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ISDA, Which Refuses To Declare Greece In Default, Has Given The US A 3 Day Grace Period Before A CDS Trigger

Tyler Durden's picture


ISDA is rapidly deteriorating to rating agency status when it comes to credibility. After it made it all too clear in the past few weeks that no matter what happens it would never "determine" Greece (or any other European insolvent country) to have breached a CDS trigger (as that would apparently destroy the world), the same trade association (logically enough comprised of the same firms that make up the heart of the status quo) has joined the rating agencies, and as of last night the CME, in making it all too clear that a debt ceiling plan (preferably Reid's because it achieves absolutely nothing) has to pass, or else, after it earlier announced that the US has precisely 3 days to cure any missed debt payment before US CDS are triggered. Obviously this can not be allowed to happen, so expect this latest development to be used by the president in his nighlty scaremongering session.

From Reuters:

The United States would have at least 3 days to make up for any missed debt payments before it triggered payments on its credit default swaps, according to trade association the International Swaps and Derivatives Association.


There has been some confusion over whether the United States would trigger an estimated $4.77 billion in payments on its CDS if it skips a bond payment as it runs up against an Aug. 2 deadline when the Treasury has warned it will run out of cash.


The Treasury would have at least 3 days to cure any default, under CDS document rules, Steven Kennedy, global head of communications at the association in New York, said on Tuesday.


"This grace period would apply if there was no grace period or if the grace period was less than three business days under the terms of the reference entity obligation," he said.

Zero Hedge will update today's weekly DTCC data on gross and net CDS notional when it is released around 8 pm tonight.


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Tue, 07/26/2011 - 11:10 | 1494451 Cognitive Dissonance
Cognitive Dissonance's picture

If you step over this line, then you're gonna get it.

OK, well if you step over this line, then you're really gonna get it good.

OK, now I really mean it. If you step over that line way over there, then you really really honest to God are gonna get it....maybe. And I really mean it this time. Really. I do. Kinda.

Tue, 07/26/2011 - 11:14 | 1494486 Ahmeexnal
Ahmeexnal's picture

make no mistake
debt will be paid
no gold left
no hard assets left
payment will be made with sheeple slaves

Tue, 07/26/2011 - 11:20 | 1494509 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

This is a good point.  The "slaves" or "taxpayers", what have you, will be fleeced with some totally sacrificed for the "greater good" of society.  Then at the last minute, when no layman has anything, they will say, "Oh, and to save the system, gold is worth X######.  Too bad none of you have any!"

Tue, 07/26/2011 - 12:03 | 1494727 Reptil
Reptil's picture

I read this today, somewhere. It's from a guy who studies Mayan calenders and all that jazz. That is inconsequential; It just shows more are catching on to the reality of wealth and how it's determined, and that they are NOT in control:

These numbers in the bank computers (Obviously the same applies to stocks, funds etc) define the power structures of our societies and determine almost all human relationships, what we as a species do and focus on in our life on earth.

With such a monetary system it seems obvious that unity consciousness cannot exist in a real sense, simply because those that have high numbers in the bank computers dominate and decide what the others are to do, and how they are to spend their time, and such dominance is inconsistent with oneness. CJ

The "gold is money" thing is still not on the radar though. Very, very bullish. :-)

Tue, 07/26/2011 - 13:23 | 1495056 Cathartes Aura
Cathartes Aura's picture

nice quote Reptil, pointing to the absurdity of allowing "high numbers" decide the worth of anyThing, anyOne. . .

I'd just add that studying the Mayan Calendar, or any other means of "measurement" is not so inconsequential really, merely another tool of consciousness that can be used towards the realisation of unity, which can only be realised by One relative to All - if One views any system of "measurement" with a view to the Whole, and ceases to dwell on the Parts - and lining them up in a competitive point-of-view which further separates the Unity - then really, Unity exists in anyThing. . . just remove the competitive, measuring "I" . . .

but yes, absurd that pixelated numbers have such power.

Tue, 07/26/2011 - 11:17 | 1494503 Popo
Popo's picture

At some point the credit markets themselves will lose faith in the validity of the ratings.

And then the real shit show begins...

Tue, 07/26/2011 - 11:33 | 1494551 hedgeless_horseman
hedgeless_horseman's picture

I wonder if the shit show (AA USA-dollar < 72) is the main attraction, or just the warm-up act?

Tue, 07/26/2011 - 11:44 | 1494659 Ghordius
Ghordius's picture

The credit market are already totally detached from the CDS "Universe".

And any serious CDS "triggering" would destroy the financial world.

What I find strange is that ZH and all commentators feel that the CDS set-up is "legitimate" "as-it-is". Wake up! Have you seen what the amount of notionals are?

The situation of the credit market is difficult enough without having a Mutual Assured Destruction device planted in the TBTF banks.

CDS are either insurance or reckless gambling. For both there are time-tested methods. As-it-is, it's idiocy.

Of course, if you really only wish for the "End of the World", then cheer on. ;-)

Tue, 07/26/2011 - 13:40 | 1495115 Cathartes Aura
Cathartes Aura's picture

I like how your post ties in with Reptil's above, Ghordius - pointing to the futility of trying to include "the CDS set-up as legitimate" - it cannot be, it's a fiction, as is the fiat wealth it measures. . .

it's all a mind-game, and the "End of the World" is another hollow version, energy merely changes form, it never ends.

So keep on playing those mind games together
Faith in the future, outta the now
You just can't beat on those mind guerrillas
Absolute elsewhere in the stones of your mind
Yeah we're playing those mind games forever
Projecting our images in space and in time

Tue, 07/26/2011 - 12:26 | 1494816 JuicedGamma
JuicedGamma's picture

You mean they'd actually have to start doing their own due diligence.  If they haven't already learnt that there's no hope for 'em.

Tue, 07/26/2011 - 11:37 | 1494618 TruthInSunshine
TruthInSunshine's picture

I was reading something (forgot what now) that stated Geithner has revised his "must raise" date 5 times since December of last year.

But August 2 fo' real, yo.

I genuinely hope that we either default (the resultant surge in interest rates would certainly impose a new era of austerity born of necessity) or government cut spending in ways it considered radical prior to this event (if we took a poll, would most Americans NOT want to see a 10% or 15% cut of the federal budget, rather than a debt ceiling raise?).

Some people accuse me and some others who think like I do of "just wanting to see the world burn down."

In Truth, I only want to see another seemingly hopeless debt junky enter recovery and succeed.

Kill the Federal Reserve, end Too-Big-To-Fail, f*ck Wall Street.

It's time to live within our means and force Wall Street and Banks to either sink or swim on their own merit.

Tue, 07/26/2011 - 11:46 | 1494666 Cognitive Dissonance
Cognitive Dissonance's picture

I hear you and I truly do understand what you are saying. But regarding your sincere desire.......

In Truth, I only want to see another seemingly hopeless debt junky enter recovery and succeed. actually already pointed out who the real debt junkies are.

(if we took a poll, would most Americans NOT want to see a 10% or 15% cut of the federal budget, rather than a debt ceiling raise?).

Just like all addicts, they we refuse to see their our own addiction. We are both the enablers and the addicted.

Tue, 07/26/2011 - 11:53 | 1494691 TruthInSunshine
TruthInSunshine's picture

At a minimum, the Federal Reserve has transferred 3 trillion dollars to banks and Wall Street entities over the last 29 months, either directly or indirectly, but with transfer payments (in whatever form, and no matter what or how they were labeled) taken directly from taxpayers. Some would claim that this tally is significantly higher, actually.

And this doesn't even account for how much savers, being paid artificially depressed yields on thinks like CDs, MMs and T-Notes, have been dinged for in the form of interest denied.

So, while I agree that Americans don't want to give up entitlements, necessarily, I also think this debt ceiling raise was necessitated in large part by the monetary policy of the Federal Reserve/Bernank.

How much money has The Bernank stolen from responsible savers?

Tue, 07/26/2011 - 11:59 | 1494713 Cognitive Dissonance
Cognitive Dissonance's picture

All excellent point TIS.

At this point we are being held hostage. Americans are now to the point where our own self interest (staying clothed, housed and fed) is being used against us by expert blackmailers to extort the last drop of remaining wealth from 'we the people' before we are allowed to be free and broke.

Just in time for a new world order.

Tue, 07/26/2011 - 11:59 | 1494715 Silver Dreamer
Silver Dreamer's picture

Unfortunately, As what happened with the Roman Empire, we are generations into the warfare and welfare propaganda.  People are accustomed to them now, and they see those ever deepening black holes of debt as normal.  Government welfare is their unalienable right, and warfare is patriotic, not corporate welfare.  In other words, we are screwed. 

Tue, 07/26/2011 - 12:11 | 1494749 TruthInSunshine
TruthInSunshine's picture

Good points, SD.

Multinational corporations, banks and other 'financial' entities owe no national allegiance to any country (ask General Electric, that bastion of American Patriotism and the best accounting firm in the world [I don't blame them for wanting to maximize tax savings, but that's not to say they aren't the archetype that will cause extraction of juice from individuals and small businesses to rise dramatically, in order to finance government recklessness, as they're figuring out how to not contribute, and they get preferential tax treatment vs Joe Q. Public]).

The problem with the planning of the globalists, at least in this context, and against the backdrop of what the TRUE elites want, is that "even the best of plans go awry," as their are way too many variables and unforseen consequences in complex environs.

One such example is that small business really and truly does drive a majority of job creation and wages paid in the U.S., and as the multinationals pay less and less into U.S. government coffers, government will inevitably come for two pounds of flesh from small businesses, which, at this point, is a recipe for collapse (of any hopes for a job recovery, economic expansion of any degree that's sustainable or significant, and hope for rising living standards or better operating conditions for small and mid-size, domestic businesses and entrepreneurs).

I'd imagine/assume that a similar dynamic would/is play/playing out in other nations, also.

Tue, 07/26/2011 - 13:10 | 1495000 TumblingDice
TumblingDice's picture

And now that the tide has crossed the super duper final line, it is time to destroy the sand castle manually.

Tue, 07/26/2011 - 11:11 | 1494455 Hugh Jorgan
Hugh Jorgan's picture

Steven Kennedy and company are on my list of those who need to be tarred and feathered immediately.

The fact these obamabots are weilding this type of threat, all the while looking the other way, when euro-trash

nanny-states are completely insolvent is beyond the pale, and must be dealt with, at the very least, by putting

the leadership in stocks in the town square, where all passers by can shame and shun them. 

Tue, 07/26/2011 - 11:52 | 1494690 Ghordius
Ghordius's picture

Hey, doughboy? What's your problem? <euro-trash nanny-state>?? Insolvent? In which currency? Because we don't want the Bernank Solution?

Do you have a clue how many regulations we have to implement here because they are standard in the US?

Do you have an idea how the non-us world laughs about things like "Danger: this microwave is not to be used to dry live animals" which have to be stick everywhere, courtesy of US-Courts awarding millions to morons? Do you have an idea how the PC work rules are creeping out of your country?

Define better what a nanny-state is and do some research beforehand...

Tue, 07/26/2011 - 11:11 | 1494459 TheTmfreak
TheTmfreak's picture

Anything and everything will be used to believe in the "supports" of these systems. They're too big to fail after all.

Tue, 07/26/2011 - 11:11 | 1494460 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Fear the reaper, bitchez!

Tue, 07/26/2011 - 11:37 | 1494493 baby_BLYTHE
baby_BLYTHE's picture


Tue, 07/26/2011 - 11:36 | 1494607 CrimsonAvenger
CrimsonAvenger's picture

You know what we need? More cowbell, that's what.

Tue, 07/26/2011 - 11:47 | 1494671 caerus
Tue, 07/26/2011 - 12:27 | 1494818 TheFourthStooge-ing
TheFourthStooge-ing's picture

Don't fear the reefer.


Tue, 07/26/2011 - 11:13 | 1494479 glenlloyd
glenlloyd's picture

Wow...they're starting to drag out the WMD heavy artillery now. I expect the flailing arms and panic screams to commence momentarily.

Tue, 07/26/2011 - 11:27 | 1494558 HungrySeagull
HungrySeagull's picture

The old German super rail guns of WW2 took a crew of 1500 + Logistical support and was only able to lob a shell every 50 minutes or so somewhere in the general direction of the enemy.


Regarding the threats of a three day line, I say they are cowards.

Call the default or get off the road and stay on the porch.

Tue, 07/26/2011 - 11:14 | 1494488 bill1102inf
bill1102inf's picture

Yeah, about that, there is 0 chance the US defaults even if the debt limit is not raised.

Tue, 07/26/2011 - 11:14 | 1494490 101 years and c...
101 years and counting's picture

would love to listen to barry trying to explain how it is the evil CDS traders that would bring armageddon on the US...


Tue, 07/26/2011 - 11:15 | 1494491 Cole Younger
Cole Younger's picture

Talk about extorting the sovereign legislation process. Hmmmm, it might be time for RICO...The way I see it, Congress and the administration are being black mailed into spending and raising the debt ceiling.

Wed, 07/27/2011 - 00:37 | 1496873 StychoKiller
StychoKiller's picture

Blackmailed?  More like bribed for their Kabuki performances to the Ignorati!

Tue, 07/26/2011 - 11:15 | 1494494 No Bid
No Bid's picture

At this point I'm not even sure if CDS action could move equities.


Robots took over at 10:09amET.  Unreal.

Tue, 07/26/2011 - 11:19 | 1494514 RobotTrader
RobotTrader's picture

Wake me up when the 10-yr. yield passes 5%.  We are still at 2.96%

When the S & P 500 topped out in January 2000, the 10-yr. yield was 7%!!

Only about 400 bp to go.......

Tue, 07/26/2011 - 11:23 | 1494533 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Wake me up when Bernanke sacrifces his career to keep interest rates low.  Oh wait.....

Tue, 07/26/2011 - 11:42 | 1494645 swissinv
swissinv's picture

the long end of the curve is likely to bounce up... (no the short-end though) 

Tue, 07/26/2011 - 11:42 | 1494646 swissinv
swissinv's picture

the long end of the curve is likely to bounce up... (no the short-end though) 

Tue, 07/26/2011 - 11:23 | 1494544 Internet Tough Guy
Internet Tough Guy's picture

Momo, you are the perfect fade. Oil is green. Did you say this an hour ago? LOL...

Tue, 07/26/2011 - 10:29 | RobotTrader (Total Score:1)
Vote up!

2 Vote down!


Things are going to get better because crude oil folded like a cheap suit again today.

Obama mistakenly let crude out of the SPR and gave the proles a tax cut!  LOL....


Tue, 07/26/2011 - 11:37 | 1494613 Hansel
Hansel's picture

WTF is going on with oil today?

Tue, 07/26/2011 - 11:29 | 1494574 Dr. Engali
Dr. Engali's picture

Yeah that ended pretty well didn't it?

Tue, 07/26/2011 - 11:22 | 1494535 Clowns on Acid
Clowns on Acid's picture

Why can't they just cut Gov't spending? Why is there even a discussion? Y'all know the answer...left wing facsists need other people's money to tell them how to live their lives and get paid for the enforced "advice".

Da na na na na - get ready, get ready.....

Tue, 07/26/2011 - 11:26 | 1494557 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I wish it was that simple, but the right wing facists want to cut SSTF, Medicare, Medicade, food stamps, and other programs that poor and elderly people rely on....oh wait, the left wing facists want to cut those programs too. 

So we give up on the system.  We fire ALL of the politicians (we could if we wanted to) and we take our rights back. 

Tue, 07/26/2011 - 11:22 | 1494539 Quintus
Quintus's picture

Genuine question - Is there even a significant exposure here?  How many people took out default insurance on the US?  Until a very short while ago, the very idea was considered insane, so I can't imagine there was a big market for such insurance, but I may be totally wrong.

Tue, 07/26/2011 - 11:33 | 1494591 uranian
uranian's picture
$1 Billion Armageddon Trade Placed Against The United States


July 25th, 2011 - Someone dropped a bomb on the bond market Thursday – a $1 billion Armageddon trade betting the United States will lose its AAA credit rating. 

In one moment, an invisible trader placed a single trade that moved the most liquid debt market in the world.

The massive trade wasn’t placed in bonds themselves; it was placed in the futures market.

The trade was for block trades of 5,370 10-year Treasury futures executed at 124-03 and 3,100 Treasury bond futures executed at 125-01.

The value of the trade was about $850 million dollars. In simple terms, if that was a direct bond buy, no one would be talking about it.

However, with the use of futures, you have to have margin capacity behind the trade. That means with a single push of a button someone was willing to commit more than $1 billion of real capital to this trade with expectations of a 10-to-1 return ratio.

The number of shops or even central banks that can take on this level of market risk is extremely small. Some that come to mind are hedge fund manager John Paulson, Bill Gross’s PIMCO, and the U.S. and Chinese central banks.


Tue, 07/26/2011 - 11:38 | 1494609 Quintus
Quintus's picture

That's a Futures trade though, rather than a CDS related position.   I guess whoever took the other side of the trade may try to cover themselves with CDS insurance, but to my original point, this trade was only put on last Thursday because the idea of US default was inconceivable just a couple of months ago.  It wouldn't surprise me to learn that there is a larger net CDS exposure tied to Greece than the US.

Tue, 07/26/2011 - 11:44 | 1494658 SWRichmond
SWRichmond's picture


Tue, 07/26/2011 - 15:45 | 1495643 Island_Dweller
Island_Dweller's picture

s there even a significant exposure here?  How many people took out default insurance on the US?


Uh, everyone who bought PMs.......

Tue, 07/26/2011 - 11:23 | 1494547 Cthonic
Cthonic's picture

That's pretty rich coming from a systemically inane institution like the ISDA.

Tue, 07/26/2011 - 11:24 | 1494549 PulauHantu29
PulauHantu29's picture

"...conscious choice is an illusion...leading some people to ponder whether there is such a thing as free will."

Brooke Gladstonein, "The Influencing Machine"

Tue, 07/26/2011 - 11:25 | 1494552 buzzsaw99
buzzsaw99's picture

Whomever is buying CDS protection must be dumb as fuck because it ain't never gonna pay off.

Tue, 07/26/2011 - 11:56 | 1494701 Ghordius
Ghordius's picture

Or doing it because he's anyway playing with other people's money and it looks better if audited: "I did the proper thing! You can't sue me!

Tue, 07/26/2011 - 11:27 | 1494564 Pretorian
Pretorian's picture

Crazy world US will be downgraded if the debt is not increased and Europe has been downgraded because of debt increased. The guys runnung the show from Area 51 muse have gone crazy.

Tue, 07/26/2011 - 11:28 | 1494566 GiantWang
GiantWang's picture

Good thing there's bad news out there today or the market might be down.  It seems that the only bad news is . . . well, hmm . . . oh yeah, there's no such thing as bad news!

Tue, 07/26/2011 - 11:28 | 1494570 RobotTrader
RobotTrader's picture

Oil was down $2 and now it bounced back.

Must be a hint that Obummer is about to unleash his new stimulus plan or something.

Algos are trading "Risk On" and "Risk Off" now on a 5-minute chart.

Tue, 07/26/2011 - 12:15 | 1494769 Internet Tough Guy
Internet Tough Guy's picture

Momos blowtorched by oil. lulz. You are the perfect fade momo. You must be puking up blood.

Tue, 07/26/2011 - 11:28 | 1494571 luigi
luigi's picture

The situation is so bad, that a scuba diving association can doom a nation like America!?

Ah, no, sorry, you meant the other ISDA... :) :)

Tue, 07/26/2011 - 11:31 | 1494582 RobotTrader
RobotTrader's picture

Shorting ES is like pulling teeth out of Godzilla.

Gotta take your money quick or your hand is going to get bitten off.

I'm amazed how the bottom fishers and dip buyers win day in and day out.

Much less stress by just staying long and not fighting the primary trend.

Tue, 07/26/2011 - 11:31 | 1494583 youngman
youngman's picture

The whole screaming politicans and text readers on the tv are all wanting the USA to spend/borrow 2.5 trillion more me that is just one can cut anything...we are chickenshits...

Tue, 07/26/2011 - 11:32 | 1494585 RobotTrader
RobotTrader's picture

Hard to be short when MS and GS are steadily grinding upward.

Tue, 07/26/2011 - 11:54 | 1494696 Internet Tough Guy
Internet Tough Guy's picture

You folded like a cheap suit on that oil collapse call an hour ago. LOL...

Tue, 07/26/2011 - 11:34 | 1494598 SWRichmond
SWRichmond's picture

There is no default unless they want one and do it deliberately.  All of this public posturing is lobbying by the financial interests for more debt.  If this announcement was initiated by ISDA it's a bunch of fear-mongering crapola.

Tue, 07/26/2011 - 11:37 | 1494616 aheady
aheady's picture

It's ALL a bunch of fear-mongering crapola.

Tue, 07/26/2011 - 11:36 | 1494608 MobBarley
MobBarley's picture

So basically, 8/6 it?


I'm assuming the first defaults would happen 8/3 so three days later right?


SO the CDS tower falls on 8/6


How appropropiate.


Tue, 07/26/2011 - 11:37 | 1494614 oldmanagain
oldmanagain's picture

"expect this latest development to be used by the president in his nighlty scaremongering session" sez Tyler.

His track record seems better than most.

Tue, 07/26/2011 - 11:38 | 1494626 fiddler_on_the_roof
fiddler_on_the_roof's picture

All this "dog and pony show" of debt ceiling and this infinite coverage in ZH means nothing. Bond markets are not budging, otherwise we should have seen a precipitous fall in Bonds.

Stocks/Oil/Gold heading higher.

Tue, 07/26/2011 - 11:40 | 1494635 williambanzai7
williambanzai7's picture


Tue, 07/26/2011 - 11:50 | 1494681 Cognitive Dissonance
Cognitive Dissonance's picture


I think you need to re-label the feet as hooves.

But I do love me some Sunday rump roast.

Tue, 07/26/2011 - 11:58 | 1494709 Dr. Engali
Dr. Engali's picture

I prefer breast meat.

Tue, 07/26/2011 - 11:42 | 1494640 InconvenientCou...
InconvenientCounterParty's picture

This constant whining about scaremongering being negative is supremely ironic. It runs counter to almost every value threaded through Zerohedge.

Imprinting an obvious bias on what fear de jour should and shouldn't be "mongered" is broken and wrong. The emperor has no clothing --and the sharp teeth? dentures.


Tue, 07/26/2011 - 11:42 | 1494644 Critical Path
Critical Path's picture

"Lift the debt ceiling, or else......or else we'll keep issuing scary remarks of a debt apocolyspe and we'll also be sure that CDS we keep threatening will be exercised never really is... trust us... you don't want this. [OH GOSH, DO IT PLEASE!!!]"

Tue, 07/26/2011 - 11:44 | 1494652 carbonmutant
carbonmutant's picture

... it made it all too clear in the past few weeks that no matter what happens it would never "determine" Greece (or any other European insolvent country) to have breached a CDS trigger... 

But the US can breach a CDS trigger...???

Does this have something to do with their " Tahawwut Master Agreement"?

Tue, 07/26/2011 - 11:43 | 1494654 Sudden Debt
Sudden Debt's picture

So... If Army wages keep on being paid...

Militairy expenses keep on being paid...

and other essentials keeps on being paid...


Paychecks have already left the door!


Tue, 07/26/2011 - 11:44 | 1494656 lunaticfringe
lunaticfringe's picture

I am a professional linesmaker. I estimate the chances of Congress failing to raise the debt ceiling as approximately the same as seeing Jimmy Hoffa doing an Olive Garden commercial on TV. Shameless self promotion and more lunacy here...

Tue, 07/26/2011 - 11:47 | 1494668 New American Re...
New American Revolution's picture

I like the Banzi line in the sandnaked principle

Tue, 07/26/2011 - 11:54 | 1494669 slewie the pi-rat
slewie the pi-rat's picture

whatever.  totally OT (what else is new?) from  Summary of the American and International Press on the Libyan Revolution - <i>Morgan Strong</i>

re: exploding black swan eggies in the strategically mandatory nafusa range south & west of tripoli, in the sweltering sahara.  perhaps the moQ doesn't like that now-tightening noose around his capitol fortress. (Paste)

Nalut was struck again overnight by salvos of rockets from the Al Qathafi forces. The following statement, translated and posted below, underscores the frustration of a population now living through a sixth month of war, and that is waiting for the batteries firing on their city to be silenced.

There was continued of bombing of the city with Grad rockets and cannon 120 (Reporter’s Note: it is not clear what weapons system is referred to here, perhaps D-30 artillery or 120-millimetre mortars, or something else that has been mistakenly identified) from the northern side, from dawn this morning.

More 70 Grad rockets landed on the Nalut … large reinforcements to the Al Qathafi forces have arrived and they are planting mines in the area of Takut and Barda, which are under the mountain and they completely cut off electricity, water and communications to the region. We urge the international community to intervene immediately to end the humanitarian suffering of the people.

The rebels have been given to overstatement during the war, so not everything here can be confirmed. As of Saturday morning, for example, there was a limited electrical supply in Nalut. But there is at least one independent foreign journalist in Nalut now - Derek Henry Flood - and he has publicly confirmed the sustained rocket attacks on the city overnight.

NATO’s air power is certainly not the only means of ending this war, and there have been ample signs that the airstrikes are less effective and more costly than NATO’s leadership would have people believe.

But the unease reasonable people would have about waging war this way, and the finer points of the shortfalls in the way the air power has been used, is not at the front of the minds of those who have high-explosive rockets landing in their neighbourhoods. They want the rockets to stop, and wonder: just what are those pilots (and those who direct them) doing each night and day?

Tue, 07/26/2011 - 11:48 | 1494676 Maxter
Maxter's picture

I have a question here.  I am no economy expert so bear with me here.


Why does it matter if the rating agency downgrade or not the US?  Is everyone supposed to suddently realise that the US is insolvent only when the rating agency tell them so?  Because in the end it looks to me like any sane person wouldn't touch those bond with or without a downgrade.

Tue, 07/26/2011 - 12:08 | 1494747 Ghordius
Ghordius's picture

Let's say you are a big bank.

Now, very simplified: You buy AAA bonds by increasing your balance sheet (this magic is reserved for banks), so on the asset side you have let's say USD 10bn AAA bonds, on the liabilities you owe the primary market dealer (also reserved for the banks that rule the world) USD 10bn of electronic "cash". You make a nice little margin, thanks to the FED/Treasury.

Now, what keeps banks to expand their balance sheets to unicorn with this neat little trick? Basle Rules, which say that you have some shareholder capital to "underpin" the risk.

So in your case, should US treasuries stop being AAA, you need in the above case from zero capital to suddenly USD 3billion or more. Whoa! There goes your bonus...

Tue, 07/26/2011 - 11:51 | 1494685 thecoloredsky
thecoloredsky's picture

In related news -- King World News had an interesting interview with Jim Rickards a couple weeks ago. He received a semi-threatening letter from one of the top dogs at ISDA.

Tue, 07/26/2011 - 12:39 | 1494873 TruthInSunshine
TruthInSunshine's picture

ISDA must run with some elite BSDs - threatening economists and the U.S. Government.

Tue, 07/26/2011 - 11:52 | 1494688 oogs66
oogs66's picture

the government will not default on interest or principle on treasury obligations

Tue, 07/26/2011 - 12:14 | 1494761 Silver Dreamer
Silver Dreamer's picture

No, I doubt the government will default on itself, and by government I mean the true bankster oligarchy, not the puppet show we are made to believe are in charge.

Tue, 07/26/2011 - 12:01 | 1494718 TumblingDice
TumblingDice's picture

There will be no grace period. Holy fuck. I don't understand how the fuck people get swept up on this. Even if the debt ceiling is not raised, the president will issue an executive order, probably mentioning the 14th amendment to issue more debt in order to rollover existing debt (he won't use that specific language). Then they will come to a multi tiered compromise that will raise the debt ceiling conditionally, and then after the election, after holding it that far they will just raise it. It is really that simple.

No default. No grace period. It is just a show folks.

Tue, 07/26/2011 - 12:03 | 1494726 GiantWang
GiantWang's picture

Good thing there's bad news out there today or the market might be down.  It seems that the only bad news is . . . well, hmm . . . oh yeah, there's no such thing as bad news!

Tue, 07/26/2011 - 12:39 | 1494876 Zymurguy
Zymurguy's picture

Sounds like more "bluffing" to me.

I say we call 'em all on it.  Don't give into the debt ceiling = default B.S.

The US has tons of cash coming in via forced tax collection.  The US needs to cut spending.  The US will never miss one single SS payment or political armeggedon will occur.

Wed, 07/27/2011 - 00:43 | 1496881 Moe Howard
Moe Howard's picture

They sure cashed my passport renewal check quick. They couldn't have had it more than a couple of hours.

Tue, 07/26/2011 - 12:49 | 1494916 Clowns on Acid
Clowns on Acid's picture

Agreed . Either significant, real spending cuts or lets bring it past the Aug 2 , or whatever feckin' date the pencil necked feckin' lil Timmy Geithner sayas we are in "default".

Call these UN inspired, left wing facsists on their shiite. Why buy USTs when one can buy stcoks that lok ie bonds...MSFT, SDRL, MckeyD's, Pepsi, et al. Sell the valueless USTs and show the insipid Geithner bureacrats that they are history.

If done, Mr market will make the socio-economic adjustmensts that are necessary. Then...prosecute Barney Frank. 

Tue, 07/26/2011 - 13:44 | 1495131 Byte Me
Byte Me's picture

ISDA = Committee CANUTE

Tue, 07/26/2011 - 17:26 | 1495988 alexanderstollznow
alexanderstollznow's picture

just for posterity and those who cant remember straight, this is what was actually said...

     July 6 (Bloomberg) -- A rollover or exchange of Greek bonds
probably won’t trigger credit-default swap insurance contracts
because the restructuring would be voluntary, according to David
Geen at the International Swaps & Derivatives Association.

Tue, 07/26/2011 - 19:38 | 1496316 Buck Johnson
Buck Johnson's picture

These rating agencies are a joke, and anyone that use their recommendations to buy or sell should be checked on for mental issues.

Tue, 08/23/2011 - 22:54 | 1593342 karmete
karmete's picture

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