Holy Sh1t....Its a Default.......all CDS now trigger !!!!!!!!!!

[Mega]

http://www.telegraph.co.uk/finance/d...ch-9-2012.html

Je sus, Monday could be a Bloodbath!

Mike

[Mega]

Re: Holy Sh1t....Its a Default.......all CDS now trigger !!!!!!!!!!

[Mega]

Re: Holy Sh1t....Its a Default.......all CDS now trigger !!!!!!!!!!

[Adeptus]

Re: Holy Sh1t....Its a Default.......all CDS now trigger !!!!!!!!!!

Raised eyebrows was certainly my first reaction, but apparently this only triggered CDS payments worth some 3.2 billion.

This 3 page document explains what happened and what will happen (according to the ISDA):
http://av.r.ftdata.co.uk/files/2012/...FAQs-03-09.pdf

Also ZH has just published a "what this really means" article here:
http://www.zerohedge.com/news/greece...where-we-stand

[lektrode]

Re: Holy Sh1t....Its a Default.......all CDS now trigger !!!!!!!!!!

Raised eyebrows was certainly my first reaction, ....ZH has just published a "what this really means" article here:
http://www.zerohedge.com/news/greece...where-we-stand

what would we do without our daily update from mr M?

i'm hopin/waitin on one of the more memorable:

".... is.... getting killed!!!!!!!"

[globaleconomicollaps]

Re: Holy Sh1t....Its a Default.......all CDS now trigger !!!!!!!!!!

what would we do without our daily update from mr M?

i'm hopin/waitin on one of the more memorable:

".... is.... getting killed!!!!!!!"

I'm holding out for the post that consists of nothing but exclamation points. The kicker would be to find out that Mr. M. was trying to tell us that he hit his thumb with a hammer.

[don]

Re: Holy Sh1t....Its a Default.......all CDS now trigger !!!!!!!!!!

I'm holding out for the post that consists of nothing but exclamation points.

+1

[don]

Re: Holy Sh1t....Its a Default.......all CDS now trigger !!!!!!!!!!

Financial Times weighs in . . .

Billions of dollars are to be paid out in insurance-like instruments as Greece on Friday pressed ahead with the largest ever sovereign debt restructuring.

However, there was a long delay over the decision by the ISDA determinations committee, which is made up of 15 global banks and investment funds, that annoyed some investors.

Uncertainty still hangs over the CDS market as an auction process to decide the amount of pay-outs may not take place for another week.

Bill Gross, who runs the world’s biggest private bond fund at Pimco, warned that CDS had been undermined by the saga. “The rules have been changed here,” he said in a radio interview. “The sanctity of their contracts is certainly lessened.”

Wolfgang Schäuble, the German finance minister, said: “Greece has today been given the chance to make it. But Greece will now have to seize this chance itself.”

In a stern message to Athens, Olli Rehn, Europe’s economics commissioner, called the second bailout “a unique opportunity not to be missed” and said: “I now expect the Greek authorities to maintain their strong commitment to the economic adjustment programme and to rigorously and timely implement the policy package.”

Greece’s lenders are mounting an unprecedented surveillance campaign to try to guarantee the government’s commitment. At least four officials from the commission’s economics department will now be stationed in Athens full time – along with representatives from the International Monetary Fund and the European Central Bank – to vet government policies.

Shedlock's opinion . . .


Greece will exit the eurozone. However, the timing is still in question.

I suggest Greek politicians will not meet increasing conditions placed on Greece by Germany and that later this month funding will be cut off triggering a Greek return to the drachma.

If so, look for enough funds to be dispersed to Greece in the next couple weeks that allow a quick round-trip to the ECB to make the ECB whole. Once the ECB is in a no-loss situation, the roof can easily cave in.

The exit trigger is cocked. All it takes is for either Greece or Germany to pull it.

[don]

Re: Holy Sh1t....Its a Default.......all CDS now trigger !!!!!!!!!!

from Zero Hedge . . .

After reading this, everyone should have a fairly good grasp of what happened not only today, but ever since the great (and quite endless) European financial crisis took center stage, and what to look forward to next...

From Chindit13

In a nutshell---okay, a coconut shell---this seems to be where we are:

1) Greece was able to write off 100 billion euros worth of debt in exchange for a 130 billion rescue package of new debt, of which Greece itself will receive 19%, or about 25 billion, so that it can continue to operate as an ongoing concern. Somehow Greece is in a better position than before, with more debt and less sovereignty and still---by virtue of sharing a common currency---trying to compete toe-to-toe with the likes of Germany and the Netherlands, kind of like being the Yemeni National Basketball team in an Olympic bracket that includes the US, Spain and Germany. At least a "within the euro" default prevented bank runs in Portugal, Spain, Italy et al.

2) As a result of the bond haircuts, Greece has many pension plans that can no longer even pretend to be viable, at least according to the original contracted scheme, but pensionholders still working can take heart in the fact that their current wages will be cut, too.

3) CDS buyers will have to sweat bullets, jump through hoops, and be forced to endure every cliche known to man, but they might end up getting something for all their trouble, provided their counterparty is solvent and that counterparty itself is not heavily exposed to an insolvent party or a NTBTF institution, otherwise known as a Lehman Brothers. Expect the legal profession to be the prime beneficiary of this "event", as any new CDS contract will be at least a hundred pages of boilerplate longer in the future.

4) Good luck to any less than AAA rated sovereign who wants to issue debt from now on out. That contracts can now be unilaterally abrogated, as Greece' bonds were with the retro-CACs, bodes ill for attractive pricing from here on out. Peripherals in the EU will suffer most, as they face the added indignity of being subordinated to the ECB at any point the ECB chooses to exercise its divine right of seniority. The thing that used to be called the risk free rate no longer exists. Bill Sharpe take note.

5) One hundred billion euros worth of perceived wealth evaporated. That can not be a good thing for a Eurobanking system already capital short, as it raises leverage (quick back of the envelop calculation) by about 6% across the board. It also will not make the interbank market any more trusting, thus increasing the likelihood of perpetual LTRO. LTRO lll looks to arrive sooner than QE lll.

6) With the drawn-out Greek event and the LTRO, Europe might believe it has firewalled the system for at least three years and limited damage to Greece and Portugal (who will likely undergo a similar default by the 3rd quarter). LTRO-provided liquidity, it is hoped, will lower market rates enough in Spain and Italy so that those countries can meet sovereign bond obligations and both service existing debt and issue new debt. When the LTRO expires in 2015, "hopefully" something called organic growth will have taken over in countries imposing severe austerity measures on their public sectors, so that debt servicing becomes easier. Organic growth obviously is something that comes in a can, a can which has been kicked out to 2015.

7) As Europe now speaks increasingly of greater EU financial integration, Sarkozy's poll numbers will be the victim and a less EU friendly individual will likely win the upcoming election. Since France and Germany fortunately have a long and storied history of being the best of friends, and no one in either country would ever pander to nationalist sentiments, this shouldn't present a problem.

8) Given how much angst was caused by the drawn out Greek affair, the Spanish leader knows he has enormous leverage with EU leadership and he can continue to do what he has been doing with regard to ignoring the deficit targets demanded/suggested by the EU. The EU might well bark at him, but they cannot afford to bite at this time. Muchos gracias, Greece.

[makimanos]

Re: Holy Sh1t....Its a Default.......all CDS now trigger !!!!!!!!!!

The CDS triggered aren't only 3.2 billion as ISDA declared and they know it. The game now is in full swing. Surprises follow.

[don]

Re: Holy Sh1t....Its a Default.......all CDS now trigger !!!!!!!!!!

from Jim Sinclair . . .

“The release made by the International Swaps & Derivatives Association (ISDA), for the average Mensa member or genius, is totally incomprehensible. The press is using the word default, but the ISDA is using the word ‘auction.’ Clearly, the amount of CDS’s outstanding is infinitely more than the $3.5 billion that is being quoted.”

“The BIS confirms, in the area of CDS’s the total outstanding is approximately $37 trillion. So I believe the reports being given about this just being a small and modest market event is false. As a market observer and having more than 50 years in the business, the real number is at least 50% or more of the existing $37 trillion that is related to Greece.

The $3.5 billion figure being quoted in the press could easily be the reporting to the US Comptroller of the Currency. For example, a foreign, non-consolidated subsidiary of a US bank, operating out of London, reports the size and kind of the over the counter derivatives to the BIS, not the Comptroller of the US.....

“KWN readers need to know that non-consolidated subsidiaries have in fact been the main issuers of over the counter derivatives.

These banks were grantors of the derivatives, some in Germany and some in Switzerland. But it is not believable that German and Swiss institutions did virtually all CDS transactions and only a tiny fraction was done by US banks. That’s absolute madness.

If in fact ISDA defines this event as a credit default and the CDS’s are brought into play, you are going to bring in significant Fed swaps which will go to the ECB. These funds will then be redirected to the subsidiaries and to the foreign banks.

Very simply, the number is not $3.5 billion. It’s some part of $37 trillion. The emergency swaps from the Fed could total in the trillions of dollars. This is based on my strong belief that the figure of $3.5 billion is not accurate.

The implications of this, if it comes to pass, are a second rescue of approximately eight international banks. Central planners would attempt to totally camouflage this and it would only be readable by tracking swaps from the Fed because the Fed is the lender of last resort.

This type of event would be the ‘meat’ by which Alf Fields would be proven right on his $4,500 projection for gold. But strictly for traders, this does not apply to investors, but for the intelligent traders, they will flatten out their positions.

If my father were still living, I could hear him telling me, ‘Go flat!’ My father Bert Seligman and his business partner Jesse Livermore would flatten out their positions because of the ambiguity that exists here. Again, this is for the traders, which is not to be confused with investors which hold positions in gold.

The bottom line is if these CDS’s are made to pay, we are looking at an inflationary hell. This is also key, whether or not this is a default, this is a revelation of the outrageous weakness in all fiat currencies.”

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/3/9_Sinclair_-_Greek_Tragedy_Part_of_$37_Trillion,_Not_$3.5_Bill ion.html