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Here Come The CACs: CDS Trigger Is Next
First comes the CACs. Then the forced debt exchange offer. Finally - default: as defined by both the rating agencies and ISDA, together with triggered CDS.
From Bloomberg:
The Greek government is drawing up legislation that could be used to impose loses on investors who don’t support the debt swap that’s part of the country’s new bailout package, said two euro-region officials familiar with the situation.
The law may be introduced to parliament in Athens in the coming days, said one of the officials, who spoke on condition of anonymity because the deliberations are confidential
Euro region finance ministers are prepared to back the use of so-called collective action clauses if a voluntary debt swap doesn’t draw enough participation, the other person said
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Everyone's swapping spit but nobody wants the mono.
Tyler, aren't the CAC's invoked to stop a CDS trigger?
my understanding is it wont stop holdouts and brings that subordination thingy into peoples nightmares....
.. which will take some time for people to translate credit risk change ACROSS EUROPE (Ouch!!! ) to wider EUR weakness
not in this case because this cac would be retroactive.
It's time for Greece to flat line.
Does this mean American Idol will be canceled?
CDS with CAC's - Kind of funny!
Sounds like a couple of venereal diseases--very appropriate.
and all those people who thought they'd got away with it are going to have to pay...
anti banksta fire wall of Troy!
if such law will exists, why not to use for 100% haircut?
It's only a matter of time.
Not for the politicially connected.
So it begins!
This is it!
I have been hearing this for five years now. The sky is falling... a wolf is coming... no really honey I won't blow in your mouth...
Calm down... the World ain't gonna end... but buy some ammo just in case.
Swear to God that was the advice from one of my brokers at a party last night. The question was what should I be accumulating?
His answer - ammo
haha...crazy thing is I've been given similar advice from people you wouldn't expect to say such things.
If either of you are like the majority of the American Idiots you aren't heeding the advice.
cheaperthandirt.com
ammoman.com
Tested both. FAST shipping @ cheaperthandirt.
Federal 180 gr. .40 cal HST JHP-50 rds. for 19.89. - - - As cheap as plinking FMJ's.
Edit: Thought the following description would be appropriate:
"A specially designed hollow-point tip won't plug while passing through a variety of barriers and this bullet holds its jacket in the toughest conditions"
Hey dude... you would have to know me for more than one minute to determine I am an American Idiot... I went to college and have a job and pay taxes...
What was I saying I lost track. Any way it ussually takes people several days to determine I am an idiot.
Somebody please... "CACs"
Picture a bunch of technocrats running around desperately trying to find the can they're supposed to kick before it disappears. A rumble comes from the sky. It's a squadron of bondholder bombers. They set their sights on the can, maybe even coyly hoping to level a few technocrats in the process, and let the CDS munitions loose...CAC CAC CAC CAC CAC
Too freaking many cans and not enough feet!
Google is your friend... http://en.wikipedia.org/wiki/Collective_action_clause
32,000,000,000,000 worth of Pyro ....
Time to load up EUR shorts.
Does anyone have an example of a CDS every paying off???
They willl pay when hell freezes over.
http://www.amazon.com/Big-Short-Inside-Doomsday-Machine/dp/0393072231
GS was paid nicely by AIG, errr... make that you.
yes
Ouch, keep the REAL newsflow that MATTERS coming Tyler!
It is much appreciated.
Ive closed out my longs today was a good ride up on the Rumour/Momo machine, looks like one hell of a ride for the weekend ahead
Slow day. Add this to the weekend "drama" list.
"The Greek government is drawing up legislation that could be used to impose loses on investors who don’t support the debt swap that’s part of the country’s new bailout package, said two euro-region officials familiar with the situation."
So......would someone please explain to me the difference between this and good old fashioned highway robbery?
It is legal...(cough cough)
The inconvenience of being stopped in order to be robbed has been eliminated.
"As through this world I've wandered
I've seen lots of funny men
Some will rob you with a 6 gun
And some with a fountain pen"
- Woody Guthrie
It kind of says it all.
On a scale of 1 to 10 in honesty..., the man with a gun will usually score several points higher than the man with the pen.
for one, highway robbery is much much quicker.
You'll get a receipt?
Pity that none of the men being robbed carried a weapon. (BTW, it looks like the stage coach driver is in on it. "Hurry it up, will ya? It's cold out and I want to put me feetsies up in front o' the fire.")
Maybe they could pass the hair-cut legislation in secret.
Then the secret financial police could (with ECB assistance ) make the collar.
No one needs to know............Shhhhhhhhh.
Is there a point where the market does not like this stuff?
Yes. And to the person that can find it there will be great riches. And for all of those seeking that magic moment, and time it wrong, there lies much pain and hardship.
Troof.
It looks less like a Persian Messenger than Barry Obama wearing an east-African ghetto beanie but the lecturing with the pointer is very apt, given the academic credentials of our Dear TOTUS.
Does this mean a Default? Final Chapter?
The volatility index is on the floor with all this about to unfold. Makes sense.
Makes sense from a complacency/all is well perspective, which appeals to the contrarian in me.
Oh my, the poor Precious Metals Suppression Conglomerate is going to need permanent iv's coctails of Xanax and Oxycontin to help them cope with their upcoming pains and stress while gold and silver shoot to new highs.
Physical sure, but I wouldn't bet on the paper price following a logical path.
Still way too many weak hands to shake out first.
Anyone who bought Greek bonds should lose 100% of their money, plain and simple.
But Papa said they were good for it!
"Anyone who bought Greek bonds should not be punished for their noble act of courage."
- Central bankers
I feel like I'm in a room of a whole bunch of filthy rich people. All of a sudden some guy comes in and says,"Guys you know that safe bet we all went in on? Turns out it wasn't so safe, we've lost everything." Another guy says, "Well who knows about this?" The guy replies, "Well only us and the broker, he lost everything too."
The other guy replies, "Well if nobody knows, then everyone thinks we're still rich. Let go buy everything we can and skip town before anyone finds out. Leave the suckers to take the fall."
The Fat Lady(Merkel) hasn't finished singing, yet!
As in..."if we can't sucker them in from the long side, let's try it from the short side, again! What a nice squeezzzeeee, AGAIN!" Or NOT!
Has she at least finished cleaning out her crack for tonight's performance?
but, she can dance!!!
http://www.youtube.com/watch?feature=player_detailpage&v=KEF63hPDukA
Who wants to make a bet on the next European riot? After buying gas, I still have a few worthless greenbacks to throw into the pile. They may not be worth as much when this debacle occurs.
I'll put in a couple bucks on the Irish.
I'll put a fiver on Greece. Stick with the hot hand.
isn't there a court date - or some kind of deadline to determine if there is in fact a default or in fact not a default?
Or is the plan to have 30 years of limbo, confusion, rumors and unconfimred press releases?
If you can't dazzle them with brilliance, baffle them with bullshit.
@Madcow and TradingJoe,
EU have issues signing off on the full bailout: (Belgian, Dutch dissent, Mekel/schooble rift, Fins holding out for collateral) plus upcoming LTROII so need to buy time.
PSI deal is sticky, some looking for ECB to get down to their level in the deal, which is not going to happen, its a central bank.
Greece has a weapon they proved they can use: Democracy via parliamentary vote (they lost the far right) plus the peoplez who by vast majority dont want euro exit (of course they dont want pain either).
So plan of action is to talk up action, screw the PSI deal for what it can take, rope up as many holdouts with CACs via Greek parliament (but some under UK law...) and wait for march 20 to make the payment from a mini-bailout
- then deal with the fallout.....
... ratings agencieswill declare a selective default (they said so) but if it doesnt trigger CDS then they hope to skip the consequences, but... as Tyler keeps saying this leads to whole issues across europe
Thats my understanding of where things are going into the weekend...
And here comes the US markets counter attack: Congress Passes Payroll Tax Cut Bill, Sends to Obama
Our GS-given Prime Minister convinced (most of) the deputies that default would meant chaos. So they supposedly voted "not to default".
They should be very careful in phrasing the CACs, because if it eventually means "default" there might be more deputy resignations coming. ("You said that we wouldn't default, and now you're asking us to legislate the means to default?")
It's getting more complicated than their IQ can handle.
So March 28th is on then.
Will make sure I've got plenty of beer, nachos and guacamole at my desk that day.
Good! But either way, the pastrami munchers at the NYSE are, as usual, being lazy and stupid because either: A) The bond swap and haircut triggers the Credit default swaps CDS dominoes fall, or; B) The CDS's are not trigerred, thereby rendering the insurance contracts on sovereign debt null and void with the immediate consequence of increasing the risk premium on all soverign debt.That's the thing. If they don't declare a default why would anybody ever buy CDS? It seems to me that the market for CDS should already be dead and buried.
hey, shithead!
what "collective" would you like to trade paper with, next?
(It would seems that the word 'voluntary' is the key. ..)
Does it matter whether the event is "voluntary" or "mandatory"?
The CDS Definitions do not refer to a distinction between voluntary and mandatory events, though it does come up indirectly. An important element of the definition of Restructuring is that the event has to occur in a form that binds all holders of the "restructured" debt. Thus, for example, if bonds contain a Collective Action Clause (CAC) with a 75% threshold for making a change to bond terms, then if 75% or more of the holders vote in favour, that change is binding on all the holders, even those that voted against. That is, the change does not have to be agreed upon by all the holders to trigger a Credit Event, just the relevant majority of them. In that sense, the change is "mandatory" for those who voted against it. We understand that Greece’s domestic law debt, which accounts for over 90% of all of its outstanding debt, does not contain CAC clauses.
Would a debt exchange trigger a Credit Event?
A voluntary debt exchange typically would not trigger a Credit Event. A restructuring credit event requires an amendment of terms of outstanding bonds or loans, whereas an exchange means the original bonds are redeemed and replaced with new bonds on the new terms. Economically they may be the same but legally they are different, which could have very different consequences for CDS.
http://www.isda.org/credit/
Please give it to me in the ass "voluntarily". I don't think many bond holders are going for this option.
Law among these bankster vipers. Walk through the ilk and get bit every time with a high dose of sovereign ruin. Stand a better chance of squeezing a bb up the thugs tight corrupted asses than having the thieves come in harmony with law. You don't think 100% possession will be the law among these lawless bankster rat bastards, you are stuck in a mark to fantasy world of assets based on zero. Reality bites and nothing but hell ahead for ameriCON'd.
And here comes the nationalization of Commerzbank, -- which when you think about it, explains merkel's schizophrenia.
Excuse my ignorance but will someone expand the acronym CAC.
Hint its spelled out in the last sentence.
so-called collective action clauses - d'oh.
Shame, shame... That wasn't even a long article!
Can't help myself again.
FUCK YOU's Bankers.....
Eat shit....
A CAC with a 10% threshold would probably insure the PSI deal will fly, but with a CDS trigger; so I have a MUCH simpler idea - when the 14.5 billion debt rolls in, just pay it off with Drachmas - sheesh, why do I have to do all the thinking around here?
There Will Be Blood and Lawsuits.
It's the Charlie Sheen economy. If you're losing, just extract some tiger Hedge Fund blood by changing the rules so that you're winning again. Always be winning no matter what.
My grandfather taught me in Blackjack that by measuring your card-counting ability and the rules of the particular house, you can caclulate your advantage on the house per every hand you play. He also taught me this: "If the dealer is dealing himself blackjack from the bottom of the deck, your advantage on the house is less than zero".
Wait, can we get back to bashing Apple now? After all, they make a product that everyone loves and uses every hour of every day of their lives. And then they have the gall to book 100% of the revenues for themselves so that cash flows match earnings. They also willfully pay bankrupt 3rd World companies for trademarks and then defend themselves when the bankrupt companies sue them for more after Apple ends up making a ton of money on the trademarked product. Lastly, Apple has the balls to force poor Asians to accept money for hard work in China of all the horrible places. They even force 25% pay raises on those poor people in their effort to enslave them. I can't wait to short their 8x earnings stock with $103 in net cash on the balance sheet because their balance sheet has too much cash and not enough debt to suit me. Stupid assholes. Everyone knows that cash is the bane of all companies existence. I'll cover the short at maybe 5x earnings after earnings estimates are raised for 2012 due to iphone 5's 4G experience being too smooth and desirable for the all the 2-year-mark iphone 4 retreads re-upping for another 2 years. 4G phone, yuck. iTV, what a stupid idea, talking to your TV instead of searching your couch for the remote. Dumb assholes, what a fraud. Who can seriously own this POS and look at themselves in the mirror each morning knowing what a fraud Apple's stock price is.
EPIC sarc rant. +1
Rant of the week winner!