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You Can’t Spell Tooth Faeries Without EFSF
From Peter Tchir of TF Market
You Can’t Spell Tooth Faeries Without EFSF
Well, actually you can, but I guess that is my point. We have been reacting so much to headlines there has been no focus on details. Even the political farce in Greece drew attention away from the real problems.
If anyone had told me that by the end of the G-20 meeting all we would have is a vague concept of a 3 pronged EFSF where none of the prongs have been explained, an IIF “haircut” plan that is still being developed, no strong commitment from the G-20, and some extremely bizarre politics in Greece, I would have laughed – and I am bearish! I didn’t think they would have a workable plan, because I don’t think anything other than printing money or default will work, but I thought they would have something concrete on the table by now.
The EFSF reminds me of the tooth fairy – there are those who believe because they are told it will work, and those who try to figure out how it will work, and come out on the non-believer side. This week, we are supposed to start seeing some real details, although they are already down-playing that.
The prong that lends money to Greece, Ireland, and Portugal, so that they can pay back the people who lent them money in the first place, should be pretty straightforward. Borrow money in the markets, lend it to those countries, those countries pay the banks that own their debt, so that those banks can buy more EFSF bonds, the next time EFSF has to lend money to the PIGs to pay back the banks to free capacity to buy EFSF bonds – straightforward doesn’t mean it isn’t bizarre.
The prong that is going be used to “recapitalize” the banks is somewhat irrelevant. They will be embarrassed to admit what great terms they are willing to buy equity stakes in banks. Regardless of how good the terms are, the banks will only use it as a last resort, in the hopes that the ensuing rally eliminates the need. If this money is ever used, it will be only in a panic, as the crisis gets worse, and the banks then come to “demand” the money that was set aside for them at the worst possible time for the countries. They won’t take this money while we are in rally mode, or even if the markets are just stable, or so long as they hope another bailout package is coming, because why dilute your deferred comp when you have a free put.
The leveraged EFSF is the best part of the “story”. They have no clue how to execute this part. As we wrote the other day, they can’t do a CDO because there is no diversity in assets. They can’t do a proper “wrap” because if there is a loss on an underlying bond, it will almost certainly be greater than 25% thus causing the “wrapped” bond to have a loss regardless of whether the “wrapper” honors their commitment – which isn’t certain. The leveraged EFSF is not a €1 trillion bazooka, it is €250 billion of binary CDS, that someone (Regling? Merkozy?) hopes the market will hoover up. I wouldn’t be surprised if they try and revert back to the bank plan later this week, as they realize the “wrap” doesn’t do much. Only then will credit investors, if not the politicians, see that the EFSF as a bank strategy has just as many problems.
So the EFSF is offering €250 billion of binary CDS in some form to entice the market to buy €1 trillion of Spitaly paper. I think Greece, Ireland, and Portugal are too far gone (the bonds trade at such a low % of face) that first loss protection does little to help them get new deals done. The first prong will have to suffice for them. While the bulls are all eagerly anticipating this tide of liquidity they are ignoring the fact that the EFSF pulled a deal this week! They were supposed to do €5 billion of 15 year bonds, which became €5 billion of 10 year bonds, which became €3 billion of 10 year bonds, which because a statement saying the deal was pulled because of market conditions. For clarity, these are straightforward, non-leveraged, EFSF bonds, where 3 similar issues already exist, and the deal was pulled! I am sure it was a matter of price, but still, how well does that bode for their bigger and far more convoluted scheme?
If it was over price, what price or yield does the EFSF think it should get? The Dec. 2016 bond yields 2.63%. French 5 year paper is trading at 1.97%, so it is a spread to France of 66 bps. That is a bit more than I would have expected, but doesn’t seem irrational. Germany yields less than 1% in 5 years. Does the EFSF expect to trade like Germany? Germany covers less than half of the useful (AAA) guarantees. The average should, trade more in line with France, but even then, there is always a haircut for structure. Is France more likely to default on French government bonds they issued, or EFSF notes? Without a doubt, the actual bonds issued by the country should trade tighter than something backed by a complex guarantee. The EFSF has massive amounts of new issue to do as well, so that will impact the price or yield they should expect. I think France + some spread is where EFSF will trade for now, 66 bps might be a bit much given how wide France is to Germany, but I think it’s in the ballpark. I have this feeling EFSF and the EU have completely unrealistic expectations where EFSF bonds should price. The EFSF 10 year bond yields 3.4%, compared to 3.04% for France and 1.8% for Germany. Again, that doesn’t seem an unreasonable price (and even the GS CFO, when complaining about the price of their CDS on their earnings call, mentioned that you can’t argue with the market price).
I think the EFSF and EU got it completely wrong on where the EFSF bonds should trade. Wait until they see how little benefit they get on a partial loss wrap on Spanish and Italian new issues. In my view, for the EFSF to be truly successful, it should focus on the 10 year maturity. If they shift to 5 year financing, it is helpful and is at least in the “sweet spot” of credit trading. Resorting to 2 year funding smells of desperation. There is now even talk about creating some EFSF money market paper. By heading down the path of short term funding with constant rolls, the EFSF would be adding a liquidity problem to the solvency problem. The market may cheer the reduced costs of borrowing in the short term paper, but that is a desperate act and a horrible solution in a world where there is no backstop beyond them. If they cannot roll the debt, then what? To “solve” the problem, or at least kick the can down the road, the EFSF needs to be helping countries extend maturities. Lending long and borrowing short is a time proven strategy for disaster, especially for leveraged entities!
I really do believe that the 5 year point is where they should focus. The markets are too choppy, that developing policy around 10 year financing is too hard right now. Shifting to 2 year, or even worse, to the money markets, is a recipe for disaster.
Just focusing on 5 year yields, shows how much work is yet to be done. Since the end of September, stocks have staged a great rally, yet, from a credit standpoint, the problem has gotten worse. EFSF, Italian and Spanish yields are significantly higher. The ECB has been buying and that has failed to staunch the bleeding. The ECB cut rates, and that too failed to solve the problem. The Italian 5 year bond started the week at 5.73%. It was trading at 6.13% right before the ECB rate cut, it dropped to as good as 5.82% (picking up the rate cut and more), but failed to hold that level (in spite of alleged ECB buying) and finished the week at 6.19% (just below the highs of 6.26%). This is a clear signal that Italian 5 year bonds are not rate instruments, but credit instruments. The ECB can continue to employ policy tools that help countries that trade as rates – Germany, France, Holland, etc., but it is not affecting Spain and Italy, because the credit risk is real, and 25 bps (or even 100 bps) on the short end ECB financing rate, is not enough to offset the fear of default and the losses from that.
We saw it in Greece, we saw it in Ireland and Portugal, and now we are seeing it in Spitaly. Outright yields are going higher, and are not responding to traditional interest rate policy tools. The curves are flattening. The Italian 2 year hit a yield of 5.4%. That is extremely high for 2 years, and is actually relatively flat to the 5 years considering the overall rate levels. It is also higher than it was Thursday prior to the rate cut. If the 2 year bond of a country is not a transmission mechanism for central bank rate cuts, than what is?
The rate cuts should at least affect the good countries, and that should translate into a savings for EFSF. In principle that would work, except German 2 year yields are already only 0.4%. Clearly they are not trading at 0.4% because of some carry trade with ECB rates at 1.25%. That is the problem, the good countries already trade inside of the ECB overnight rates, so the benefit is marginal, and the bad countries are no longer responding to interest rate policies because they are credit products. EFSF gets no real benefit, and as the complexity and self-referencing financing nature of the whole program gains attention and the potential political problems when it comes time to pay become more apparent, the premium of EFSF to France will increase.
Lost in the shuffle this week is the fact that there still is no IIF plan. No definition of what an NPV haircut is, or how much EFSF support is going to the banks as part of this “haircut” and which prong of EFSF money this will come from. Merkozy can complain about Papandreou backing out of “the plan” but honestly, don’t you think he should have been given a plan? A vague promise by bankers of a 50% NPV haircut so that Greece can achieve 120% debt to GDP in 9 years, doesn’t sound that great. I don’t believe Greece was on board with any plan, and probably haven’t even seen what it will look like. Once the IIF comes up with their plan, I suspect some people will be disappointed – Greeks and the taxpayers of countries that see more money going to banks, rank right up there as candidates to be disappointed.
What I have finally seen, is some actual discussion of what default would mean. For all the talk about “Greek Default” very little serious work has been done on it. The instant reaction is “horrible for Greece”, “stone ages”, “togas and sandals”, “hyperinflation”, etc., yet as some analysis starts to come out, more and more is showing that Greece could have a much better debt burden while retaining core state assets if they head down the path of default or repudiation. After the initial nasty comments that came out of European leaders forced Greece back on the “path”, more reasoned voices are coming out – slowly, but at least starting to come out. If Greece defaults, would they even have to give up the Euro? Important leaders have said they would, yet there is no mechanism to force them, and would be a great way for Greece to wipe out its debt and not experience hyperinflation. If Greece left the Euro, could it remain in the EU? There are 17 countries that use the Euro, but 27 in the EU, so it would seem possible that they could leave the Euro but remain in the EU. That too is only starting to be discussed. The initial headlines were all about – don’t pay and get kicked out and starve, but the reality is likely much different and probably much better for Greece.
The EU leaders may be able to stop this line of thinking, but as people get over the initial “shock and awe” of the word “default” they are realizing it is not the end of the world for Greece and may in fact be the fresh beginning they need – Argentina and Russia might be better examples than Zimbabwe.
I am not sure what exactly has happened to the Greek government. So far, it is being interpreted as positive because they will go along with the plan. I guess that is the case, but I find it hard to believe that the people will be pleased that the referendum was taken away. I think as they also start seeing proper and reasoned arguments against accepting the terms being forced on them, the level of dissent will grow. There were no tanks rolling into town squares to send the people back to their homes in fear, but enough has potentially been done to turn the tide of the people against the politicians. I don’t think we have seen the end of dissent in Greece, and if anything, I would expect it to become more vocal, and supported by more facts about what Greece could do, rather than just fear mongering of default and fewer summit invitations.
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TooEFSF Faeries slip IOU's and derivative liabilities under pillows.and they want to slip in Germany's GOLD!
http://www.handelsblatt.com/politik/international/euro-retter-wollen-gol...
I've been under the impression, after observing for years, that nothing ever comes out of G20 meetings.
it's not we see, that the G20 is really about! wide screen TV which is used to teleconference with their masters. G20 is handed info and instructions of their upcoming duties, a script if you will, with parts to be memorized and played to the sheeple. you all don't think that they laugh, at how gullible and stupid we all are, to fall over and over again, for the same ruse to screw us over? it is they that have the popcorn!
Thats a great idea for a SNL skit.
Based on the flurry of headlines the last 24 hours, ES should be lock limit down Monday morning.
We'll have to see if the world is really on the brink of an all out collapse, or if all this news is just overblown hysteria.
IBD is still under a buy signal, but now changed its outlook to "Rally Under Pressure"
I hope Bulgaria itself isn't trading on this bs. America's already running a dozen countries. I'm not sure we can handle anymore!
I hate weekends where everything is gloom, doom and nastiness. They inevitably lead to rallies. It's almost as bad as having Goldman, Citi and Cramer agree with one's bearish position. Oh, come to think about it that's exactly what it is.
I don't sense any "overblown hysteria." It seems like 'same shit, different weekend' to me.
Usury and fraud. Banksters call it prosperity.
Short of German tanks what could stop them from using euros? How many countries use US dollars as their currency? It does lead to an elegant solution. Stupid lenders lose their money and stupid borrowers have to stop borrowing.
Everything bodes well in Finance Fantasyland where Fiscal Faeries do whatever they want including riding skittle-shitting unicorns.
hey, Big_C-!
peter t. laments that nothing concrete is on the table. but what if the table is concrete?
news this past week indicated that if germany has one iota of sense left, they will put up a new berlin firewall and try to protect themselves from the commies and socialists, including china
doug noland [PrudentBear] indicates the slippery slope, here:
November 4 - Bloomberg (Gabi Thesing and Jeff Black): “German factory orders unexpectedly plunged in September as demand from the euro region slumped, adding to signs the region’s debt crisis is damping growth in Europe’s largest economy. Orders… fell 4.3% from August, when they dropped 1.4%...”
November 4 – Financial Times (Simone Meier): “Europe’s services and manufacturing output indicator fell the most in three years in October, adding to recession signs… A euro-area composite index based on a survey of purchasing managers in both industries fell to 46.5 from 49.1… That’s a 28-month low, the sharpest drop since November 2008 and below the estimate of 47.2…”
November 2 - Bloomberg (Rainer Buergin and Brian Parkin): “German unemployment unexpectedly rose for the first time in more than two years in October and manufacturing contracted as pessimism mounted among businesses in Europe’s largest economy. The number of people out of work rose a seasonally adjusted 10,000 to 2.94 million… Economists forecast a decline of 10,000… The adjusted jobless rate rose to 7% from 6.9%...” (end paste-my emph)
speanking of teutonics, whatever happened to frankNstein? i hope it's nothing more serious than just being in the cooler...
Stuttgart's increasing unemployment has me really worried. Will there be enough Porsche parts to satisfy WS demand?
SPITALY paper. God this is so funny. Only traders can come up with this shit. Lol
How long till all markets realize the EFSF cant work the way intended?
Any time you fight the market you eventually lose. Do the Eurocrats believe that 250 billion in losses (the first loss insurance is guaranteed to drain that 250 billion. It is just a nice way to hide a subsidy.) will stabilize sovereign bonds and make them do tricks like a trained pony?
Reading ZH for almost an year, I have to say that this article is caveman grade drivel. Where do I need to go, to get back the 3 minutes of my finite life I wasted reading this crap?
are you a sock-puppet?
I think more like a prophylactic-puppet.
You don't get it. A badly constructed article is still bad even if it favours your bottom line, your shorts or makes you feel warm and fuzzy inside
Somebody...Please give "Wipeout2097" a hug and tell him it'll be ok.
He's scared!...Running from site to site, looking for an answer.
Tyler, ignore him...I know why I'm here!
YOU'RE THE BEST!...SECOND TO NONE!!
A reasoned counterpoint to the article would be interesting. I suspect you cant provide one.
It's not a matter of counter-point, he can speculate whatever he wants. I'm just personally fed up of reading no-news, content free opinions, rehashing, and distractions.
yeah, have to hate actual facts and observations that have time and again proven correct....
Wipeout,
News flash! Once you start an article you don't have to finish it.
Wipeout you've left a stain please clean it up
Is that you Mr. Draghi ? Or do you still get to use GS interns ?
All is well on this side of the pond! Freddie Mac ONLY lost $4.8 billion in derivatives trading last quarter. Watch the hillarity ensue when they try to hedge increases in interest rates!
A Closer Look at Mac’s Q3 Earnings of -$4.4 billion: Derivatives Losses of -$4.8 Billion and Lower Mortgage Insurance Recoveries
http://confoundedinterest.wordpress.com
We are on the road to Europe in a serious way.
Do you see a yellow or brown brick road?
snake_ize keeps putting up the same post & link
cobblestones? mud? would you like to borrow the canoe?
Total loan loss provision is less than 3%????? Is that supposed to be a joke?? The only way that would be true is if it is net of taxpayer support!!!
It would take a real auditor about 5 minutes to blow these supposed financial statements apart.
The ECB is going to print. Prudent German savers will be sacrificed on the wheel of the European project. Germany can not let too many of the weak southern countries simply leave the Euro or Eu because the resultant Euro strength would kill their increasingly fragile exports.
The politicians and bankers are looking at the US and thinking, they seem to have got away with it - we can too. And in the sense that the status quo is completely unchanged the US has got away with it.
If greece does a disorderly default then the French Banks and a few German ones go bust. Greece will not be allowed to do a disorderly default like Iceland. They know they hold a decent hand and have not yet finished playing it. Potugal and Ireland are waiting to see what they get and will demand similar largesse. Spain is a tinderbox, horrible unemployment and a dire propperty bubble hangover. Things could get nast in Spain fast.
Italy is next up - but in fact a lot of their debt issuance is held internally and their population is not maxed out on credit. They have an efficient beaurocracy - who get on with running the country while governments come and go.
France and the UK have been living WAY beyond their means for decades and have monstrous banks struggling to reign in out of control ballance sheets. It may be too little too late, but the UK is printing and will print as much as it takes to keep its banks afloat in an attempt to maintain `the City`where 10% of GDP is `produced`. The lower the GBP goes the better as far as the government are concerned. It wont help with the totaly unfunded welfare payment with are linked to inflation, but that is tomorrows problem.
Who the hell would be suprised that there was litteraly NO demand for EFSF bonds, when it is pretty clear that every option to get them underwriten or backstopped has failed. Failed in the sense that the maths still does not add up.
Its going to be printing, and on a binlical scale. But as the savings, of anybody at all with savings, are consumed by inflation, the bastard politicians and bankes will say "we tried everything, there was no othe solution, but for the good of our citizenery we now have to take these special powers to ensure their safety"
sadly, that seems to be the way...print..print..and print...rich happy...poor screwed and middle class become poor....god forbid some defaults and punishment for those who got rich on what turned out to be bad decisions.
I get the sense that everything that has happened since 2000 internet bubble has been a delaying tactic. And the only game they know is bubbles.
A lot of people say the bubble game is over now since debt levels are already too high. Maybe.
So now all we are left with is slapping band-aids on the old bubbles and praying that something (China?) saves the entire world. Europe right now looks like a guy tied to a railway line who needs to cut off his legs or get killed by the oncoming train....there is no happy solution.
My e-mail address is changed. Can someone please tell me how I could convey my new e-mail address to zero hedge? Also how do I change my handle?
Thank you,
When logged in, click on 'My Account' (upper right, near where it says 'Welcome' to you) and then click on 'Edit'. You can change your e-mail address there, or add or change avatar.
But changing the handle I think is not do-able ... would be unfair to most users if site trolls could just change their handles every day.
Thank you.
Latest developments: ECB wants to confiscate German gold stock.
The governments of France and Germany are planning an attack on the independence of the German Bundesbank. They target at its reserves of gold and foreign currencies which have accumulated over decades. This reports the Frankfurter Allgemeine Sonntagszeitung, citing negotiating groups of the G-20 summit in Cannes.
http://tinyurl.com/3dn4596
Germany is supposed to have about 3500 tonnes of gold....which is about $200 billion (crazy fiat money) I think at today's prices.
Can't help but think if things get out of hand that the value of this asset will increase rather dramatically. When you have the Europeans throwing around $1trillion like nothing it makes you wonder.
gold @ ~ $9k oz. = trillion$$$
so where does inflation go -
'n' da "Relic Bin"
So, the ECB is going to kindly ask The Bernank to change the placard on the cage in the NY Fed's basement from "Deutschland" to "Dreamland"?
I'd focus on the CME move and the negative multiplier effects deleveraging will have on the system. Debt deleveraging is an O(n)^2 shock, which will break alot of links in the network. ie cascading collapse.
If I'm understanding it correctly, the CME has disallowed leveraging from margins, in all positions? I must have misinterpreted, because if they did that, it would surely lead to a systemic collapse.
After they've exposed their books. I wonder how much of a risk whore MF Global was. Were they leverage more than 40:1?
Mr Tchir, cannot thank you enough for these great articles!
What i find extremely funny and yet extremely disturbing is this:
Like it was shown in an earlier post here in ZH, the Wall Street "experts" thought this is automatically bullish, especially for equities. Really? What good has been done by imposing these "plans" over Greece, Portugal and Ireland? These three economies, esp Greece and Portugal, are struggling for their existence and are actually getting worse. These "plans" have done no good for these countries, quite the opposite. Yiels are sky high despite bailouts and ECB buying. GDP's dropping, deficits even getting WORSE than before bailout, debt burden going up. Loss of sovereignty to faceless bureaucrats from EU/IMF/ECB, destruction of the social fabric, poverty, unemployment. You name it they got it. And these "plans" def haven't stopped the imo natural course to the next weakest economies getting under the radar of "markets". And why in the earth should these "plans" have nothing to do with that. The "plan" is nothing more nothing less than more debt on top of the old debt which cannot be paid.
I agree that these plans are terrible, but I cannot feel sorry for a country that still allows itself to be governed by the same gang of crooks that got them into this mess in the first place (and enriched themselves at the same time).
Everywhere I travel in southern Europe they have brand new infrastructure everywhere (and still are working on projects). In Italy they had a program where the state would pay to completely renovate buildings (inside and out) if the building was in a earthquake zone....even paying for your rental costs while the work was being done. In the town we stayed in a few years ago the skyline was filled with construction cranes as people rushed to meet the deadline. Most of the buildings were at least 200 years old...sadly the interiors were sort of ruined as they looked like modern apartments on the inside after the work was done.
So, if any of these bankrupt countries do leave the Euro so they can default/inflate away their debt burden who do you think will benefit? The same crooks.
Bottom line, people need to clean up their own screwed up systems (including US, UK etc) before there is any solution that will really work in the long term.
>>I agree that these plans are terrible, but I cannot feel sorry for a country that still allows itself to be governed by the same gang of crooks that got them into this mess in the first place (and enriched themselves at the same time). <<
Where exactly IS this magical Utopia of yours?
deleted
Look, Faeries only has one F in it. Count em - one F. EFSF has two - count em - two F(s)
I am really disappointed to catch you double counting Fs.
LOL, it is better than CNBS making stocks go up on the hope that EFSF will work, when it won't!
Just say it 'Toof Faeries' and it'll all work out.
Yes, Peter Tchir here is very good on Europe and Greece. Quite worthy of being a regular on ZeroHedge.
Some gems above from Tchir:
« Merkozy can complain about Papandreou backing out of “the plan” but honestly, don’t you think he should have been given a plan? ... I don’t believe Greece was on board with any plan, and probably haven’t even seen what it will look like ... Greeks and the taxpayers of countries that see more money going to banks, rank right up there as candidates to be disappointed. »
« If Greece defaults, would they even have to give up the Euro? Important leaders have said they would, yet there is no mechanism to force them, and would be a great way for Greece to wipe out its debt and not experience hyperinflation. »
Tchir is right they can't be compelled to 'stop' using the euro. Several countries use the euro already as their main currency, without being a Euro-zone member: Andorra, Monaco, San Marino, Vatican City, 4 out of our 5 European 'mini-countries', the other, Liechtenstein, similarly 'borrows' the Swiss franc, now pegged to the euro. Not to mention businesses in other countries, plus various global mafias, freely using the euro as well. Greece could easily be a dual currency country, with the drachma and euros also accepted.
Tchir of TF Market Advisors also writes:
« I find it hard to believe that the people will be pleased that the referendum was taken away. I think as they also start seeing proper and reasoned arguments against accepting the terms being forced on them, the level of dissent will grow. There were no tanks rolling into town squares to send the people back to their homes in fear, but enough has potentially been done to turn the tide of the people against the politicians. I don’t think we have seen the end of dissent in Greece, and if anything, I would expect it to become more vocal, and supported by more facts about what Greece could do, rather than just fear mongering of default and fewer summit invitations. »
Spot-on. I still wonder if Papandreou was secretly fomenting populist revolution from the inside, by putting out the referendum plan for the brief time he could hold it there, knowing that once the idea was out there it could never be bottled up again.
I read somewhere that he was planning his obituary. This way, if the plan is a disaster, he can argue that he tried to bring it to the Greek people. And if it works out, no one will care so much and he can take credit for delivering the plan. Thought it was a very good analysis. Also a sign that he doesn't really believe it will work.
Webster Tarpley on his World Crises Radio June 4, 2011: Why don’t you create a debtors club since they call it ‘Club Med’. Allright fine the Europe ‘Club Med’. Let’s have a debtors club. A club of the outsiders. The Greeks, the Portugues, the Spain, the Irish. Maybe the Italians can join? There maybe some Easterners? The Baltics might wonna join?
A Debtors Club because of couse the creditors are organized in the Club of London and the Club of Paris. You need a debtors club to say: “You’re organized, quess what? We’re organized too. You have a syndicate, we have a syndicate. You have a kartel, we have a kartel and our policy is: We can’t pay! So, cut those debts and whipe out all the derivatives.” That’s gotto be the key demand.
0 - FORCE MAJEURE! – Call Void All Bankster Bogus Derivative Debts! Because paying off these trough fraud induced debts have become a technical and practical impossibility.
This sounds like a tiny ray of hope. Greece takes the hit and the infected wisdom tooth is extracted giving the mouth a small chance to heal. If that can happen and they get a workable model (with a small “civilized population”), then maybe other piigs could follow. This could be a good place to start with the austerity. If they can figure out a way to control the population and situation, then maybe expand it. If the thing blows up, then then then what.
Desperate times create desperate people. Flipping through the pages of history can give a view of why the “leader #^&%@” are in such a quandary about facing reality and dealing with it. Calling for an election in Greece is a fine example.
These are times that have created leaders of last resort that have, well look at history.
People in the street, results in boots on the ground. figure it out
The main issue that every one avoids that when the EFSF insures the first 20 to 25% of the SpItalian bonds; what does that imply for the exisiting SpItalain bonds that are not insured? If I hold such bonds, the first thing I would do is to short them as fast as I can because there is better bonds in the EFSF.
So when these bonds kick in (no wonder they could not sell them last week); it is like run on the banks, but this time it is like a run on the SpItalian Bonds
Geraten größere Staaten in den Strudel der Schuldenkrise, droht der EFSF an seine Grenzen zu stoßen. Darum wollen die Euro-Retter zu ungewöhnlichen Maßnahmen greifen - und notfalls den deutschen Goldschatz verpfänden.
Goldbarren der Bundesbank sollen den Euro sichern. Quelle: dpaBerlinDie Regierungen Deutschlands und Frankreichs planen einem Zeitungsbericht zufolge wegen der Schuldenkrise einen Angriff auf den Goldschatz der Bundesbank. Mittels der seit Jahrzehnten aufgebauten Gold- und Devisenreserven der Bundesbank solle die Haftung Deutschlands in der Krise um mehr als 15 Milliarden Euro erhöht werden, berichtete die „Frankfurter Allgemeine Sonntagszeitung“ unter Berufung auf Verhandlungskreise des G-20-Gipfels in Cannes. Auf diesem Wege solle der Bundestag umgangen werden. Hintergrund sei, dass die Feuerkraft des 440 Milliarden Euro schweren Euro-Rettungsfonds EFSF nicht ausreichen werde, sobald größere Staaten ins Wanken kämen.
Vorgesehen sei offenbar, dass sich die Europäische Zentralbank (EZB) des Goldschatzes bemächtige, schrieb die Zeitung. Unter den Staats- und Regierungschefs in Cannes sei darüber beraten worden, das System der Europäischen Zentralbanken mit seinen Devisenreserven in Höhe von insgesamt 50 bis 60 Milliarden Euro in Form von Sonderziehungsrechten des Internationalen Währungsfonds (IWF) an eine Zweckgesellschaft des europäischen Krisenfonds zu verpfänden. Als „Erfüllungsgehilfin“ habe sich die EZB angedient. Offenbar seien bereits politische Vorschläge ausgearbeitet worden.
Die Bundesbank beharre jedoch darauf, dass die Sonderziehungsrechte ihr gehörten, berichtete die Zeitung. Wegen des Widerstands der Bundesbank sei das Thema in Cannes zunächst wieder vom Verhandlungstisch genommen worden. Schon am Montag solle die Euro-Gruppe jedoch abermals darüber beraten. Verbündete unter den anderen Notenbanken habe die Bundesbank nicht, und Bundeskanzlerin Angela Merkel verhalte sich uneindeutig.
Max Keiser: “The bulk of Germany´s national gold is not in Germany and has not been since the 1960s.”
Peter Boehringer, head of Germany’s precious metal society: As max and Dimi have already confirmed: It is no secret that the bulk ok Germany´s national gold is not in Germany (and has not been since the 1960s when Germany has earned most of the gold through its trade surplusses) but in NYC and London and a little bit in Paris, too. Even the Bundesbank itself has confirmed this part of the story several times – and “defended” that storage policy with “reasons of trading convenience and historical storage custom”… As far as [just] GERMANY´s gold is concerned, we are however talking about close to 3,400 tons, not 6,000. Germany should end the secrecy and bring its gold home http://news.goldseek.com/GATA/1318256526.php
This is a fucking Götterdämmerung.
We havent allready a peace treaty so we are not an independant state.
But our fuckin Gold is in New York and London.
So they can do what they want with it.
What a joke.
All Germans should go on Generalstreik.
But with this move to grab the Gold I think they have awakend the whole population of Germany even the dumbest idiots know now whats up.
Now 100% of us want out of the EU.
Angela is dead.
Ja ja die Gute, Alte, namens Angie!!! Wer will sie jetz noch waehlen?!? Ich denke wir werden in ein paar tagen einen COLLAPS sehen!
Fuck the banchero thieves and their political cronies, in the streets and fuck em all!
All that's happening is predictable, as there are 7 stages that every major economy goes through. Those who know how it works profit & massive wealth is transferred to them. Several months ago I learned this information from a millionaire whose site I found & am sharing it with everyone I know.
His free video
"How To Create Incredible Wealth in Today's Economic Crisis"
is at:
http://theelevationgroup.net/presentation/register.php?a_aid=160667&a_bi...
Hope this info helps everyone as much as it has me.
Dr. Nancy
check out this ad-bot's posts! all the same!
worse than ori! fuking trolls, BiCheZ!
... & I was told that Gold was so UNimportant :
G20: German Bundesbank should deliver gold to the ECB
http://translate.google.com/translate?sl=de&tl=en&js=n&prev=_t&hl=en&ie=...
http://www.mmnews.de/index.php/wirtschaft/8817-g20-bundesbank-soll-gold-...
+ Handelsblatt :
Euro-Retter wollen Goldreserven der Bundesbank verpfänden
http://www.handelsblatt.com/politik/international/euro-retter-wollen-gol...
I am sure that no one is sure what the outcome a Greek default would mean for Greece or the world. It would not send Greece back to the Stone Age or some other ridiculous consequence . . . but I would be hesitant to say that it would be "okay" for Greece--it is neither Russia or Argentina nor is this the late 1990s or early 2000s. As to plans for Greece and the EFSF, I am fairly confident there are myriad plans with an abundance of bureaucratic detail, but to say what "the" plan is at this point would be premature in my opinion: flexibility is a must.
As an observation, here in Germany, most people don't give Greece much thought, as most Americans probably don't think much about California's debts.
If you have the time, please check out this patriot, or rather an interesting take on a patriot: http://bicandmac.blogspot.com/2011/10/chapter-one.html.
Still trying to find the "list"
SkyNewsBreakSky News Newsdesk
Sky Sources: 29 of world's largest banks set to fail critical safety tests unless they undertake major reforms
Here the shit list that you need to short:
http://online.wsj.com/article/SB1000142405297020380420457701778158465066...
The full list is as follows:
U.S.: Bank of America, Bank of New York Mellon , Citigroup, Goldman Sachs, J.P. Morgan, Morgan Stanley, State Street and Wells Fargo.
U.K.: Royal Bank of Scotland PLC, Lloyds Banking Group PLC, Barclays PLC, HSBC Holdings PLC;
France: Crédit Agricole SA, BNP Paribas SA, Banque Populaire, Société Générale SA
Germany: Deutsche Bank AG, Commerzbank AG
Italy: Unicredit Group SA
Switzerland: UBS AG, Credit Suisse AG
Belgium: Dexia SA
Netherlands: ING Groep NV
Spain: Banco Santander SA
Sweden: Nordea AB
Japan: Mitsubishi UFJ FG, Mizuho FG, Sumitomo Mitsui FG
China: Bank of China
Another reason why nobody really want to buy these straight forward bonds could be last year or ealier this year deal that banks had to take a 21% cut on bonds and then the EU and ECB saying now you will take a 50% cut at least and it will be voluntary and you can't call it a credit event to get insurance back on these bonds. Who's to say that if individuals buy these bonds that they won't get stuck with a deal like this also. No one wants this junk and they are slowly starting to realize that all these schemes are are just that schemes. Ways to get suckers with money to buy into this and bailout the govt. and their banks so that they don't have to face their society the fact that the nations are insolvent or at best in a depression.
So who exactly do you think "printing more money " would "work" for,,,?
“Olive Oil Crisis” – G-20 Wants Germany to Contribute Gold to the Crisis Fund – Germany Says “Nein!”
http://confoundedinterest.wordpress.com
Look at the charts of Greek and Italian 5 yr CDS as of today.
What will the craziness in Europe bring this week?
Seriously, who at the G-20 could possibly give a rat's ass about any and all of this minutae. The real issues to them are (1) how was the wine; (2) were the hor'sdervs proper and tasty (3) was anyone attending wearing any single accessory or piece of clothing that cost less than $10,000 (4) were the proper fall colors in clear view at all times and (5) who won the drunk prize. Other than that, what else is there.
Tyler and Peter, Hi,
European bankers and politicians in every country will be running for the lives, with nowhere to run and nowhere to hide, as they are asked to provide their position, which will be made widely known to the masses and comment on the following little video .... http://youtu.be/5CZr17HLH5U .....and its accompanying text ... http://consilium.europa.eu/media/1216793/esm%20treaty%20en.pdf
Their free ride is over. Now they have to pay over everything just to survive and they can kiss goodbye to prospering outrageously on their control of fiat currency, unless of course, they radically change their ways and bring in new controllers who know how to keep a virtual lid on things with their power in cyber communications to beta manage human perception. Anything less and they can expect to lose their heads, methinks, such is the unstoppable flow of information and intelligence around the world, regarding their misguided and quite decidedly rather fascist folly.
And they would only be foolishly following the Fed and Washington DC model of corrupt and perverse administration and enslavement, so one can fully expect copycat actions and major traumas in Ponzi Land USA too? And shared as a question just so that it can accommodate and feed disagreement and hubris.