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Presenting Europe As A Giant CDO
Continuing our series of charts worth a thousand words (first one here), below courtesy of Credit Suisse's William Porter, we present the Euro Area as if it were a giant CDO. It should answer most outstanding questions.
Once upon a time, everyone ignored subprime as it had the same detachment points as the Bank of Greece does now. Fast forward a few years, and we are talking prime mortgage impairments. Which incidentally explains why once the dominos start falling (think CDS trigger), it will get very messy all the way through the Super Seniors.
And as a bonus chart, here is another follow up from Porter, showing that absent hundreds of billions in Eurosystem loans to various PIIGS' banks, the entire system would have already collapsed like a house of cards. The pick up in the last three months speaks volume as to why the European market is on such a "tear." P.S. this is in addition to the LTRO.
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Uber-leverage, bitchez
This is something Satyajit Das has been saying for a while. Europe is just piling leverage on top of leverage and calling it a 'solution'.
Check out this interview with Satyajit Das on the Busted "Botox Economy":
http://www.planbeconomics.com/2012/02/26/satyajit-das-botox-economy-busted/
Das is under-rated, here's a much better interview with him:
http://www.nakedcapitalism.com/2011/12/satyajit-das-on-what-went-wrong-w...
...but does it feature a host wearing heels and leggings?
Here is this guy Alessio Rastani he know's that Greece will not only get busted, (now also their gold will be confiscated as well)
when i first saw him, i thought this guy is a douche, but after seeing couple of interviews with the Irish T.V and this CNN he told the people to be prepared to make money from a downward market (he just lied about the USD and the bonds though)
here is a very interesting part again, because we seem to forget with all this hype that is going on in the markets today
CNN Anchor: but but the reason this whole thing, the interview went viral because you said some thing which considered to be shocking, but you do that because you are trying to sell your self, you are trying to sell a book, you trying to get people to sign up for your trading desk
Alessio Rastani : oh i see whatcha saying, "NO" with all due respect i would not say that.. ah i believe there is a god and could not sit infront of you and say something i dont believe.
it's unfolding
http://www.youtube.com/watch?v=7c6d_1QUfC4&feature=related
Found from your link, thanks --
Trader on the BBC says Eurozone Market will crash:
http://www.youtube.com/watch?v=0oVDxybmZE8&feature=related
Mute the sound, LOL.
Just finished the first vid, didn't hear any mention of Au or Ag.
Noted that ZH is not on Naked Capitalism's blogroll.
A great European market week is upcoming. Successful auctions in Spain and France, as well as a new LTRO which saves the banks. No collapse. I expect a market rally and gold + silver lower, now the system will be saved again. Boring world we live in.
BTW: if Obama draws back his fleet from the Hormuz Strait, tension will lower and oil + gasoline prices would plunge. OBAMA CAUSES YOUR EXPENSIVE GASOLINE!
The world is Obama's oyster, and the elite can manipulate with their advent of the printing press, today's philosoher's stone. The majikal men will go on in this world where imaginary creations rule. Rid yourselves of reality, and a boring world we live in.
we are talking prime mortgage impairments.
One jumbo mortgage going into foreclosure like the 180 estates in Beverly Hills equal like 10 average homes going into foreclosure.
Italy, Spain, and Portugal have serious gold reserves compared to Greece. Don't think they won't be grabbed before this crisis subsides. Those guy's aren't even the primes...they're the next sub-primes on the list. This is about to get interesting.
http://silverdoctors.blogspot.com/
Projected PIIGS Pillage: 3233.5 Tons Of Gold To Be Confiscated By Insolvent European Banks
And whatever happened to PrimeX?
Obviously its not newsworthy.
Projected PIIGS Pillage...
"Put Neidermeyer on it... He's a sneaky little shit..."
@ Tyler
Somehow, I doubt that any gold left within the PIIGS' physical control will get grabbed... No way. They'll just pay with paper fiats or default.
Gold left in other places (like the NY Fed vault in NYC), could be another story...
"gold to be used as payments for the debt." it's not that hard to understand and it's not stealing. Greece made the choice...voiced by the folks..."to stay." well..."you stay...you pay." remember how hard Europe laughed when the USA demanded the same thing...even though we bailed THEM out? Well..."and now euro denominated oil costs 40% more." and what's on tap? is it a trillion from the IMF? hahahaha! really?--"show the IMF the gold first then." no? "you'll find a way to work your way through this?" okey dokey! meanwhile...in a desert somewhere south of Beserkistan...
http://www.youtube.com/watch?feature=player_detailpage&v=2vOBL5qPxHs
The politicians made the choice to forfeit the gold for fiat ponzi worthless souless paper
NOT THE PEOPLE OF GREECE!
surge: The PEOPLE are responsible for their politicians. What are you, a serf?
all politics corrupts and political arguments corrupt absolutely
The 'bailers' are starting to make it part of their bailout agreeements ... pretty soon they're gonna say 'why don't you just let us hold that for you ... you know, for safe keeping' ...
Make no mistake about it -- the banks want the gold.
at 32,000 ounces per ton that makes for around $186 billion (@1800/oz), compared to PIIGS paper money debt of what? c.$600 billion equivalent of soveriegn debt. Let's see, does the price of gold move to where the 600 billion equates to the gold holding or will gold never matter. So on that basis.....gold = around $6,000 an ounce. Funny how round numbers keep turning up. 3,233.5 tons = just over 100 million ounces. Lukcy that Italy and Germany have so many gold fillings, er filings.
Collateralized Dogshit Obligation?
Think of them as being collateralized by gold. Now imagine you are buying them not because you think you will get paid back in euros, but rather that you expect them to default and pay you in gold.
Deutsche Bank is AAA? LOL!
Slight difference between Deutsche Bank and the German central bank. The latter just happens to be the real backstop of everything in Europe... Including the former.
You might what to add, " and the ONLY real backstop of everything in Europe" :)
Is it not ironic that Deutche Bank gapped up on Friday. The HFT's must be reading more blogs to squeeze shorts.
Confirming the rigged markets in the financial sector are alive and well. The Banking Cartel, (FED & Co.), lives on.
that's because the Fed is the real "backstop to Europe" and everything else for that matter...and not some fictional "Bundesbank." ya'll need to stop asking "who's printing" and start asking "who's paying." if all you can argue...as the MSM is suddenly doing...is "Greece" (insert "hardy guffaw" here)...you're simply another minion buying into the propaganda. See our own Bruce on "IOU's with drug companies" at Seeking Alpha. Once "they" demand payment for their good..."the charade is over." Trust me..."Europe" already understands this and is acting accordingly. Buying gold for the individual investor is everywhere and always an option. not so for a bank. what they need to be doing is buying oil. interestingly..."there are currently three prices for the identical good." that's just for the unrefined product! "better stick with natural gas" is my advice.
I found that quite funny. The morally and economically bankrupt Fed, being the backstop for Europe. Funny but abysmally sad at the same time.
If the FED is printing them out like they did our banksters, (some, ones of the same).
It is holders of the dollar who pay. By a devaluation dollar. Which seems to be the plan for our debt too.
Yeah I failed at reading on that one.
Tyler, are these good guys resigning in protest, or rats leaving the sinking ship?:
GOVERNMENT RESIGNATIONS
2/6/12
Romanian prime minister and cabinet resign en masse
http://www.guardian.co.uk/world/2012/feb/06/romania-pm-cabinet-resign
2/20/12 (GERMANY) GERMAN PRESIDENT Christian Ruff resigns (financial corruption charges)
http://www.dailymail.co.uk/news/article-2102524/German-President-Christian-Wulff-forced-resign.html
RESIGNATIONS FROM WORLD BANKS:
(1) 9/25/11 (SWITZERLAND) Bank chief resigns over £1.5bn rogue trader crisis
http://www.dailymail...ng-scandal.html
(2) 10/29/11 (CHINA) Resignations Suggest Shift for China's Banks
http://online.wsj.co...4190522426.html
(3) 11/01/12 (INDIA) More directors of the Beed district bank resign
http://www.thenews.coop/article/more-directors-beed-district-bank-resign
(4) 11/21/11 (JAPAN) UBS's Japan Investment Banking Chairman Matsui to Resign
http://www.bloomberg...-to-resign.html
(5) 11/29/11 (Iran) Iran's Bank Melli CEO Resigns Over Loan Scam
http://www.dailymoti...-loan-scam_news
(6) 12/15/11 (UNITED KINGDOM) Senior private banker resigns from Coutts [a very exclusive private bank]
http://www.reuters.c...E7NF23S20111215
(7) 12/22/11 (FRANCE) Societe Generale's Investment Banking Chief Steps Down
http://dealbook.nyti...ief-steps-down/
(8) 1/05/12 (UNITED KINGDOM) Chief executive of Saunderson House [Private Bank] steps down
http://www.ftadviser...GM/article.html
(9)1/09/12 (SWITZERLAND) Switzerland's central bank chief resigns
http://www.aljazeera...5612935171.html
(10) 1/12/12 (United Kingdom) Lloyds' head of wholesale quits
http://www.bankingti...holesale-quits/
(11) 1/19/12 (SPAIN) Spanish bank Santander's Americas chief quits
http://www.expatica....its_202395.html
(12) 1/20/12 (JAPAN) Normura's head of wholesale banking quits
http://www.euromoney...king-quits.html
(13) 1/29/12 (NEW ZEALAND) New Zealand Reserve Bank Governor Alan Bollard to Step Down in September
http://www.bloomberg...-september.html
(14) 1/21/12 (Greece) Banks' top negotiator quits Greece, but talks go on
http://www.france24.com/en/20120121-banks-top-negotiator-quits-greece-but-talks-go
(15) 2/06/12 (INDIA) Dhanlaxmi Bank CEO Amitabh Chaturvedi quits:http://www.livemint.com/2012/02/06160111/Dhanlaxmi-Bank-CEO-Amitabh-Cha.HTML
(16) 2/07/12 (INDIA) Falguni Nayar quits Kotak Mahindra Bank
http://articles.econ...hanti-ekambaram
(17) 2/07/12 (IRAN) Iran denies central bank resignation rumor (don't believe until its denied?)
http://finance.yahoo...-164154294.html
(18) 2/09/12 (VATICAN) Four Priests Charged In Vatican Banking Scandal
http://articles.busi...nces-italian-tv
(19) 2/10/12 (INDIA) Tamilnad Mercantile Bank CEO resigns
http://www.business-...resigns/464259/
(20) 2/13/12 (KUWAIT) Kuwait Central Bank CEO resigns
http://www.washingto...rOAR_story.html
(21) 2/14/12 (NICARAQUA) Nicaraqua Central Bank Pres Rosales resigns
http://www.bloomberg...s-amid-row.html
(22) 2/14/12 (UNITED KINGDOM) Social finance pioneer Hayday steps down from Charity Bank
http://www.socialent...wn-charity-bank
(23) 2/15/12 World Bank CEO Zoellick resigns
http://business.time.com/2012/02/15/world-bank-president-zoellick-resigns/
Did the White House tell the World Bank president that he's out?
http://bosco.foreignpolicy.com/posts/2012/02/15/did_the_white_house_tell_the_world_bank_president_that_hes_out
(24) 2/15/12 (SLOVENIA) Slovenia TWO largest Banks CEO's (2) resign
http://www.bloomberg.com/news/2012-02-15/slovenia-s-nova-kreditna-banka-maribor-ceo-plos-resigns.html
(25) 2/15/12 (KENYA) Governor of Kenyan Central Bank to Resign
http://www.centralbanking.com/central-banking/news/2152753/parliamentary-committee-calls-kenyan-governor-resign
(26) 2/16/12 (GHANA) Ken Ofori-Atta steps down as Executive Chair of Databank Group
http://business.thinkghana.com/pages/finance/201202/57429.php
(27) 2/16/12 (SAUDI ARABIA) Saudi Hollandi Banks Managing Director Quits
http://webcache.googleusercontent.com/search?q=cache:ZVfFZypqVIcJ:www.a1saudiarabia.com/4489-saudi-hollandi-banks-md-quits/+&cd=4&hl=en&ct=clnk&gl=us
(28) 2/16/12 (AUSTRALIA) Anz Bank CFO Australia resigns
http://www.proformative.com/news/1470243/cfo-anz-bank-resigns-amid-turmoill
(29) 2/16/12 (AUSTRALIA) Royal Bank of Scotland Austrailan CEO Stephen Williams resigns
http://www.theaustralian.com.au/business/wall-street-journal/andrew-chick-to-lead-royal-bank-of-scotlands-australian-arm/story-fnay3vxj-1226272513981
(30) 2/17/12 (USA) Blankfein out as Goldman Sachs CEO by summer
http://finance.fortune.cnn.com/2012/02/17/gary-cohn-goldman-sachs/
(31) 2/18/12 (PAKISTAN) AJK Bank's executive steps down
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/national/18-Feb-2012/ajk-bank-s-executive-steps-down?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+pakistan-news-newspaper-daily-english-online%2F24hours-news+%28The+Nation+%3A+Latest+News%29
(32) 2/20/12 (RUSSIA) Head of Russian Bank Regulator Steps Down
http://newsley.com/articles/head-of-russian-bank-regulator-steps-down/206711
(33) 2/20/12 (SWITZERLAND) Credit Suisse Chief Joseph Tan resigns
http://www.businessweek.com/news/2012-02-20/credit-suisse-s-private-bank-chief-asian-economist-tan-resigns.html
(34) 2/10/12 (KOREA) Korea Exchange Bank chief steps down
http://english.yonhapnews.co.kr/business/2012/02/10/0503000000AEN20120210005100320.HTML
rats
{ED. two legs bad}
This isn't so much an economic problem as it's a political one.
Too bad the economic problem will have to hit the fan before we can apparently do anything about the political problem
It's as much an economic problem as a political one.
Why stop at Europe? The world is a massive CDO. Don't have the numbers off hand, but how do you reconcile a global debt to asset ratio of (say) 2x without devaluation or default?
The world is a Ghetto - War
Charts, bitchez!
(Thanks, TD.)
It was brought up again on a thread yesterday and I neglected to say anything. I can't find it now so I will say it here, Thanks to whom ever it was that recommended Rickards' book, "Currency Wars". I am only on page 120 so far, and I am impressed. This is a very rich read. Can't wait to pick it up again to coninue and read the rest of it.
Relevant. Make sure you read the part about LTCM and Jim's complete and utter heroism there.
This proves JS's call about "QE to infinity" because the money to cover a triggering of these CDS's has not even been printed "YET". (41 to 1 JPM leveraged balance sheet)
How many haircuts will the private sector agree to ;-) Before there is no hair left to cut ?
and with the loss carry forwards piling up against taxing future profits (for the next 100 years) and the general public with no jobs, where "The Fudge" are the taxes going to come from to support this largess ?
Answer: Checkmate !
+ 1
3g's, yes, an incredible amount of real (debt based) wealth is about to be lost. Checkmate indeed.
The private sector bond holders are going bald taking haircuts while they pile up a mountain of Loss Carry Forwards.
Banks don't pay taxes
Governments don't pay taxes
Corporations don't pay taxes
Now the Private Bond holders won't pay taxes on future profits for next 100 years.
P.S. Loss Carry Forwards are worth an avg of .33 cents on the dollar.................can they re-classify them as equity ?
LOL !
Clusterfuck !
NO REPRESENTATION WITHOUT TAXATION! Let's pass a few laws nationalising all banks and remove all prop desks to hedge funds where they can pay any of the bonuses they want without taxpayers guaranteeing their screw ups.
Since white stole the plates and took them to Russia the U.S has decided to go
Deeegeeetaaal
+1
Here again, a picture is worth more than a thousand words.
Appears the manic Chavez of Venezuela was kinda smart to bring all of the country's gold...
Home!!
Ya wants my gold? Ya gots ta come an' git it........bankers in tanks!!
Do we have a single idea for how long this farce can last...?
what can make the bubble burst?
Does the new ECB LTRO this week make possible the stock market to go higher...Again...
Thks for yr feedback
The bubble bursing is a possibilty short term. The next question in line is, what would be the next bubble?
Agree, almost finished with Currency Wars. A well done read and very educational for us here.
Can someone please point me to a good primer on CDOs?
March 20/March 29 :)
http://www.investopedia.com/articles/bonds/09/collateralized-debt-obliga...
Thanks Gene. Investopedia is full of useful info.
I had a pretty good idea what CDOs were, functions, pros/CONS, but it's good to know more.
I was in a hurry, and asked my original question poorly so I'll try again.
What is Tyler talking about here:
I see the columns 'attached' & 'detached', but I don't have a clue what the numbers represent.
Any help would be appreciated.
Any addictive relative who has a penchant for gambling and failure and the enabling family memebers who co-sign on loans and give them cash to "tide them over .
And in the above context we need to view Europe. The reason that Euroland keeps on running with it's begging bowl to China is because China has real money, not like the pledges that Germany's Europartners give. And since there is a Eur 560b hole in the Euro payment system (Target2)that needs to be filled, China/BRIC's are the natural donors. Now I suspect Turbo Tim and the ChairSatan are just itching to fill that hole, but the Eurolanders don't want a 2.0000 EUR/USD, that would make their BMW and Mercedes out of reach of the US/Chinese consumer.
I assure you it will continue on until our idiotic Fed has the printing press taken away. At that point it will be game over. Not until. And my guess is we have a while to go yet. Then, the "financial funding crisis" will begin. And what a show it will be.
Tomorrow Lloyds Banking Group proposes applying for LTRO as the first British bank to do so, yet it is effectively a UK-analogue with few overseas businesses since selling BOLSA etc decades ago. So what about other banks like Brclays, HSBC, RBS - will they follow suit ?
Doesn't it seem like these countries degraded to animal status have nothing to gain by continuing to play by the eurorule? If they break now, they have a short trip back to a fair standard of living. If they don't, their standard of living goes to hell until they break.
This doesn't seem like the kind of choice a rational being would make. The shadow banking system must be a full service concierge. Private flight out, plenty of cash, plastic surgery for identity change, acreage in Zimbabwe, private security force (good luck with that) and a new identity. Rather like witness protection, eh?
that totals around €610 billion...what about the other €2 trillon to french british and german banks?
If you rotate the bottom chart 90 (or is it 270?) degrees, the greyish signal for Spain precisely scribes a silhouette of King Tutt's father!
Another observation: CDO means "Collaterallized Debt Obligation", right?
Collateral Obligation, these days. only exists in the cocain dulled eyes of the ponzi man holding the note. Most presumptuous, indeed, to simply assume the borrower will make good on either the note or the terms of a default - sheesh - look at at the US bank bailout - by all measures Wall Street should have turned into a ghost town in 2009. Instead, the street paid itself a 144 Billion boner, courtesy of the FED's draw on taxpayer assets.
Is there a CDS disclaimer promising the full faith a credit of US taxpaers? THere is not one on privately written mortages either - which is why Lehmans and the NY FED were so hot to dump that shit on FNMA.
Asset flows are little more than counter parties swapping a basket of air ferns for a box of pet rocks. Nothing is real - strawberry fields forever!
Let them eat collateral!
Looks like Italy and Spain are next; no wonder the banksters want to rob another $2 Trillion from taxpayers and savers.
Story out on Bloomberg sounds real negative on the G20 summit. Basically says that the G20 told the Europeans (read Germans)to show them the money.
http://www.bloomberg.com/news/2012-02-26/geithner-schaeuble-spar-over-so...
What is interesting is that the Germans don't really have any money to throw into the bailout funds since they have to fund the March 20 Greek redemption/interest payments. The Buba has no assets to monetize so they could lend to the German state to make the cash injection. The rest of Euroland is broke, and the respective CB's can't print money even if they wanted to. And the March 20 bond redemption/interest payment has to be made, (mostly to the ECB from the looks of it), and there probably are no funds for that either. Definitely no funds for the PSI and ECB. And French/Belgians/Luxemborgers (whatever) are sitting on a E120b loss from Dexia.
So the Eurolanders need to get the good funds in the door, but can't since they can't put the guarantee in place.:)
Therefore, all that is left is the ECB and the printers.
Therefore, all that is left is the ECB and the printers.
Guwssing that means the EUR will shed value back to the USD - are we talking about an 80 cent EUR again?
it would, only the US is in a worse position...short US dollars now that European "bad news" is priced in, it has brought most of its problems onto its balance sheets and aired its dirty washing. The US....hasn't and will form headlines when city after city then county after county then state after state airs its own dirty washing. We already know that a holder of US Treasuries will only ever get coupon interest back and no principal (with the Fed desprately trying to make this perpetual bond have a zero coupon). A zero coupon perpetual is worth....ZERO!!! hedge that one baby! heh
From your lips to China's ears.....
A zero coupon perpetual is worth....ZERO!!! hedge that one baby! heh
Truer words never spoken - but - let's look at it from the ponzi man's POV understandings: B-Girls don't look at value - their eyes roll, B-Girls rut based on the token count like a size queen at a bathhouse for horses!
Maybe if we call them "i-Dollars" their merchandising value would be more appealing - and then later - when "i-Dollar" marketability stagnates, we can rename them "Classic Dollars"!?!
of course! this is an insolvent house0'crads kept "inflated" by fiat CTRL+P + "politicalPromises"
in slewienomics, we have CTRL+P + "ploticalPromises" = EU + "money"
today, for exapmle, we get PrudentBear:
LET THEM FREAKING F-A-I-L!!! {the future of the globe does not lie in working overtime to make a buncha lozers look like they own the joint!}
The whole sovereign debt crisis was played up to cover the dire US budget situation on the basis that:-
1. If nobody panics then all is OK ( as in prior to sovereign debt crisis).
2. If they are going to panic, get them to panic about some obscure old world kingdom (Greece) or oil free middle eastern property bubble (Dubai).
3. Play it as hard as you can using agency cover (Zero Hedge) to gain time and avoid your own downfall (USA - budgets, property bubble and employment , Germany /France - Banks and financial collapse and Britain Budget, property bubble , banks, financial collapse and unemployment).
Oh, and by the way, the solution is growth!
No, not Chinese of Greek growth, your growth, like the old idea of making things!
Once you have bought enough time got some money back through the desperate central banks action then cut off funding to IMF and precipitate a Greek crash and burn, follow with Portugal, Spain etc., etc
But maybe leave Italy out in case they come for you!
Here's an idea.
Why don't the peripheral areas of Europe default en masse!
Call the bluff of the powerful nations and demand retrospective payment for having supported them for years by allowing the rich to avoid taxes in order to afford the latest apple device, BMW (substitute whatever).
Maybe the Governments don't want to because Goldman Sachs has hired their children to live in New York
Uh, I'll take What is called The Hellenic Republic for 900%, Alex.
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Is there an estimation of how much money should be payed by those who have sold CDSs in case of a greek default? I searched but did not find an answer. I read in a greek paper that the amount is approx. 3 to 5 billion USD.
Is there an estimation of how much money should be payed by those who have sold CDSs in case of a greek default? I searched but did not find an answer. I read in a greek paper that the amount is approx. 3 to 5 billion USD.