thier investigations
Tabibi is a Black Swan for Obama and Geithner. Who would have thought that a guy from Rolling Stone Magazine would be the one to do more than most anyone to expose the craziness? That was out of left field. But, I can see the regular business press was not going to publish Tabibi and offend their big advertisers....
The second coming of Hunter S Thompson....... only he's clean off the hopium!
I don't know why. I would expect to get paid back on a 1 year note with a 347% yield so why wouldn't the paper hangers agree to deal with the Greek government. Sheesh.
We've gone to ludicrous speed.
http://www.youtube.com/watch?v=wI4tevra8Lg
Think we need Leo Kolivakis back for his perspective.
Um.. no thanks. Plenty of ZHers don't need him to rehash "the greatness of Chinese solars" all over again.
Folks at Vega should choose very carefully the hotels where they stay. Or face DSK-like fate.
Vega, DSK, PIMCO, Gold and Silver, GloomDoom-Faber, and Nicholas Taleb are all hangn' the same way on the same side of the street...same hotel with adjoining rooms. No limit poker. Winner takes all. No exit.
fucking unreal how the mkt is so housing mkt sensitive....no we get the truth that the sales data was wrong for 3 years and the mkt doesnt selloff...this game is so fucking rigged..i hope these hedge fund guys fuck em right in the ass
Everyone 'expects' the numbers to be rigged. Lies are the new accepted reality.
ever since ford pardoned *nixon [*pro's [jmo] never ordered the watergate breakin/hated communism, and was a friend of joe mcCarthy, as was 'jfk & family' - ** kissinger was/could have been [deep throat?], eh?
it's time the country moved on, says jerry - and put the unsettled past behind us?
answer me this? where the hell did ford [before or after spiral???/dsk?] come from to begin with?
and how did nelson rockefeller get in the picture?
seems that's the 'mo' for the country the last 40years,... and just how has it worked out for the future - america?
put the cart in front of the horse, and don't be afraid to close the barn doors behind ya - for the rustlers have already cashed in at the local glue factory, binding-up our defunct history books via dysfunctional reverse political psychology
WTF is this guy rambling about?
perhaps your illiterate,... so i'll excuse you this time?
beginning with the ford administrations denial to prosecute,... the country has walked past all historically necessary changes,... the fact finding 'rule-of-law' events of public trust and transparency to witness the known or unknown as grownups in order [sequestering the truth, and proliferating the lies?] to right the countries wayward path,... but our countries leaders chose not! why? in order not to upset the malfeasance, and nefarious actions that were present, and common,... now and forever more established as america's status-quo - which to this very day has metastasized beyond hope, and change [other than mindless words from past and present presidents?].
faber explains in explicit concrete terms our financial degeneration --- i explain in implicitly abstract political decadence the cause and effect of not dealing with a crises - because in todays' present tense it has morphed into the norm --- in which i rest my case [the politicians write the laws - just ask; gramm,leach,bliley,frank,dodd,sarbanes, and oxley to name a few] ,if ever i had to!
for the norm today in politics and our financial universe has been corrupted beyond salvation
yours truly, "The Rambling Man"
Great point - What I found absolutely amazing was the fact that DESPITE the revisions, the month-over-month changes were not affected significantly. As such, the directional trend in existing home sales remains the same - Ummm, really?!
I don't see any good news, but the market, led by XOM, is shooting for a green.
so who can i sue for my Au and Ag losses?
If you're black you can sue anyone and win.
Can anyone explain why the VIX is getting hammered again today?
It's low volume.
BIG options traders are already with their famililies in the Hamptons getting shit faced.
Also, 3x and 2x levered (and inverse levered) ETFs are more widely used so ultimately the VIX becomes ever more irrelevant as these products become more widely used.
no one goes to the hamptons in the winter. come on.
dumb.
I know. The truth is sad and dumb.
Blacks sue for not getting approved for mortgages. Blacks sue for getting mortgages. They win in both cases.
Unless blacks are handed 1,000,000 in cash that never has to get repaid the banks are discriminating.
just shut up already.
You know your name comes from a song by a black man? Ice Cube's cousin in fact.
He's takin' it back for the white man, lol.
It's a play on the duality of our society.
A low class black guy making fun of the corrupt system that keeps most black people on welfare.
And some people are so stupid that they judge an entire set of people by the idiocy of a few. Those same people refuse to see that such behavior is sown and vigorously promoted by the welfare state, instead preferring to focus on stupid, divisive issues like "race", while ignoring the apocalyptically corrupt collapsing system.
Cut the pc crap.
http://www.lagriffedulion.f2s.com/index.html
Well, there are two different worlds. Here's the proof:
http://www.hulu.com/watch/10356/saturday-night-live-white-like-me
If you're black you can sue anyone and win.
By that "logic"
If you're Jewish you will KNOW how to sue anybody and win.
Excellent!
Beware of Greeks bearing Gilts
Vega has some realistic arguments against the ECB, IMF and Greek Banks. Not up to speed on your prior post of six months ago, but can see that this threatened action may become the sand under the foundation of Euro debt. I wonder how long it will take other financial asset management venues to get in line behind Vega.
And if the EU crats try to bugger the Hedge Funders in court trust in markets drops even lower.
Anyone listen to Peter Schiff radio show? He had AnnBarnhardt on today. She was going off pretty good.
Compared to that chick, Fukushima and Chernobyl are just glow in the dark watch dials.
I guess the VIX could give a rats ass...ha ha NASDAQ down 2 - 1.5 % VIX down over 5% broken markets...
Big options traders are vacationing already.
they can litigate, and then wait and wait, and by the time greece has to pay them, it will be in hyperinflated drachma at 1 percent of the value of the euro. good luck with that!
your right it will take an emense amount of time and thery wont get anything but what it will do its put a spot light on it and the ECB special considerations
Indeed. It's just sad that they believe some form of free-market fueled democracy still exists... and the property rights that go with it. Too many people are looking at the trees and not the forest we are being pulled through.
kito said:
No doubt this is true, and they know they'd be lucky to get ten cents on the dollar. Their litigation isn't about winning, it's about fucking (specifically, fucking up or fucking over).
This is a brawl between goons and thugs. Litigation would throw a monkey wrench into the gears of the whole "voluntary" writedown charade. It all depends upon everybody agreeing to pretend that there is not, never has been, and never will be a default. A lawsuit with little chance of prying loose much cash from Greece could still be hugely successful as a threat for extorting a big bribe from Merkozy, the ECB, the Bernank, the IMF, etc.
You can expect to see anyone that thinks they can get a better deal resort to litigious extortion.
lmao.
Bread, circus & freaking carnival time.
Someone ring me when the Hindenburg crashes into the Titanic that's carrying Fukushima's concentrated MOX which causes CERN to misfire, creating a wormhole.
Wouldn't matter at this point... That comment already made the hot coffee come out of my nose...
Mayan's started their Apocalypse countdown clock yesterday...T-minus 365 days and counting.
Where is Gary-7 when you need him most ?
You have it backwards. There is already a banking wormhole that is sucking every dollar and every resource on the planet into it. Then the elites will build a new airship, styled like Hindenberg but luxurious like the Titanic, and power it with CERN technology for a getaway into the atmosphere, while Fukishima melts down and destroys all life here on the ground below.
Don't you know anything? Think, man! Didn't you see '2012'?
How juvenile to accuse Hedge Funds of the unfavorable failure to realize that the rules of risks/losses, which were meant for other people, also apply to them.
Very narrow minded some might say.
http://www.finalternatives.com/node/19105
We can only hope this blows up the entire zombie bank system.
Haircut? shave your @ss and walk backwards
Markets love the idea... jesus.
Dad I have a gun upstairs! LMAO! Let the { Discovery Channel}, kill THEM!>
This market can run for weeks on $650 Billion in bailouts.
Let the games begin.
Vega suing Greeks. Poetic, in a way.
How dare Vega destroy the festive mood of the Season.
Misanthropic if you ask me.
End the Fed.
Van Halen/ http://www.youtube.com/watch?v=NkJOZOOXJWk Some one give me a doctor!!!!
Anyone hear about how the debt redemption that Greece was to pay out this past Monday turn out? Any funds hitting accounts?
It's like this 2.5b Euro redemption fell into a black hole, sight unseen :/
wake me when Santa pozi is over, 'cause it appears nothing will stop it.
my big bulimic greek divorce
I see the armed drones being launched tonight. Here's a message to all the wives and loved ones of all the Vega Asset Management executives, make sure your guys have up to date life insurance, they won't let you file that case.
Oh, extra message to Jesús Sáa Requejo, better stay clear of hotel maids in future or better still, publically declare yourself gay now.
The collapse a cometh.
The will get their money back...well maybe 2020....
60% of lehmans counterparties are still waiting for money.....
Now we talk about the Greece
Has the world gone crazy?
Firstly, which court will they sue them in? Secondly, why couldn't Greece just tell them to shut up and go away? What's Vega going to do, raise a private army and invade Greece? Thirdly, by issuing a rumour, is Vega guilty of some form of implied blackmail?
So they might have to take a bigger then expectedhaircut, sob, sob, sob. Remind me to sue my broker next time I lose more than I expected.
And in any case, who'd be afraid of an army of Vegans?
After the crappy compact 1970's Chevrolet with melting aluminum block called the Vega, I never thought anyone would ever use that name again.....
Vega is the name of a star, a very brightly burning star...draw yer own conclusions.
do we really need to answer your first question?
LOL... suing because they made a bad investment... Sorry hedge fund, YOU LOSE YOUR MONEY.
Love the Dr. Evil. One MILLION dollars!!
Vega....The Grinch that stole Greece. LOVE THE GRINCH.
Which world leader is The Grinch, and who is Cindy Lou-Who?
don't know but we're all Max the dog smiling like idiots, pretending we're something we're not, pulling an impossible load up the steepest hill in history
Especially the super curled up celebration of deviousness smile - thanks for sharing this!
This is bullish for New line cinema and Austin power productions
Waiting for coffee to triple in price so the Canadians can start to revolt...
Yeah, that'll work. First we find a fair court, and an honest judge, then we sue......
Just how does one define a net present value of something that will only have value afterwards due to the write-down?
Is this like dividing by zero? Or multiplying by infinity?
No surprise. Austerity is almost impossible unless you want revolution. See my House testimony of why none of this will work. http://confoundedinterest.wordpress.com
Going on Fox Business at 4:30 est to discuss housng but will throw in Greece as an aside. without the Dr Evil picture.
I see you have your PhD from my alma mater. Just bookmarked your blog. Keep shining the light.
hilarious!
Roll on 2012, i still have half a head of hair and all my teeth.
I doubt any of Vega's plans will actually succeed. Let's remember back to the bondholders here in the US who held GM. They were pushed aside in the courts essentially for the "greater good" or whatever phraseology you prefer. The bottom line is when there is a conflict between government and the private sector, the courts will invariably side with the government sector.
Such a brilliant plan on how to avoid triggering CDS event.
[Fund Manager] So about all of that toxic debt
[Greece] What debt?
[Fund Manager] ...the national debt...?
[Greece] I'm not sure I follow
[Fund Manager] The money you owe people for buying your bonds?
[Greece] We dont owe anybody money!
//legal action against officials negotiating the country’s debt restructuring if losses are too deep//
What's the basis for this legal action? What do they mean by "too deep?" What was the logic in coming up with that 50% haircut to begin with?
//“Vega needs to start considering all available legal options to refuse and challenge any exchange that implies a NPV loss of more than 50 per cent.”//
Maybe you should have done some due diligence before buying those Greek bonds and should take the losses in accordance with the risk (which you obviously miscalculated, were probably in the camp of "no way something like this could happen! Sovereign debt is risk-free!") you took?
Imagine that, not everyone is o.k. with getting screwed over to extend and pretend.
Whatever happened to Leo. Did he just move on or is he ill?
I'm actually surprised by Greece.
That great big monster thing with a daft crown on his head, managed to keep those shuddering cliffs apart in Jason and the Argonauts (original version), so why can't they keep their finances in order?
History teaches nothing.
The guy in the picture is the head of the UE right?
I love it when the crooks attack each other (Hedgies, Bureaucrats, and Bankers). Maybe in the melee a few innocents can get out the door, but I doubt it. Looks like a battle to everyone's death.
sorry but the ECB will crush them, tie them in the court system for years as the plan passes them by without a peep. They can't do a thing but sue. Big whoop. You think France and Germany will care??? Germany had its own suit filed by the people to stop its own government from ponying up extra money as it was clearly against the charter. What happened? The judges found for the government of Germany to keep giving money. The people who sued? Too bad, so sad. There's no stopping this until it all implodes like a star going black hole. 3 countries together have to go default - italy, spain and they together have to drag down france. that's the only way this is going to end. Italy starts in april with their refi. Germany won't be able to save all 3. That's the end game.
Tiny Boobies, you are missing the point! ( Pun Intended).
While I would like to see the whole euro experiment blow up, as these self serving sociopaths do all they can to save it, I'd also like to see the guy who runs this firm lined up against a wall. the powers that bee aren't giving us enough from a bankrupt country, so we are going to sue, make it imnvolentary and trigger cds (that's my read) and blow up the euro zone. yep, line em up against a wall.
What a joke. Historically speaking buying soverign bonds has always been a risk because there is no way to collect a judgement against a government.
If you don't believe just read Reinhard and Rogoff's book: This Time It's Different. In over eight hundred years of financial history it's a well known fact that governments are complete and utter deadbeats that default every few decades.
http://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691142165
Anyone who lends these guys money is just asking for trouble. Good luck collecting. I don't see why the Greeks simply don't default outright. There is no sense in continuing this senseless charade.
I feel like I am in the pit band, playing accordion, for the longest running vaudeville show ever, where the snappy patter and repeats of the same joke are etched in my mind. And it can't end until someone finally screams enough with this crap and can we get another show to replace the eurofarce.
you know, hell.
A hedge fund is trying to run Greece like they own it. When does this circus end?
I have said it many times here, when the shooting starts and those that deserve it get their heads ventilated by a .308 or .223. When the hedgies are starting to notice and protect themselves, the game is over, officially. It is a circular firing squad. While they are making so many firing noises, we need to use it for "cover fire" and shoot at the right people. That way the circular firing squad masks our muzzle flash and noise!
Seriously though, shit like this does not stop, until those "vacationing in the Hamptons" are less concerned about vacationing and yachts and more concerned about losing everything or more concerned about "drawing breath".
Otherwise, this stupid little thing keeps rolling along.
Is anyone surprised by this?
Our own US started the pure Socialist response of protecting the bankers. No wonder this is happening. Nobody likes to loose money. Welcome to investing 101 you dumb asses!
I dunno. Starting a lawsuit to bring down the Ponzi seems like tossing a firecracker at a raging bull elephant. With rabies. Methinks the legal process will still be in the pleadings stage when the Ponzi falls apart.
lol lol madrid based hedge fund lol. seriously TD, this is CNBC-caliber sensationalist garbage. why dont you sue the US govt for debasing the $ by 50% vs gold. good luck.
50%? Wait'll they find out it's really gonna be closer to 90%!