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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
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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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.
make no mistake
debt will be paid
no gold left
no hard assets left
payment will be made with sheeple slaves
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!"
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:
The "gold is money" thing is still not on the radar though. Very, very bullish. :-)
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.
At some point the credit markets themselves will lose faith in the validity of the ratings.
And then the real shit show begins...
I wonder if the shit show (AA USA-dollar < 72) is the main attraction, or just the warm-up act?
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. ;-)
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
http://www.youtube.com/watch?v=8ca7w73YOS8
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.
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.
I hear you and I truly do understand what you are saying. But regarding your sincere desire.......
.....you actually already pointed out who the real debt junkies are.
Just like all addicts, they we refuse to see their our own addiction. We are both the enablers and the addicted.
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?
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.
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.
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.
And now that the tide has crossed the super duper final line, it is time to destroy the sand castle manually.
Nobody move or the Polack gets it!
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.
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...
Anything and everything will be used to believe in the "supports" of these systems. They're too big to fail after all.
Fear the reaper, bitchez!
deleted
You know what we need? More cowbell, that's what.
I got a fever...
Don't fear the reefer.
Wow...they're starting to drag out the WMD heavy artillery now. I expect the flailing arms and panic screams to commence momentarily.
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.
Yeah, about that, there is 0 chance the US defaults even if the debt limit is not raised.
would love to listen to barry trying to explain how it is the evil CDS traders that would bring armageddon on the US...
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.
Blackmailed? More like bribed for their Kabuki performances to the Ignorati!
At this point I'm not even sure if CDS action could move equities.
Robots took over at 10:09amET. Unreal.
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.......
Wake me up when Bernanke sacrifces his career to keep interest rates low. Oh wait.....
the long end of the curve is likely to bounce up... (no the short-end though)
the long end of the curve is likely to bounce up... (no the short-end though)
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!
-8
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....
WTF is going on with oil today?
http://finviz.com/futures_charts.ashx?t=CL&p=m5
Yeah that ended pretty well didn't it?
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.....
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.
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.
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.
Soros...duh.
s there even a significant exposure here? How many people took out default insurance on the US?
Uh, everyone who bought PMs.......
That's pretty rich coming from a systemically inane institution like the ISDA.
"...conscious choice is an illusion...leading some people to ponder whether there is such a thing as free will."
Brooke Gladstonein, "The Influencing Machine"
Whomever is buying CDS protection must be dumb as fuck because it ain't never gonna pay off.
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!
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.
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!
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.
Momos blowtorched by oil. lulz. You are the perfect fade momo. You must be puking up blood.
The situation is so bad, that a scuba diving association can doom a nation like America!?
Ah, no, sorry, you meant the other ISDA... :) :)
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.
The whole screaming politicans and text readers on the tv are all wanting the USA to spend/borrow 2.5 trillion more ...to me that is just insane...no one can cut anything...we are chickenshits...
Hard to be short when MS and GS are steadily grinding upward.
You folded like a cheap suit on that oil collapse call an hour ago. LOL...
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.
It's ALL a bunch of fear-mongering crapola.
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.
"expect this latest development to be used by the president in his nighlty scaremongering session" sez Tyler.
His track record seems better than most.
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.
Banzai7,
I think you need to re-label the feet as hooves.
But I do love me some Sunday rump roast.
I prefer breast meat.
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.
"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!!!]"
But the US can breach a CDS trigger...???
Does this have something to do with their " Tahawwut Master Agreement"?
So... If Army wages keep on being paid...
Militairy expenses keep on being paid...
and other essentials keeps on being paid...
THE US MUST BE OVER THEIR LIMIT ALREADY!
Paychecks have already left the door!
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...http://thecivillibertarian.blogspot.com/
I like the Banzi line in the sandnaked principle
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?
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.
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...
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/7/16_Jim_Rickards.html
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.
ISDA must run with some elite BSDs - threatening economists and the U.S. Government.
the government will not default on interest or principle on treasury obligations
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.
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.
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!
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.
They sure cashed my passport renewal check quick. They couldn't have had it more than a couple of hours.
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.
ISDA = Committee CANUTE
just for posterity and those who cant remember straight, this is what was actually said...
These rating agencies are a joke, and anyone that use their recommendations to buy or sell should be checked on for mental issues.
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