IIF's Dallara Warns Holdout Greek Bondholders Could Kill "Successful" Greek Deal

Tyler Durden's picture

To all those who stayed up until 6 am local time yesterday to hear Europe announce that the Greek deal is done, Europe is fixed, and that a pot of gold was found at the end of the rainbow, our condolences. Sorry, no isn't. Following up on our earlier post about the potential of UK-law bondholders to once again scuttle the deal, here comes none other than the IIF's Charles Dallara who basically says that the fate of Greece, the Euro, and the Eurozone, are in the hands of Greek creditors as we have been cautioning all along. And after all why on earth would hedge funds who just lost over 70% of their recoveries bear a grudge whatsoever...

From the BBC Newsnight interview to air at 10:30 pm tonight:

Jeremy Paxman: What is to stop someone like a hedge fund or someone who has bought Greek debt trying to trigger the insurance involved in a credit default swap?
Charles Dallara: Well there is nothing I am aware of, Jeremy, that will definitively stop  someone who wants to take such action and there is no iron clad guarantee...that individual investors may not contemplate counter-productive activity here. They have the rights they have the legal rights they have the market judgements to make.


Jeremy Paxman: If the insurance system worked they could recover perhaps 100% of the money they've lent the Greeks instead of something like 30%
Charles Dallara: Its not inconceivable.  If too many go in that direction though, the system breaks down, we will not have the successful conclusion of this deal and then where will they be?


Jeremy Paxman: The whole deal could still be held for ransom?

Charles Dallara: I don't eliminate that possbility.

Oops. Well, so much for that. And where Elliott is involved, Elliott wins.

Full clip after the jump:

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kito's picture

just think, all of those evil hedge fund managers would be responsible for the end of the world....its bad enough they arent liked now.............just think of their reputation after the world implodes...............thats some heavy burden to be carrying...........

slaughterer's picture

Maybe Phil Falcone can make his comeback here?  Got greek debt Phil?

hyperbole2000's picture

The hedgefunds are simple dung beetles cleaning up the dietrius deposited by the true predators. The predators being CDS issuing banks who collected fees for insurance with incompetent and negligent, most likely criminal, actuarial risk management.

Cognitive Dissonance's picture

Before this global collapse is finished, the (fiscal sanity) holdouts will be tarred and feathered in the name of maintaining the PONZI can kicking.

carbonmutant's picture

Those who threaten to hold out will be able to leverage a higher percentage to maintain the Illusion. Of course there is always the possibility that some will be too greedy or that those taking a bigger hit will object. The bottom line is you can be sure that "some are more equal than others"

Calmyourself's picture

Exactly, any person or entity that stands on rule of law to the detriment of this ponzi will be lucky to get tar and feathers. 

The worldwide ponzi is coming apart but so very many individual actors from Charles here to your son in law the stock broker,  the friendly local retiree simply counting on 8% returns, the overpaid government worker all of them will do anything to keep it afloat.  Marx's class war is coming but will be different from the one he envisioned or maybe not so different..

Do not count on rule of law, start to plan for scenarios that leave rule of law behind.

grovernors's picture

Beans, bullets, bullion and belief before bedlam because busy bees breed better babies bitchez.

Dr. Engali's picture

"There are going to be a lot of people coming together in the coming weeks to pull this together"


 We are going to have to hear about this everyday for weeks still. If they expend this amount of energy and resources spent on such a little country, what is the hell are they gonna do when it's us?


Uchtdorf's picture

Call in UN peace-keeping troops.

catacl1sm's picture

I feel sorry for those poor fellas. They'll simply be target practice.

Dr. Engali's picture

Those blue helmets will stand out like a clay pigeon.

carbonmutant's picture

Jeremy Paxman: "If the insurance system worked they could recover perhaps 100% of the money they've lent the Greeks..."

This a major assumption that is not valid. AIG (cough...cough)

Piranhanoia's picture

Insurers will notice they have enough to pay out 3% of the claims and use/lose all their money.  Can anyone say litigation please?  

"The deal was phony, the terms were phony, the country was phony, their bonds were phony.  We aren't paying anything to you other crooks.

surf0766's picture

So there never was a successful deal. Dam no golf this week

Hugh_Jorgan's picture

Eh... they got their bump on the Dow, that should medicate the sheeple for another week or two

Waterfallsparkles's picture

NEVER CAN HAVE A DOWN MONDAY.  That is the rule.  As someone just might Sell.  People worry over the weekend so you have to keep the Market Up on Monday at all costs.

LawsofPhysics's picture

I maintain that actually having a real greek deal is bad for any future auctions of U.S. debt.  Hence, there will never be a deal.  Once the E.Z. is settled, the world may actually pay attention to the mother of all insolvencies.

TheSilverJournal's picture

If the ponzi system breaks down, then where will they be?

Well in a much better world, of course, in which the monetary system isn't built on a gigantic paper ponzi that's destroying the wealth of the world by misallocating resources and causing those resources to flow into unproductive areas, such as into the government's hands.

The sooner the ponzi ends, the better. The bigger the ponzi gets, the more painful the bursting of the fiat bubble will be.


AnAnonymous's picture

There is no misallocation of resources: resources go where US citizens want them to go, that is themselves.

Resources go to the most efficient consumers ever, ensuring they are consumed once for good.

And no bright future coming on, you dont build a bright future on less and less resources.

US citizens, stealing the present was not enough, now we are stealing your future.

TheSilverJournal's picture

I'm pretty sure I can't wave a magic wand and get resources to go where I want, so no, US citizens can't get resources to go wherever they want. I would like a lot of resources but wishful thinking isn't quite going to do it.

The misallocation is caused by the government controlling the price of money through interest rates, therefore borrowing from future prosperity in order to over consume today and destroying the savings and capital that would have been used in order to consume in the future. Also, the government prints currency, which is misallocating resources because that newly printed currency steals its value from currency already in existence and then the government goes on to squander those resources by pooring them into unproductive areas.


Tuffmug's picture

Hmmm?? Door # 1 - trigger the CDS for 100% or Door #2 - get fucked in the ass by a very large Greek Jabba the Hut???

Monty, I'm taking Door #1!!


shushup's picture

"Coming Weeks" ??? Did he say "weeks" ????? guess it was not a done deal.

Joebloinvestor's picture

I should fucking hope the "under UK law bondholders" would throw a big ass spanner in the works.

These ECB fucks don't care about any rules of law or precedents.

They are just looking forward to the next meeting at a 5 star hotel and room service.

They should pass a rule that every "emergency" meeting to resolve the same fucking problem triggers a 50% haircut in their compensation.

Let them eat sandwiches out of a bag and meet in a courtyard.


alien-IQ's picture

We are now in Week 8 of the seemingly never ending rise of the /ES.

If it closes green again this week, it will tie the record for consecutive weeks rising as far back as my charts go (20 years).

This is beyond ridiculous.

Ag1761's picture

this is like Tantalus reaching for the fruit only to be forever disappointed

SLOMO66's picture

Did you hear? The only way is UP! :D


Bernanke's wallet has predicted the future... IT'S OVERWHELMINGLY GREEN!...

Hugo Chavez's picture

Where is robotrader? He should be out here gloating. Boy it sure climbed a wall of worry this time.

q99x2's picture

Pay those private bondholders off under the table and lets get on it.

Spain now please.

Piranhanoia's picture

Does the concept of triggering a credit default swap scare the pale vibrating fellow?

hedgies will trigger CDS when they know the game is over and their clients are coming for them.

Westcoastliberal's picture

Which would YOU prefer, 30% or 100% (or more)? Duh?

Aliblahblah's picture

It's estimated that Hedge Funds only own about 5 Billion in Greek Debt.

catacl1sm's picture

I'm disappointed in today's end of day ramp. It's been quite... limp.

bobola's picture

The standoff continues.

The bond holdouts may be secretly paid by Greek unions to tank their country, as that seems to be their goal.......

Why not use the 'Bernanke solution' and just give the private bond holders their profits and charge the tax payers..??  

Convolved Man's picture

Is this organized crime, or disorganized crime?

redpill's picture

Organized crime, disorganized default

mktsrmanipulated's picture

I love it maybe we should forward this to CNBC.... i sat around this am listening to Erin Burnet, that Cee U Next Tuesday, stae over and over how the Greek deal was done.....FN joke...remember Blodgett....Dorfman...and the guys who have been charged with mkt manipulation....tell me why the puppets at CNBC arent included in these charges.....WTF ...u wanna know why if the mkt goes up then nooone gets hurt...what a fn joke...its still manipulation..by the way the Steve leisman and Joe Kernan commercials are a a joke they couldnt trade their way out of a paper bag....clowns...as the old saying those who can do those who cant teach/report




bdc63's picture

Uhm .... Erin Burnet doesn't work for CNBC anymore.  She moved to CNN about 6 months ago.  Has her own hour long prime time show, so she hasn't even spoken in public about the Greek debt deal yet.

Wanna try again?

mktsrmanipulated's picture

just called cnbc to tell them how irresponsible they are and told them about this report and they hung up on me....they dont want to air anything bad what a fucking joke...everyone should call


201 735 2622 ask for the news desk...the girls names was Brie...like the cheese....

Waterfallsparkles's picture

I feel like Gomer Pile on the Andy Griffin show.  Suprise, Suprise, Suprise.

gatorengineer's picture

What I have yet to hear anyone say is that they take a 70% haircut now, and in a year they take another 70% hair cut or about 90% total.  Why in the bleeps name would they ever go along with this?  LTRO is going to have to be awefully huge to twist those arms.

rsnoble's picture

According to the ISDA, Greece is not a default. JPM, GS, BAC, C and WFC run the ISDA. Gee, imagine that. Esp considering there the ones that sold the insurance.

rsnoble's picture

Oh and btw..........I want a check for all my stupid stock picks over the past couple years while they're at it.

iamtheeggman whooooooooooooo's picture

All caterers will remain on standby.


tiwimon's picture


"Jeremy Paxman: What is to stop someone like a hedge fund or someone who has bought Greek debt trying to trigger the insurance involved in a credit default swap?
Charles Dallara: Well there is nothing I am aware of, Jeremy, that will definitively stop  someone who wants to take such action and there is no iron clad guarantee...that individual investors may not contemplate counter-productive activity here. They have the rights they have the legal rights they have the market judgements to make.



This whole CDS and the question of what/when/how/where its triggered is pure horse hockey. No way on gods green earth do the folks who took out the CDS not have it spelled out in precise/clear terms of exact details of what triggers CDS payout and waiting for some organization who manages CDS to be the end all, be all, say all of when exactly a default has happened is pure horse puck. These folks put the capital D in Details and I find it hard to believe they did not spell out clearly in the contracts specifically in D.E.T.A.I.L. what it would be triggered by, what the payouts are and a haircut of any kind, especially deep into the double digits would be a default and trigger to me.


/course what do I know, other than running a car into a bridge piling and is 66% smaller is declared salvage, sounds like it would trigger some insurance yeah? 

whoisjohngalt11's picture

So is every one going to be NICE and just stand in line??? is that what happens , no one has the balls to demand full payment?? If i were your representative wouldn't you demand it or has the whole world been cowed into submission???

BlackholeDivestment's picture

...wow! even the tone in this assholes voice rings true to the prophetic strong delusion. This guy sounds like a father that just slaughtered his Son like a China (PIIGS) Pig and is sad that everyone can see that he's full of shit and needs to take another dump in the PIIGS pen. http://www.youtube.com/watch?v=84nz5K1yoYs


willien1derland's picture

Somewhere near Atlanta GA a tap dancing Bob Prechter is tapping down Peachtree Blvd in endless concentric fibonacci induced Elliott Waves screaming laugh at me will they - EVEN A BROKEN CLOCK IS CORRECT TWICE A DAY!!!! DIE BITCHEZ DIE!!!! And the dance continues...perhaps a little Ozo & some plates to toss at the fireplace tonight!