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Moody's Downgrade Of French Banks Imminent, Risk Waterfall To Follow?

Tyler Durden's picture


As regular readers may recall, back on June 14, before it became an even bigger pariah in the thoroughly discredited rating agency space due to its refusal to downgrade the US, Moody's placed French megabanks SocGen, BNP and Credit Agricole on downgrade review, which means that at some point in the future the rating agency would have to cut the banks' rating from its existing Aa1-2, to Aa3 or even a single A. It is true that when it comes to downgrade reviews the rating agencies are notorious for being as unpredictable in their timing as they are conflicted in their rating: for example even though Belgium was supposed to be downgraded months ago due to the fact that it continues to be the longest running modern anarchy, nothing has occurred, as political interests are obviously pushing the raters to do as paying clients request, not as reality demands. Alas, for France, which is very sensitive to any inkling it may have a less than sterling rating (due to its sovereign AAA requirement without which the EFSF/ESM falls apart), the luck may have run out. Bloomberg reports that the abovementioned banks "may have their credit ratings cut by Moody’s Investors Service as soon as next week because of their Greek holdings, two people with knowledge of the matter said.  

Bloomberg continues: "Cuts are expected next week as the review period concludes, said the people, who declined to be identified because the matter is confidential." Needless to say, this event will come at what is possibly the worst time for Europe, which is already scrambling on all fronts to protect itself from a financial and sovereign implosion courtesy of risk contagion and general insolvency. The point is that while the French banks will likely receive the implicit support of the G-7 which is meeting in Marseilles as we type, the ramifications are that an even weaker financial system will case the French sovereign rating in an even weaker light, and a cut to the country's AAA rating will hence be inevitable. When that happens, Europe will have no choice but to completely redo its entire bailout struture, as a French downgrade will throw the EFSF-CDO mechanism, and the European bailout crusade, in terminal flux.

From Bloomberg:

Credit Agricole spokeswoman Anne-Sophie Gentil declined to comment, as did BNP Paribas spokesman Antoine Sire. Societe Generale spokeswoman Laetitia Maurel said she couldn’t immediately comment. Voicemail messages left on the mobile and office lines of Moody’s chief European spokesman Daniel Piels today, outside of working hours, weren’t immediately answered.


Societe Generale has dropped 55 percent in Paris trading since June 15, while Credit Agricole tumbled 45 percent and BNP Paribas has declined 42 percent. The Bloomberg Europe Banks and Financial Services Index of 46 companies fell 30 percent in the same period.


The reviews of Credit Agricole and BNP Paribas are unlikely to lead to downgrades of more than one level, Moody’s said when it put the banks under review. Societe Generale’s debt and deposit ratings may be cut as much as two grades because of the “uplift it receives from systemic support, which is currently higher than average for the French banking system,” the rating company said at the time.


Credit Agricole’s main risk arises from its Greek subsidiary Emporiki Bank of Greece SA, which was downgraded earlier this month, Moody’s said in June. Societe Generale, France’s second-largest bank by market value, faces risks from its stake in General Bank of Greece. Credit Agricole is France’s third-largest bank. BNP Paribas doesn’t have a local unit in Greece and is instead at risk from direct holdings of Greek government debt, Moody’s said.

And since in finance it is always about relative value, or lack thereof, we remind readers that yesterday we speculated that Credit Agricole, whose 3M USD Libor fixing soared to the highest of all BBA member banks, may soon become the next most prominent target of shorts (after Dexia of course, which is in for a rollercoaster of its own in the coming week).

Sure enough, the imminent downgrade provides an explanation why the bank scrambled to procure last capital funding before the funding doors shut. Alas, what matters far more is what the market response will be. Unfortunately for the bank, it will hardly be favorable; and with shorting already illegal, there is very little that European authorities can do reactively to pretend they still have any semblance of control over this slow motion train wreck.


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Sat, 09/10/2011 - 18:56 | 1655224 equity_momo
equity_momo's picture

We're gonna need a bigger popcorn bowl.

Sat, 09/10/2011 - 19:00 | 1655237 cossack55
cossack55's picture

....and a little more butter. Watch that sodium though.

Sat, 09/10/2011 - 19:14 | 1655267 Sudden Debt
Sudden Debt's picture

Indeed, a lot of investors will get a hart attack next week... RIP...

Sat, 09/10/2011 - 20:09 | 1655377 LeBalance
LeBalance's picture

one must take care with the rascally English Languish:


[hahrt] Show IPA noun, plural harts, ( especially collectively ) hart.
a male deer, commonly of the red deer, Cervus elaphus,  especially after its fifth year. ( /smile/

Sat, 09/10/2011 - 20:27 | 1655406 knukles
knukles's picture

Like when I have a Deer Sized Harton?

Sat, 09/10/2011 - 20:57 | 1655463 markmotive
markmotive's picture

Risk off for everything not nailed down.

I'm waiting patiently for gold to hit peak gold-to-S&P 500 ratio (originally hit in early 1980s) before going long risk assets.

Sat, 09/10/2011 - 21:26 | 1655497 Market Efficien...
Market Efficiency Romantic's picture

as long as gold does not hit the real ratio to fiat currencies, fiat creators will be tempted to confuse their crash by manipulating gold and other reserves, as the gold price has become popular and increasingly creates a de-facto standard among people. Such price confusion is a logical strategic move. Due to its emancipation from gold-backing and as long as the real ratio is not hit, fiat has the power to confuse about its doomedness. Inception becomes reality or the perfect example for the tail wagging the dog.

Sun, 09/11/2011 - 03:41 | 1655804 chinaguy
chinaguy's picture

Moody's only leaked in advance so they can sell (not downgrading) to the highest bidder(s).

Sun, 09/11/2011 - 11:08 | 1656062 disabledvet
disabledvet's picture

Wasn't it Moody's who downgraded the US but not Europe...and just in time for the biggest rally in treasuries since the early 80's?

Sun, 09/11/2011 - 11:20 | 1656079 MsCreant
MsCreant's picture

S&P did it and it got their head exec. fired and demands that they go in front of congress and explain themselves (accusations of frontrunning it). 

Sun, 09/11/2011 - 06:47 | 1655863 Smiddywesson
Smiddywesson's picture

If you are saying TPTB are likely to become even more interventionalist in the gold markets, I agree.  They have no choice.

Sun, 09/11/2011 - 10:27 | 1656006 Marco
Marco's picture

TPTB own more gold than anyone ... their private banks might be short PMs ... but the private banks are set up to fall with everything else in the collapse. They will retreat to their private islands, gated communities and resorts in friendly oil based dictatorships as chaos rampages through the world ... but the collapse will not make them poor and it will certainly not reduce the percentage of true wealth they control (including gold).


This fantasy that the collapse will wipe out TPTB is complete lunacy. It won't do a damn thing about wealth distribution, it's just going to crater productivity. They'll still wash down caviar and truffels with champaign, it will be the poor that suffer. Some of us might be able to hitch a ride with PM investment, but the only people guarantueed to not lose are TPTB ... except in a true revolution. That's why they are TPTB.

Sun, 09/11/2011 - 10:44 | 1656020 TruthInSunshine
TruthInSunshine's picture

Who could've seen this coming? (/sarc)

Surely not these guys:

Sat, 09/10/2011 - 20:28 | 1655409 rocker
rocker's picture

Maybe it was just a typo. I do it all the time. And no, I don't proof read everything.

This is ZH, the point is what matters. Eh.  LOL  Just look at the makets. Less than Perfection.

Sun, 09/11/2011 - 05:20 | 1655480 Ratscam
Ratscam's picture

riots in zurich, cause unknown, as of now,
looking for athens, meeting any westhern town.
edit 11 AM: no biggy just an illegal party with 1500 people that became quite violent. the real deal will show after the euro has crashed

Sat, 09/10/2011 - 21:16 | 1655485 nmewn
nmewn's picture

"Maybe it was just a typo."
Yeah, no big deal. He's Belgian, he does pretty damn
Besides, I have a sticky "C" key...anything an happen ;-)

Sun, 09/11/2011 - 06:29 | 1655856 Motley Fool
Motley Fool's picture

Perhaps it was intentional. The deer in headlights picture comes to mind. :P

Sat, 09/10/2011 - 20:34 | 1655419 LetThemEatRand
LetThemEatRand's picture

I think the missing letter was an 's', not an 'e.'

"Indeed, a lot of investors will get a shart attack next week... RIP..."

Sun, 09/11/2011 - 10:20 | 1656000 bentaxle
bentaxle's picture

"F" maybe?

Sun, 09/11/2011 - 11:00 | 1656049 New_Meat
New_Meat's picture

WaPo's reason to exist: The famous "change one letter" contest.


Sun, 09/11/2011 - 12:01 | 1656239 Ursa Major
Ursa Major's picture

Is that the one frozen in the headlights?

Sat, 09/10/2011 - 20:49 | 1655450 macholatte
macholatte's picture

Belgium was supposed to be downgraded months ago due to the fact that it continues to be the longest running modern anarchy,


So how is Belgium doing?

Riots? Bloodshed? Starvation? Flesh eating zombies in the streets? Mad Max?

The meticulous care with which Belgian cooks select their foods can best be illustrated by a walk through a Belgian supermarket, where even every-day items like butter and cream are carefully labeled with the proud producer's name, where an incredible array of exquisitely garnished cold meats, pates, sausages, salads, and prepared appetizers delight the eye, and where varieties of canned, packaged, and bottled goods line up in colorful profusion unparalleled elsewhere. Advertisements proudly proclaim:

"Butter from Namur" ... "Asparagus from Malines" ... "Pork and pork products from Pietron" ... "Walnuts from Bastogne" ... "Strawberries from Wepion."


Sun, 09/11/2011 - 07:23 | 1655878 oogs66
oogs66's picture

shows what a country can do without a government

Sun, 09/11/2011 - 07:56 | 1655896 Bendromeda Strain
Bendromeda Strain's picture

Big deal, Japan does that. They just slip the word "not" in there.

Sun, 09/11/2011 - 11:23 | 1656084 Byte Me
Byte Me's picture


YEAH -- we're having it real tough over here in Belgium.

PS -- you forgot all the beer and chocolate. Nearly a year without too, Tough times for sure...

Sat, 09/10/2011 - 23:09 | 1655599 Yen Cross
Yen Cross's picture

Those Brits have their austerity package lock, stock and barrel! I'll be playing those GBP trades over the next few months.

 Great post S/D as always!

Sun, 09/11/2011 - 05:49 | 1655848 Snidley Whipsnae
Snidley Whipsnae's picture

European bankers are just as greedy as US Bankers... US bankers offered time bombs that looked like 'sure fire money making CDOs/MBS, etc' to the European bankers and the greedy European fools took them onto their books.

The time delay fuses have set the synthetic garbage held on European banks balance sheets off and the mission of taking down the Euro fiat currency is almost accomplished.

While military warfare is usually sporadic, economic warfare is continuous... and there are no rules.

Next time Europe decides to construct a currency to compete with the dollar they should do due dilligence on factors they are vulnerable to... For instance: No one is more succeptable to a scam than a scammer... The European banker scammers got caught in a scam perpetrated by US banker scammers...all is fair in economic warfare.


Sun, 09/11/2011 - 06:31 | 1655858 jhm
jhm's picture

Well, Snidley, it is not precisely that the US is without problems. Let's wait and see. In german there is a saying: "Nicht zu früh freuen" - that is not to crow too soon. Or: "Wer im Glaushaus sitzt, sollte nicht mit Steinen werfen" - talk about the pot calling the kettle black. ;-) Never underestimate historical memory and experience ...

Sun, 09/11/2011 - 07:14 | 1655872 Snidley Whipsnae
Snidley Whipsnae's picture

jhm... To the contrary, I am not 'crowing' about what is transpiring. I am simply pointing out what I believe has happened.

I certainly do not approve of a movement by US banks, in collusion with regulators, to create toxic time bombs aimed at wrecking a competing currency to the dollar.

The consequences of what the US has done to wreck the Euro are wide ranging and certainly effect 99% of the worlds population due to decreased purchasing power of various fiat currencies including the dollar. The damage caused can be seen in higher energy prices, higher food costs, political unrest, etc... and could easily spiral into global conflict.

I did not mean to give the impression that I approve or that I am gloating.

Color me a disapproving observer... but, what can individuals do? We go to the polls to cast our votes and there are no candidates that we approve of, no candidates that are not bought and paid for by bankers, no candidates that offer meaningful change.

So, I watch and make comments on events. I read an article and sometimes offer a different slant on what I believe is happening... Strictly my opinons...Disinformation is everywhere and I hope not to add to it. 

I believe European bankers were patsys for a scam perpetrated by US bankers... with prior approval and encouragement from the highest level...all in an attempt to prolong the life of the dollar as the world reserve currency and to eliminate competition to the dollar from all other currencies.


Sun, 09/11/2011 - 11:56 | 1656223 TwelfthVulture
TwelfthVulture's picture

Snidley, very interesting.  Nice take on "recent" events.  Be careful with the red team blue team analysis though.  US bankers, Euro bankers.  All major TBTF banks are global these days.  Not saying your thesis, € v $, is wrong, just don't think there is such a thing anymore as a European bank, or a US bank, or an Asian bank.

Sun, 09/11/2011 - 19:08 | 1657759 Dingleberry
Dingleberry's picture

Snidely is doing the simple (and usually correct) rationalization since time immemorial:  FOLLOW THE MOTHER FUCKING MONEY.  In other words:  WHO BENEFITS????  You can then deduce the wherefore's, why's, and how's.  

Mon, 09/12/2011 - 06:26 | 1658820 jhm
jhm's picture

Understood (great to read that!) and thank you for your answer, very much appreciated. Food for thought, always a gain for the brain. :-)

See, to watch this multitude of levels in this "game" i have a strange feeling that no matter how sophisticated the US bankers (and politicians) seem to be and no matter how utterly clever their preparations were (since a very long time) they will sooner or later lose their funny game. As will their european friends (minions) in the relevant positions everywhere in all european countries. And with all of them the whole western political and banking scam will fall in a way the world has not seen since the dragon wars.

Chaos is not a certainty, given historical experience with people in Europe in situations of dire crisis. I am realistic about human nature, but am hopeful, too. In the worst times when all expect the (human) beasts to rave and rape in the streets often the best comes out in people nonetheless very fast, against all odds.

Looking at Germany i would strongly advise to take Russia, China, India and Turkey into the game, especially the russians and the indians are far underestimated in the great game. The ages-old anglo-american nightmare is a eurasian bloc with the russians and the germans in it working together, with Poland and France at the russo-germanic coat-tails as partners in crime.

To prevent that eurasian nightmare ever happening the anglo-american (empire) has done and would do everything, including as to go so far to try to ruin the planet at all cost just to stay in their illusion of power. This is not the whole story, there are myriads of levels here to watch, but it is one major part of the whole drama. Well, known (and lesser known) human history stands like a giant rock against all these efforts (by the anglo-american "elite" and its minions) to keep control, no matter what. No winning game here, for none of the players.


Sun, 09/11/2011 - 11:13 | 1656071 disabledvet
Sun, 09/11/2011 - 07:01 | 1655869 Smiddywesson
Smiddywesson's picture

If that were so Snidley, and the whole CDO/MBS fiasco was a plot to take out the Euro, then why did the Fed secretly funnel all that money to shore up EU banks?  Why not just let them fail?  Why all the cooperation to massage gold prices lower while central banks buy up gold if the plan is for the USD to be the sole currency standing?  In that case, central banks wouldn't need the gold.  I don't buy it.  The system isn't solvable and the Fed and ECB intend to remain at the top of the new system.  The Fed can't go it alone, it needs the ECB to get its way.  

I see this crisis as a tag team match led by the Fed and the ECB on one side, and any country stupid enough to follow them vs. all of the rest, led by China, and perhaps Russia.  Winner takes all.  

Guess who's going to win?  My money's on the Bernank

Sun, 09/11/2011 - 07:34 | 1655884 Snidley Whipsnae
Snidley Whipsnae's picture

Smiddywesson... I am as interested as anyone to see how this plays out.

I have presented a hypothesis that cannot be proven at this time. In time we will see if the dollar is still around when the Euro is extinct. The proof, if indeed there is any, will be in what currency is still standing when others have disappeared.

If you dig into how the Euro was structured you will see that it was a sound system, lacking only physical/fiscal union. The Euro was attacked at it's weakest this an accident?

Another bomb that was planted in the EU was Greece. Greece was aided by Goldman Sucks in hiding off balance sheet it's true debt...which allowed Greece entry into the EU when it should have been denied. Was this an accident?

US based and European based multination banks were instrumental in spreading toxic derivative instruments throughout European economies. A housing bubble similar to the one in the US was spread to Europe... a toxic economic virus.

Iran set up a program to sell oil for Euros and they were invaded. Lybia wanted gold for oil and they are invaded. Any country that introduces a currency that competes with the dollar runs into 'bad luck'... Could this all be coincidence?

Were the swap lines that Benny opened with European Central Banks for saving the Euro or for saving multinational banks? European countries were settleing trade with China in Euros, leaving the dollar out of the loop and endangering the dollar as reserve currency...

Lot to consider here and I have barely scratched the surface...

Sun, 09/11/2011 - 09:24 | 1655956 JoBob
JoBob's picture

Interesting hypothesis, Snidley. The facts fit, so keep fleshing it out.

Sun, 09/11/2011 - 10:21 | 1656002 Max Hunter
Max Hunter's picture

The Euro was attacked at it's weakest this an accident?

Without ouside influence, everything will travel the path of least resistance.

Sun, 09/11/2011 - 10:52 | 1656033 Léonard
Léonard's picture

People believe a world war is about to come but that war has already started and it is a silent war without apparent death, a financial-economic-cultural war, with the USA vs. Europe and the USA vs. the World.

Sun, 09/11/2011 - 09:15 | 1655942 jekyll island
jekyll island's picture

Woah!  The takdown of the euro was collateral damage caused by the law of unintended consequences.  Remember, CDO's were developed based on the theory of a Chinese national Ph.D quant, who developed a formula to allow them to do risk analysis of the piles of dogshit, errr, subprime mortgages they mixed in with regular mortgages based on CDS priced by the market.  It was hailed as a major breakthrough, all prior attempts failed due the large number of variables.  Clearly they were too smart for their own good and didn't test the algorithm against a falling market.   Greedy dumbasses.  Anyway, CDOs and CDSs, all these opaque derivatives are developed for one thing:  wealth transfer to the banks and Wall Street.  

So why did the Fed transfer all that FRN$ to the EU banks?  There are probably multiple reasons, but seeing as how they are all banks, I believe it was to protect the interests of their controllers.  The owners of the Fed most likely have multinational exposure and the collapse of EU banking system who have wounded them deeply.  Why should the banking elite suffer when they can transfer that pain to the taxpayers?  Isn't that why the Fed was developed in the first place?   It's about the money.  It's always about the money.  




Sun, 09/11/2011 - 15:32 | 1656985 I did it by Occident
I did it by Occident's picture

to keep with the military theme, the banks are sitting on non-IM (Insensitive Munitions) compliant stockpiles and they didn't read their quantity-distance tables correctly.  Thus when one gets set off, the rest of the magazine will go high-order via sympathetic detonation.  In other words, BOOM!

Sun, 09/11/2011 - 10:46 | 1656024 Martin T
Martin T's picture

"European banks seems to be facing a US dollars funding problem as no investors is willing to lend (buy a CP/CD) with a duration over 1 week. That information, if confirmed, is of significant importance as it has major implications not only in the money market (the spread OIS/Libor is at the widest for almost 2 years and keeps on worsening- 1rst confirmation), but also FX basis market (the basis swap between currencies has been deteriorating significantly and stands at -60 bps versus -10 bps 4 months ago -2nd confirmation). IF the trend remains unchanged in the coming weeks, the casualties may be the following:

  • 1- a US dollar rally against most currencies as there is both a lack of US dollars in the funding market, but also because most of the players are short US dollars versus currencies with higher yields ( Haaa … the famous carry trade may suffer a blow, and unwinding positions may be costly and create dislocations).
  • 2- a leg down in the commodities universe (except for Gold) as a most of those are US $ denominated.
  • 3- a leg down on the equity market as the losses from a higher US dollar will have to be offset by some unwinding on liquid assets (Welcome margin calls !!!). In addition, a higher US dollar versus Euro means lower earnings for the US corporations (non-withstanding slower growth in Europe, a major trade partner for the USA).
  • 4- a worsening credit market as banks funding problems have a direct effect on the overall spectrum of the economy."
Sun, 09/11/2011 - 22:51 | 1658359 jackinrichmond
jackinrichmond's picture

if the same people that own the fed also own the european banks, why would they want to wage war on themselves ?

Sat, 09/10/2011 - 20:44 | 1655435 monopoly
monopoly's picture

That was great. lolol

Sun, 09/11/2011 - 07:52 | 1655891 Ben Bermonkey
Ben Bermonkey's picture

hahahah, check out this funny video of the Frenchman Chairsatan Trichet:

"Arithmetically, mathematically, it's not an esay job! Do you remember that?"

Sat, 09/10/2011 - 18:57 | 1655227 digalert
digalert's picture

"Que Sera Sera"

Sat, 09/10/2011 - 19:28 | 1655308 Sudden Debt
Sudden Debt's picture

The Future's not ours to see?



Sat, 09/10/2011 - 20:13 | 1655386 DoChenRollingBearing
DoChenRollingBearing's picture

Yes we do Sudden!  ZeroHedge, the antidote to State Run Media shilling.  Without ZH I would not have learned so many things.

In less than 24 hours we will see how futures are reacting.  LOL.

YES, above comments re SPOT-ON about lots of popcorn!  Another interesting week ahead!

Sat, 09/10/2011 - 21:00 | 1655465 Manthong
Manthong's picture

Watch for a $60.00 spike down in gold.

That means that the downgrade will be announced 5 minutes later, just like with the SNB CHF peg.

Sun, 09/11/2011 - 07:15 | 1655873 Smiddywesson
Smiddywesson's picture

Yes, absolutely.  When TPTB are brash enough to crash gold in the overnight markets, seconds before the SNB announcement, we have arrived at a whole new plateau of price manipulation.  

TPTB didn't spend decades denying gold manipulation just to blow all their credibility on one currency move.  TPTB didn't want to do that, events forced them to do it.  (which of course undermines my previous post that the SNB coordinated the move, but being wrong is part of this game too).

The downgrades will no doubt be coordinated with the central banks, so the gold manipulation may not be as obvious to the public as the SNB event, but with gold prices sitting this close to the $2k level, they are going to have to be a lot more obvious about things from here on out.

I also think they will use a margin hike or two to defend the $2k level, otherwise, where do they use them next, $3k?

Sun, 09/11/2011 - 11:10 | 1656061 Manthong
Manthong's picture

Here’s where it gets interesting. They desperately do not want $2K breached.

What else would explain the waterfall drops that cannot possibly be profit motivated?

Everybody accepts “policy action” manipulation of interest rates.. why on earth would someone doubt “policy” is being carried out in any other area of the illusory “free Market”?

I hate this market but I am loving this action.

Sun, 09/11/2011 - 02:06 | 1655776 BigDuke6
BigDuke6's picture

Well said SD , you poor suffering Belgian
TD if u read this please remember that if ZH ever goes mega popular and u r tempted to sell out just remember the total Respect of the mad gang of commentators here is worth more than shitty devalued millions of dollars.
Stay frosty.

Sat, 09/10/2011 - 18:59 | 1655233 Hulk
Hulk's picture

Downgradeathon 2011...

Sat, 09/10/2011 - 20:14 | 1655388 DoChenRollingBearing
DoChenRollingBearing's picture

Coming to multiple jurisdictions near you soon!

Sat, 09/10/2011 - 23:12 | 1655603 Yen Cross
Yen Cross's picture

Great comment Hulk! I just wonder who is downgrading, " The WHO"?   Not much credo left in the rating system, and I love the Band!!! (:...

Sat, 09/10/2011 - 19:02 | 1655238 lolmao500
lolmao500's picture

That happens, the collapse is staged and wanted by the elite. Moodys are controlled. They wouldn't do this if they weren't given the order.

Also, if they do downgrade the French banks over their Greek debt holdings, they need to downgrade the Swiss banks...

Sat, 09/10/2011 - 19:10 | 1655256 TwelfthVulture
TwelfthVulture's picture

The 2-day Fed meeting is next week, 9/20.  There needs to be a hard sell off this week (9/12 - 16) to justify QE3.  Dow 14K and S&P 1400 won't do.  Keep in mind, QEn doesn't only benefit US banks.

Sat, 09/10/2011 - 19:25 | 1655299 DeadFred
DeadFred's picture

The current dollar rally and maybe some more commodities drops will give them the cover of emerging 'deflation'

Sat, 09/10/2011 - 19:49 | 1655347 TwelfthVulture
TwelfthVulture's picture

That is what it looks like.  Nothing like fear and panic to raise the call to "do something."  As we know, something is always the same thing.

Sat, 09/10/2011 - 19:54 | 1655357 TwelfthVulture
TwelfthVulture's picture

On another note, Fred, I remember when successful investing meant finding undervalued companies with solid fundamentals.  With this manipulated bullshit, I find that success only comes when one is able to correctly anticipate what the manipulators are going to do next and trade, not invest, off the manipulation.

Sat, 09/10/2011 - 20:12 | 1655384 LeBalance
LeBalance's picture

the only way to win is not to play.

Sat, 09/10/2011 - 20:18 | 1655391 TwelfthVulture
TwelfthVulture's picture

Ever hear the parable of the three servants and the three talents of gold?

Sun, 09/11/2011 - 01:24 | 1655757 Real Estate Geek
Real Estate Geek's picture

I thought that there were four servants and four talents of gold, with the fourth one being put to death for losing it in a game of three-card monte.  But maybe that was the Old Testament version . . .


Sat, 09/10/2011 - 20:20 | 1655393 DoChenRollingBearing
DoChenRollingBearing's picture

Green for all above.  The game IS rigged.  Like a casino...

Buy gold and take care of yor own.  Do not let the thieves take your money, or be conned into that by CNBS.

Now it looks like France comes under pressure.  Previously it was thought Italy was the TBTF there in Europe.  If France takes a beating (I do NOT see France failing though), then Game Over.

Sat, 09/10/2011 - 23:25 | 1655619 DeadFred
DeadFred's picture

A casino, yes I admit it I'm hooked on the flashing red and green ticks but at least in the short term you can win. All spring Tyler kept saying the Fed needed cover to get the next round of QE which they desperately wanted to provide to their friends. It had the ring of truth so I put money on it. You can make money on this market, but not in the way it was designed to provide capital for companies. I wouldn't be able to evaluate a company's fundamentals if I had to but I was able to predict and profit from many of the trends by answering a few questions, how many bonds are they going to need to sell, what meetings are coming up and such. Greece, Italy Ireland and such aren't significantly worse off now than they were a month ago. Worries about 'contagion' and such are brought into the news when the market is needed to be moved. I'm not accurate enough to make good profits in most markets but todays market has become so wild that options would probably make money using a dart board (as long as they are puts). I won't be gambling with any more money than I can afford to lose, but thank you Tyler, I'm not losing.

Sat, 09/10/2011 - 23:42 | 1655642 SheHunter
SheHunter's picture

Agree. These days it is 'trade the news' instead of trade the tape and trade the fundamentals.  And be ever so nimble!  So nimble indeed.

Sun, 09/11/2011 - 04:46 | 1655829 Flatchestynerdette
Flatchestynerdette's picture

This is exactly my problem: manipulated bullshit. I want to buy my neighbor's house. Its worth about $300k. They think they can get about $450k-$500k because everything stays the same. Moody's is still looking into it. SINCE JUNE. how long does it take to see France has Greek bank debt that is worthless on its books? GMAFB. I've been asking for months - what when will it take to make this house of cards start to crumble? To start the cleansing process since the banks have all been shoveling fiber down their gullets? Its got to come of their asses sometime. They can't keep it bottled up. I hate the elitists who are using new words every day to describe what they will do to fix the problem and yet the problem doesn't get fixed but somehow they keep marching onward. I was shocked that they got to the German court verdict. Shocked. I felt for sure that would have punched through their bullshit but all they said was "see parliament for any more money" - with Merkel's party in disarray, who's winning? the leftists who will print more money? or the far rightists that will pull germany out of the euro? Every time she goes into a meeting with Sarkozy she hedges and says no Germany won't do more and then comes out for some pan-european crap that has her covering France now. WTF? Someone explain when the end starts. How it will start. We thought it was Switzerland but no, that went by with a whisper. Now we're back to Greece???? Anyone looking at Spain. Whats the spread on those bonds? Are they going to come knocking at the chairistan's window too? And there's Obama talking about $450 billion on a jobs bill thats to be paid for with smoke and mirrors when we just had a debt limit debate that brought the country to a halt. I want to say "Wake me when something real happens because all THIS is contrived" I guess the real action is in the Arab Spring going into the Islamic Winter. Wonder how the meditteranean sea lanes will be with the North part of Africa fully under control. I guess nobody will be cruising next year.

Sun, 09/11/2011 - 07:55 | 1655894 WonderDawg
WonderDawg's picture

Nerdette, sit tight. Properties that people think are worth 500K now, even in this depressed real estate market, will eventually sell for 200K. Keep your powder dry, there will be a time to buy real estate, but it isn't now, even if you think you're getting a great deal.


Sun, 09/11/2011 - 10:37 | 1656016 Marco
Marco's picture

Obviously not if the dollar goes hyperinflationary ...

Sun, 09/11/2011 - 11:24 | 1656086 disabledvet
disabledvet's picture

I've got my eye on my neighbor's house too. No one lives there. It's much nicer than mine. Needs a little work but nothing i can't handle. Not only is the price I'm thinking pretty aggressive (free) but so are the taxes i'm willing to pay for being there (none.) Luckily it's in the woods so "it doesn't have that lived in look" cuz my house is "right on the road" and i get noticed...and sheet.

Sun, 09/11/2011 - 07:20 | 1655877 Smiddywesson
Smiddywesson's picture

It's all kick the can.  If they can delay QE3, they will and just announce that the next meeting will be 3 days, and intimate that will be the real meeting to watch.   This is all just a show to kick the can and buy gold, it's not about fixing things or deciding anything, otherwise, central bankers wouldn't be bragging about their tools, they'd be using them.

Sat, 09/10/2011 - 19:21 | 1655288 Landrew
Landrew's picture

Mr. Potter a.k.a. Buffett owns Moody's Mr. Potter would not give an order to down grade, upgrade yes, down no.

Sat, 09/10/2011 - 19:54 | 1655359 maxmad
maxmad's picture

Dillusion of Granduer

Sat, 09/10/2011 - 20:36 | 1655423 Landrew
Landrew's picture

You do know that Berkshire a.k.a. Buffett a.k.a. Mr. Potter owns Moody's right?

Sun, 09/11/2011 - 08:23 | 1655905 Bendromeda Strain
Bendromeda Strain's picture

Yes - what he should have called it was "Dilution of Grandeur"

Sat, 09/10/2011 - 23:25 | 1655616 PeterB
PeterB's picture

Also, if they do downgrade the French banks over their Greek debt holdings, they need to downgrade the Swiss banks...

I thought the Swiss central bank already did that by piggy backing the Euro. Oh well after all a problem shared is a problem halved. i think!

Sat, 09/10/2011 - 19:01 | 1655242 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

What a wicked game we play.

Sat, 09/10/2011 - 19:01 | 1655243 Infinite QE
Infinite QE's picture

Bank dustification to commence.

Sat, 09/10/2011 - 19:05 | 1655251 Marcuz Aurelius
Marcuz Aurelius's picture

So apart from the currency kicking into high gear really soon, we also will see the rating-warfare tools being used to widen the spreads.

Sat, 09/10/2011 - 23:47 | 1655655 Qa
Qa's picture

Already has... compare the consolidation on USDX ($DXY) from 3/14/08 till the 8/8/2008 breakout to 4/29/2011 till last weeks breakout. Almost identical.

Sat, 09/10/2011 - 19:06 | 1655253 lolmao500
lolmao500's picture

A little question. If France get downgraded... and EFSF is ``cancelled`` (for France)... can they pull off a Germany-only EFSF?

Sat, 09/10/2011 - 19:13 | 1655262 TwelfthVulture
TwelfthVulture's picture

I think I read that it would mean 100% German GDP backstopping S. Europe without French participation.

Sat, 09/10/2011 - 19:18 | 1655282 fishface
fishface's picture

I don't think Germany wants to be/is strong enough for that

Sat, 09/10/2011 - 20:23 | 1655401 DoChenRollingBearing
DoChenRollingBearing's picture

I agree.  Without German squire France (snide remark courtesy of Jim Willie) at their side, Germany is likely to decline to be the savior of the Euro.  Or the PIIGS.

Sun, 09/11/2011 - 07:27 | 1655879 Smiddywesson
Smiddywesson's picture

I view a lot of the talk out of Germany as just that, talk.  They need to keep the public calm and pliable while they go along with the Fed and the ECB's plan to move us to a different monetary system based on gold.  They will do whatever they have to do to make the switch work, so Germany is going to talk, and talk, and talk, and then do exactly what Ben and company wants.  Did we not just see the SNB commit suicide in order to join forces with the kick the can game?  So will it be with the Germans. 

Sun, 09/11/2011 - 08:26 | 1655907 Bendromeda Strain
Bendromeda Strain's picture

Your avatar - is that Merkel's head after 2-3 weeks on a pike?

Sat, 09/10/2011 - 19:21 | 1655289 lolmao500
lolmao500's picture

And? Like that would stop them.

Sat, 09/10/2011 - 19:47 | 1655344 TwelfthVulture
TwelfthVulture's picture

Why did you ask if you're only going to argue?

Sat, 09/10/2011 - 20:31 | 1655412 knukles
knukles's picture

Oh, he must be in the wrong room. This is snide remarks.  Argument is down the hall.

Sat, 09/10/2011 - 20:52 | 1655453 stormsailor
stormsailor's picture

no it isn't.

Sat, 09/10/2011 - 21:28 | 1655491 TwelfthVulture
TwelfthVulture's picture

I realize this is fight club and all, but I gave a serious answer to what I thought was a serious question and got slammed.  That's just blindsided sucker punching with a roll of quarters in your hand that is.

Sun, 09/11/2011 - 01:07 | 1655752 lolmao500
lolmao500's picture

No I'm sorry. Thank you for your answer.

Sun, 09/11/2011 - 08:29 | 1655908 Bendromeda Strain
Bendromeda Strain's picture

Fer cryin out loud, "Sucker Punching with a Roll of Quarters" is located in the annex. Can't anyone use a Directory??

Mon, 09/12/2011 - 01:20 | 1658610 X.inf.capt
X.inf.capt's picture

vulture, ive been here a week and learned this place is a lot less FIGHT CLUB and a lot more like GLADIATOR SCHOOL. you learn alot, you learn it quick.....or you will have your arm chopped off and get get beaten with it. THIS PLACE IS NO JOKE!!!

Sun, 09/11/2011 - 08:54 | 1655929 knukles
knukles's picture


Sun, 09/11/2011 - 10:09 | 1655991 WmMcK
WmMcK's picture

Simple contradiction.

Sun, 09/11/2011 - 07:29 | 1655882 Smiddywesson
Smiddywesson's picture

Terribly sorry, I was looking for the drivel room

Sun, 09/11/2011 - 12:20 | 1656319 slewie the pi-rat
slewie the pi-rat's picture

slewie is in the bong room

Sun, 09/11/2011 - 17:05 | 1657272 DoChenRollingBearing
DoChenRollingBearing's picture

I'm not, clearly I'm in the WRONG room.

Sat, 09/10/2011 - 19:14 | 1655258 virgilcaine
virgilcaine's picture

The vix is set to explode, always a bull mkt somewhere, now in fear.  

Sat, 09/10/2011 - 19:17 | 1655277 TradingJoe
TradingJoe's picture

Got VXX calls!? :)))

Sat, 09/10/2011 - 19:24 | 1655294 Ahmeexnal
Ahmeexnal's picture

Don't forget to put your shorts on. Triple shorts with FAZ.

Sat, 09/10/2011 - 19:33 | 1655321 scatterbrains
scatterbrains's picture

what's wrong  with DRV ?

Sat, 09/10/2011 - 20:03 | 1655365 cosmictrainwreck
cosmictrainwreck's picture

interesting......... but (so far) VXX, FAZ, TZA out-perform. I didn't even bother comparing TVIX - in a class of it's own

Sat, 09/10/2011 - 23:04 | 1655489 HyperLazy
HyperLazy's picture

DRV has potential but it is limited since a fair volume of real estate is Marked to Magic and sheltered by a banker stasis field. However, once the banks are dead and their holdings are released then its game on. If there is an economy left...

Edit: In regards to VXX, quoting my immaculate self -

Disclosure: I doubt I will pick up VXX again. Barclays is the instutition behind VXX and VXZ. These are non-secured ETN instruments. Don't get caught holding the bag.

To which a reply was posted -


I agree. DO NOT BUY VXX and hold even overnight. It has a big problem with decay AND it is a Barclays etn which means it is only as reliable as Barclays solvency... I have no inside scoop or anything, just what I read and see, and the experience of having been a sucker and held vxx last year...



Sat, 09/10/2011 - 23:09 | 1655598 DCFusor
DCFusor's picture

I've found VXX to be a good short-term short right after a big spike.  The fear-adrenaline wears off after a few hours, for a few hours.  There's a nice little window in there you can make money off in a trade, often as not.  Decay helps you if you get stuck in it.  Great way to play a dead cat bounce in the market.

Sat, 09/10/2011 - 23:42 | 1655646 DeadFred
DeadFred's picture

An ignorant question I've wondered about is somewhat related. What happens if you hold a put on an iffy stock (VXX, GLD, BAC etc.) and they go bankrupt? Does your put go to maximum value or does it enter some untradable purgatory?

Sun, 09/11/2011 - 01:44 | 1655768 Smithovsky
Smithovsky's picture

you can retire

Sat, 09/10/2011 - 19:11 | 1655260 LookingWithAmazement
LookingWithAmazement's picture

In case, there will be a lifeline for the French banks, just as the G7 or the central banksters recently announced. No Armageddon. I'm even not eating popcorn anymore, I just ignore all the news and do useful things.

Sat, 09/10/2011 - 19:17 | 1655278 Hephasteus
Hephasteus's picture

Yes. Japan will provide money that's not locked up in old japanese peoples safes as well as fresh food and drinking water and assist with electricity that doesn't brown out.

France will bring treasure maps to gaddafi's gold.

Us will have haliburton fuck up the entire mediteranean with toxic chemicals.

England will bring 50 EU cop thugs to strip search people.

It's going to be a really healthy really healing situation. Just watch.

Sat, 09/10/2011 - 20:53 | 1655455 TwelfthVulture
TwelfthVulture's picture

It's looking like it's almost the BOJ's turn to buy Yen hand over fist again.

Sat, 09/10/2011 - 21:01 | 1655468 LookingWithAmazement
LookingWithAmazement's picture

To print & dump yens, you mean. Do the SNB. Japan wants one thing: a crashing yen.

Sat, 09/10/2011 - 21:27 | 1655482 TwelfthVulture
TwelfthVulture's picture

No, I meant buy, but I can see your confusion there.

We all agree that ALL central banks are in collusion together.  They have to be for the system to function.

I think from your post that we can also agree that every currency is now in a race to the bottom.

But think like a banker where debts are assets and cash (deposits) are a liability.  Even in a race to the bottom, some one is lagging (i.e. stronger) while some one is leading (i.e., weaker).  The weakness right now is in the Eurozone, the weakness to come (post QE3) will be the US, so the strength must be ... the Yen.  They won't (can't) tank the Yen until AFTER the weakness plays out in the Eurozone (and quite possibly the US), then they will print & dump.  But for now, the BOJ needs be by necessity the garbage collector.

*Remember they're working together.  It's not BOJ v ECB v FED.  It's central banks v the rest of us.

Sat, 09/10/2011 - 23:49 | 1655659 DeadFred
DeadFred's picture

The front-runner in the least ugly contest is currently the dollar. Who would have thought it, buck teeth, zits and obese yet the darling of the ball. But the interview and talent portions of the contest are yet to come!

Sun, 09/11/2011 - 00:57 | 1655741 Manthong
Manthong's picture

Don't forget the B.O.

Sun, 09/11/2011 - 08:40 | 1655916 Bendromeda Strain
Bendromeda Strain's picture

Yes of course - funny round wingnut ears also...

Sun, 09/11/2011 - 10:09 | 1655989 TwelfthVulture
TwelfthVulture's picture

I don't know about that.  Look at the 5 year chart.  The Yen and the Swiss Franc have been the place for smart money to be.  2007: ¥100=$0.8, today $1.2.  Today, the Yen buys about half as much gold as it did in 2007, same as the Franc.  The dollar and the other major currencies buy a third.

Sun, 09/11/2011 - 10:52 | 1656035 DeadFred
DeadFred's picture

But I'm a very shallow individual and my attention span is not that long.

Sat, 09/10/2011 - 19:43 | 1655338 SMG
SMG's picture

You might be right, but Armageddon will not be postponed forever.   It will come one day or tommorow.   But it is coming. And then hopefully a new a better world.

Sat, 09/10/2011 - 23:39 | 1655639 FearedDevil
FearedDevil's picture

Armageddon: A dramatic and catastrophic conflict, typically seen as likely to destroy the world or the human race.


I do not think that means you get to be around to see the new better world.

Sun, 09/11/2011 - 06:34 | 1655859 MsCreant
MsCreant's picture

But the roaches just looove what we have done with the place (especially the new radiation reveling, plastic eating variety!)!

Sun, 09/11/2011 - 05:07 | 1655838 Snidley Whipsnae
Snidley Whipsnae's picture

"And then hopefully a new a better world."

All things not maintained tend to chaos...

For instance, the population of Germany, after losind WW1 and being subjected to huge reparations payments, suffering through hyperinflation and then a grinding depression, were hopeful that the arrival of Hitler on the scene would improve their lot... and Hitler did for a time... then came a level of chaos that made what went before look tame.

There is absolutely no reason to believe that the destruction of the status quo will result in a 'new and better world'...

Even though we are all hopeful of that outcome.

Sat, 09/10/2011 - 20:33 | 1655415 knukles
knukles's picture

I've been trying to do that too, but got raw.  So back to intellectual manipulations, snarks and cynicism.

Sat, 09/10/2011 - 23:24 | 1655615 snowball777
snowball777's picture


Sun, 09/11/2011 - 03:05 | 1655789 Roger Knights
Roger Knights's picture

"In case, there will be a lifeline for the French banks, ..."

One of these days the lifeline will pull down the rescuer.

Sun, 09/11/2011 - 07:38 | 1655885 Smiddywesson
Smiddywesson's picture

Agreed, we didn't kick the can all this way to simply stop and behave rationally.  This is all about delay and gold acquisition.  There won't be any major developments as long as TPTB want to delay.

Sat, 09/10/2011 - 19:14 | 1655268 dumpster
dumpster's picture

these are confidental talks ... lol  but some people will squeal as long as you not name us ..

as the case may or may not be 

Sat, 09/10/2011 - 19:45 | 1655341 MsCreant
MsCreant's picture

PIIGS squeal?

Or bankster piggies?

Sat, 09/10/2011 - 23:24 | 1655617 snowball777
snowball777's picture

It's just escaping gases.

Sat, 09/10/2011 - 23:42 | 1655643 Yen Cross
Yen Cross's picture

PiiGs are great on Discovery channel! Myth Busters!

Sat, 09/10/2011 - 19:14 | 1655269 The Deleuzian
The Deleuzian's picture

I don't know about the rest of you guys out there... but pretty soon an apathetic, seen this before, diluted, the new normal type attitude will set in for many...

But even stepping an inch back and looking up scares the shit out of me!!!

Sat, 09/10/2011 - 19:34 | 1655319 Lord Welligton
Lord Welligton's picture

But even stepping an inch back and looking up scares the shit out of me



And so it should. The new normal is not a place you want your mother or sister to live in.

Sat, 09/10/2011 - 20:26 | 1655405 DoChenRollingBearing
DoChenRollingBearing's picture

Yes, this whole New Normal meme is scary...

+ another 1, even if it's not working Lord W.

Sat, 09/10/2011 - 21:17 | 1655486 Lord Welligton
Lord Welligton's picture

another 1


Oh No Not Another One.

Oh No Not Another One.



Sat, 09/10/2011 - 23:51 | 1655636 DoChenRollingBearing
DoChenRollingBearing's picture

+ $1860 and green, except green STILL not working for you.

GREAT Song!  I even went and took a look around at some of his other stuff there at YouTube.  This guy was one of the best.

Thanks for sharing that!  Soon as I have an excuse, I will put one of his songs up there on my blog.  Treasures like that must be shared.

Sat, 09/10/2011 - 21:40 | 1655504 dwdollar
dwdollar's picture

They don't call it a depression for nothing.  A real depression isn't phony GDP numbers which show umpteen quarters of whatever growth.  It is a society which has given up.

Sun, 09/11/2011 - 09:01 | 1655933 knukles
knukles's picture

By numerous conversations of late with regular, ordinary non-ZH'ers, "Normies" if you will, it is devolving to exactly that.... giving up.  Anger and frustration giving way to morose sadness, helplessness.  It's gonna get mega fucking depressing, this depression.

Sun, 09/11/2011 - 05:19 | 1655841 Snidley Whipsnae
Snidley Whipsnae's picture

"the new normal type attitude will set in for many..." But the new normal is not set in stone and is getting 'worse' daily when compared to the 'old normal' of 40 years ago...

Hence, the comparison to a slow motion train wreck. What happens slowly allows us time to mentaly adjust... even if we do not like the new normal.

If all that has happened since 2000 were compressed into a couple of days most of the world would be in total shock, and many would never recover; instead, they would find mental relief in creating a delusion to live in.

Or, is that what some have already done and others are working on?

Sat, 09/10/2011 - 19:15 | 1655273 TradingJoe
TradingJoe's picture

It looks like QE3-people will have a make or brake next week! If they still believe in SantaBen then it hasto happen this coming week, otherwise bye bye QEsomething! If not, next week, after the the FEDsters have NOTHING TO ANNOUNCE the BIG DOWN will commence, I somehow doubt this will be let to happpen by SantaBen, my take is THIS coming WEEK IS IT! TIme is of the essence and they have none left, primaries are around the corne too, by now everybody and their mommies know the bad news to come, and no, it's not "priced in", YET!

Buckle Up, hold your PMs and whatever puts you had the balls to get into and enjoy IT!

Sat, 09/10/2011 - 19:31 | 1655318 Landrew
Landrew's picture

I am holding BAC puts but, I never have the balls to just hold while there are profits to take. The only way I don't settle for a single is if overnight kills the equity. I was holding Lehman when overnight it died, otherwise I would have sold it for a single instead of the home run! No balls here.

Sat, 09/10/2011 - 19:57 | 1655361 TwelfthVulture
TwelfthVulture's picture

May Buffett lose shitloads money before your puts expire.

Sat, 09/10/2011 - 20:35 | 1655408 DoChenRollingBearing
DoChenRollingBearing's picture

@ Landrew

Consider selling half your puts, and let the rest ride!  Then you are not on the hook for much if things go against you.

Good move buying BAC puts, H/T.

Sun, 09/11/2011 - 07:44 | 1655888 Smiddywesson
Smiddywesson's picture

Yes, sell down to the sleeping point. That is always good advice.

Sat, 09/10/2011 - 23:26 | 1655620 snowball777
snowball777's picture

Courage, man. You can doooo it!

Sat, 09/10/2011 - 19:34 | 1655322 DeadFred
DeadFred's picture

So what are the chances they're doing yet another head fake trip, get everyone to go short with a planted or badly timed article or two then the rabbit comes out of the hat a sharp rally and they harvest all the shorts. I'm not saying I don't believe the party line here but banksters will do what's in their nature to do.

Sat, 09/10/2011 - 19:44 | 1655339 TwelfthVulture
TwelfthVulture's picture

I hear what you're saying Fred, I just don't know what that rabbit will look like?   Short of finding a unicorn that does shit gold shittles out its ass, I can't imagine what the impetus for a rally here could be.

Sat, 09/10/2011 - 20:05 | 1655367 Captain Benny
Captain Benny's picture

Maybe they found a real living leprechaun and are now stealing his gold... thats about the only thing I can see them pulling out of a hat able to solve these debt issues.

Sat, 09/10/2011 - 20:27 | 1655407 spanish inquisition
spanish inquisition's picture

Bubbles are about to go parabolic.

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