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Next Steps For Greece

Tyler Durden's picture


And so we are back to the same fiscal feudalism that Germany demanded, and the Greece refused weeks ago. We have been pondering the ECB bond swap 'news-story' and the market's reaction to this with incredulity. Our earlier discussion of the deal (here and here) pointed to the problems and now Peter Tchir explains how this debt swap is actually a step towards a Greek default (thanks to the removal of the CAC-encumberance within the ECB). It is also a large step towards colonization as the FT notes that the bailout terms will contain "unprecedented controls" on Athens. It is our earlier comments on the unintended consequence of this ECB action - that of explicitly subordinating all other sovereign bondholders in Europe, and that this would likely raise the very large specter of legal action by other Greek bondholders arguing the ECB has received unfair treatment - that the FT also brings to investors' attention (which is seemingly being ignored on the eve of OPEX). Whichever way you look at this - it is not good for Greece and could have significantly negative implications for the rest of the European sovereign bond market just as investors are starting to dip a toe in the cool risk water once again.

From Peter Tchir:

Firstly this debt exchange story is still that, just a story, and just doesn't read right. It feels like either the reporter didn't understand the source, or the source had some key detail wrong, but let's pretend it's true.


Well, early this week I tried to put some ideas down on what Greece should be doing. The key is ensuring that they have financing in place after a default. An operating central bank would be helpful and the ECB was on the list of groups that Greece needs to deal with. The exchange seems very favorable to the ECB. No notional reduction - which frankly seems greedy - why not just take a notional amount equal to the cost basis. Most importantly, it looks like the ECB is trying to segregate its holdings from the "private sector" bonds. This step would make it easy for Greece to default on old bonds and remain current on new bonds. Maybe that encourages greater participation, maybe it won't. Why would Greece cut a special deal with the ECB that is so favorable to the ECB? Did they negotiate continued ECB support for its bonds as part of the exchange deal? I really don't understand the exuberance over the story (which really does seem to be off).


On the other hand, maybe the problem is solved. Italy issued a 100 billion 30 year bonds with a 1% coupon. Banks buy these at 50 on the auction (since the ECB can't participate in auctions). The banks then sell the bonds to the ECB for 55 .  The banks build equity capital quickly since 5 points on a 100 billion adds up quickly. The ECB then exchanges these bonds for new bonds with a 1.1% coupon. It distributes the 45 points of "profit" to the Italian central bank. Italy would owe 1.1% on 100 billion of debt due in 30 years. Italy would have received 115 billion from the sale of the original bonds and their share of the ECB profits based on the exchange. The banks will have made 5 billion on a single trade. Repeat this as often as necessary. Does this sound stupid? If so, how is it so much different than the bond swap story the market is so excited about?

and from the FT: ECB avoids forced losses on Greek bonds


However, the deal secured by the ECB for its Greek holdings could undermine its intervention in other eurozone government bond markets, by raising fears among private sector bondholders that it would also receive preferential treatment in any future bail-out. It could also trigger legal action by other Greek bondholders arguing the ECB has received unfair treatment.

and further from the FT: Athens faces tough bail-out terms


A €130bn bail-out of Greece will contain unprecented controls on Athens’ ability to spend aid, officials said, as European leaders scrambled on Thursday to paper over their division... If the deal is finalised by Monday, it will still include a list of 24 “prior actions” that Greece must complete by the end of the month, before aid is released.


And so, as we noted above in the introduction (despite Weidmann's insistence just yesterday on non-profit sharing and concerns on monetization - which this seems to be more like just a simple legal action to remove CACs) we are back to the same fiscal feudalism that Germany demanded, and the Greece refused weeks ago.

It seems like nothing has changed for the positive here in terms of Greece's debt sustainability, the PSI is unchanged simply because the blocking-stake holders that we have been so adamantly describing will not budge (and why should they) and now we will likely see non-UK law sovereign bonds for Portugal (and perhaps Spain) also being sold again to avoid the long-arm of Draghi.


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Thu, 02/16/2012 - 16:49 | 2167129 battle axe
battle axe's picture

DEFAULT DEFAULT might be suprised how good it feels.

Thu, 02/16/2012 - 17:03 | 2167191 TruthInSunshine
TruthInSunshine's picture

It's now  4:02 pm EST.


I want my Greek/EU rumors of a 'big deal' or 'major complications' flavor in exactly 13 minutes, damnit!


baaa baaaa baaa

Thu, 02/16/2012 - 17:07 | 2167210 DaveyJones
DaveyJones's picture

"The next steps for Greece" Do they lead to the basement?

Thu, 02/16/2012 - 17:21 | 2167251 The Watchman
The Watchman's picture

nope... bombshelter in the backyard.

Thu, 02/16/2012 - 17:25 | 2167268 Max Fischer
Max Fischer's picture



With all doom and gloom coming from Europe, it's easy to miss the $7+ billion in profits that GM announced today for fiscal 2011, nearly 62% better than 2010. 

The stock has catapulted from $19 to $27 in less than 60 days.  Such an incredible turn-around story and a huge victory for the American worker, American manufacturing and Obama.  I know most of the libertarians want GM to burn and die, but it's nice to see a little good news every now and then.  

Max Fischer, Civis Mundi

Thu, 02/16/2012 - 17:29 | 2167282 AgShaman
AgShaman's picture

That's great news. If they keep doin well....they should be able to pay back the taxpayer bailout monies someday

Thu, 02/16/2012 - 17:37 | 2167303 duo
duo's picture

and the bondholders that got screwed. 

Thu, 02/16/2012 - 17:55 | 2167296 DaveyJones
DaveyJones's picture

Yes, America is saved. The Resurrection has nothing on selling a second rate car

Thu, 02/16/2012 - 21:24 | 2167933 Bringin It
Bringin It's picture

I recall back in 2007 some guy yelling at me about all is saved because GM is back to making a profit.  But it turns out it wasn't really GM making a profit.  GM the car manufacturer was still losing big money.  But GMAC, the pseudo-bank, Ponzi vehicle, slapped on to GM was racking up big ponzi paper gains, until it wasn't. 

Fri, 02/17/2012 - 01:46 | 2168613 AgShaman
AgShaman's picture

Haven't you heard?....Ally Financial is your friend...they are the controllers of needn't worry

Thu, 02/16/2012 - 17:46 | 2167345 taraxias
taraxias's picture

Best laugh of the day in my opinion.


Thu, 02/16/2012 - 18:47 | 2167539 greensnacks
greensnacks's picture

Greece is a lot like buying a lemon from, say GM. No matter how much money you spend to repair it, it keeps breaking down and each repair gets more and more costly. It's just better to walk away from it and spend your money on a good toyota from Kentucky.

Thu, 02/16/2012 - 19:02 | 2167583 q99x2
q99x2's picture

Does it have anything to do with the US economy? Accounting rules are no longer enforced. Go follow BO into the abyss troll.

Thu, 02/16/2012 - 22:16 | 2168078 DCFusor
DCFusor's picture

I have to admit I don't understand all the GM hate out here.  When I was homesteading and dirt poor, I got by buying GM luxobarges used with about 100k miles on them - usually used for long range commuting, so not super old.  Got them cheap, from 2k to 6k, drove them for a few years, got another when I got bored.  I had one total repair out of, lessee - a Buick (cool with a CRT screen), a pontiac, an olds, another buick.  The one repair was a plugged catalytic converter - all cars have those sometimes, and this is out of a few hundred k total miles on cars that started with around 100k each - they felt barely broken in.

Since I started having a lot more money, well, I've owned a 2010 Camaro SS - a real frigging hot rod, a 2012 Cruze - a nice econobox, fun to drive too - and a 2012 Volt which is one cool car indeed - and I charge it off my solar system and drive with no OPEC fee.  All have been exactly as advertised, high quality fit and finish, no "issues".  Sure, it sucks we bailed out all the car companies but the cost of not doing it might have been worse - all those guys on the dole and so on.

I got to drive a Chrysler Challenger - a complete piece of crap by comparison to the Camaro - not as fast, way too obviously flimsy (had to be careful not to break the dash and door handles), because it got stuck on a hill nearby and the driver couldn't extricate it.  After a ride in the Camaro, his jaw dropped and he sold it quick.  The Volt produces similar reactions in riders and drivers.  The Cruze the local dealers can't seem to keep on the lot - they go out fast because it's a hell of a car for the money if you're not rich.

All the companies got bailed (Ford got loan guarantees) - who's got a car as cool as the Camaro or the Volt as a result?  Does Chrysler have an electric?  They took the incentive money like everyone.

Is all this GM hate astroturfing by employees of the other companies or what?  I've had a lot of experience with american cars and I just don't see it - I must have been incredibly lucky or something?  I find a lot of things in other american cars to like a lot less than my GMs.

I just can't see it; if you own and drive one - they're nice.  Maybe some furrin cars are nicer, but not for the bucks, that I've seen yet - and those foriegn cars don't create the American jobs I hear all this whining about us sending overseas - Volts are built in Ohio.  Ford uses Microsoft software, and I sure hear a ton of complaints about that one - blue screen of death might become all too real at some point!

GM uses linux in the car, for what it's worth.  Same as I use for trading, because it's rock solid reliable and more secure than the alternatives.


Fri, 02/17/2012 - 02:02 | 2168628 LowProfile
LowProfile's picture

Oh, WTF...

Do I really want to take the time to...  Hell no I don't.

Read up on the example of crony capitalism that is GM, willya?  If you won't, then STFU NOOB.

Thu, 02/16/2012 - 17:27 | 2167275 He_Who Carried ...
He_Who Carried The Sun's picture

The reality of the Greek situation is very simple, and extremely grave. The country will not deliver on the vast majority of its promises. Frankly speaking, it never did deliver anything real or sustainable in terms of growth and competitiveness in the past and it is not about to start doing this in the near future. The only uncertain part of this equation is just how long will it take the markets to realize that the Greek economic recovery arithmetic is simply bogus, computed not to reflect the reality of rising debt, falling tax revenues, collapsing economy and destabilized society, but to fit the Brussels-Frankfurt objective of pretending that debt to GDP ratio of 120 per cent is sustainable...
(Source: Constantin Gurdgiev, Trinity College, Dublin)

Thu, 02/16/2012 - 17:59 | 2167399 withnmeans
withnmeans's picture

Tyler, I have just a thought on this chain jerking the German's have been doing. Check their markets for shorting U.S. equities, I believe they run it up , put on the shorts "then run out some bad news". Then repeat the process. I think its called "Getting Even".

Thu, 02/16/2012 - 20:01 | 2167738 falak pema
falak pema's picture

you make it sound like multiiple big O...

Thu, 02/16/2012 - 23:06 | 2168234 Buck Johnson
Buck Johnson's picture

Greece should default and be done with it.  The people who don't want that is the rest of Europe and the US.

Thu, 02/16/2012 - 16:50 | 2167131 SheepRevolution
SheepRevolution's picture

Oh for f*ck sake, default already!!!

Thu, 02/16/2012 - 16:49 | 2167133 slaughterer
slaughterer's picture

I think the news story--no matter how mangled in logic--simply confirms that the ECB is printing and will print.  That is what equities are reacting to.    

Thu, 02/16/2012 - 16:50 | 2167134 indianajohns04
indianajohns04's picture

Chance to hop on the TVIX train!

Thu, 02/16/2012 - 16:52 | 2167145 Frank N. Beans
Frank N. Beans's picture

I'm on it, but today it didn't go anywhere but backwards.

Thu, 02/16/2012 - 16:59 | 2167173 indianajohns04
indianajohns04's picture

Haha yeah ....... although you definitely have to save some cash so you can average down; decay is a b!tch. Just waiting for some back-to-back 30% pops. It's hard to justify investing at these levels mightas well do a little gambling.

Thu, 02/16/2012 - 16:57 | 2167136 falak pema
falak pema's picture

Zero percent interest to Greece, Ireland and Portugal, 2% to Italy and Spain, and the problem is solved. If the rich in Europe plus the Oligarchs of Eurozone  in Caymans/Schweizer land contributed it would be possible and even certain. 

Creating a dynamic euro zone is worth it; with a two tier currency or a readjusted north south one with south to devalue 30-40%.

Percent chances of this occuring in current screw up and spuke out euro technokrat land : 1% (optimistically, never-say-die-hard projection).

Thu, 02/16/2012 - 16:51 | 2167139 Mongo
Mongo's picture

Monty Python is a drama compared to the european farce...

Thu, 02/16/2012 - 16:54 | 2167148 sabra1
Thu, 02/16/2012 - 16:55 | 2167155 Everybodys All ...
Everybodys All American's picture

This is also a downgrade in the debt the rest of Europe is holding. Subordination means you own something of lesser quality/value than the ECB now. Unintended consequences of this are going to be severe. Who wants to buy the next Italian or Portuguese treasury issued when the ECB can just decide to change the rules?

Thu, 02/16/2012 - 17:15 | 2167212 slaughterer
slaughterer's picture

Junk me if you want, but I think the whole subordination thing is not such a big deal: Who gets preferential treatment today besides central banks and deep-pocketed high-profile plutocrats like Buffett ad Soros?  How can a measly (technically insolvent) bank demand an unsubordinated position any more?    

Thu, 02/16/2012 - 16:55 | 2167156 Yen Cross
Yen Cross's picture

Fancy Vernacular? That works for the Asia session.<> Ping Pong

Thu, 02/16/2012 - 17:03 | 2167162 Zero Govt
Zero Govt's picture

"Next Steps For Greece"

Concrete blocks, bottom of the ocean

Plan B. Iceland, Iceland, Iceland


Thu, 02/16/2012 - 16:57 | 2167163 lix333
lix333's picture

Tyler, Any comments on this




Thu, 02/16/2012 - 16:59 | 2167171 Zero Govt
Zero Govt's picture

Monday's a good day... as good as any other ..go for it (for fucks sake.. get it over)

Thu, 02/16/2012 - 17:07 | 2167209 Tyler Durden
Tyler Durden's picture

Yes. Any proof aside from "sources" would be a start

Thu, 02/16/2012 - 17:13 | 2167227 Yen Cross
Yen Cross's picture

Tyler = Truth

Thu, 02/16/2012 - 17:21 | 2167250 battle axe
battle axe's picture

Mondays a holiday so might be a good time for a default....At least it will be something different.

Thu, 02/16/2012 - 17:45 | 2167338 Always Positive
Always Positive's picture

Tyler = Agenda

Truth may or may not come into it

Thu, 02/16/2012 - 17:53 | 2167378 DaveyJones
DaveyJones's picture

yeah, objective, independent, critical journalism is a pretty sick agenda isn't it

Thu, 02/16/2012 - 18:02 | 2167403 Yen Cross
Yen Cross's picture

 You / use those " tentacles" well Davey Jones! +1

Thu, 02/16/2012 - 18:35 | 2167501 slewie the pi-rat
slewie the pi-rat's picture

yup:  "everybody's got an agenda" is trueTyler

the 2nd statement is also valid in said scheme0'thingies

somebody gaveUaGreenie!

Thu, 02/16/2012 - 21:13 | 2167907 wiser
wiser's picture




Thu, 02/16/2012 - 21:38 | 2167966 Bringin It
Bringin It's picture

Friday March 23rd could work.  You're gonna need a big diversion for the sheeples though.  Like Obummer's bc released some old guy got wacked in Abbotobad.  What could be big enough to cover this up? ...  Could something be planned for the new moon evening of March 22?

Thu, 02/16/2012 - 23:55 | 2168352 He_Who Carried ...
He_Who Carried The Sun's picture

They are expecting "voluntary" participation in Greek haircuts to fail and therefore they change their holdings of old Greek bonds in to new ones in order to be on the safe side of the "bet"...  That operation alone is not leading to default. Not yet!

Thu, 02/16/2012 - 16:58 | 2167170 Hedgetard55
Hedgetard55's picture

I got tired of being kicked in the balls by Uncle Ben and sold 10% of my Prudent Bear Fund, so it is probably ok for you dudes to get short again.

Thu, 02/16/2012 - 17:11 | 2167221 fourchan
fourchan's picture

lol ditto this market is not going down any time soon.

Thu, 02/16/2012 - 17:15 | 2167232 sabra1
sabra1's picture

the markets might not go down, but the internet sure will!

Thu, 02/16/2012 - 17:03 | 2167196 tobinajwels
tobinajwels's picture

What the difference between a disorderly default and a default? Isn't that the same thing?

Thu, 02/16/2012 - 17:20 | 2167235 nonclaim
nonclaim's picture

I think the former includes cascading defaults through the financial system.

Catastrophic uncontained engine failure versus a catastrophic failure, in other words.

Thu, 02/16/2012 - 17:35 | 2167291 tekhneek
tekhneek's picture

It's the difference between paying a portion of your bill at a restaurant vs. just running out and ignoring your obligation to pay entirely.

Only imagine you've ordered all the food that restaurant had to offer, twice. Now if you run out, you very well might be the end of that restaurant.

Thu, 02/16/2012 - 17:04 | 2167197 YesWeKahn
YesWeKahn's picture

" €130bn bail-out of Greece will contain unprecented controls on Athens’ ability to spend aid"

The whole shitty thing is unprecedented, I don't see any surprise.

Thu, 02/16/2012 - 17:07 | 2167205 fonzannoon
fonzannoon's picture

Transports Financials all rallying hard today. dow 13k Nasdaq 3k S&P 1,400 all hit at same time tomorrow?

Thu, 02/16/2012 - 17:07 | 2167213 kito
kito's picture

wow, just think, if all of that financial creativity were redirected in a positive way to actually create something, other than illusion...................

Thu, 02/16/2012 - 17:10 | 2167217 slaughterer
slaughterer's picture

... we would have the iPhone 5, 6 and 7!

Thu, 02/16/2012 - 17:15 | 2167233 kito
kito's picture


Thu, 02/16/2012 - 17:17 | 2167239 fonzannoon
fonzannoon's picture

People are taking their gains and exiting this market. CNBC keeps pounding the desk about what it's going to take to get them back in. They are not coming back. They will sit there in their stable value funds till armageddon.

Thu, 02/16/2012 - 17:19 | 2167244 kito
kito's picture


People are taking their gains and exiting this market.

people...what people??? where?????

Thu, 02/16/2012 - 17:23 | 2167260 The Watchman
The Watchman's picture

There are 3 left. Hamy, Robo and MDB.

Thu, 02/16/2012 - 17:37 | 2167302 fonzannoon
fonzannoon's picture

I am referring to people's retirement plans. In my small sampling it is what I am seeing.

I think the big money wants to cash out but there is no one out there so they will continue to ramp up the markets to suck in some retail that finally starts chasing and then hands them a big bag of shit.

Thu, 02/16/2012 - 23:26 | 2168290 Vaiman
Vaiman's picture

And there are bears taking their losses and exiting the market never to return!  Unbelievable how there can even be a market left when so many people get screwed over.

Thu, 02/16/2012 - 17:08 | 2167215 fourchan
fourchan's picture

Time to pay the piper, and the piper is the 4th Reich.    Hail victory! Hail victory! Hail victory!

Thu, 02/16/2012 - 17:12 | 2167223 Yen Cross
Yen Cross's picture

 Balsa Wood Boats, and rubber band aero planes? Those " Defence cuts", HURT HARD!

Thu, 02/16/2012 - 17:18 | 2167238 ebworthen
ebworthen's picture

CALPERS and CALSTERS likely getting the hard sell on Spanish, Portugese, and Italian bonds and saying "Wow, we can make our 8% target!  We'll take some!".

Thu, 02/16/2012 - 21:44 | 2167981 Bringin It
Bringin It's picture

With Corzine as gov, NJ public pensions were buying Lehman with both hands when there were no other buyers in the Summer of 08.

Thu, 02/16/2012 - 17:21 | 2167241 Benjamin Glutton
Benjamin Glutton's picture

The London Agreement on German External Debts, also known as the London Debt Agreement, was a debt relief treaty between the Federal Republic of Germany on one part and on Belgium, Canada, Ceylon, Denmark, the French Republic, Greece, Iran, Ireland, Italy, Liechtenstein, Luxembourg, Norway, Pakistan, Spain, Sweden, Switzerland, the Union of South Africa, the United Kingdom of Great Britain and Northern Ireland, the United States of America, and Yugoslavia and others. The negotiations lasted from February 27 - August 8, 1953 [1] The London Debt Agreement covers a number of different types of debt from before and after the second World War. Some of them arose directly out of the efforts to finance the reparations system, while others reflect extensive lending, mostly by U.S. investors, to German firms and governments.

In the London Agreement, the German government under Chancellor Konrad Adenauer undertook to repay the external debts incurred by German government between 1919-1945.[1]

The total under negotiation was 16 billion marks of debts from the 1920s which had defaulted in the 1930s, but which Germany decided to repay to restore its reputation. This money was owed to government and private banks in the U.S., France and Britain. Another 16 billion marks represented postwar loans by the U.S. Under the London Debts Agreement of 1953, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years.


Just 8 years after killing millions half of Germany's debt was written off and the remainder extended but Greece on the other committed the unforgivable sin of being mislead by their own politicians.

Thu, 02/16/2012 - 18:27 | 2167481 PhilB
PhilB's picture

You dont seem to understand. German defaulted. The loans were restructured. Same needs to happen to Greece. They need to default, more of its loans need to be restructured through massive haircuts. No one is saying Greece needs to repay existing debt at PAR. We are saying that it needs to complete its semi-default process and get onto a path of growth so that it can come out just like the example you have shown..and in fact..just like all the other examples in modern history...except Japan (clocking is ticking on them too).

Thu, 02/16/2012 - 23:33 | 2168302 CrashisOptimistic
CrashisOptimistic's picture

You have missed the lesson of that event.

The lesson is there is no such thing as sovereign default.  You still owe the money.  You can bet that the phrasing there "restore reputation" had some tangible meaning, like elevated interest rates, or maybe a threat of confiscating assets held outside German borders.

That repayment was re-opened for reasons other than making people respect Germany.  It largely doesn't matter why it was done.  The fact it was done means . . . there was no default.  That debt remained.

All the folks on ZH screaming for Greece to default are similarly failing this lesson.  There Is No Such Thing As Sovereign Default.  The debt remains.

Thu, 02/16/2012 - 17:22 | 2167254 Snapperton
Snapperton's picture

My biggest concern is over Greek sovereignty.  Will the Greek people allow anything other than default at this point?  It looks pretty crazy over there right now and I don't think a "bailout" under the terms that have been outlined thus far produces a good outcome for anybody, especially Greece.

Thu, 02/16/2012 - 18:12 | 2167448 cnx
cnx's picture

Apparently, the Greeks are quite "happy" with the current procedure, since all polls conducted so far consistently showed that over 70% of the Greeks preferred staying in the Eurozone to a default.

Thu, 02/16/2012 - 23:37 | 2168312 CrashisOptimistic
CrashisOptimistic's picture

The Greeks have been told their deficit has to go to 0 the day after default, and . . . it does.  That's actual truth.  They have to instantly live within their means and that will translate into mass firing and shutting off of pensions.

Their alternative is gradual draw down, continued borrowing on the tiny chance that they can 1) get some of the debt forgiven (awarded a gift) and 2) grow their way out of the rest of the problem, most particularly by mass firings and shutting off pensions GRADUALLY, and maybe, hey, maybe there will be a miracle and there will be no firings or loss of pension.

Faced with those two choices, of course the people will pick the second.

Thu, 02/16/2012 - 17:22 | 2167256 NEOSERF
NEOSERF's picture

Colonialization vs. Colonization I think is what you were going for...

Thu, 02/16/2012 - 17:23 | 2167257 RobotTrader
RobotTrader's picture

I'm amazed anybody is still following Greece.


The Euro Crisis is over for now.

If there were any serious trouble on the horizon, the markets would be discounting it now, with banking stocks under pressure, retail stock cratering, bond spreads blowing out huge.

None of that is happening.

In fact, based on the huge, epic reversals in KGC and AEM today, if the GDX and GLD is getting ready to launch, then stock market bears are about to get blowtorched.

Thu, 02/16/2012 - 17:38 | 2167283 The Watchman
The Watchman's picture

I'm with you. It's not like countries don't go bankrupt all the time. The losses will just VAPORIZE and no one will be hurt.


DOW 15000 right around the corner baby!

Thu, 02/16/2012 - 17:30 | 2167284 Yen Cross
Yen Cross's picture

I'm amazed you're LONG! It's that 5.5 Trillion looking for a Dividend? Hey NOW!

Thu, 02/16/2012 - 17:30 | 2167286 slaughterer
slaughterer's picture

Robot Trader, I like you.  You have tenaciousness.  

Thu, 02/16/2012 - 17:34 | 2167292 lieutenantjohnchard
lieutenantjohnchard's picture

if your mind is twirling at the flip flops coming from the 'tard you're not alone. so far this week the 'tard has told us that gold was signalling 15,000 dow. then he said the dow was about to rollover if the bond market was right. today 'tard perfectly timed the bottom in gold when he said gold holders were getting blow torched. earlier this week he joyously noted that newmont was down 8 days in a row. now he's talking epic reversals in kgc and aem. i guess the "millions" of hedge funds as he says, are stepping in to the breach to buy 'em.

robot trader: where the dumb money treads.

Thu, 02/16/2012 - 17:42 | 2167321 RobotTrader
RobotTrader's picture



Long time, no hear from you.

Hey, I got good news for you.

Now that we have a high probability that GDX made a major low this morning,

You might be able to see some of your horrid investments in TRX, MUX, GBG, etc. claw back some of the 70% losses incurred since General Jim's "This Is It!" highs.

Imagine the wealth that will be made by those who rode the retail cult stocks up for 5 and 7-baggers, who now can start taking profits and investing in gold companies at low prices starting today.

Next time you are in L.A. I'll buy you a few beers and we can go out and chase some Beverly Hills Escorts here on the Westside.

I work in Brentwood, so you can look me up.

Thu, 02/16/2012 - 17:57 | 2167389 taraxias
taraxias's picture

Junk addict sighted.

Thu, 02/16/2012 - 18:11 | 2167446 lieutenantjohnchard
lieutenantjohnchard's picture

sorry, no escort is as good looking as my wife.

no investments for me. all bullion.

Thu, 02/16/2012 - 17:34 | 2167298 oogs66
oogs66's picture

If the S&P didn't move 10 points on every headline your argument would be more convincing

Thu, 02/16/2012 - 17:50 | 2167365 bobola
bobola's picture

I'm amazed that anyone besdie you clicks your green g spot...

Thu, 02/16/2012 - 18:34 | 2167498 Apeman
Apeman's picture

The Euro Crisis is over for now.

I dare you to go to Athens and say that to a small group of young people.


Thu, 02/16/2012 - 17:28 | 2167279 rsnoble
rsnoble's picture

Are they still rioting in Greece or did they all go back to work and accept the paycuts and are cleaning up the place?

Thu, 02/16/2012 - 17:34 | 2167294 surf0766
surf0766's picture

They cleaned it up

Thu, 02/16/2012 - 17:35 | 2167300 oogs66
oogs66's picture

Think of all the stimulus required after the rioting - bullish

Thu, 02/16/2012 - 17:50 | 2167354 Yen Cross
Yen Cross's picture

Why does the SPX move 1000 basis points, yet the VIX has yet to flutter?

 Ok SPX 80o basis points, and VIX over 20. Look at credit spreads.

Thu, 02/16/2012 - 18:14 | 2167451 Money 4 Nothing
Money 4 Nothing's picture

They called it "Investing in Greece progam".

Thu, 02/16/2012 - 17:37 | 2167304 navy62802
navy62802's picture

I'm so fucking sick of this shit. I've gotten to the point where I just check in on the situation every couple of days or so. But mostly, I'm waiting for the March 20th deadline. Nothing will be set in stone until that date arrives. No rumors carry any weight. Neither do the denials. It's just a bunch of lies and wishful thinking. And even beyond the March 20th deadline, assuming there is some sort of emergency bailout, Greece is DOA. Just look at their economic numbers. Their economy is breathing its dying breath. Any bailout of Greece is a foolish waste of money, because the inevitable end-state is default. Either way, there is going to be violence and discord in Greece and the broader region in the coming months and years. This is far from over ... neigh, I think it's just the beginning. And anyone who says there's optimism is just a blind fool.

Thu, 02/16/2012 - 17:42 | 2167323 fonzannoon
fonzannoon's picture

I have news for you buddy. March 20th is the new Dec 19th 2011. Nothing happened. Nothing will.

Thu, 02/16/2012 - 17:48 | 2167348 navy62802
navy62802's picture

It doesn't even matter really. With an economy that shrinks at a 7% annualized rate and unemployment over 20%, they are going to require "bailouts" ad infinitum. They won't be able to make the next bond payment after March 20th either. It's insane. Not to mention the fact that the cuts they're making in order to just receive the next bailout are going to induce further economic contraction. Again, no hope with the Greek situation. The question to ask is who is benefitting from the delay, because we know with 100% certainty what the end result is.

Thu, 02/16/2012 - 17:54 | 2167375 fonzannoon
fonzannoon's picture

The end result is default. I am curious to know what if any chain of events that really sets off.

Thu, 02/16/2012 - 18:30 | 2167491 navy62802
navy62802's picture

I don't think anyone has a full answer to that question.

Thu, 02/16/2012 - 22:24 | 2168111 DCFusor
DCFusor's picture

Who benefits from the delay is anyone needing to cut exposure in a slow and controlled way, so as not to put enough selling pressure on the market to make it even worse before they get out.  That's probably a fairly long list.

Thu, 02/16/2012 - 22:54 | 2168201 navy62802
navy62802's picture

Exactly, and I hope for Europe's sake that the major investment institutions there have taken this prime opportunity to do so. But the problem is that I don't think most of the major players even know how deeply they are exposed. Which is why they simply push this thing as far down the road as they possibly can without it being too blatant. They want to buy as much time as they can because they don't know how exposed they are. In the end, it may not matter. But there's only one way we're going to find out the truth. Greece is going to have to default eventually, and when they do, we'll finally learn the truth ... at least to a larger extent than we now know.

Thu, 02/16/2012 - 20:47 | 2167852 CrashisOptimistic
CrashisOptimistic's picture

You guys have simply got to get calibrated.

Do not toy with anything that governments can control.  They are whimsical.

There is only one thing they cannot control and that is growing scarcity of oil.  In the end, that destroys everything.  

Until that end, governments will murder and prosecute to keep the wheels turning.  They will turn slower and slower, but attempts will be made to hide that.

You won't be able to get out.  It will all happen overnight.  You'll wake up with the circuit breakers poised to trigger at the opening crash.  The market will be closed.  You won't be able to trade.  The next day, exactly the same thing.  And the next.  And the next.  If you're in, with any position at all, it will all be gone at the end of a few days, and there will be not a single minute of those days you can trade.

Thu, 02/16/2012 - 22:57 | 2168213 navy62802
navy62802's picture

And I'll be off setting up my camp in the woods. I realize how fragile our constructed reality is, and I'm prepared for it to fall apart. Most people aren't, however, which gives me (and I'm guessing a few of the other ZH subscribers) a leg up on the competition.

Thu, 02/16/2012 - 17:38 | 2167306 Yen Cross
Yen Cross's picture

 My life spins with the World. Most people spin in a " Time Zone".

Thu, 02/16/2012 - 17:42 | 2167317 Rodolfito
Rodolfito's picture

Who is the real Ron Paul?  click here ....

Thu, 02/16/2012 - 18:02 | 2167404 Money 4 Nothing
Money 4 Nothing's picture

Next steps for Greece..

Call another meeting, but bring a pen this time.

Thu, 02/16/2012 - 18:07 | 2167424 Yen Cross
Yen Cross's picture

Do you enjoy Bantering? You were the PERSON in WOOD shop that sold dope?

Fri, 02/17/2012 - 09:55 | 2167438 Money 4 Nothing
Thu, 02/16/2012 - 18:04 | 2167410 Fozzy Slippers
Fozzy Slippers's picture



What's your other choice BIS/IMF scum bags?

Your heads being kicked around like a football?

Thu, 02/16/2012 - 18:09 | 2167434 Joebloinvestor
Joebloinvestor's picture


No "done deal".

Greece holding WWII over Germanys head while asking for money.

Notice how the Sunday "deadline" came and went and now they don't even bother except to announce "Monday there will be a deal!

IMO Greece will be given the money to stop the March bond default, then the plug is gonna be pulled.

Thu, 02/16/2012 - 18:36 | 2167503 AldoHux_IV
AldoHux_IV's picture

The only thing to describe market action today is to create a higher place to fall from. Outside of that, nothing coming out of Europe makes much sense and only portends to people losing their liberties which is a worldwide phenomenon-- markets seem to love that notion anyway.

Thu, 02/16/2012 - 19:18 | 2167609 trebuchet
trebuchet's picture

ECB has to segregate its holdings from the private sector - it is a principle of the current banking system - central banks are and connot be seen to be "ordinary banks". 

ECB gets treated separately as it provides an implicit market guarantee as lender of last resort. 

Hence its accounting - even if it yields a profit to the operation, is not a profit, but an "accounting gain".

ANY suggestion or semblance that the ECB acted in a manner motivating gain (and by mirror image, concern over loss), raises the issue of subordination and undermines the bank's credibility. 


As for the rest, the 24 item "shopping list" looks like delaying tactics while EU/Greece kick this can down the road. 

The market is dichotomously deivided into "default/130bn bailout".   The more i look at that the more i get the feeling that this is about making a partial bailout now, while keeping options open post March 20th.



Thu, 02/16/2012 - 20:40 | 2167839 FreshThought
FreshThought's picture

Defaulting as soon as possible seems to be the most palitable option now. Anyone believing that Greece will ever be able to repay needs a serious reality check.

Defaulting will mean

- the Germans don't have to feel they are throwing good money after bad

- Greece can prioritize what funds  it has into maintaining its economy (sure, it can never borrow again, or not at least for a long time)

- Greece gets time to decide whether it wants to be in or out of the euro (the practical steps to leaving the euro which I've started to discuss on my blog are not as obvious as many make out - )

- Most people, apart from lenders, save face


Fri, 02/17/2012 - 00:01 | 2168373 flyweight
flyweight's picture

One question on that.

Last Sunday's vote in parliament, which lead to the deal for the new bailout was hailed by most media and press here in Greece.

The reasons given were that if the country were to default, panic would ensue, and because its budget is still in deficit, and because Greece is not food independent (it imports agricultural products, meat, etc) and it needs to import energy (oil, gas) and medicine and machinery, and in case of a default it would have no money, because of all these things, it would be a catastrophe not to accept this bailout.

How would Greece solve these problems if it followed your suggestion?

Fri, 02/17/2012 - 04:01 | 2168714 the tower
the tower's picture

This is why a majority of Greeks want to stay in the Euro.

Greeks need not be afraid though.

If chaos would ensue after a default then Europe would be more than happy to supply all Greece needs.

There are MASSIVE surpluses in the EU, and investments would be happily made as they would be no longer "gifts" from the EU to Greece, but B2B investments.

Let Greece default and we'll all be better off. Even the Euro would be solid and safe again, and it would be a model for all PIIGS.

MSM: Europe is NOT the problem, stop using Europe as an aversion for the real problem, the US economy.

Thu, 02/16/2012 - 21:25 | 2167932 whateverwhatever
whateverwhatever's picture

I'm sure this has been suggested somewhere by someone recently.  Maybe it might be better for Greece to not only default but peg the new drachma to USD instead of the euro.  Certainly a Republican government in November would probably stack the Fed so that this wouldn't happen.  Still, Greece has to completely sever all links with the troika.  That includes the European common currency.  

A USD peg would be a snub to the ECB.  Still, it'd give the Greeks a greater level of independence over their money.  If the Greeks ever decide to reapply to the eurozone, they can then do so as a "fresh applicant" and not one who has been tied to the euro through the years. 

This scenario is predicated on the idea that USD isn't going to go into berserk inflation soon. 

Thu, 02/16/2012 - 22:25 | 2168116 ovigia
ovigia's picture

Insider Documents Detail a March 23 Greek Default Plan; Gov to Freeze Bank Accounts, Restrict Capital Flow #greece

Thu, 02/16/2012 - 22:37 | 2168150 alpenfritz
alpenfritz's picture

considering thiel's example. apart from the fact that the swap deal isn't a real debt reduction for the issuing government, but in my eyes it's kind of a move of buying some time against higher interest payments. italy issues 100 bln 30Y 1% bonds, banks buy them at 50 and sell them at 55 to the ECB, making 5 bln. the ECB then swaps them against new ones with a coupon of 1.1%. so far so good. italy would have gained 50 bln from the auction and 45 bln from the swap, hence in total 95 bln (how to get to 115 bln???). That's per se the same as issuing 1.1% bonds at 95, which is better compared to the original auction, when the ECB wouldn't have stepped in, italy would only have gotten 50 bln with 1% interests. in my opinion, the real question is, if the swap is done, what does the private sector think of this?

Fri, 02/17/2012 - 03:44 | 2168699 Investor_0815
Investor_0815's picture

excellent fraud from the ECB and de EU guys!
this is disappropriation.

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