Greek Writedowns - Let's Do ONE Thing Correctly

Tyler Durden's picture

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Manthong's picture

write down Greece 50%??

OK.. but how can you do that without triggering real, card carrying  technical default?

(ha ha.. only by lying)

DormRoom's picture

'Song for the Unification of Europe'


composed by Zbigniew Preisner and sung in Greek

traderjoe's picture

Why do sovereign countries borrow at all? Default on the private cartel currency and simply create new interest free debt free script. See the united states note.

ratso's picture

Greece has done the same thing only with other Europeans money - and, now those Europeans don't like it.

The easiest solution that could have been acted on in the beginning for all the Greek debt was to have the ECB, EFSF and EU buy it ALL from the banks.  That will look like it would have been a bargain in the next few months now that they didn't have the courage and foresight to have have done it.  There would have never been additional payments to Greece and the Greeks would have been free to fend for themselves without oversight and without an ability to borrow.

topcallingtroll's picture


When short term debt comes due or matures, the creditors "volunteer" to roll over the money into new long term debt with a NPV of fifty percent of what the original short term debt would have been worth at maturity.

So you dont get your money back when your two year greek bond matures. You get a thirty year bond instead, and its current value is only fifty percent of what you should have received in cash when you redeemed your original two year bond. That is a fifty percent haircut, but you volunteered to give away half your money, so no credit event.

Just jigger the interest rate and maturity and you can turn a voluntary rollover into any size hair cut you want, in terms of net present value.

taraxias's picture

What you described is defined as a "credit event" (default). Funny thing is it appears you don't even know it.

Easy my ass.

topcallingtroll's picture

Read more carefully.

It is not a credit event if all the european banks "voluntarily" roll over their short term debt into long term debt.

"Voluntary" rollovers are not credit events.

Everybodys All American's picture

What this points out is that the whole CDS as insurance against default(s) is complete and utter BS. Because we all know how voluntary this is likely to be and no one can or will pay on the default, fake default, voluntary default or whatever you want to call it.

Everyman's picture

Scissors, Bitchez!

SWRichmond's picture

Yes, now that the US banks have moved their swaps onto their depositors' books, by all means let's start the fun!


Long PMs, bitches.

oogs66's picture

yeah, they can't put them on an exchange, because that would be far too complicated, but move them to a safer entity for their counterparties, that can be done in a day :(

Tucson Tom's picture

OK,I get this,but if you are sitting on mostly cash,Where do you go with it? I moved out of B of A,six months ago.What if you have 6 figures in cash in Schwab? Where does Schwab keep their cash? Gets sticky unless you keep it under the mattress.Ideas please!

Hulk's picture

Gold, the physical stuff...

topcallingtroll's picture

Long term money dollar cost average into EWZ.

for your short term stash a combination of money markets in various currencies and some gold ought to keep you fairly stable.

buzzsaw99's picture

They could force a haircut on some bond holders way greater than 50% by just buying Greek debt on the open market. They are so inept it is hilarious.

oogs66's picture

wrong, the worst banks won't sell, so all the open market purchases do is let the dealers make some bid/offer...the dumb banks will hold this til par or death

ArkansasAngie's picture

Repeat after me ... this is a solvency issue and not a liquidity.

Hold'em to maturity ... if you can

And to think people are furious with governmant.

Maybe it's because the government is listening to the whispers in their ears and not the roar outside the gates.


The4thStooge's picture

This remineds me of a saying I once heard regarding large women and musical performances...

buzzsaw99's picture

to so arrogantly say that I am flat wrong is to say that **ZERO** Greek bonds are available at market prices. I say that you are full of crap and should thus STFU about it.

ZeroPower's picture

Wrong. While some GGBs might be trading on any given day, it merely facilitates dealers in catching their b/o for the day, i.e. HF calls in wanting some exposure to Greece as a lottery ticket. Or to show some sign of activity in an updated px available on the market - even though you might see an offer of 45 flash on your screen, you'd be very hard pressed to find any size in either buying or selling amount.

The big funds (read: long only) who are otherwise not allowed to hedge their long bond exposure (by way of short credit) are sitting tight no matter if the bonds trade to either 10 or 90 tomorrow. 

High Plains Drifter's picture

All DTCC evidence (which covers everything except some legacy trades and structured trades) shows that the Net exposure on Greek CDS is less than 1% of the bonds outstanding, and that across all sovereigns the Dealers (big banks) are net short credit via CDS. In fact across all sovereigns the DTCC data shows that dealers have bought $21 billion of credit protection, so are in fact net short. This fits the line that many bank CEO’s state they have minimal net exposure as they have bought hedges.<<<<<<<

somehow i just don't believe this.

Mike2756's picture

Who would they have bought protection from?

oogs66's picture

hedge funds?  dumb banks that should go under?  who knows, but in any case it is amazing that something as important as this, that occupies so much time for regulators and politicians ISN'T EXCHANGE TRADED!!!   How can this product not be properly controlled yet??????

High Plains Drifter's picture

that i would like to know.  also would a greek default be like the first domino to fall.   obviously there are things going on, (of course) that we don't know about.  otherwise they would have allowed a default a long time ago but some of the big players don't want to get stuck with the bad paper and as reggie wrote about , they are wanting someone else( you know who) to pick up the tab for their failed usual.  it is time to fix bayonets and do some pig sticking.....

topcallingtroll's picture

Why who do the big players want to take money from? Who could possibly make up their losses so they can stay rich?

You are not thinking taxpayers are stupid enough to give rich people money when their investments go bad.

Surely not!

DeadFred's picture

"Their (irrational) fear of triggering a CDS Credit Event makes the problem of what to do with residual bonds, that much greater."

It may not be such an irrational fear. Maybe they understand the credit event will be the TNT charge that sets off the fission explosion that sets off the fusion bomb. Context is everything with these events.

oogs66's picture

or maybe like everything else, they got that idea in their head and haven't once tried to see if it is correct?

bigwavedave's picture

Yeah Fuck the banks. Greece needs to default AFTER getting as much bailout as they can squeeze. Will go there on holiday next year and spend some Drachma. Its how it should be.

topcallingtroll's picture

You should be able to buy some greek college girls cheap after the reset.

I bet they go for ten percent of a high end, low volume escort (the safest) compared to the USA.

A $1000 per night bombshell twenty something escort will go for the equivalent of 100 usa dollars when converted to drachmas.

ArkansasAngie's picture

I'm sorry ... but all this accounting machinations is getting really, really old.

Can you people not think in terms of real numbers and delete all this imaginary crap.

The fact of the matter you guys placed your bets and lost.  Now pay up shatheads.

We need to be occupying the DOJ and the dad gum FBI.

GAAP has meaning to us peon.

You want instruments?  I'll show you instruments.  Try a pitchfork up your arse


High Plains Drifter's picture

pitchforks are cool.  they make 4 small perforations in the stomachs of bankers when applied correctly...

DeadFred's picture

And like the Greek bond problems the wounds are not that impressive to look at, but completely lethal.

topcallingtroll's picture

Arkansasangie I am already in love with you.

I live in fort smith.

Petite beorgeoise lifestyle.
Dr. by trade.
Libertarian at heart.

That turns me on that you probably know what GAAP stands for.

ArkansasAngie's picture

Are you good with going to an occassional Razorback game?


TheSilverJournal's picture

All of the Euro leaders are depending on the bank lobbyists to figure out how to maintain the Euro. 

BandGap's picture

Then they aren't really "leaders", are they?  Let the blame game begin.  Who left the henhouse gate open for the fox to get in?

Bithead1's picture

Greek Groupon?


maxw3st's picture

I think you hit on something there. And, it would certainly help with Groupon's flagging IPO.

Hansel's picture

Any word on the proposed haircuts for Ireland and Portugal?  This won't be over for a long time.

BandGap's picture

No, it will be over....suddenly and quite brutal.

Wonder how many will realize when they go off the cliff?

Hey, Baracka needs my help.  Fancy that.

spanish inquisition's picture

Ah yes, the Irish politicians who bent over for the price of a happy meal, now see the Greeks and how much they could of charged if they would of played hard to get. Of course Portugal could still toss bankers in jail, using the Iceland approach and still have its virtue intact.

BandGap's picture

Somebody put on a fresh pot, we'll roll up our sleeves and clean up this mess.  I have seen 50% off sales before, and this close to the holidays things are going to get hectic.

lolmao500's picture

Let Greece get out of the euro. (still won't solve the problems, but still)

Will be interesting to watch when we reach the point that Italian bonds and FRENCH bonds have to take a 50% cut... But I doubt the EU will make it that far.

Banksters's picture

So this means I should be buying Italian bond with both hands.   Shit, I don't have much money though because I spent it all on the Mexican 100 year bond!   Fortunately they are liquid, like piss...

BandGap's picture

Get them while they're hot!

The funny thing is they have no idea where and at what point they can stop the snow boulder from crashing into Chalet Europe.  But the longer it rolls, the bigger it gets.