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Weekend Rumormill Fails To Gain Traction As French, German And Belgian CDS Hit All Time Wides

Tyler Durden's picture


While this morning's bout of ridiculous volatility, especially in precious metals, may be briefly over (but certainly not for long) after gold has surged by nearly $100 from overnight lows, the economic weakness persists despite what the futures are saying. As usual European liquidity is at the forefront, with 3M USD Libor rising per usual and every single day for the third straight month in a row, this time from 0.360% to 0.363%, leading to new all time wides in German, French and Belgian CDS to 111 (+3), 201 (+4) and 301 (+6) respectively, which no matter how hard the /ES frontrunning and momentum machines can try, there is little that can be done to dissuade the market that French banks will soon be in need of a full blown bailout.

Also, while we don't know yet how much in PIIGS bonds the EFSF bought last week (TBD shortly), or how much was borrowed from the FRBNY's swap lines, we do know that French banks, notably SocGen and BNP, were once again responsible for the deterioration in the interbank lending market, rising to 0.39% and 0.40%.

As usual the great white hope of the weekend, that the EFSF would be expanded to E2-3 trillion was roundly rejected after German Finance Ministry spokesman Martin Kotthaus told reporters at a regular press conference that the "German government sees no need to expand the EFSF, and reject leveraging the fund." This is not the first time this rumor has been refuted. Which means we expect the FT to come out with a brand spanking new rumor that the, wait for it, EFSF would be expanded, some time before either Europe or the US closes. In the meantime, expect the market to process this latest set of news and drop eventually.


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Mon, 09/26/2011 - 07:15 | 1710315 Josephine29
Josephine29's picture

As markets thrash around and look for a sense of direction it is becoming clear that the plan is to bail out the banks one more time. Except as pointed out below one bank that needs a bail out may be unexpected by many...

Plans for Greek default may cripple both the European Central Bank and the IMF


Mon, 09/26/2011 - 14:09 | 1712071 covert
covert's picture

why not just let the banks fail and sink? the economy would rebalance itself out.


Mon, 09/26/2011 - 07:17 | 1710318 Robslob
Robslob's picture

And que a 20 point S&P futures rally...

Mon, 09/26/2011 - 08:08 | 1710421 Oh regional Indian
Oh regional Indian's picture

it's totally nutty, disconnected. Asia is a sea of red and Europe a sea of green?


Imagine those with inside information..... volatility like this....but it also tells me that the rubber-band could snap anytime now. Too much swinging around and I don't mean the topcallingtroll variety.


Weird World, Getting Weirder....

Mon, 09/26/2011 - 07:17 | 1710319 Boilermaker
Boilermaker's picture

Time to gas the shit out of the futures!!!  WHEEEEEE

Mon, 09/26/2011 - 07:18 | 1710320 yabs
yabs's picture

equity markets love it though

french banks are up 8 percent

I am sick of this circus

just crash and be done with it

Mon, 09/26/2011 - 07:19 | 1710321 KlausK
KlausK's picture

Ah, all these cynics. Now that PMs went down a little everything is well! The bubble bursted and we will live in a thriving economy happily ever after.

Mon, 09/26/2011 - 08:15 | 1710444 financeguru500
financeguru500's picture

Pssh, who cares about the economy. It's football season WOO!

/sarc off

Mon, 09/26/2011 - 07:21 | 1710325 TradingJoe
TradingJoe's picture

Will fade, be sold, S&P will drop below 1000 this week! It's all engineered to get the big boys out! And not to forget them month/quarter end bonuses, someone has to collect those, eh?!

Mon, 09/26/2011 - 08:11 | 1710441 LongSoupLine
LongSoupLine's picture

+100 (bingo!)

Mon, 09/26/2011 - 07:22 | 1710326 bigdumbnugly
bigdumbnugly's picture

is it an odd even thing as far as the validity of a rumor to the amount of times it is refuted?   or maybe it's cumulative?

if odd, even - does odd mean its on or does even mean that?

if cumulative - how many times before its considered a done deal?

Mon, 09/26/2011 - 07:22 | 1710327 Tense INDIAN
Tense INDIAN's picture

but CDS never cared about rumours last few weeks why should it now.......its all about equities....

Mon, 09/26/2011 - 07:23 | 1710329 UK debt marsh
UK debt marsh's picture

German Constitutional Court has effectively ruled that any new substantive move towards new or additional funds with whatever initials, must be subject to a referendum.  Will never pass.  Germans can't do it.

If the French contributed to such a fund, it gets added to their own debt, and bang goes their Triple-A rating, so end of fund.  French can't do it

Eurozone Debt:GDP will be around 88% collectively by year-end, with Germany and France both individually already over 80%.

There is no solution to the problem, because the problem is a dilemma, for which there are only painful outcomes.

Hence entirely rational can-kicking, hoping that something may "turn up".


Mon, 09/26/2011 - 07:47 | 1710358 aleph0
aleph0's picture

" must be subject to a referendum. Will never pass. "

.... or the Ac'Counting will be "mark to model" !



Mon, 09/26/2011 - 07:23 | 1710330 TankWolf
TankWolf's picture

12:02 Dealers' CDS coverage doesnt' seem to match Greek exposure, and max. amount dealers could collect on Greek CDS is 4.1bln

12:04 Combined Greek sovereign exposure to French banking system trio is 6.6bln


Tyler any ideas what the real exposure from the big three in France is to Greek debt?

Mon, 09/26/2011 - 07:38 | 1710345 reload
reload's picture

Tyler any ideas what the real exposure from the big three in France is to Greek debt?

And how much of it is safely parked already at the ECB (at par) as loan collatoral? I suspect (but have no evidence) that a lot of it has been got rid of in this way.

Mon, 09/26/2011 - 07:24 | 1710331 AUD
AUD's picture

Not ridiculous at all. Antal Fekete at least has long predicted such an outcome to the twilight of irredeemable debt.

Mon, 09/26/2011 - 08:00 | 1710380 Tyler Durden
Tyler Durden's picture

Everyone who has a semi functioning frontal lobe has predicted it. That does not make it unridiculous.

Mon, 09/26/2011 - 08:28 | 1710468 LongSoupLine
LongSoupLine's picture

I believe this is frontal lobe funtions combined with hippocampus (memory formation, classifying information, long-term memory)

Plus, have you seen this?!  A secret Wall Street, Fed, Treasury, CME, SEC and CFTC surgical procedure has been uncovered!!

Mon, 09/26/2011 - 07:27 | 1710333 Cassandra Syndrome
Cassandra Syndrome's picture

Ireland is printing Punts and preparing to leave the Euro, probably in 6 weeks time

Mon, 09/26/2011 - 07:48 | 1710359 Diplodicus Rex
Diplodicus Rex's picture

Can you please provide a link for that?

Mon, 09/26/2011 - 07:58 | 1710374 Cassandra Syndrome
Cassandra Syndrome's picture

I heard the first rumours a couple of months ago from someone who was involved in the logistics. I dismissed them at the time. But I have heard from separate sources since and it has been whispered in the local media in the past 2 weeks.

Despite all the spinning, behind the scenes in Dublin Plan B must surely be ready. Even as the IMF was giving us a clean bill of health, dark rumours were circulating in financial circles that the Central Bank was secretly printing its own Irish pound notes.

They might be prudent to do so. Plan B is undoubtedly already hatched down in the vaults of Merrion Street. First Greece, then Ireland, next Spain and finally Italy spells Armageddon, even to the optimists.

Next stop, France. The French sovereign debt may not be as scary as others but France is hopelessly exposed to Greek and Italian banks. If they sink or are forced to burden share , the mighty France could be the next domino to tumble.

Back home, Noonan seems speared to a tree in Merrion Street, oozing optimism as the Continent collapses. This weekend the euro is in mortal danger. But Ireland is supposedly doing just fine.


The Finance Minister denied the rumour when directly asked in Parliament last week


However, it is now probable that within 6 weeks, the Punt will be re-introduced, along with other countries in the Eurozone bringing back their old currencies. 

It adds up, that in the event of a country leaving the Eurozone that there would be a lot of behind the scene, closed doors activities for a number of months to ensure stability on the inevitable day that an announcement is made public. 

Mon, 09/26/2011 - 08:35 | 1710477 Oh regional Indian
Oh regional Indian's picture

Wow, that is pretty crazy. All the out-liers will fall off first then.

What is Spain upto? Too quiet ont he Spanish front.


Mon, 09/26/2011 - 07:29 | 1710335 Boilermaker
Boilermaker's picture

The over / under for the open will be 30 SPX handles.

Any suckers want the under??

Mon, 09/26/2011 - 07:32 | 1710338 Nate H
Nate H's picture

where are the periphery CDS (portugal, etc.)?

Mon, 09/26/2011 - 07:35 | 1710341 KingOfMilwaukee
KingOfMilwaukee's picture

Fails to gain traction? The FTSE is up 500 and all markets are up. Gold continues to do poorly and was down to 1549.

I love this site but it does get tedious when it refuses to admit it was wrong. Just 3 weeks ago when gold was at 1913 it proclaimed 2500 was a few weeks away. More like 1500!! And don't give me any BS about margin hikes and the rest. All commodities are down.


It would be nice is among the 24/7 flood of the world coming to an end the powers that be could admit when they were flat out WRONG.

Mon, 09/26/2011 - 07:46 | 1710356 Kina
Mon, 09/26/2011 - 07:53 | 1710364 Robslob
Robslob's picture

Welcome new guy (KingOfMilwaukee) on your 3rd week here at ZH.

We have seen many shills come and go.

We always see more of you when our PMs get smacked down by coordinated margin hikes near contract expiration.

The upside is you always leave shortly after...hope the Obama "Paid to Post for America" program is covering food expense.

PS You guys should be a little less preDICKtable and create an ID months out so your spam seems a little more authentic.

Mon, 09/26/2011 - 08:04 | 1710402 EvlTheCat
EvlTheCat's picture

""hope the Obama "Paid to Post for America" program is covering food expense.""

You do mean SNAP, right?

Mon, 09/26/2011 - 08:14 | 1710445 KingOfMilwaukee
KingOfMilwaukee's picture

I've been reading this site for over a year and there were password problems that kept me from posting, you los(er.) 


I am Libertarian and my economics are Austrian and I am 100% gold for 3 years. So go f yourself and stop thinking you know anything about me you pos.

Mon, 09/26/2011 - 08:34 | 1710474 LongSoupLine
LongSoupLine's picture

wow, achieving royality in Milwaukee must have a pretty low bar...

Mon, 09/26/2011 - 08:43 | 1710504 KingOfMilwaukee
KingOfMilwaukee's picture

Of course. Have you ever been to Milwaukee's airport?

Mon, 09/26/2011 - 08:46 | 1710512 LongSoupLine
LongSoupLine's picture

lol...yes! (I was being funny btw...well, trying to be funny at least)

Mon, 09/26/2011 - 08:47 | 1710513 Robslob
Robslob's picture



Wow...password problems for over a year? Kinda says it all right there...?


"I love this site but it does get tedious when it refuses to admit it was wrong. Just 3 weeks ago when gold was at 1913 it proclaimed 2500 was a few weeks away. More like 1500!! And don't give me any BS about margin hikes and the rest. All commodities are down."


" I am Libertarian and my economics are Austrian and I am 100% gold for 3 years. So go f yourself and stop thinking you know anything about me you pos."


And yes, we know you...and all the others like you...

Mon, 09/26/2011 - 08:51 | 1710523 KingOfMilwaukee
KingOfMilwaukee's picture

Unlike you, who seems to be fearful of any idea that does not fit into your rather small world, I am capable of accepting that ZH was flat out wrong on its prediction of "2500 gold within weeks" and at the same time be quite happy that I have been 100% gold since 2008. I, unlike you, do not feel the need to only think in a one dimensional way to keep myself from needing meds and questioning myself. I have something you do not... conviction.

Mon, 09/26/2011 - 09:41 | 1710782 philipdybel
philipdybel's picture

OMG, I've been having the same password problems too!!!

Where it says "Password: *", do I type "password" -- or just make something up?

I'd really appreciate if Tyler or someone computer savvy would help me out with this one...

Mon, 09/26/2011 - 08:40 | 1710497 Dapper Dan
Dapper Dan's picture


Is it "normal" for gold to move $100.00 up or down in a 4hr time frame?

My poor grammar (not gramma) is well known on this site,

yours seems deliberate, also we don't spell out 'powers that be" we use PTB or TPTB.

Mon, 09/26/2011 - 08:45 | 1710508 KingOfMilwaukee
KingOfMilwaukee's picture

I will catch on. I would change things now but I am too busy bashing Keynesians on HuffPo to change it.



Mon, 09/26/2011 - 07:36 | 1710344 D.O.D.
D.O.D.'s picture

What's up with AAPL?  Anyone got any news, I would think that with the /es up, apple would be rocketing.. but au contraire mon fraire...

Mon, 09/26/2011 - 07:41 | 1710350 reload
reload's picture

  Its just Robo lightening up a bit to load up on some cheap PM`s

Mon, 09/26/2011 - 07:43 | 1710354 D.O.D.
D.O.D.'s picture

I dunno... smells like a lawsuit...

Mon, 09/26/2011 - 08:35 | 1710476 LongSoupLine
LongSoupLine's picture

people aren't eating them fast enough.

Mon, 09/26/2011 - 07:38 | 1710346 LookingWithAmazement
LookingWithAmazement's picture

Armageddon - gold down.

Mon, 09/26/2011 - 07:38 | 1710347 Rockfish
Rockfish's picture

Damn, fell asleep after watching football and bunch of beers missing that 1550 au. 

Mon, 09/26/2011 - 07:43 | 1710351 Kina
Kina's picture

Wow, markets are absolutely and totally fake. Grand manipulation extreme.



Mon, 09/26/2011 - 08:52 | 1710524 LongSoupLine
LongSoupLine's picture

Fake!?!?  get with it!  These are price discovering capitalist exchanges vital to our economic balance, prosperity and survival.

Fake? if you'll excuse me, I have some real fighting to know...WWE.

Mon, 09/26/2011 - 07:43 | 1710352 toothpicker
toothpicker's picture

Short term gold is down. Good for us who know a game is more than one half

Mon, 09/26/2011 - 07:46 | 1710353 Zola
Zola's picture

Again troll posters on this site bashing gold. Probably dont own any, have no clue to value it and dont understand history or fractional leverage of gold claims. Useless to argue with these people. Let them sit in cash. Unfortunately when the shit hits the fan and the currency gets printed into oblivion, these kind of people always look to government to fix the problem and give us dictators or genocidal maniacs. 

Mon, 09/26/2011 - 07:57 | 1710370 PeterB
PeterB's picture

Since when did this site become a strickly pro-gold site? Gold is merely a barometer of paranoia of which this site has plenty of. I'd suggest you turn some of yours into cash so that you don't end up a hypocrite govenment dependent

Mon, 09/26/2011 - 08:01 | 1710398 Kina
Kina's picture

Gold is merely a barometer of paranoia

Is why China, South Korea, Thailand, Russia, Paulson, Soros etc etc got into it...why central banks are net buyers and why TPTB take turns in trying to crush it???



Mon, 09/26/2011 - 07:48 | 1710361 phi-in-the-sky
phi-in-the-sky's picture

It's just a big misunderstanding BNP chief Pérebeau said: we can mark to model if we want to, it's in our culture. You fools lack culture.


Mon, 09/26/2011 - 07:51 | 1710362 DosZap
DosZap's picture

Gold will be at or above $2k before year end..................

Don't believe me, ask JPM.

Gotta get the Defationary crap out of the way first.(or start printing like fools to KTC one more time to salvage it).

Crank up the presses.

Mon, 09/26/2011 - 07:56 | 1710369 unky
unky's picture

No matter, the silver inventory of Germany largest dealer (proaurum) is now almost wiped out. Even no Maples anylonger.

Mon, 09/26/2011 - 07:57 | 1710372 Kina
Kina's picture

DAX up 4% Why not after all Germany will have to eventually bail out the entire EU or ... let it sink.... Its all good, no wonder the DAX is zooming. Makes sense.

Mon, 09/26/2011 - 08:02 | 1710399 The4thStooge
The4thStooge's picture

How long before equities OD on hopium? Apparently it still gets em high.

Mon, 09/26/2011 - 08:03 | 1710400 Mr_Wonderful
Mr_Wonderful's picture

Looks like nerves are very frayed out there.


Shares in Eastman Kodak fall 14% premarket after the firm announces it borrowed $160 million against its credit line for "general corporate purposes".

Mon, 09/26/2011 - 08:22 | 1710461 Peter K
Peter K's picture

Heads Up Tyler,


Something you might have suspected, but couldn't put your finger on :)




PS: The parallel of the Eurosceptics to the Tea Party/GOP is delicious :))))))))


Mon, 09/26/2011 - 08:47 | 1710514 KingOfMilwaukee
KingOfMilwaukee's picture

Poor John Paulson. The only position he has that was up is taking a beating. Gotta figure he is losing assets faster than Greece.

Mon, 09/26/2011 - 09:02 | 1710562 ivars
ivars's picture

Faber is right, for gold, the price will go up now, as it rebounds quite sharply, though not higher  than 1800 in November,  for a few months till March 2012,  or so when it will fall again back to 1600. For silver, on other hand, the corridor till Q2 2012 is pretty flat- 25-32 USD- but then it may start moving to  reach 80-100USD. At least that is what the charts say.

Gold will however take long time to reach above 2000 USD.

Silver went to 26 on Monday, amazing! Exactly where it was predicted to land in this time in this March prediction chart(25-32USD corridor in H2 2011).:

and gold went to 1550! fantastic: Again, exactly where it was expected to be in this April prediction ( which predicted also the bubble-well I expected it to be there in November) - down to 1500-1600 in November 2011.And I expected bubble and crash in October- it happened in September..

Mon, 09/26/2011 - 09:39 | 1710774 Peter K
Peter K's picture

Obviously another ZeroHedge satisfied customer. Clip below.

Just kidding:)

Mon, 09/26/2011 - 09:48 | 1710837 wuzetka
wuzetka's picture

Can anyone tell me why a greek default automatically means Greek exit from the EZ? Defaulting on debt and staying in the EZ would really be a good outcome for the Greeks, they could use any money left to buy back outstanding bonds at market prices and lower their current debt burdens

Mon, 09/26/2011 - 10:20 | 1711017 Dingleberry
Dingleberry's picture

Because it's not about the greeks, it's about the germans and french banks.  The main reason the EZ let greece in was so they could borrow and buy german shit. Now they can't do that, and they are about to screw over the german banks. BIG TIME. So no EZ for them!!! They won't have the economy required for membership. The EZ just doesn't let anyone in the club.....

Tue, 11/01/2011 - 04:50 | 1831026 karmete
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