Risk Drifts Lower On News Germany To Delay EFSF Implementation Until 2012, Abysmal Debt Rollover Participation

Tyler Durden's picture

Update: more bad news as Reuters reports that participation in the Greek private sector debt initiative at just under 75% according to financial sources. This is a miserable miss to the required 90% and means that the debt rollover initiative is basically dead in its tracks, as 25% of the bondholders will become holdouts and seek to derail the entire Bailout #2 process in return for massive "nuisance value" payments. Problem is nobody will pay said demanded payment.

Those seeking a reason for the sudden drop on no news, can attribute the weakness in the EURUSD and its 1.000 correlated derivative, the US policy vehicle known as the stock market, to the following news making the rounds brought to us by RanSquawk, namely that Germany is likely to delay ESM legalisation beyond year end of 2011. Specifically, "facing a storm of protest from within its own ranks, Germany's ruling coalition government has delayed discussing the ESM in cabinet meaning that legislation on the Eurozones permanent rescue fund, will not likely be in place by end of this year as hoped." As a reminder, Stark quit due to disagreement over the SMP's usage. This most recent update means the SMP program, not only will not end as was expected originally in September, but will be forced to monetize Italian debt for at least three more months, and likely much longer, until the EFSF is activated, some time in Q1 2012. This also means that the ECB's SMP program, currently pregnant with €140 billion of PIIGS bonds, will expand to double its size by the end of the year, further pushing the zEURo lower as Europe continues with its explicit debt monetization on the books, and not as was envisioned before, using an SPV in the form of the EFSF.

We will bring more as we see it.

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firstdivision's picture

WTI went off a cliff.

Cassandra Syndrome's picture

Nooo! What are we going to do with all the goods falling in price from a deflationary correction! Its going to be hell!!!

SheepDog-One's picture

'Goods falling in price' oh I see, so suddenly we've somehow printed less? Or intend to print less daily going forward? All theyve got is printing.

CrashisOptimistic's picture

Brent is oil, not WTI.  The spread just spiked back to $25.

Irish66's picture

Good night Greece

drider's picture

Maybe you Irish people want to join Greek people?

Maybe you got fed up paying for the greedy-irresponsible Irish banks?

Or you are feeling better off seeing your young people fleeing to other countries for work?

SheepDog-One's picture

WTF?? "Yes we're completely bankrupt, but nevermind all that for another year or so"....hell we've got STOCKS to pump!! Cant let defaulted nations get in the way of that or anything.

What a stupid retarded world, theyre never going to fool me with any of this BS its smoke and mirrors for something real bad coming within weeks.


DirtMerchant's picture

interesting that they announce this 15 minutes before market close...some may not find the exits...

PicassoInActions's picture

Of topic



New International Terror Alert Levels, as read by John Cleese


The English are feeling the pinch in relation to recent terrorist threats and have therefore raised their security level from "Miffed" to "Peeved." ~

Soon, though, security levels may be raised yet again to "Irritated" or even "A Bit Cross." ~The English have not been "A Bit Cross" since the blitz in 1940 when tea supplies nearly ran out. ~Terrorists have been re-categorized from "Tiresome" to "A Bloody Nuisance." ~The last time the British issued a "Bloody Nuisance" warning level was in 1588, when threatened by the Spanish Armada.


The Scots have raised their threat level from "Pissed Off" to "Let's get the Bastards." ~They don't have any other levels. ~This is the reason they have been used on the front line of the British army for the last 300 years.  


The French government announced yesterday that it has raised its terror alert level from "Run" to "Hide." ~The only two higher levels in France are "Collaborate" and "Surrender." ~The rise was precipitated by a recent fire that destroyed France's white flag factory, effectively paralyzing the country's military capability.  


Italy has increased the alert level from "Shout Loudly and Excitedly" to "Elaborate Military Posturing." ~Two more levels remain: "Ineffective Combat Operations" and "Change Sides." ~

The Germans have increased their alert state from "Disdainful Arrogance" to "Dress in Uniform and Sing Marching Songs." ~They also have two higher levels: "Invade a Neighbor" and “Lose."  

Belgians, on the other hand, are all on holiday as usual; the only threat they are worried about is NATO pulling out of Brussels.  


The Spanish are all excited to see their new submarines ready to deploy. ~These beautifully designed subs have glass bottoms so the new Spanish navy can get a really good look at the old Spanish navy.  


Australia, meanwhile, has raised its security level from "No worries" to "She'll be alright, Mate." Three more escalation levels remain: "Crikey,!", “I think we'll need to cancel the barbie this weekend", and "The barbie is cancelled." ~ So far no situation has ever warranted use of the final escalation level. ~


bnbdnb's picture

Is this the reason for the 1% drop in 5 minutes?

kurzdump's picture

Strange, I was sure they would implement the EFSF and send Greece to default soon after. It would have been in line with the liquidity announcement. Could it be the Timmy-Factor that I left out in my assumptions? It might take some more time to redesign the EFSF accordning his proposal. 

BarryG's picture

German Banker Axel Weber confirmed yesterday that the crisis is being used as political cover to force through changes, and that things will need to get worse before people accept those changes!!!


Dick Darlington's picture

as Europe continues with its explicit debt monetization on the books

Tyler, Tyler, didn't u hear it's not debt monetization. Monsieur Trichet emphasized that zSMP zpurchases are to zsecure ze ztransmission zmechanism of ze IMPECCABLE monetary policy. IMPECCABLE he said!

rubearish10's picture

A rather mild response to that threat of failure. It is beginning to feel like "terrorist threat" propaganda. There's really no threat just like last Sunday. Getting real tired of this and feels like I'm not alone.

Mae Kadoodie's picture

ABC easy as 123...


PivotalTrades's picture

Wont this meen that the US will have to play a bigger role?

virgilcaine's picture

Investors are growing weary with this endless drama, default is your only option.  Like those b&w gangster movies from the 40,s... come out with your hands up, the place is surrounded.

SheepDog-One's picture

Top of the world, Ma! TOP OF THE WORLD!!

Musical chairs man! Just going from one chair to another around in a circle till the music suddenly stops and the rug is pulled out all at once!

lano1106's picture

Timmy is releasing his strong arguments to force the hand of some resisting european finmins to play the game.


SheepDog-One's picture

Bah, theyre ALL in on it together.

drider's picture

Ofcourse, but some of them look to gain more than what it was allocated to them in the 1st place.

I am beginning to suspect that all this well-presented euro-farce aims to get the americans even more financially involved in the euro mess. Not that they are not happy to do so - way to go Timmy!

But appearances should be kept in place. The sheeple are watching!


Dick Darlington's picture

But but but, i was told it's all fixed in the death errr eurozone.

LeBreizhou's picture

The English version is not available yet: 
The Global Europe Anticipation Bulletin in French


Instant Wealth's picture

Point here is that the EU hasn´t been able to come up with a official german translation of the ESM treaty, yet.

I imagine  a Barroso there, trying the usual gypsie rip off trick with a document written in portuguese or even greek (!) letters:

"A-you `avve do sign a-herre ... it-a is-e urgente ... it-a is-e a matter-e of warr or peace-e"

drider's picture

Hillarious! I can envisage him as a bear dancing to the music played by the banksters...

Instant Wealth's picture

A somewhat criminal bear indeed.

Check out the connection between him and his old buddy Spyros Latsis, a very wealthy greek banker. He controls the media in Greece and is a friend of G-Pap, too.

X.inf.capt's picture

me thinks these banker are suffering from ZERO STROKE...

( look it up on wikipedia, you guys will LAUGH)

uwsjack's picture

ESM is not EFSF... You're confusing the two. 

SheepDog-One's picture

'Yes we have a cure for BK Eurozone....nevermind its the same FAILED BS as before and we wont even do it for another year, but take our word for it we're fixed! And I'll gladly pay you tomorrow for a souvlaki today...BLAH BLAH BLAH.

drider's picture

This happens when you have gyro (Greece inevatable default) and you wrap around many slices of pita (euro BS)...

The problem is that as you wrap more and more pita around the gyro, it gets increasingly difficult to eat and digest the damn souvlaki!

Dick Darlington's picture

participation in the Greek private sector debt initiative at just under 75% according to financial sources.

The propaganda blowhorn and the banker lobbyist IIF have declared victory several times saying it's already close to 90% and will be filled soon. Well, can't say that i'm surprised. EU has turned into dictatorship obeying only the insolvent banking cartel and lies and perception management is what they do.

drider's picture

I have yet to comprehend why 90% is the "magic" number. Everyone knows that the PSI program will have only a marginal effect on the Greek debt dynamics...

Dick Darlington's picture

And here comes the gubbermintless and ah, ever so insolvent, Belgium.

So this whole charade abt private investors taking losses (which they aren't because of the IIF structured sweet deal masked as a private sector participation) is turning into a bigger joke than it was for the beginning. When do people in Europe wake the f*ck up? All these crooked politicians held hostage by the banks will do anything to keep the status quo and rape the tax payers until there's nothing left to rape. All the Banana Republics want SOMEONE ELSE to pay for their profligate life and horrible mistakes and wrongdoings.

drider's picture

First, you have to decide for yourself if the "babana republics" or the banks that lent them are at fault...

And when you get your story straight then you will have a clearer view on what is happening.

Dick Darlington's picture

It's both. The corrupted politicians and the banks. The politicians were and are happy to borrow and spend with full knowledge that they're never able to pay back. And the banks were and are willing to lend them and the housing bubble hungry people the money because they know that when they get in trouble the politicians with the help of central banks will make sure someone else will be shouldering the bill. Of course there's much more into the story but that's pretty much it in a nutshell.

drider's picture

Agreed. So if you were Greek what will you be doing right now?

nah's picture

for spending so much time defending the euro and euro zone they sure are turning the states into shitty little insufficient packages

slewie the pi-rat's picture

further pushing the zEURo lower as Europe continues with its explicit debt monetization on the books, and not as was envisioned before, using an SPV in the form of the EFSF.

sounds kinda inflationary, don't it?