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Guest Post: Greek CDS Shennanigans

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Fri, 10/28/2011 - 12:00 | 1821108 PaperBear
PaperBear's picture

Shennanigans is the polite word for this.

Fri, 10/28/2011 - 12:11 | 1821127 falak pema
falak pema's picture

btw : its spelt 'shenanigans' not shennanigans...and im not splitting shenanigans like hairs.


Is it likely that this coporate banking group having pledged their acceptance to Euro group as 'non coercitive' now pretend the contrary? Have you considered what THIS about turn does to their international credibility? as spokesmen of TBTF bankstas...

You don't walk away with impunity once you've said in writing 'there is voluntary agreement'...

Fri, 10/28/2011 - 12:13 | 1821185 ratso
ratso's picture

When is a CDS not a CDS, when it's for a Greek bond.  A new for of Liar's Bond Trading or how to live in an illusion and asking everyone else to join you.

Fri, 10/28/2011 - 12:19 | 1821207 narapoiddyslexia
narapoiddyslexia's picture

Is this what "bondage" means?

Fri, 10/28/2011 - 12:54 | 1821340 trav7777
trav7777's picture

WTF difference does it make WHAT the haircut is?  Greece won't abide by any budget targets and will be back needing ANOTHER bailout in freakin 6 months.

Why should ANYONE take a writedown on Greece?  They should go take Greece as collateral.  I cannot believe that these idiots who thought up the EU would ever want a piss country like Greece in their club...wtf.

Fri, 10/28/2011 - 13:00 | 1821375 espirit
espirit's picture

Let's see if Greece's Pirahna Club robs the Widows and Orphans Fund first. 

That will be the prime indicator whether this is yet another rumor.

Fri, 10/28/2011 - 12:21 | 1821209 Oh regional Indian
Oh regional Indian's picture

ratso, zatso.

But I think the masters swung the hammer to crack the illusion some time ago. It is on an unstoppable path now.

What we will see, starting next week, I imagine, is TPTB cannibalization. So many banks are shaky. Any one will tumble if their government support leg is kicked out from under them.

So, basically, I'm saying we will see politics Vs. corporations. Which is weird, because we know who pays who, right? All the world's a stage and all that sort of thing.

I hope this Sunday Passes calmly.


Nuclear Echoes

Added: Do any of the BRICS hold large tranches of greek debt? I keep thinking these guys will take to Asia again (contagion that is), like 1997. It'll be good for another 2-3 months of can-kick. That, or Brazil via Santander.

Fri, 10/28/2011 - 13:09 | 1821417 trav7777
trav7777's picture

more dire predictions?

Fri, 10/28/2011 - 12:31 | 1821246 living on the edge
living on the edge's picture

This is almost as hilarious as Clinton saying "it depends on what the meaning of the word is is".




Fri, 10/28/2011 - 12:28 | 1821241 TheMerryPrankster
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Behind the wall, in the kitchen at shenanigans, the real discussion goes on:




Fri, 10/28/2011 - 14:23 | 1821822 GoinFawr
GoinFawr's picture

@ Falak: At the risk of making Gold Leaf distinctions, what does a European wheat have to do with an old Californian word for skullduggery?

Fri, 10/28/2011 - 15:21 | 1822174 falak pema
falak pema's picture

we say skull drudgery, but never mind, I'm a great fan of californian wine, surfing and silicon valley skull excellence...also european wheat is sweet and not GMO.

Sun, 10/30/2011 - 00:26 | 1825698 GoinFawr
GoinFawr's picture

I hear that

Fri, 10/28/2011 - 15:22 | 1822187 falak pema
falak pema's picture

lots of lipstick today! Like in mad men!

Fri, 10/28/2011 - 12:12 | 1821177 disabledvet
disabledvet's picture

Boondoggle. Commence guffaw.

Fri, 10/28/2011 - 13:44 | 1821446 blueRidgeBoy
blueRidgeBoy's picture

I swear to God I'm going to pistol-whip the next person who says "shenanigans"

Fri, 10/28/2011 - 14:24 | 1821837 GoinFawr
GoinFawr's picture


Fri, 10/28/2011 - 13:41 | 1821575 TheFourthStooge-ing
Fri, 10/28/2011 - 16:33 | 1822498 Uncle Sam
Uncle Sam's picture

And do you believe everything a lawyer from Chicago says?

Fri, 10/28/2011 - 12:00 | 1821110 Deadpool
Deadpool's picture

anyone stupid enough to hold Greek debt at this time deserves a 100% head-cut.

Fri, 10/28/2011 - 12:09 | 1821166 tarsubil
tarsubil's picture

Makes you wonder who is buying this shit. Perhaps it's Corzine clones destroying those not in favor anymore from the inside.

Fri, 10/28/2011 - 12:10 | 1821175 Deadpool
Deadpool's picture

the list is directly above....

Fri, 10/28/2011 - 12:20 | 1821212 tarsubil
tarsubil's picture

It appears I've gone crosseyed...

Fri, 10/28/2011 - 12:13 | 1821182 cossack55
cossack55's picture

Just another reason to never (NEVER) buy any paper with counterparty risk (meaning ALL PAPER).  Toilet paper is good.

Fri, 10/28/2011 - 12:56 | 1821347 Central Wanker
Central Wanker's picture

In case of toilet paper, it is OK to have shit as counterparty.

Fri, 10/28/2011 - 18:32 | 1822973 FeralSerf
FeralSerf's picture

Not all toilet paper is good.  Have you tried the Soviet variety?

Fri, 10/28/2011 - 12:15 | 1821193 fuu
fuu's picture


Fri, 10/28/2011 - 13:10 | 1821422 trav7777
trav7777's picture

I think people bought Greek debt for the same reason they buy GSE paper...it's considered money good because the expectation is that there is a print operation behind it to prevent any default

Fri, 10/28/2011 - 12:02 | 1821114 jcaz
jcaz's picture

LOL-  I'm thinking that no one spent much time around the holders before this fiasco...

If they're "asked", of course the holders will tell the EU to kiss their ass.

Everyone agrees on a solution- until it costs them actual MONEY.


Fri, 10/28/2011 - 12:23 | 1821230 Hippocratic Oaf
Hippocratic Oaf's picture

I'm in the fixed income business. Doesn't matter if holders 'elect' to participate. Issuers do this all the time. Gives holders a sense of involvement. The deal will get done, at 50%. There are a few fortunate bastards that bought below 50.

Fri, 10/28/2011 - 12:01 | 1821116 Milton William ...
Milton William Cooper's picture

Anyone looking for a gold ETF backed by T-bills?



Fri, 10/28/2011 - 12:03 | 1821132 jcaz
jcaz's picture

.... And it's wrapped in magic pixie fairy dust, which enables it to pay an 8% dividend......

Fri, 10/28/2011 - 12:30 | 1821252 TheMerryPrankster
TheMerryPrankster's picture

and its tax free and you get a special tax credit just for reading the prospectus, let alone owning it.

Fri, 10/28/2011 - 12:02 | 1821122 peekcrackers
peekcrackers's picture

You know whats in the purple kool aid .. drink at your own risk

Fri, 10/28/2011 - 12:32 | 1821259 TheMerryPrankster
TheMerryPrankster's picture

purple drank, apparently is a better investment.


HOUSTON — A 70-year-old Houston grandmother from the Phillipines has been charged with being the ring leader of a codeine distribution ring.

The woman, Lucita Uy, banked at least $10 million and used her own renegade pharmacies to purchase 97,000 pints of prescription-strength cough syrup and smuggle them from California to Houston to make a deadly potion wildly popular in the hip-hop world.

Fri, 10/28/2011 - 13:12 | 1821429 trav7777
trav7777's picture

sizzurp is hardly deadly, but is very popular among a particular demographic.  But, surely poverty drove them to consume so much drugs; it couldn't be that consumption of tons of drugs leads to poverty.

Fri, 10/28/2011 - 12:03 | 1821124 French Frog
French Frog's picture

Thank you ZH for being yet again such a wonderful source of news, explanations and above all ... education.

If I had more time on my hands, I would Thank You every day.

Fri, 10/28/2011 - 12:06 | 1821129 SheepDog-One
SheepDog-One's picture

Got to love these timeline adjustments...Wednesday it was do or die time, 2 days later after nothings been solved so theyll get back to looking at things, in around 20 years or so. WTF? Pretty good 20 year can punt, I dont think it will work so well though, by next week something else will blow up.

Fri, 10/28/2011 - 12:26 | 1821239 Amish Hacker
Amish Hacker's picture

I'd say by Monday. Everyone is going to have the weekend to think things over, then hands will slap foreheads in the long-delayed realization that the jig is up. When goalposts are moved so that defaults won't trigger default insurance, and markets are gamed to prevent price discovery, what's a poor boy to do?  

Fri, 10/28/2011 - 12:58 | 1821364 topcallingtroll
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Fri, 10/28/2011 - 13:40 | 1821564 jdelano
jdelano's picture

ever heard of a bull/bear trap?  how about Goldman hawking CDO's to their own clients while secretly letting Paulson pick the worst of the bunch?  The big boys have one goal in life--to screw fools like you out of their daily bread.  

Fri, 10/28/2011 - 12:05 | 1821142 Capitalist10
Capitalist10's picture

Hopefully a sizable minority of the bondholders will decline the "invitation".  Why not, if you have already paid for much of the CDS "insurance" up front?

Then the Greeks can either pay you your 150+% interest or they can default, triggering the CDS via a indisputable non-payment credit event.

Fri, 10/28/2011 - 12:06 | 1821143 slewie the pi-rat
slewie the pi-rat's picture

beware of greeks bearing bonds

Fri, 10/28/2011 - 13:04 | 1821144 Mercury
Mercury's picture

Now I don't feel so crazy about asking pointed questions along these lines yesterday.

90% of Greek debt might be governed by Greek law but in terms of CDS being triggered or not - its what the fine print says in the CDS contracts themselves that really matters - no?

Is it generally the case that a default is only a default if the defaulting party (The Greek government) calls it a default?  Or is it the case that some very much not disinterested party/committee is tasked with giving the thumbs up/down on said trigger?

Either way I'm afraid to ask who would be dumb enough to enter into the long side of a contact with those kinds of terms...that would be like buying life insurance that only gets triggered when either the insured person admits he's dead or the insurer's family acknowledges that there has been a death. 

Actually, that would be more like buying American war insurance in 1946 that pays out if/when Congress declares war.    Ouch.

Fri, 10/28/2011 - 12:12 | 1821145 lolmao500
lolmao500's picture

That how you freaking protest. That's how you show who's a slave and who's not.

Veterans with AR15s protecting Occupy Phoenix


Fri, 10/28/2011 - 12:07 | 1821154 pragmatic hobo
pragmatic hobo's picture

won't these greek bonds already tradeing at 70% discount prior to the agreement?

Fri, 10/28/2011 - 12:09 | 1821156 vegas
vegas's picture

We went over this yesterday. No credit default? This is bullshit. Governments and exchanges and other quasi-regulated groups like the NFA, SEC, FSA, and of course ISDA will make their own rules and then break them when the mood suits.

Look what Barry Soetero and his gang did to the Chrysler bondholders; fuck creditor rights, let's reward the unions.

ISDA are fucking pimps, just like the CME in Chicago. When members need help on short positions, no problem, just hike margin rates to squeeze out Johnny Retail who doesn't have the money in his account to hold the long position.

Oh, to many ISDA member banks on the sell side of the Greek CDS? No problem, it ain't a default. Keep the premium, and business as usual. Fuck you if you thought you were going to collect. Sue us.


Fri, 10/28/2011 - 12:15 | 1821191 cossack55
cossack55's picture

Like what you said and how you said it.  You will never get elected.

Fri, 10/28/2011 - 12:16 | 1821199 jcaz
jcaz's picture

Right on- no one will play in a game where the rules change every day.

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