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ISDA Says No CDS Trigger On Subordination

Tyler Durden's picture


And just as ISDA was starting to become somewhat credible again, we get this from Bloomberg:

  • Spanish CDS Trigger Unlikely on Subordination, Says ISDA *Dow Jones

So..... Subordination? Thank you ISDA for confirming that the true reason of today's sell off has now been enacted.

From Reuters:

Credit default swaps on Spain are unlikely to trigger as a result of the 100 billion euro bail-out of the country's banking system announced over the weekend, according to leading derivatives lawyers.


The European Stability Mechanism's senior creditor status has led to questions over whether a subordination credit event will be triggered upon Spain receiving loans from the permanent bailout fund. In contrast to the IMF's preferred creditor status, which is implicit rather than legally documented, the ESM's treaty actually specifies its seniority to other creditors - a clause that some analysts reckon could trigger CDS.


There have been subsequent reports that Spain's emergency loans may be funneled through the temporary bailout fund, the EFSF, before the ESM becomes into force in July to avoid a potential credit event. Such measures may prove unnecessary, though, as derivatives lawyers have cast doubt on the possibility of ESM rescue money triggering CDS.


"I can't see any basis on which this would constitute a subordination credit event as it doesn't change the terms of the claims held by the other creditors," said Simon Firth, a partner in the derivatives practice at Linklaters.


"It's actually impossible to have a restructuring credit event based subordination without something that affects the rights of existing bondholders. In the absence of some kind of agreement or change of law, then I don't see anything that will [do that]," said Firth.


The definition of subordination has two parts, neither of which would apply to the ESM loans, according to Firth. The first pertains to companies in liquidation, which does not apply to sovereign CDS as countries cannot enter insolvency proceedings.


The second states that existing bondholders won't be entitled to receive or retain payments with respect to their claim while the reference entity (Spain) is in default in respect of its senior obligations (in this case the ESM loans).


"There won't be anything that affects the entitlements of the existing bondholders to receive or retain payments," said Firth. "Their entitlement is exactly the same - all you have is an obligation between the sovereign and some other creditors to pay off those creditors first. That is not binding on the bondholders."


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Mon, 06/11/2012 - 14:06 | 2515424 hedgeless_horseman
hedgeless_horseman's picture



And just as ISDA was starting to become somewhat credible again...

Really?  ISDA and credible in the same sentence?  Don't you mean conflicted?

Mon, 06/11/2012 - 14:07 | 2515439 Atlas_shrugging
Atlas_shrugging's picture

subordinacion no es subordinacion

Mon, 06/11/2012 - 14:16 | 2515473 FL_Conservative
FL_Conservative's picture

You mean, subordinacion no es Uganda.

Mon, 06/11/2012 - 15:06 | 2515651 GOSPLAN HERO
GOSPLAN HERO's picture

Obama was born in Uganda not Kenya.

Mon, 06/11/2012 - 15:46 | 2515789 magpie
magpie's picture

At some point the ECB will be bound to accept BCs als collateral.

Mon, 06/11/2012 - 16:25 | 2515910 ToNYC
ToNYC's picture

Like the old Johhny Carson skit with Ed McMahon that went., "Ubangi? Ubetcha!"

We're done; it's 12 hours after the iceberg.

Mon, 06/11/2012 - 14:17 | 2515480 jus_lite_reading
jus_lite_reading's picture


WHAT A SHAM!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Mon, 06/11/2012 - 14:30 | 2515532 resurger
resurger's picture

Lite, lets start a CDS index and register it with ISDA

We know that the triggers will never ever ever be triggered.

How about we start with 5,000,000,000,000 and and 2big2fail #plates, and if they ever do, fuck it! The government will just fucking print.


Mon, 06/11/2012 - 15:02 | 2515631 disabledvet
disabledvet's picture

NO! the Government will CONVINCE..."then determine whether and WHAT to print." SAYING SOMETHING comes first. "then an action"...provided any action is required of course.

Mon, 06/11/2012 - 15:22 | 2515702 resurger
resurger's picture

Many say we are at a cross roads, and either way its all good for Gold Disabldvet.

Chose from the following:

1- Financial "Reset"

2- Print to Infinity

Now we are exactly in the middle of teh 2

Mon, 06/11/2012 - 14:44 | 2515579 smlbizman
smlbizman's picture

i imagine the isda as the bad guy referee in the fans are screaming at him for not seeing the foriegn object, but he says fuck you i am calling this match.....

Mon, 06/11/2012 - 14:05 | 2515427 SemperFord
SemperFord's picture

Why would the ISDA ever have been thought of as credible in the first place???

Mon, 06/11/2012 - 14:15 | 2515470 CClarity
CClarity's picture

They aren't thought of as credible.  They're simply built into the "system" - more of the self-policing that only works for the big guns.  Those who write the CDS decide what triggers events that might cost them if they had to pay out after collecting all those fees.  What a system!!!  The Trillions of $ nearing a Quadrillion of derivatives for protection and hedging - - - against what?  Reality?  Most of the hedges won't be worth the paper they're printed on if they actually have to be played out.  

Mon, 06/11/2012 - 14:29 | 2515524 JR
JR's picture

+ 1

This is the sound of panic from the banks. They are losing their control; they’ve let too many criminals under the tent.

They thought they had control, and they don’t; they thought they could make it all work, and they can’t.

Mon, 06/11/2012 - 14:05 | 2515430 francis_sawyer
francis_sawyer's picture

We already know where the 'trigger' is...

Mon, 06/11/2012 - 14:20 | 2515491 Whoa Dammit
Whoa Dammit's picture

Trigger is stuffed and is at the RFD-TV Roy Rogers museum. ;-).

Mon, 06/11/2012 - 14:52 | 2515597 Temporalist
Temporalist's picture

That just makes me want to say "Hi ho Silver!" (hi yo too)

Mon, 06/11/2012 - 14:06 | 2515433 Dick Darlington
Dick Darlington's picture

Spanish bonds marinated in subordination? Does the price include insolvency salad on the side? Thanks but no thanks.

Mon, 06/11/2012 - 14:06 | 2515434 NERVEAGENTVX

So sovereign CDS trades because...?

Mon, 06/11/2012 - 14:16 | 2515472 RoadKill
RoadKill's picture

CDS will be triggered, just not by this. Do you have a prospectus for a specific issue of Spanish debt (specific CUSIP) that says subordination at this level is a default? Unlikely.

CDS was triggered and paid on Greece. Paitence young Padawan.

From the outside something that might seem to trigger CDS depends on the specific covenants of the specific issue (CUSIP) that a specific CDS is written on. This game is for those that read 500+ pages of legalease on EACH issue and know what is good (UK law bonds) and what isnt.

If it was easy to make $$ on this the return profile would look like a short equity ETF rather then letting you turn a few million into billions.

Mon, 06/11/2012 - 14:07 | 2515436 Seize Mars
Seize Mars's picture

What a shit show.

Why even bother trading credit? It doesn't work! It CAN'T pay off!

Mon, 06/11/2012 - 14:19 | 2515488 junkyardjack
junkyardjack's picture

TPTB know that if any event ever triggered a CDS event then all of the banks would be immediately bankrupt because none of them expect to ever have to pay.  There will never be a major CDS trigger event because it would collapse the whole system.

Mon, 06/11/2012 - 14:31 | 2515529 bigkahuna
bigkahuna's picture



However, there will be such an event TO collapse the system.

Mon, 06/11/2012 - 14:07 | 2515437 Rongen
Rongen's picture

Surely this is bullish for Spanish bonds.

Mon, 06/11/2012 - 14:11 | 2515456 gojam
gojam's picture

As I recall, it didn't have that consequence in the past.

As the 'insurance' was no longer credible it pushed sovereign bond yields up. (but I'm sure someone will correct me if I'm wrong)

Oh, and don't call me Shirley!  :-)

Mon, 06/11/2012 - 14:08 | 2515440 chinaguy
chinaguy's picture

Well, seriously, Greece was annoying, but Spain? That would hurt big time.

Mon, 06/11/2012 - 14:14 | 2515467 mayhem_korner
mayhem_korner's picture



You sound like Bwanee Fwank reading up on a new "technique"...

Mon, 06/11/2012 - 14:59 | 2515616 Jethro
Jethro's picture

As long as he has Timmy Geithner as his cabin boy, I'm OK with it.  I don't want to know about it, but I'm OK with it.

Mon, 06/11/2012 - 14:08 | 2515442 lemonobrien
lemonobrien's picture

what's the use of buying a CDS when they're never triggered cause it's a rigged game?

Mon, 06/11/2012 - 14:10 | 2515451 Conman
Conman's picture

Isnt the real question why buy the bonds if you can hedge against them imploding?

Mon, 06/11/2012 - 15:27 | 2515722 UP Forester
UP Forester's picture

It's a zero-sum game.

If you're not a TBTF bank, you end up with zero.

Mon, 06/11/2012 - 14:13 | 2515463 Sudden Debt
Sudden Debt's picture

Why by 100 year bonds when you know the system is imploding?
Why even buy a 10yr?

Mon, 06/11/2012 - 14:45 | 2515580 El Oregonian
El Oregonian's picture

At this rate a 3 MO. sounds incredibly risky... and very stupid at this point.

Mon, 06/11/2012 - 15:05 | 2515646 disabledvet
disabledvet's picture

yet all it creates is "an inversion" yes? "so then what"? my money is on "someone says the word recession." and of course "this is true." interestingly though "he claims a mild one"...meaning "recession." which is why i ask "and then what?" in other words "once you get you...ahem..."mild" recession then what?" and now we know. NOTHING!

Mon, 06/11/2012 - 15:15 | 2515678 kridkrid
kridkrid's picture

You may be very smart... or you may be very high... or both... or neither.

Mon, 06/11/2012 - 14:17 | 2515479 icanhasbailout
icanhasbailout's picture

because you can then represent the net hedged position as "risk-free capital" and count it as part of your bank's Tier 1 capital ratio

Mon, 06/11/2012 - 15:05 | 2515641 kridkrid
kridkrid's picture

Nice racket.  Let me see if I have this right.... I'm TBTF bank... I borrow digital money from the fed... I buy sovereign debt.  I then "hedge my risk" through acquirig insurance in the form of a CDS.  I can then loan money against that hedged position levered up 10x's (or higher)?  Something like that?  Is that the whole picture?

Mon, 06/11/2012 - 15:08 | 2515658 disabledvet
disabledvet's picture

"until you can't." or "what the market will bear." in short "no credibility means no credibility"...even if all you offer is "incredibility." indeed "especially if you offer incredibility." what's that line about "not suffering fools" again?

Mon, 06/11/2012 - 15:17 | 2515685 clones2
clones2's picture

Let me check my Finance 101 book from Yale SOM...........    Yep - you got it.

Mon, 06/11/2012 - 15:25 | 2515714 kridkrid
kridkrid's picture

I'm not always super smart, so let me extend my question even further... I'm still a TBTF: Is the same true of other forms of debt?  If I were to buy some sort of CDO... say some collection of MBS... if I hedge that through a CDS, does that also now represent Tier 1 capital against which I can loan at 10x's (or something like that)?

Mon, 06/11/2012 - 14:21 | 2515500 RoadKill
RoadKill's picture

BTW something only 1% of ZHers understand is that CDS is collateralized. The buyer pays a fee periodically, not for an empty promise, but for a claim on a collateralized account. At the end of every day the issuer of CDS has to add collateral to the esgrow account based on price movements in the specific issue.

This is why a "trigger" isnt a catostophic event. As the value of the CDS rises the esgrow account is funded. Its a rapid rise in value of CDS that is a capital drain on issuers. The trigger is uneventful because 99% of proceeds are in esgrow the day before the trigger.

Mon, 06/11/2012 - 14:27 | 2515517 Village Smithy
Village Smithy's picture

What makes you sure that the esgrow accounts are actually fully funded?

Mon, 06/11/2012 - 14:29 | 2515528 Terminus C
Terminus C's picture

That would be true, but you suffer from a false assumption... that they play by the rules.

Mon, 06/11/2012 - 14:32 | 2515540 SheepDog-One
SheepDog-One's picture

AH yes I see....its all 'backed by collateral'....lmao

Mon, 06/11/2012 - 15:31 | 2515553 sschu
sschu's picture

Is it possible this collateral has been pledged multiple times or is posted based upon un-real value?

Who is responsible for making sure the rules are really followed and do you have any faith in the financial institutions or the regulators tasked with overseeing the institutions?

This is the real problem, no one trusts anyone, so your collateralized CDS could be just a bunch of false promises.


Mon, 06/11/2012 - 14:56 | 2515607 Temporalist
Temporalist's picture

Something is "esgrow"ing and it's the pile of bullshit people are willing to suffer.

Mon, 06/11/2012 - 15:00 | 2515622 junkyardjack
junkyardjack's picture

So there is $25 trillion of collateral in escrow?  Not likely.  Its more like there is enough funds put in escrow that if the counterparty goes bankrupt you can go out into the market and buy another CDS instrument, of course when everything collapses at once the collateral isn't enough to buy at the market without major losses.  No one is holding in escrow the amount related to if a CDS event is triggered, that would be a ridiculous waste of capital.

Mon, 06/11/2012 - 15:03 | 2515629 insanelysane
insanelysane's picture

BTW something the 99% of ZHers understand is that it is an ESCROW account and that doesn't mean that that there is anything in there.  MFG clients had actual accounts with balances and they were vaporized.

Mon, 06/11/2012 - 15:27 | 2515720 withnmeans
withnmeans's picture

Look at it this way, its like CDS Kiting !!! A revolving door ! Covering a check with another check with another check, and so on... There is no MONEY !

Mon, 06/11/2012 - 15:02 | 2515635 Bansters-in-my-...
Bansters-in-my- feces's picture


Hurry up and live up to your user name.


Mon, 06/11/2012 - 15:09 | 2515662 disabledvet
disabledvet's picture

since it is based on some "future event" however..."how is one to know"? and of course..."one"...cannot. though just as equally..."many can."

Mon, 06/11/2012 - 14:08 | 2515444 AL_SWEARENGEN

I guess when you control the law and definition of said laws you're free to be a group of lying, thieving, COCKSUCKERZ!!

Mon, 06/11/2012 - 14:24 | 2515510 I Am Not a Copp...
I Am Not a Copper Top's picture

and dirt worshippers

Mon, 06/11/2012 - 14:09 | 2515446 carbonmutant
carbonmutant's picture

When you can't tell who the mark is...

Mon, 06/11/2012 - 14:09 | 2515448 junkyardjack
junkyardjack's picture

LMAO, CDS will always be worthless!  When they can constantly change the rules to the game why even bother to play?

Mon, 06/11/2012 - 14:33 | 2515548 SheepDog-One
SheepDog-One's picture

Heads I win tails you lose.....ok now gimme some moneeez lets bet!

Mon, 06/11/2012 - 14:10 | 2515450 moonstears
moonstears's picture

Why would individuals or banks buy CDS, if they're all worthless, can never trigger, why spend the dough? MFGlobal, these CDSs never redeemable, unlimited printing to benefit banks at the cost to Sovereigns...makes me think someone WANTS the shithouse to go up in flames(to quote Jim Morrison). JMO.

Mon, 06/11/2012 - 14:11 | 2515452 Dr. Engali
Dr. Engali's picture

What is it going to take for the CDS maket to finally blow up? How many times do the buyers have to get screwed before they realize that all they have  are paper trading vehicles in a giant invisible casino?

Mon, 06/11/2012 - 14:13 | 2515461 mayhem_korner
mayhem_korner's picture



The only logical move is not to play.  (War Games)

Mon, 06/11/2012 - 15:07 | 2515655 Temporalist
Mon, 06/11/2012 - 14:23 | 2515471 hedgeless_horseman
hedgeless_horseman's picture



CDS are a very profitable business for the banks that are writing them (selling) at high prices, knowing they will be able to purchase them back (buying) at much lower prices.  This is assured, because the same banks that write the CDS sit on the commitee to determine if and when the CDS have any value.


Mon, 06/11/2012 - 14:14 | 2515465 sudzee
sudzee's picture

Pssst. Its 2pm do you know where your accumulated wealth is?

Mon, 06/11/2012 - 14:17 | 2515478 SheepDog-One
SheepDog-One's picture

No, not THAT kind of subordination....we meant the other one...see?

Mon, 06/11/2012 - 14:17 | 2515482 williambanzai7
williambanzai7's picture

Isn't ISDA the Southern province of Uganda where ISDA Amin hailed from?

Mon, 06/11/2012 - 14:54 | 2515602 El Oregonian
El Oregonian's picture

I believe Amin's first name was IDI as in: "All that money you had in your bank account has been turned into an IDI-BIT after the bank holiday".

Mon, 06/11/2012 - 15:48 | 2515795 magpie
magpie's picture

Nice "Last King of the Eurozone" reference.

Mon, 06/11/2012 - 14:18 | 2515484 Everybodys All ...
Everybodys All American's picture

Hey, that didn't take long. These guys are right on the ball. Working day and night to keep this economy sputt ... never mind.

Mon, 06/11/2012 - 14:20 | 2515493 TrustWho
TrustWho's picture

Who can you trust?  BANKERS, you fools!

Mon, 06/11/2012 - 14:22 | 2515502 Piranhanoia
Piranhanoia's picture

Why would anyone buy a box of rocks said to contain diamonds, but never demand to see the box or the rocks?


Mon, 06/11/2012 - 14:29 | 2515509 hedgeless_horseman
hedgeless_horseman's picture



Answer:  Legal tender laws.  All taxes must be paid with boxes of rocks said to contain diamonds.

Mon, 06/11/2012 - 14:24 | 2515506 disabledvet
disabledvet's picture

So the ISDA takes orders directly from the White House. No news there.

Mon, 06/11/2012 - 14:57 | 2515610 Piranhanoia
Piranhanoia's picture

Seems like they take their orders from the same place the white house gets theirs.

Mon, 06/11/2012 - 15:13 | 2515671 disabledvet
disabledvet's picture

the gay lobby? "rich indeed."

Mon, 06/11/2012 - 15:50 | 2515803 magpie
magpie's picture

After the halo, there isn't much else to give him.

Mon, 06/11/2012 - 14:25 | 2515511 carbonmutant
carbonmutant's picture

Apparently EU banks missed that Greek bendover clause in the Spanish bond prospectus.

Mon, 06/11/2012 - 14:25 | 2515512 insanelysane
insanelysane's picture

CDS is only triggered if the master banksters know that it can be paid out.

Mon, 06/11/2012 - 14:29 | 2515525 ejhickey
ejhickey's picture

OK who is the genius that said buy Spanish bonds?

Mon, 06/11/2012 - 14:31 | 2515537 LongSoupLine
LongSoupLine's picture



Show me any financial regulatory or oversight body with "credibility" and I'll show you a legitimate "market".

Mon, 06/11/2012 - 15:15 | 2515679 disabledvet
disabledvet's picture

EXACTLY! in other words "i have it on INCREDIBLE authority that...

Mon, 06/11/2012 - 14:31 | 2515541 LeisureSmith
LeisureSmith's picture

The trigger has been crazyglued, to get this thing to fire one would have to place it between the teeth and hit the primer with a pointy rock until the desired result.Good luck and dont despair if you miss the first time.No Spain no game. Cartridge Derived Suicide 101.

Mon, 06/11/2012 - 14:32 | 2515544 Westcoastliberal
Westcoastliberal's picture

I liken this decision to a thunderstorm moving through the area with heavy rain; the ISDA referee steps outside, extends a hand and says "no, that's not rain, it's precipitation.  No payoff for you"!

Mon, 06/11/2012 - 14:36 | 2515546 Winston Smith 2009
Winston Smith 2009's picture

"Thank you ISDA for confirming that the true reason of today's sell off has now been enacted."


The Subordination in Spain Will Cause Pain


Spanish banks have already hocked any available assets that could be used to “secure” the debt that will be issued in the bailouts. Therefore, the only alternative is for the banks to issue new debt that is unsecured. This is a subtle difference, but an important one. It might end up blowing up the entire European banking sector.

There is a simple fact that must be considered. Any debt that a Spanish bank has outstanding to the Spanish government is Senior to all other classes of debt except depositors. It doesn’t matter what the language says in the creditor agreements. What matters is how the markets will perceive the transaction.

I know how the market will react. If one were a holder of a Senior Debt security of a Spanish bank on Friday, you would end up with a functionally subordinated debenture after the bailout transaction on Monday. Any publicly issued senior debt (including senior secured) of that bank issued after the government bailout debt was created, would be perceived as tainted. It would be unsalable swill. The existing bond debt would sink like a stone.

Mon, 06/11/2012 - 14:34 | 2515555 Nobody For President
Nobody For President's picture

OK. How do you short ISDA?

Mon, 06/11/2012 - 14:40 | 2515567 Vince Clortho
Vince Clortho's picture

Why not just eliminate CDS triggers?

That would solve a big part of the issue.

Mon, 06/11/2012 - 14:45 | 2515581 SqueekyFromm
SqueekyFromm's picture

This isn't FAIR!!! A credit card company can up the interest rate on their card if you get behind on another card totally unrelated to them. Your Credit Score can be reduced for all kinds of things, even if you have always paid your bills on time. Here, somebody's collateral gets significantly impaired, and nothing happens???

Squeeky Fromm, Girl Reporter


Mon, 06/11/2012 - 15:17 | 2515682 disabledvet
disabledvet's picture

"yes" and "how dare you!"

Mon, 06/11/2012 - 14:53 | 2515599 Rock the Casbah
Rock the Casbah's picture

The wonderful thing about Tiggers
Is Tiggers are wonderful things
Their tops are made out of rubber
Their bottoms are made out of springs

Oh, you said "Triggers".......

Mon, 06/11/2012 - 14:58 | 2515611 nomorebuyins
nomorebuyins's picture

Ok let's get this straight, first the tar and then the feathers. Got it.

Mon, 06/11/2012 - 14:58 | 2515612 hedgehog9999
hedgehog9999's picture

The CDS market is only a tool of the bankers in control, they decide what triggers and when to suit their rigged agenda.......... anyone buying bonds should require a yes answer to the following two questions:

1)  am I part of the trigger decision making process?


2) is the subject bond likely to be protected by the trigger decision making team

Question 1 is easy but question 2 is more subjective as there colud be false flag bonds (protected but not really) due to the interconnectedness of the CDS market, the trigger team could pull the trigger where you least expect, that's what happens when only one group holds the guns, they can shoot at will...........

It amazes me that people still buy bonds or that they buy bond protection which is a waste of money when you are not part of the inner circle.

Mon, 06/11/2012 - 14:58 | 2515615 Alpo for Granny
Alpo for Granny's picture

Should have stuck to sewing that traditional non-dividend paying barbaric relic into their clothes......

Mon, 06/11/2012 - 15:00 | 2515618 nomorebuyins
nomorebuyins's picture

BTW 3pm is a ramp trigger.

Mon, 06/11/2012 - 16:17 | 2515895 Mark123
Mark123's picture

asleep at the switch today....must be planning on a bigger ramp job tomorrow.

Mon, 06/11/2012 - 15:02 | 2515630 ParkAveFlasher
ParkAveFlasher's picture

So let me get this straight because I never took an economics or political science class in my life.  Correct me if I'm wrong but "subordination" in this case means, "you'll get your money after this list of other guys we owe.  Could be six months, could be six years, could be six decades.  And if you don't like that, we'll write down the value and you walk out of the office today with a percentage of what you are contractually owed." 

And they're not calling it a "default" because that would mean insurance pays out the full value as promised in the policy.  It's a subordination event, as in if you had a deal, you just got bent over some administrator's chair. 

So, "up" means "up" until it means "down", and it means "down" when some group of shady individuals over here with the letters in the name says so.

So I have this right?

Mon, 06/11/2012 - 15:20 | 2515698 disabledvet
disabledvet's picture

other than the "no we will not write this down either" part yes, spot on. in other words "what isn't an asset in this world?" and "so long as price agrees then we're GOOD TO GO!" (unless we're not.)

Mon, 06/11/2012 - 15:03 | 2515637 riley martini
riley martini's picture

 The ISDA said the same thing about the Greek default but after the ISDA insider bought up the Greek CDS on the cheap they declared Greece in default . It took two from the Greek no default to Greek default. Spain in larger, we will see if Spain CDS tanks and the ISDA insibers buy.

Mon, 06/11/2012 - 15:10 | 2515666 LeisureSmith
LeisureSmith's picture

Bankruptcy Abuse Prevention and Consumer Protection Act.

With a name like that you just know its good stuff.

"The special bankruptcy treatment given repos and derivatives means that repo lenders and parties to derivative contracts can keep the collateral if their trading partner becomes insolvent. This exempts them from the “automatic stay”  rule in bankruptcy, which prohibits most creditors from trying to collect ahead of others."

Does Europe have this "automatic stay" rule?

Mon, 06/11/2012 - 15:14 | 2515674 vincent
vincent's picture

Car insurance claim=          screwed over

Health insurance claim=      screwed over

Home insurance claim=       screwed over

Life insurance claim=           screwed over

Bank insurance claim=        screwed over

Who ya gonna call? 

Promises  are made to be broken. 

Mon, 06/11/2012 - 15:22 | 2515700 disabledvet
disabledvet's picture

again: "what is a warranty" then "proceed to the equity called Navistar" and go from there for another view on your very honest take on things.

Mon, 06/11/2012 - 15:29 | 2515730 obejoyful
obejoyful's picture

Why do people buy the CDS's, it is obvisous no matter what happens they are not going to pay out.

Mon, 06/11/2012 - 15:50 | 2515804 Oliver Budde
Oliver Budde's picture

For what it's worth, Simon Firth happens to be the very author of the Linklaters legal opinion that Lehman Brothers obtained in order to carry out Repo 105. Just as a reminder, GAAP requires a "true sale" opinion in order to even contemplate treating a loan against collateral as a sale of the collateral. In the context of one-week loans over reporting quarter-ends with large amounts of collateral straight-repo'd from Lehman New York to Lehman London and then Repo 105'd by London to non-US banks (who always returned the collateral to Lehman and who charged more for accommodating Lehman's wishes, even though they were receiving better collateralization), and with Lehman continuing to control the voting rights and to receive any coupon payments on the collateral after it was supposedly "truly sold," Mr. Firth was happy to provide an opinion that ostensibly says yeah, those are true sales (the opinion did not even address bankruptcy, as required under GAAP, and is riddled with a variety of assumptions and carve-outs, so as to allow Mr. Firth to wriggle out from under it if anyone ever puts pressure on him). So understand that Mr. Firth tries really, really hard to please his clients.

Mon, 06/11/2012 - 16:16 | 2515889 Mark123
Mark123's picture

Reminds me of the Monty Python cheese shop skit.....


Will you just tell us what IS covered?

Mon, 06/11/2012 - 16:16 | 2515891 boiltherich
boiltherich's picture

I am SHOCKED, SHOCKED that there is gambling going on in the eurobond markets.

What is really shocking is that anybody wasted time even asking if the violation of the bond covenants via subordination would trigger their CDS insurance.  If they got no CDS payout on Greece they will never get any payout on anything, yet they kept on buying Spanish debt like the a heroine addict buys smack.

For so long now I have been wondering when this INSANITY would end, this Bizzaro world of fiat fraud, accounting magic tricks, and mythological solvency, when someone would just wake up and say no matter how bad the collapse might be it can't be worse than this now.  The bad news is that because it is fraud, fiction, and hidden thefts, they can keep it going for as long as they want, there are so many more ways to screw the people they have not even tried yet. 

I still think a massive space rock is headed our way and TPTB know this, they are not worried about debt or insolvency because impact will take care of it soon enough.  Or an ice age, or an alien invasion, or some other depopulating event that they are feathering their nests and building survival bunkers for the chosen, more than two thirds of global productivity is being taxed or borrowed from the people that produce, it must be going somewhere. 

Tue, 06/12/2012 - 10:19 | 2517800 EZYJET PILOT
EZYJET PILOT's picture

Escrow accounts and CDS, don't make me laugh. There is nothing in the escrow accounts because the damn things are never triggered! I can really see JPM honouring their contract with the clients and giving them a chance to see that their "escrow" accounts on a real time basis are topped up, what a joke!

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