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US "Pours Cold Water" On IMF Expansion Plans, Leaves European Bailout To Europeans

Tyler Durden's picture




 

It is probably not too surprising that the negative news of the day, namely that the US has decided against expanding the IMF and thus leaving the European bailout to the Europeans (at least for now), was released quietly long after happy hour started on Friday. Yet that is precisely what happened after Reuters dropped a Friday night bomb that with hours before a communique is issued by the G20 in Paris, contrary to previous rumors and representation "U.S. Treasury Secretary Timothy Geithner and his Canadian and Australian counterparts poured cold water on the idea" of injecting $350 billion into the International Monetary Fund. As a reminder, the IMF expansion myth was one of the latest rumors floated today by none other than the tag team of Geithner and Liesman. It lasted less than24 hours but it served its purpose. The full on media onslaught of never ending lies has never been more acute, more relentless, and more blatant: with every central bank and trade surplussed nation all in, the very nature of the global ponzi is at risk.

From Reuters:

They (the IMF) have very substantial resources that are uncommitted," Geithner said.

 

German Finance Minister Wolfgang Schaeuble agreed the euro zone debt crisis was for Europe to solve, and expressed confidence that EU leaders would produce a plan at the October 23 summit that would be convincing for financial markets.

 

The United States is among countries keen to keep pressure on the Europeans to act more decisively to end the two-year-old debt crisis that began in Greece but has since spread to Ireland and Portugal and is lapping at Spain and Italy.

 

"The first priority here is for Europeans to put their own house in order," Australian Finance Minister Wayne Swan said.

The second priority is to get the world's solvent countries' future so deeply intertwined with that of the bankrupt ones, that letting Greece, and hence France, would result in a Global Assured Destruction.

G20 sources said most BRICS economies were in favor of bolstering the IMF's capital as a crisis-fighting tool.

 

"We have said this before and have conveyed this again, that if emerging economies and the BRICS are called upon to contribute, we can do it via the International Monetary Fund," one of the sources said. "India is open to it, China and Brazil are also okay with the idea."

The same China which on Monday had to bail out its banking sector, is somehow expected to provide billions to plus briefly an infinitely large European liquidity hole. But those billions are nowhere near as much as what the US taxpayer will have to shovel into the European money pit once Geithner's "cold water" announcement ends up steaming for a few days in a bidless stock market.

And while discussions over what form if any the expanded EFSF will take (a moot point as if a E440 billion expansion took Europe 3 months to ratify, a E3.5 billion version will certainly not be done before 2015) what seems to be increasingly under question is if the conditions of even the second Greek bailout will be satisfied.

The Franco-German crisis plan is likely to ask banks to accept bigger losses on their Greek debt than the 21 percent spelled out in a July plan for a second bailout of Athens, which now looks insufficient.

 

"It will be more, that's more or less certain," French Finance Minister Francois Baroin said.

Well...no, because the FT informs us that according to Greece itself any haircuts over 21% are out of the question:

The lead negotiator for private holders of Greek debt has said that investors are unwilling to accept greater losses on their bonds than the 21 per cent agreed in July, jeopardising eurozone plans to finalise a second Greek bail-out by the end of next week.

 

Charles Dallara, managing director of the Institute of International Finance, criticised European leaders on Friday for failing to allow the July deal to proceed. He said any greater losses imposed on Greek bondholders could prompt investors to sell the sovereign debt of other eurozone countries, destabilising the single currency.

 

We do not see that a compelling case has been made to reopen the deal,” Mr Dallara told the FT. “A deal is a deal.”

 

Securing a voluntary “haircut” from Greek bondholders has been the centrepiece of the second €109bn ($150bn) Greek bail-out after a German-led group of creditor countries demanded private investors bear more of the rescue burden so eurozone taxpayers would not be saddled with the entire bill, as in previous bail-outs.

So with all apologies to Mr. Baroin, his idealistic version of reality, in which CDOs magically self fund themselves, and in which Greek bond funded pension and retirement funds see 50% losses and virtually guarantee social instability and civil war, is about to fall apart.

Yet the real kicker is the following: the whole Greek "restructuring" with a bankruptcy is predicated upon the voluntary nature of the debt exchange transaction. And as we have now learned, it was voluntary up until 21%. At 21.01% it becomes involuntary... and hence triggers CDS according to even that most corrupt of deterministic organizations, ISDA.

And once there is an official Event of Default, and the multi billion CDS complex starts collapsing on itself, exposing the whole premise of "gross exposure is not net" due to bilateral netting for the lie it is, the not even the loftiest lies and the most incredible propaganda won't do anything to lift the offer in the EURUSD.

 

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Fri, 10/14/2011 - 22:36 | 1776118 holdbuysell
holdbuysell's picture

Someone in Europe better call HP. They gonna need the ultra super jumbo ink cartridges.

Fri, 10/14/2011 - 22:48 | 1776153 Ahmeexnal
Ahmeexnal's picture

Just when the weak hands had covered their euro shorts....

ka-booom

Fri, 10/14/2011 - 23:01 | 1776179 doomz78
doomz78's picture

The best phrase for this insanity is," It will work perfectly fine until it doesn't...  "  So true.  Once it doesn't I don't want to think of the endgame.  Maybe they will surprise me with a world bailout.  So I guess this bailout will buy more time?  But how much?  And can they make this fiscal monstrosity of a policy actually work even short term.  I know long term the game is over, this short term positioning is fun to watch. At times moronic. This is the new normal. lol  A new Bloomberg line.  What a farce. 

Fri, 10/14/2011 - 23:04 | 1776187 theXman
theXman's picture

I think Geithner was overriden by Obama. At the same time, Treasury is delaying report on China's currency manipulation while Hillary gives speech criticizing China for currency manipulation. Looks like Tim is going to be overridden again. He should resign immediately.

Fri, 10/14/2011 - 23:41 | 1776250 nope-1004
nope-1004's picture

A loser and a failure of a person has no clue what "resign" means.  Sociopaths don't resign, they get "asked to take on a higher position in another department", or so they tell everyone.

He won't acknowledge that he's a failure.  He will stay where he's at until some idiot blows him in the Treasury hallways so he can go on a book tour.  That's what professional nothings do.

 

Sat, 10/15/2011 - 09:19 | 1776727 Ghordius
Ghordius's picture

Outlaw "Funny Money"
Outlaw "the CDS complex" now

Sat, 10/15/2011 - 05:14 | 1776558 Everybodys All ...
Everybodys All American's picture

Think again. Obama is as uninformed as they come.

Sat, 10/15/2011 - 08:09 | 1776663 Bobbyrib
Bobbyrib's picture

Maybe Geithner remembered the way the Europeans treated him on his last trip.

Sat, 10/15/2011 - 15:05 | 1777312 Fíréan
Fíréan's picture

proverbial

Guillotine for Giethner !

Sat, 10/15/2011 - 10:40 | 1776782 4horse
4horse's picture

-

-

Think again. Obama is as uninformed as they come.

...and again. Obama is as uniformed a toysoldier, le rouge et le noir, as any heretofore placed gamepiece on the grand chessboard

 

1913-                                                   check

 

positions everybody?  .  .  .  ok. PNAC. let's do this lookin like we've done it before

 

sound off,  1     2

brigades ready! and, marchingorders, again armegeddon, all deployed across the castlefloor in their redtunics,blackhats&erect rifles right down to each little individual rothschildt

sound off,  3     4

long positioned, preemptively, toward what for a quadrillion reasons was to inevitably be, first) not just another noisy budgetbattle but, bombs-bursting-in-air) an all-out for alltime worldwide moneywar

 

 

before, tabula rasa, and zero, WW

 

 

sound off:                   which, without www and the likes of zh, is where        -                                  we'd already be 

                                                           nyt,tv,king-of-all-media Slaughter

 

 

 

 

soundoff 1  2, 1  2,  WW 3 4

Sat, 10/15/2011 - 14:02 | 1777219 Fish Gone Bad
Fish Gone Bad's picture

What the fuck is that supposed to mean???  Let this be a lesson to anyone reading this, don't type shit for the world to see on a widely read site when you are high. 

Sat, 10/15/2011 - 16:02 | 1777435 4horse
4horse's picture

-

  -

don't type shit for the world to see on a widely read site when, fish-gone-bad, you are long already-rotted from the head down

 

fgb to the bone

Sun, 10/16/2011 - 01:13 | 1778351 falun bong
falun bong's picture

OK...I'm backing up towards the door...reaching behind me for the doorknob...no sudden movements...frozen smile in place

Sat, 10/15/2011 - 08:15 | 1776671 Mike2756
Mike2756's picture

Nope, no more bailouts, the natives are restless. The EU tried taking the soft approach vs. the Bernank thermo-nuke bazooka and it's not gonna work.

Sat, 10/15/2011 - 00:01 | 1776289 FL_Conservative
FL_Conservative's picture

Not this cowboy!  Been averaging down all during the squeeze, since I know that house of cards was built on loose sands.

Sat, 10/15/2011 - 15:43 | 1777400 Randall Cabot
Randall Cabot's picture

Oct 15, 2011 2:16 PM ET

 

"We heard encouraging things from our European colleagues," Geithner told reporters after the meeting. "The plan has the right elements."

http://www.bloomberg.com/news/2011-10-15/g-20-tells-europe-to-deal-decisively-with-debt-crisis-at-oct-23-summit.html

Fri, 10/14/2011 - 22:42 | 1776129 Mugatu
Mugatu's picture

Its time for the bill and everyone is acting like they are pulling for their wallet, but no one ever pulls the wallet out - classic cheapskate trick!

Fri, 10/14/2011 - 22:52 | 1776162 zorba THE GREEK
zorba THE GREEK's picture

Mugatu... That's the best time to go to the lavatory.

Fri, 10/14/2011 - 23:43 | 1776254 Hansel
Hansel's picture

Words can only hurt if you read them!  Don't listen to Mugatu!!!

Sat, 10/15/2011 - 07:39 | 1776637 Mugatu
Mugatu's picture

It's that damn Hansel! He's so hot right now.

Fri, 10/14/2011 - 22:41 | 1776132 navy62802
navy62802's picture

This is just for media consumption. Behind the scenes, you know Geithner is making promises like a little bitch.

Fri, 10/14/2011 - 22:53 | 1776164 BoNeSxxx
BoNeSxxx's picture

Yup... and we will find out what the promises were in late 2012 through a FOI request or a Congressional hearing.

 

Unless, of course, we find out earlier via pitchforks, tar, and feathers.

Sat, 10/15/2011 - 01:20 | 1776355 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Geithner loves spending American taxes to give to the Global Banking Houses.  So he is talking out of both sides of his mouth?  Nothing new.

Now if only Israel would bomb Iran already, then the banksters could get away with another bailout.

Sat, 10/15/2011 - 04:56 | 1776547 max2205
max2205's picture

Good God, love the ' G.A.D'. Learn to love the Bomb.

Sat, 10/15/2011 - 10:22 | 1776779 ptoemmes
ptoemmes's picture

If you can get past the head exlpoding setting of Liesman interviewing Geithner your head can explode during the interview.

At 4 Oct 2011 12:29PM ET

Exclusive Interview with Timmah

http://www.cnbc.com/id/44875650

I'd excerpt, but I really don't know what to excerpt

========================================

At 14 Oct 2011 10:25 AM

US to Play 'Very Major Role' In Helping Europe: Geithner"

http://www.cnbc.com/id/44902075

==========================================================

But at 14 Oct 2011 10:44AM appears to be an announcement related to this top post

US Rejects Plan to Strengthen IMF In Euro Zone Crisis

http://www.cnbc.com/id/44902738

===========================================================

Finally, just a few minutes ago

http://www.youtube.com/watch?v=oep4mRpmrkQ&feature=fvst

 

 

 

Sat, 10/15/2011 - 15:20 | 1777338 Fíréan
Fíréan's picture

In the first interview Steve Liesman with Geithner , which you linked to above, he is very specific when refering to "us", "they", "them" etc., to cover himself himself and inform to whom his is refering, and yet he is not clear ( and neither am i as the reader ) to whom he is refering in this answer when he states that

TIM GEITHNER: Well, you know, basic rule of-- financial crises management is you want to make sure that you have a level of resources that are larger than the potential needs you face. And if markets see that then they'll have the incentive to continue to lend, invest-- take exposure to those countries. And so what they're trying to-- Europeans are trying to do is to find ways to increase-- to dramatically increase the effective financial capacity of their fund.

 STEVE LIESMAN: How big does that bazooka, so to speak, have to be? Canadian Governor Mark Carney said before he left for-- for Paris that he was looking for $1 trillion euros or more. Do you have a number?

TIM GEITHNER: No lots of ways to assess that. Again what the-- what you need is the clear commitment by the governments that they'll do what's necessary to hold us together and that they'll put as much resources behind this as is necessary. And you know, that's what they're trying to do.

Who is the "us" to whom he is refering in the context of that answer  ?

The european governments must must do what's necessary to hold us together ?

Fri, 10/14/2011 - 22:47 | 1776138 AldoHux_IV
AldoHux_IV's picture

The black hole that is our current global monetary/fiscal system is getting bigger and soon no one central banked sovereign will be safe from the event horizon.

Haven't we been effectively bailing out the insolvent European banks via the fed and it's dollar funding facilities? Through the veil of shits and illusions of central banking and emergency 'temporary measures' we've been throwing bailouts left and right and through our legs and even handing them out with no-look passes.  Of course by 'we' I mean the official 'we' and probably soon to be the dictator 'we'.

From all aspects: market reactions, politician rhetoric, policy-making goofs, and the idiotic pursuit of using debt to enslave more people under the already crushing size of existing debt-- this crisis has been one sad fucking joke.

Fri, 10/14/2011 - 23:04 | 1776185 Skid Marks
Skid Marks's picture

Factsheet

Where the IMF Gets its Money

http://www.imf.org/external/np/exr/facts/finfac.htm

 

 

IMF Members' Quotas and Voting Power, and IMF Board of Governors

http://www.imf.org/external/np/sec/memdir/members.aspx

Sat, 10/15/2011 - 07:04 | 1776623 DollarDive
DollarDive's picture

There are no more - independent governments.  The IMF is the ruler of the world.  They are the OZ behind the curtain, pulling the levers - making the deals - out of view from the sheeple.  World governments are really just puppets that are controlled by the IMF.  The puppet strings are loans made to the governments from the IMF.

Fri, 10/14/2011 - 22:44 | 1776139 legal eagle
legal eagle's picture

Intentionally Mad Fund

Sat, 10/15/2011 - 00:27 | 1776324 greased up deaf guy
greased up deaf guy's picture

this guy has great reflexes...

http://www.telegraph.co.uk/finance/financevideo/8825221/IMF-official-ducks-eggs-during-student-protest-in-Turkey.html

he must have been practicing the "duck and cover" for situations like this.

Sat, 10/15/2011 - 07:51 | 1776648 I only kill chi...
I only kill chickens and wheat's picture

Hell he even knew to check his right and left flanks, a true soldier of the banking industry.

Sat, 10/15/2011 - 08:14 | 1776669 Bobbyrib
Bobbyrib's picture

Being that it was Turkey, I wouldn't be surprised if no one heard from those kids ever again.

Sat, 10/15/2011 - 09:24 | 1776730 Esso
Esso's picture

Obviously gun control is working as intended in Turkey, unfortunately.

Fri, 10/14/2011 - 22:46 | 1776142 monopoly
monopoly's picture

This is never ending. Until it is over.

Fri, 10/14/2011 - 22:46 | 1776143 bigwavedave
bigwavedave's picture

Old news that came at lunchtime Friday not after the close. You must have been napping. (12:24:34 PM) twitter.com: Reuters: U.S. rejects plan to strengthen IMF in euro zone crisis http://t.co/aJclxs9k

 

Fri, 10/14/2011 - 22:50 | 1776151 mfoste1
mfoste1's picture

It is very clear what is going on....the US will certainly bail out EZ. This will take course of every other bailout. They will argue, argue and argue some more until scumbag politicians finally give in. Why will this happen?  This will be a great disguise for a 2nd round bailout of US banks for trillions.....

Fri, 10/14/2011 - 23:09 | 1776192 Skid Marks
Skid Marks's picture

"THEY" will NOT allow the EZ to go down in flames.

Take that to the bank.

Sat, 10/15/2011 - 04:40 | 1776533 ZippyDooDah
ZippyDooDah's picture

Put a fork in the EU.  And while you're at it, put a fork in the banks.

Fri, 10/14/2011 - 23:14 | 1776201 knukles
knukles's picture

Here's my take... a tidge of game theory.
If one concludes that regardless of the amount of new debt piled upon old debt within the ECB/EU/European banking system clusterfuck dead as a forgone conclusion doornail then....
The "optimal" financial resource allocation for the US Fed/Treasury is to forgoe any and all further contributions to the IMF/BIS/whateverthefucks and save said ammunition for....

The next TARP/QE to directly "save" (as in bail out the bankers bonus pools once again, who happen to be the Big Campaign Contributors) the US banks from not necessarily their direct loan and debt exposure, but right now, the Who The Fuck knows internicine mess of Counter-Party Risk with all the swaps, CDS, etc.  
Watch.  It'll be once again find the fucking bag holder (AIG last time around) who insured all the screwball risk contracts that nobody can figure out for the terms thereof (what is or is not risky) and thus what is value...  who is gonna suck the proverbial hairy end of the lollipop and thuus be the cancerous transmission mechanism for the rest of the infrastructure. 
The systemic risk bag holder.
That fuck gets bailed, the shit's settled at full values and whoopie doopie, biznez as normal. 

Fuck Europe, the problem's right here at Home in River City.

Plus, what with Solargate, Fast n' Furious, SaudiAmbassadorGate, Mexico Drug Cartels (they're everywhere, they're everywhere) and now US troopis boots on the ground in central Africa, bailing out a bunch of foreign banks might not play too fucking well in Dubuque with Ma and Pa Kettle... not with campaign/elections now in a 24/7 cycle.

Fri, 10/14/2011 - 23:36 | 1776241 rocker
rocker's picture

 I like the way you think. Who will get bailed out next. The debate is now hindged on 50% more or less of a haircut for the bondholders of the PIGS debt.

 We need to remember that, yes, some of our banks do own some of the bonds or hold contagion of banks over seas who own the bonds.

Either way, Big Ben will want to Bail Out them to bail out, guess who, Goldman Sachs. The wonderful people who had AIG cover their backs.

And where did that get AIG?  Hmmmmm.

But don't worry, guess who has GS's back.

Republican Judd Gregg is a Goldman Sachs Advisor Board Member.

So, how much will Goldman profit again from the demise of another group of banks.

Sat, 10/15/2011 - 00:26 | 1776325 knukles
knukles's picture

LOL

Congressmen as advisors to Goldie.  Advisor my ass.
And thinking about it more, betcha the marching orders to cease and desist were made by lloyd, Jamie, et.al, seeing the opportunity for the next Banker's Enrichment Act of 2011/2.

I mean, it's not hard to imagine that kinda crap at all with what goes on these days.

Sat, 10/15/2011 - 08:16 | 1776673 Bobbyrib
Bobbyrib's picture

Dudd Gregg is a fine, upstanding politician. How dare you attack a great man like Mr. Judd Gregg! /sarcasm.

Sat, 10/15/2011 - 00:33 | 1776341 mraptor
mraptor's picture

It is called Triffin dillema.

If you have the reserve currency you have to bail out everybody OR lose the reserve status.

Simple as that.

The point is they dont want to lose reserve currency status, so they will bailout everybody.

And Europe will bail out everybody from the Euro Union too. It is just different scale.

 

Sat, 10/15/2011 - 00:54 | 1776361 Market Efficien...
Market Efficiency Romantic's picture

Make any regulator and Senate/congress member arguing for the non-acountability and freedom of regulation of deriavtives vote only with the backing by their personal wealth. Wonder how quick you would get an effective derivative regulation?

Sat, 10/15/2011 - 02:59 | 1776465 Market Efficien...
Market Efficiency Romantic's picture

In that strategy game of yours, you missed one important variable, maintaining USD as global reserve currency. That, if wished, requires playing the lender of last resort or bail-out wonderboy. In that case, the increase of power and control and the access of US banks to currency and liquidity needs to compensate the US spending abroad instead of nationalized recapitalizations.

Basically, that is what the world is trying to convey to Merkel, if you want Germany relying on a reserve currency status of the EUR, controlled by Deutsche Bank with very positive effects on German export business, you have to show the power of the controller of a reserve currency now. Only that in the EU, it is not comparable, as Germany is no sovereign itsself in the monetary sense. That's like financing a car, letting everyone in the neighborhood drive it without restriction and without any right to ever get behind the steering wheel yourself.

Fri, 10/14/2011 - 23:25 | 1776224 HoofHearted
HoofHearted's picture

The point at the end of this piece is what is well taken...if the CDS for Greece have to be paid off...BOOM!!!!!

Sat, 10/15/2011 - 05:38 | 1776566 cossack55
cossack55's picture

Enough with the Franco-German. Time to update.

Frank-Kraut

vichyssoise-kartoffel

Maginot-Siegfried

Wine-Beer

Citroen-Mercedes

Something more current, or even better, funny.

Sat, 10/15/2011 - 13:39 | 1777178 knukles
knukles's picture

Sarkozy-Merkel (OMG, now look what I've got us into)

(Does anyone have a burning desire?  Hi it's me Knukles and I'd like to cornhole someone today.  Can I come to the G-20 meeting and play fuck your buddy and the peasantry.  Are they having it at Versailles this time around?  How the fuck much is this gonna cost us this time?  Has that comet/meteor Elenin hit anyplace yet?  Do they all have birth certificates?  Why do they have birth certificates?  Mommy, I can't sleep.)

Sat, 10/15/2011 - 11:23 | 1776900 Belarus
Belarus's picture

The market won't go bidless this week because no one alive believes that ultmately the powers that be will sit idle as the banking system, and therefore soveriegns in Europe, and everywhere else for that matter, will sit idle and let the dominoes start to fall,  one by one by one. 

Instead, what will happen this upcoming week, should the market stumble, even slightly, the next Geither rumor or China rumor or whatever rumor of the day will be leaked, to make sure the market gets to the grand Oct. 23 unveiling of the big plans. So it will be all about Apple's blockbuster earnings this week and how all the markets will have turned green for the year.

Ironically, the despots are already flinching on the Oct. 23 date, and the big "plan" might not be unveiled until November. If so, I expect market turmoil to begin after the 23rd, one way or the other as the dominoes actually begin to fall at that point upon the initial plans (if they go ahead with it without outside funding). 

This is where the U.S. and the fiat system WILL step in after freaking out, along with China, etc. and fund the IMF with untold sums of money so they can buy Greek bonds above the much needed and mere 21% haircut,  plus fund Greece the additional 150 billion they need to keep running, plus infuse lots of money into banks that couldn't handle even the 21% voluntary cut. If somehow they do get and iniitially force a 50% cut, unlikely given the stance for bondholders who say they can't afford that, then expect once the U.S. gets involved the bailout look will suspiciously look and feel just like TARP, because that is what it will be. Eitehr way, there's going to be a market route in here somewhere so have lots of dry powder ready to roll.

And, naturallly, through all of this, the one percenters, the ones who took the risk of buying all this toxic debt in the first place, will have not suffered for it, nor will shareholders at most banks. At this point, it's back on the taxpayers ass to have "saved the world" once again supposedly. By this point of the story, Slovaks will be feeling really stupid for voting for the EFSF, so too will Germans, and OWS protests will grow louder than ever.

And that's how this non-sense is going to play out. Once it does, it's time to go very very long PM's and commodities.....because at this point their will be no turning back with the money printers and the race to the bottom of the currency pile will have entered a new paradigm.

Fri, 10/14/2011 - 22:49 | 1776155 RobotTrader
RobotTrader's picture

Europe doesn't matter.

The only thing that matters is AAPL and IBM earnings next week.

Sat, 10/15/2011 - 01:36 | 1776410 DeadFred
DeadFred's picture

Fundamentals will make a difference? How quaint. What is the current level of correlation of stocks one to another and to the currency market? How much freedom does that give fundamentals to influence valuation? I really wish it did matter, we might have an honest market then. 

Sat, 10/15/2011 - 05:40 | 1776568 cossack55
cossack55's picture

Have you noticed that the only time you experience "price discovery" is when you have lost all your bucks.

Sat, 10/15/2011 - 08:08 | 1776661 Market Efficien...
Market Efficiency Romantic's picture

Concerning the recent irrelevance of micro-fundamentals, I agree. The correlation is proof enough.

I am not so convinced by any of the recently published equity strategists' views that as the correlation fades with decreasing volatility, the reemergence of fundamentals will show an undervaluation of US equities,

Looking at the historic development of equity valuation, I get the impression, over time the sell side developed ever increasing, more forward looking, higher multiplied valuations. From a sell-side perspective, great accomplishment, if you can convince the public that there is undiscovered value to be picked up.

With the doubts about the endless continuity of the growth paradigm, the entire valuation function becomes somewhat questionable. So, high correlation may not only be explained with macro-driven markets, it may also originate in the increasing doubts and insecurity investors feel with traditional valuation models.

IMHO realization of debt and financial innovation having been the major driver of growth, investors not only question the future prospects of valuation but doubt the sustainability of the current valuation. According to this logic, global deleveraging would would revert some of the already priced-in growth.

As long as there is no clear vision of whether, to what extent, with what structure and in which timeframe deleveraging will occur, equity markets will remain at high correlation levels, however with a bearish overall trend, as any approach/solution to the global debt crisis will include devaluation and thus discount past, present and future growth expectations.

Fri, 10/14/2011 - 22:56 | 1776169 Atomizer
Atomizer's picture

How would you like your eggs prepared? This reminds me of the Steve Ballmer incident.

Turkish students hurl eggs at IMF speaker

http://www.bbc.co.uk/news/world-europe-15297794

Mark Lewis sure has sharp eyeballs and nimble maneuvers.

Sat, 10/15/2011 - 00:29 | 1776332 greased up deaf guy
greased up deaf guy's picture

just posted the same thing above.  i figured it's been seen before, but posted it anyway. cheers.

Fri, 10/14/2011 - 22:59 | 1776175 Schmuck Raker
Schmuck Raker's picture

"A deal is a deal."

Mr. Charles Dallara, your a poopy-head, and I don't like you.

Fri, 10/14/2011 - 22:59 | 1776176 Spitzer
Spitzer's picture

haha yeah right.

Europe is willing to pull the plug.......

Fri, 10/14/2011 - 23:00 | 1776177 CashCowEquity
CashCowEquity's picture

Summer may be over, but im ready for some Steak !

BBQ Bull coming soon

:-)

Fri, 10/14/2011 - 23:04 | 1776186 zorba THE GREEK
zorba THE GREEK's picture

Zorba, son of Erudities, has come up with a plan to fix the Euro problem once and for all.

Greece's debt holders should take a 200% haircut on Greek debt. This would punish them

for making bad loans and satisfy the European people because they won't have to bail out

Greece. That would mean that whatever Greece owed the bond holders and banks, they

would now owe Greece. Greece could then use that money to buy shares in the banks to

keep them solvent. Then Greece would use their shares in the banks as collateral to make

low interest loans from the ECB and the IMF to sustain Greece's high living standard for

10+ years. Problem solved.

Fri, 10/14/2011 - 23:06 | 1776188 Ras Bongo
Ras Bongo's picture

My question is: how many commenters here have made money reading ZH?

Fri, 10/14/2011 - 23:18 | 1776207 prains
prains's picture

Ras Bongo

I think I speak for a few people when I say, the dial tone you hear constantly in your head is not a good thing.

Fri, 10/14/2011 - 23:24 | 1776220 knukles
knukles's picture

Agreed.  I much prefer the voices when they pick up.

Fri, 10/14/2011 - 23:23 | 1776217 knukles
knukles's picture

Lots.
Not commenters, money.
And maybe more importantly, sure as shit minimized/escaped a boat load of losses.
Got some great ideas by staying here, reading and researching.  Great stimulation.
Perfect juxtaposition to the CNBS realm of "official drivel"/PR/Propaganda.

Why in Gods' name would you ask?  Seems self evident.
Nobody here is gonna make you rich with individual picks and hints... it's the painting of the broad pictures and themes so important, thence for one to decide if correct and implemet accordingly.
This is not a slam dunk panacea for all answers to all seasons.
That don't exist.

Sat, 10/15/2011 - 01:11 | 1776360 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Maybe Bongo was genuinely curious?

Sat, 10/15/2011 - 08:20 | 1776674 Mike2756
Mike2756's picture

"This is not a slam dunk panacea for all answers to all seasons.

That don't exist."

 

If it did, we'd all be retired, lol.

Fri, 10/14/2011 - 23:38 | 1776244 Hansel
Hansel's picture

Commenters don't get paid to read this site.  It is ad supported by Google.  Google pays ZeroHedge to produce content.  You're welcome.

Sat, 10/15/2011 - 02:31 | 1776444 LongBallsShortBrains
LongBallsShortBrains's picture

I will get junked but, it is true.

When I read about how they are blowing this market up and you can just feel the frustration in the words in some comments...... I shorted the Dow futures. (11560 last time ). I don't usually play the dow, but .... Anyway, I have made more than I have lost by paying attention here.

More of feeling the sentiment than any specific trade idea. However there have been some good trade ideas here. I just have a rule to not follow anybody else's "tip"

My .01

Sat, 10/15/2011 - 04:45 | 1776538 ZippyDooDah
ZippyDooDah's picture

When I was younger, I used to bang on a Bongo.  Good fun.  Might take it up again.

Sat, 10/15/2011 - 05:45 | 1776572 cossack55
cossack55's picture

I must say that I have made some. Not a lot, but I have not lost any at all.  ZH is more a forum for the closest you may get to truth, IMHO, and a lot of very funny sarcastic humor. As a confirmed asshole, I love ZH.

Sat, 10/15/2011 - 07:43 | 1776640 Atomizer
Atomizer's picture

We get all of our insider trading tips from RobotTrader and do the opposite.. LOL

Fri, 10/14/2011 - 23:08 | 1776190 bugs_
bugs_'s picture

Sir! I have a plan

Sir! I have a plan

Mein Führer! I can walk!

Sat, 10/15/2011 - 11:06 | 1776856 optimator
optimator's picture

Gentlemen, you can't fight in here, this is the War Room.

Fri, 10/14/2011 - 23:15 | 1776202 gjp
gjp's picture

Read Doug Noland

Don't read Doug Noland

A survey to satisfy curiosity.  This week's essay is great

http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10583

Fri, 10/14/2011 - 23:23 | 1776218 LongOfTooth
LongOfTooth's picture

I'd bet that this smoke screen is for political purposes only.  If the European bailout gets into trouble the US and Canada will have a check cut in the blink of an eye.

Let's face it, we're screwed.

 

Fri, 10/14/2011 - 23:35 | 1776238 HoofHearted
HoofHearted's picture

....glued, and tattooed...

Sat, 10/15/2011 - 07:55 | 1776651 machineh
machineh's picture

... steamed, cleaned and gyreened ....

Fri, 10/14/2011 - 23:48 | 1776255 Rob Jones
Rob Jones's picture

Bankers are using CDS threat ("financial weapons of mass destruction") to scare governments into bailing them out. Never again! Ban derivatives!

If the derivatives system is sound, then why are they claiming it would be a catastrophe if any CDS was actually triggered?

And if the derivative system is unsound, then derivative trading should be shut down before it can cause any more damage.

It reminds me of the 'Lost' television series where there was a button that had to be pressed every 90 minutes. No one knew why it had to be pressed or what would happen if it wasn't pressed. But everyone was sure that something terrible would happen if it wasn't pressed.

Sat, 10/15/2011 - 00:35 | 1776345 Market Efficien...
Market Efficiency Romantic's picture

The only thing you need to change now, is to legally seperate derivative liablility from deposit base. Huh, where is your poison sting now, Banker?

It wil sure create friction in derivative markets, but that friction is only the correction to assumed coverage of derivative losses by general public deposits and tax payer money.

Either netting and counterparty risk management is as effective as suggested by banks and such a regulatory move would not change a thing to banks or their derivative desks turn belly up. Well, then, it was their misjudgment and credit derivative practices would be cut to an appropriate risk level.

Sat, 10/15/2011 - 01:05 | 1776366 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Derivatives are contracts that are valued based upon the value of an underlying asset.

The problem is not the derivative system, it is the fact that all derivatives are priced in dollars, which are absolutely worthless. 

You can't ban derivatives.  People will always trade using derivatives.  You can make the system sound by using proper monie to trade with, so that when people derive their trades from underlying goods, they are shown at a fair value.

Sat, 10/15/2011 - 01:40 | 1776414 Rob Jones
Rob Jones's picture

You certainly can ban derivatives from the banking system. You just make a law saying that banks are not allowed to purchase or underwrite derivatives.

Derivatives are a form of insurance and most traditional forms of insurance are highly regulated. In fact, there was initially a big debate over whether to regulate derivatives. And Hank Paulson, who was then head of Goldman argued that government oversight was completely unnecessary. Then a few years later as Treasury sec., he bailed out all of AIG's counterparties with no haircut, which netted tens of billions for Goldman.

 

Sat, 10/15/2011 - 01:45 | 1776419 Market Efficien...
Market Efficiency Romantic's picture

Exactly right, alternatively make them hold 100% of the payout risk in cash and it will both appreciate the risk and be of no longer interest to any banker.

Fri, 10/14/2011 - 23:53 | 1776276 cranky-old-geezer
cranky-old-geezer's picture

 

 

The only real question here is when is Bernanke willing to watch the US dollar crash ...which will happen if he tries to bail out the entire EZ ...which he won't ...hence telling IMF they're on their own.

The problem is simple:  Too much sovereign debt by nations with collapsing economies and no meaningful exports ...including America incidentally.

The only thing saving America from Greece-like default is the US dollar WRC status.  When that goes away ...and it will... America will crash faster than Greece.  It will be stunning to watch ...from outside America ...and not holding Treasuries ...nor dollars (hear that China?).

But I'm confident China is on top of this.  They'll know when the bottom is going to fall out well before us 99%ers do.

Who knows, they might even help if fall out.  Particularly if we keep this trade war sabre-rattling.

Sat, 10/15/2011 - 00:41 | 1776348 Market Efficien...
Market Efficiency Romantic's picture

and I bet, China is smart enough to even take a 2T hit in reserves as price for having a doomed system be exchanged by something more effective. 2T loss may appear unthinkable to us, to the emerging world power it is peanuts on the way. So, the potential threat of USD depreciation only provokes China to say, well here you are, we show you the effects live and in 3D.

Sun, 10/16/2011 - 01:54 | 1778375 falun bong
falun bong's picture

The Chinese already got what they wanted: all of the factories, roads, bridges, power plants, ports, airports, and know-how. They don't give a damn about that worthless little pile of paper.

"All of your base...are belong to us"

Sat, 10/15/2011 - 00:57 | 1776365 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Bernanke, and all Keynesians, believe a lower dollar is good for the economy.  It is not enough to say he wants a lower dollar; he demands it.

Sat, 10/15/2011 - 08:24 | 1776679 Mike2756
Mike2756's picture

It will under the current kleptocrats, the u.s. has been in far more difficult times and has made it through. It would probably take ww2 austerity to make things right, just need a good leader to make the case for it.

Fri, 10/14/2011 - 23:58 | 1776278 kill switch
kill switch's picture

Finally,,, we have a man on his way to the IMF who will solve the EURO problem Iron Clad!!! Can he do any worse??Than these morons presently in command?

 

 

 

 

 

http://www.youtube.com/watch?v=Ce9FgV6sXtg&feature=related

Fri, 10/14/2011 - 23:58 | 1776285 junkyardjack
junkyardjack's picture

Investors won't even remember this by Sunday.  Cocaine is a helluva drug. Rally on

Sat, 10/15/2011 - 06:37 | 1776607 StychoKiller
StychoKiller's picture

Cocaine?  Everyone's O'D on Corruptol!

Sat, 10/15/2011 - 07:58 | 1776652 machineh
machineh's picture

True that.

The only known antidote is Efamol.

Say it again: EFAMOL!

Sat, 10/15/2011 - 13:10 | 1777126 LooseLee
LooseLee's picture

Those driving the past 3 weeks market rally are not investors, by the way.....

Sat, 10/15/2011 - 00:28 | 1776331 Market Efficien...
Market Efficiency Romantic's picture

Well, guess what would have been liquidated to fund the IMF superfund? Oh no? BRICs do not need to cash fund, they just promise, well, then they promise to no longer maintain USD and treasury levels for ther benefit of Euriope. Sure thing, why that never resting smart-ass Timmeah is trying to discredit it.

Would solve shit, anyway.

In plain terms, as with every bad credit, the bond holders will at some point have to accept that their assessment of absence of risk had been illusionary (could have been realized with in interest rate spreads all along) and take a hit. Hair cuts and write downs with their own global domino chain will be required to establish manageable debt levels globally. but that's why it is so dangerous. The EU situation has a precedence role and with all the global old money sitting in credit, don't expect them with all their lobby power not to accept a precedence crippling their asset base.

Sat, 10/15/2011 - 00:42 | 1776351 mailll
mailll's picture

The Federal Reserve, as usual, will give money to the IMF in secret.  It doesn't need to be made public, since it never is. Some day the US will rise up against these Elitists who are controlling the world and send them all back home to Hell where they belong so this world can live in peace. 

Sat, 10/15/2011 - 01:09 | 1776377 Market Efficien...
Market Efficiency Romantic's picture

haha, and by what means, directing the elite-controlled intelligence and military body at few, amost unidentifiable individuals with succession rules. It is all controlled, the US government has no executive power over the global elite and if it had, the elite would sacrifice in person to let their successor redeem the power. No freakin chance. JFK was the first modern-times president to realize his de-facto lack of executive power. Read Krushchov's memoires. I would not want to be a president nowatimes, burdened with the ability of holding the ultimate power to control any issue in the world and effectively playing the puppet and arguing for why you signed what the elite ordered the Fed, the intelligence or the military to do. Guess why none of the controlling elite body of the past 100 years this time steps up to pose as president. As poor Obama, his successor will neither in presence not in the history books play a too favourable role. NWO design is just so to the point, first an Afro American Democrat, then the Mormon Republican, both without initial ties to the elite body only to later prevail due to unprecedented funding support. The elite enters their bunkers and lets the elected scapegoats run the show and be taared and feathered on their behalf.

Sat, 10/15/2011 - 01:28 | 1776402 mailll
mailll's picture

And this scapegoat/pupper Obama will be replaced by the one who already sold her soul to the Elitists in order to become the next president, Hillary Clinton.  And in order for her to be elected, all she has to do is throw her hat into the race, and she will sometime in 2012. Even republicans will foolishly vote her in.

Sat, 10/15/2011 - 01:42 | 1776417 Market Efficien...
Market Efficiency Romantic's picture

Don't think so, why would she, she is too high up the elite ranks not to know what is ahead. The relevant question, how would she benefit? Ok, maybe being last president of the US is something remembered in history books, but sriously I doubt there is any incentive for someone with her inner-sanctum-insight.

Sat, 10/15/2011 - 10:47 | 1776820 optimator
optimator's picture

And they're prepared for that too, that's why they all have two passports.

Sat, 10/15/2011 - 01:08 | 1776375 paul_Liu
paul_Liu's picture

Tyler,

Geithner's speech actually was considered as one of the reasons for
the bs rally today.
Obviously a group of people wants this market to go up, way up!
On the other hand, billions of dollars were paid for SP Oct puts. I am
thinking another group of people will try everything possible to bring
the market down next week. The question is which force will win.

Does this make any sense?

Sat, 10/15/2011 - 01:15 | 1776384 Market Efficien...
Market Efficiency Romantic's picture

As posted before, its bankers all in against hedge funds all in. Well, you guess, who will win, HFs have no function to society and cannot cover as much shit. Also, they mostly do not count a top-elitist family name among their largest LPs. If HFs do not manage to quickly leverage to a TBTF level, the will be eliminated and be scapegoated in history books. I would suggest to them, if not TBTF in a global systemic sense, create a potential of devestation to selected, required infrastructures to the global economy. Once achieved, the current fight will be settled behind the scenes before going out to jointly search for the next endgame shit bag holder.

Sat, 10/15/2011 - 02:25 | 1776440 dr.charlemagne
dr.charlemagne's picture

given the size of the PM markets, couldn't the Hedge funds just run the price of gold and silver thru the roof? that would do the job.

Sat, 10/15/2011 - 02:34 | 1776446 Market Efficien...
Market Efficiency Romantic's picture

Only destroys the perceived value function of PMs. So it would harm anyone with an absolute value interest, but would do nothing to the relative value interests resiging with the banking cartel and their backers. Besides, either the size would not allow such price effect or would the collective HF scene sit with their PMs at moon prices and then...?

Not an option in my opinion. Focus on an asset of categorical value to the public, ideally sitting on banks balance sheets in some form. Gain control over that asset or trading of that asset and you will become a NICHE-TBTF.

Sat, 10/15/2011 - 06:56 | 1776618 broke433
broke433's picture

They did that with gold in July and August after they bought $50,000,000 in call options which amounted to a profit of $1,000,000 as proved by the 11:00am ramp up during those months.

Edit: $1,000,000,000 in profit from their 50,000 short dated out of the money contracts

Sat, 10/15/2011 - 07:57 | 1776650 falak pema
falak pema's picture

Dead on. One part of buccaneer Oligarchy, the leveraged HFs fed on toxic fungus called ZIRP, using USD carry trade, bring down the other part of Oligarchy by speculating madly on interest/currency arbitrage trades against interests of those classical Oligarchs involved in central planned protection of WS asset 'crown jewels' : the DJIA/S&P companies, the TBTF lobby. Its this internecine fight, capitalist world's suicidal race to bottom, that will determine the short term outcome. 

 

The longer term outcome is now looking worse and worse with every turn of the short term screw to wrench out the last drops of privatised profits at the expense of socialised debts, before the game of musical chairs comes to jarring, globally painful halt.

Sat, 10/15/2011 - 01:35 | 1776407 mailll
mailll's picture

The Elitists control the stock market behind closed doors.. If you were behind these closed doors with them, you would be filthy rich, just like they are.  I'm sure Geitner at least has his ears against the door listening in, if not on the inside.  Like I said before, us outsiders can only guess what gameplan is being planned behind these closed doors.

Sat, 10/15/2011 - 01:39 | 1776412 Market Efficien...
Market Efficiency Romantic's picture

only consider that the defining difference between them and us is, their relative power/wealth perspective is entirely abstracted from any decision-making including absolute wealth as a decision parameter. IMHO, that is the most important aspect to consider when trying to anticipate their power gamble.

Sat, 10/15/2011 - 12:54 | 1777095 Randall Cabot
Randall Cabot's picture

So what are you anticipating?

Sat, 10/15/2011 - 01:18 | 1776388 El Gordo
El Gordo's picture

How many more times can we promise to buy a dead horse and pay for it with a dead cow?

Sat, 10/15/2011 - 01:32 | 1776392 Tuffmug
Tuffmug's picture

Europeans have been jerking around all this time trying to get someone else to pay the bill. IMF was to be the ultimate bagman. They waited too long as now the US election cycle politics, the deficit battle logjam, and the stirrings of popular protest make large contributions by the US to an IMF bailout impossible. That endgame is now blocked as without US contribution the IMF kitty won't be large enough. Timmy just called their bluff and the private greek bondholders just gave them the finger as well with their rejection of a haircut greater than 21%.

Timmy has been telling them to print. Now they will have to.  Expect the ECB to fire up the presses to lever up the ESFS and the Euro banks and suck up enough PIIGS debt to drop yields and entice yield hungry bond investors back into the peripheral bond markets. Greece and the other PIIGS continue as a overindebted zombie states and the Euro is saved. Phony crisis ends in a flurry of Euro fiat and the Europeans must accept the devaluation of the Euro which will occur.

Sat, 10/15/2011 - 02:26 | 1776443 Mentaliusanything
Mentaliusanything's picture

If they print the money will  just becomes debt. That would be the Nuclear option because on top of Austerity you get raped by inflation that must follow.

Then its commodity/ hard asset time and that will sink the countries that hold them. 

What a complete fuck up.

Eat drink and be merry for tomorrow you won't be able to afford it

Sat, 10/15/2011 - 02:44 | 1776452 Market Efficien...
Market Efficiency Romantic's picture

Exactly, any sovereign printing in EU would manifest the relative terms among countries at a lower level. Paired with the relative deterioration effect of austerity, count on greeks founding Alpha Kaidros and reaching personal income levels of some central African states.

Sat, 10/15/2011 - 01:35 | 1776406 Davalicious
Davalicious's picture

 

This seems to be bullish for the USD and bearish for gold. Are we going to see world markets gap lower Monday morning, bringing gold way down to new lows?

Sat, 10/15/2011 - 06:42 | 1776611 chump666
chump666's picture

yes you missed the rally, this thing will correct hard.  once the 'haircuts' become less of a rumor and a fact.  either that and the germans start an occupy frankfurt protest on their 'forced' 40%+ bailout tax of french/german banks.  

Sat, 10/15/2011 - 08:01 | 1776657 machineh
machineh's picture

Davalicious is probably right.

Fresh EZ turmoil will jack the USD -- creating a headwind for US stocks and gold.

Sat, 10/15/2011 - 01:48 | 1776409 Market Efficien...
Market Efficiency Romantic's picture

If Timmeah could figure out where those 3T unaccounted losses of the DoD od the past ten years resided, we sure had an attempt at a solution. Lets say, BoA and JPM as of tomorrow could not explain where their book assets went, they are just MIA. Well, learning from history, up to 3T, the administration would do nothing. 3T is probably jist too large an amount to expect tracking anywhere, as it has drippled in margins and mispricings, just a long-term ugly political interest that had to be accounted for one day (9/10/2001) without much LONGER TERM public attention.

What tells us, BoA and JPM have not claimed false margins and strategically misprices assets and transactions. So, uups, now 3T are missing, what do woun want to do. Oh, yeah, this time it is all different, you will hold the CEO accountable and send the poor puppet to prison for 5 years. Ok, problem solved to the greatest possible extent.

Just saying, any lack of transparency at that critical infrastructure level not only creates a tiny transitional risk, it allows for major shifts of power at any time without actual responsibility. How could any legislative power in such an endgame environment put itsself in the position of mother of al shit-bag-holders. Right, action without consequence, no incentive to act just. When the people start ex-post executing politicians for the losses incurred under their decision-making, maybe then political accountability will become a value among the political establishment.

Sat, 10/15/2011 - 02:08 | 1776431 Richard Chesler
Richard Chesler's picture

That should be good for another 100 points up on the S&P.

 

High level plateau bitchez!

 

Sat, 10/15/2011 - 02:19 | 1776436 Mentaliusanything
Mentaliusanything's picture

Hmmm - investors in Greek debt will not accept a loss of more than 21%. By the time this thing goes through the ringer they might be over the moon if they get free wallpaper and a bottle of Ouzo.

I know some home owners who would die to get back to a 21% loss

Stop think and look for exit marked "shaved/bleeding/alive "

Sat, 10/15/2011 - 02:39 | 1776449 Market Efficien...
Market Efficiency Romantic's picture

My basic understanding what is currently discussed is, cut assets by 50 -60% and take out the asset holders threat of the central banking function failing in the aftermath by recapitalizing banks.

Sure does not please asset holder, will hurt pension fund investors more than those holding 80% of those assets, but that's the only way to go. Moral won't work, any indirect investment decision associated with defaulting sovereign debt has previously indirectly accepted higher retuns, so live with the consequenes.

Sat, 10/15/2011 - 02:48 | 1776456 agent default
agent default's picture

It will also create a massive unwinding of derivatives and other structured investment instruments, which may create a cascade effect through the system.  That's why nobody is allowed to fail today.  At the same time, nobody will really explain the problem clearly, because everyone will realize the extent of  the Ponzi going on in the financial world, and rightly panic.

Sat, 10/15/2011 - 03:11 | 1776468 Market Efficien...
Market Efficiency Romantic's picture

Right, I thought, though, the world was just going to question the ultimate extinction threat of Greek sovereign derivatives. I think at one point that argument needs to be tested. First step, require any derivative contract and parties to be listed with a central agency. That way, counterparty risk and net-net-exposure could be assessed, allowing a sense of the true destructive potential. Further, any CDS-imposed threat based on the argument of counterparty risk enforcement would require banning credit derivatives before enforcement is either privately guaranteed or government-regulation is allowed. Not the other way around. Why does the people let these attackers play them so easily? Let's see how they react to an offensive regulatory powerplay. Just don't pose as a deer willing to be slaughtered by the first rookie-hunter.

Sat, 10/15/2011 - 03:52 | 1776488 agent default
agent default's picture

Not happening. Transparency in the OTC market would essentialy negate the whole point of the OTC market.  It is the gotcha factor behind these instruments that make the TBTFs love them so much.

Sat, 10/15/2011 - 04:37 | 1776521 Market Efficien...
Market Efficiency Romantic's picture

Exactly, it's obvious, but if not in '08 and not now, global legislatives at some point will have to weigh something against the efficiency advantage Summers and Greenspan brought forward about a decade ago to fight off OTC derivative regulation. Right from the beginning, their arguments were do damn weak. Regulation increases transaction cost, wow right, in retrospective saving that additional TC definitely compensates for the '08 bailouts and the continuous black mailing by the TBTF threatening to take out the world economy in a second with their derivative chain reaction.

I know, legislation does not serve the people, but arguing for derivative deregulation becomes a pretty academic field.

It is all about turning offensive on derivative exposure threat. If they can make it transparent, you can ojectively assess the risk, if they cannot or wish to be perceived so, well, then they cannot assess or manage the implied risk and either bank or product should be banned from that market.

Sat, 10/15/2011 - 03:45 | 1776481 slackrabbit
slackrabbit's picture

"The lead negotiator for private holders of Greek debt has said that investors are unwilling to accept greater losses on their bonds than the 21 per cent agreed in July, jeopardising eurozone plans to finalise a second Greek bail-out by the end of next week."

 

The lead negotiator clearly doesnt understand either bankruptcy nor an angry mob at a politicians door...in which case  they suddenly find the threat of  'car accidents' and 'buglarys that went wrong' are the order of the day.

As the chaos decends, its every man for themselves and threats are used to enforce reason.

Sat, 10/15/2011 - 06:37 | 1776606 chump666
chump666's picture

it's getting cold in hell

Sat, 10/15/2011 - 06:47 | 1776614 Tic tock
Tic tock's picture

No, that's clearly a bridge too far.  Look, under the current system either the (entire alphabet of) banks have to give, or the Eurozone finances have to give.

If the eurozone fragments, the smaller nations can 'swap' their monetary assets into local currency with a lot more ease than Germany and France - who would probably therefore elect to keep 'the Euro', which due to the 'Bank recapitalixation' would then be somewhat diluted. (troubling to think what will happen to term deposits and wages).

If the Banking system implodes, then States 'have' to step in with  full Nationalization of the retail Banking system. That's actually 'bullish' for the totalitarian cannibal sociopaths... and new, relaxed charters will be granted to 'encourage' new banks to be set up.  - just an idle thought.

Sat, 10/15/2011 - 07:44 | 1776641 falak pema
falak pema's picture

Illogical Oligarchy play... We're in it together, but no ... we're not. SO whose doing what?

O'bammy not coherent with his cry to upgrade EFSF, if IMF doesn't carry its weight as reclaimed by its new management. Are the Oligarchs in to stop the domino fall or not; as its global and will wipe out WS hopes?

Crazy race to bottom...

Sat, 10/15/2011 - 08:34 | 1776685 Withdrawn Sanction
Withdrawn Sanction's picture

the multi billion CDS complex starts collapsing on itself, exposing the whole premise of "gross exposure is not net" due to bilateral netting for the lie it is..."

This is the "money" quote (sorry). It explains 2 interrelated issues: (1) the foot dragging and reluctance to take haircuts among bondholders; (2) the inability to paper over the mess w/money printing. The reason for the second has to do w/the non-linearity of such a collapse. Check and mate.

Sat, 10/15/2011 - 08:35 | 1776687 buzzsaw99
buzzsaw99's picture

I could be wrong but an amount that large ($350B) would have to be authorized by CONgreff. Turbo was talking out hizass.

Sat, 10/15/2011 - 09:06 | 1776707 GoldmanBaggins
GoldmanBaggins's picture

Why deny the IMF the funds to bail? Very simple. The PTB want Euro Bonds! This is one more push closer to that cliff. This whole mess will continue until they get what they want.

Sat, 10/15/2011 - 09:08 | 1776715 Grand Supercycle
Grand Supercycle's picture

SP500 / DOW daily charts remain choppy but bullish.

A reminder that SP500 / DOW weekly indicators now give bullish warning. If confirmed, it suggests significant equity rally this year.

Importantly, monthly charts remain bearish.

http://stockmarket618.wordpress.com

Sat, 10/15/2011 - 09:15 | 1776716 Miles Kendig
Miles Kendig's picture

Europe's governments, banks, pension funds and all the rest are running into the hard forgiving wall called objective circumstances.  Governments are just now coming to appreciate that guarantees aren't the same as cold hard cash.  Regardless what course is taken, governments both within and outside of the Eurozone will have to come up with hundreds of billions of CASH. 

The same holds true of the banks, like it or not.

"Sovereign risk has to be made risk-free again," - Josef Ackermann

http://uk.reuters.com/article/2011/10/14/uk-deutschebank-idUKTRE79D5Q220...

LOOOOOOL.  Joey and his associates in France, Austria,  The Netherlands, Spain, yadda yadda are finding out that no matter the temper tantrums there is no such thing as risk free risk.  This means their capital buffers are non existent.

Same holds true for all the pension funds, insurance/re-insurance scammers .. er .. companies and more.

The capital asset pricing model is predicated upon sovereign debt/guarantees being risk free risk.  This concept was not only made the foundation upon which the ponzi is premised, but tragically is proving its undoing.

Timmay G and the gang may be preaching no IMF money right now simply because they don't want to risk public backlash over another few hundred billion dollars going out the fiscal door hoping that the hundreds of billions going out the monetary door out of sight and mind will suffice.

Everyone knows what happens to someone that shows up at the CME without cash to trade with ..... They get laughed out of the rooom as happened to Timmay G hizzelf in China and JCJ at a news presser.  The fact is that after all the shuffling of feet, flailing of arms and navel gazing while losses were transferred to sovereigns has now reached its limit.  There are no more pockets to plunder as the treasure chest has run dry.

Suck it up

Sat, 10/15/2011 - 09:43 | 1776740 GS21A
GS21A's picture

This is a staring contest, and somebody soon is going to blink.  The only way to end this is to step out of the game, and the first country to repudiate this debt is going to blow the derivatives market, as the counter party will not be able to cover.  Like a bookie that took only the bets on the nag at 100/1 odds.  They can't cover them.

Sat, 10/15/2011 - 10:09 | 1776765 MrBinkeyWhat
MrBinkeyWhat's picture

Take that Bitchez!  "Bullish" Had to do it...couldn't resist.

BTFD...PM's Dumb Fukks!

Sat, 10/15/2011 - 10:17 | 1776772 azzhatter
azzhatter's picture

Liesman must dream these up during butt sex with timmay.

Sat, 10/15/2011 - 11:14 | 1776867 Flounder
Flounder's picture

There seems to be a lot of sanitizing of the articles since TD posted the original Reuters story.  Jeethner's and Schaeuble's names have been taken out.  Other articles are now calling it "All of the officials spoke on condition of anonymity to talk about sensitive negotiations." 

The least sanitized article seems to be from the AP.

"Wolfgang Schaeuble, finance minister of Germany, said an increase in the IMF’s resources was not necessary.

“The IMF has enough to fulfill its tasks,’’ he told journalists as he arrived at the meeting. He said help and solidarity from the rest of the world were welcome, but stressed that “the Europeans have to take care of the biggest part of the task.’’

Schaeuble said he expected EU leaders to take the necessary decisions to tackle the crisis at their summit next week.

“We are on the way to take clear measures to contain the danger of contagion.’’

US Treasury Secretary Timothy Geithner indicated yesterday that he was in favor of maintaining IMF support, but stressed that Europe had enough money to resolve its troubles on its own. He also opposed beefing up the IMF’s resources, as might be required if the fund was to take on a more active role."

http://www.boston.com/business/markets/articles/2011/10/15/g_20_wrangles...
Sat, 10/15/2011 - 11:30 | 1776911 Flounder
Flounder's picture

And now this from Sky which strongly supports TD's post...

, 15:56, Saturday 15 October 2011

"G20 finance chiefs are continuing talks in Paris as plans designed to combat Europe's debt crisis run into resistance from the United States.

The second day of discussions comes ahead of a G20 leaders' summit in Cannes on November 3 and 4.

Proposals have been outlined to double the size of the International Monetary Fund as part of a broader international response to the ongoing debt crisis.

The plan to inject around $350bn (£221bn) into the IMF has the backing of several developing economies.

But US Treasury Secretary Timothy Geithner and his Canadian and Australian counterparts dismissed the idea.

The IMF's dominant shareholders, including the US, Japan, Germany and China, feel the fund's $380bn (£240bn) worth of resources is enough.

Mr Geithner said: "They [the IMF] have very substantial resources that are uncommitted."

German Finance Minister Wolfgang Schaeuble agreed the euro zone debt crisis was for Europe to solve.

He expressed confidence that EU leaders would produce a plan at a summit on October 23 that would be convincing for financial markets.

The United States is among countries keen to keep pressure on the Europeans to act more decisively to end the debt crisis that began in Greece.

Since the problems began two years ago, they have spread to Ireland and Portugal - and are also lapping at Spain and Italy.

The talks come as Standard and Poor cut Spain's long-term credit rating, citing the country's high unemployment, tightening credit and high private sector debt

Fears about the damage a default by Greece - and possibly others - could inflict on the financial system have seen global stocks fall 17% from their 2011 high in May."

http://uk.finance.yahoo.com/news/IMF-Plan-Opposed-Amid-G20-skynews-14029...

 

Sat, 10/15/2011 - 13:33 | 1777169 slewie the pi-rat
slewie the pi-rat's picture

great job by you & otter

doesn't tyler want a E 3.5 Tril here?  (a moot point as if a E440 billion expansion took Europe 3 months to ratify, a E3.5 billion version will certainly not be done before 2015)

this is puppet theatre.  who knows what it means?

sure!  what does the G20 care?  beef up the "IMF"!

germany?  the finimini has confidence in the EU!

timmah?  he doesn't want to advertiZe IMF backstopping; europa can deal with their mess;  wink-wink

slewie?  this is wtf happens when "assets" are not market to market, BiCheZ!  we end up w/ a buncha central planning morons deciding what things are "worth" and how to "ringfence the contagion" so their fuking 'pensions' get paid

there is so much worthless paper out there marquerading as "assets" as to necessitate passing the bong just to keep up the requisite laughter as we follow the accountants' fascist fantasies into the puppet theatre formerly known as "earnings reports"

Sat, 10/15/2011 - 11:23 | 1776905 Zodiac
Zodiac's picture

So, how does one say "Go Fuck Off" in French to make it plain to Ms LaGarde?

Sat, 10/15/2011 - 13:29 | 1777162 Randall Cabot
Randall Cabot's picture

Time to fade the euro:

http://www.cnbc.com/id/44906694

Sat, 10/15/2011 - 15:20 | 1777339 Randall Cabot
Randall Cabot's picture

 

Oct 15, 2011 2:16 PM ET

"We heard encouraging things from our European colleagues," Geithner told reporters after the meeting. "The plan has the right elements."

http://www.bloomberg.com/news/2011-10-15/g-20-tells-europe-to-deal-decisively-with-debt-crisis-at-oct-23-summit.html

 

 

Sat, 10/15/2011 - 16:12 | 1777471 malek
malek's picture

"The second priority is to get the world's solvent countries' future so deeply intertwined with that of the bankrupt ones, that letting Greece, and hence France, would result in a Global Assured Destruction."

I thought we already reached that state long ago, and now the main goal is to block all attempts in untangling the entities and/or erecting firewalls?

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