Greece

[cottonpicken]

Take it or leave it.

http://www.youtube.com/watch?v=9802NwSSS6U


Looks like Mr.Bass might take a bath.

[parsley]

If the cool Wall Streeters/Fed had taken the
advice of, or listened to, the warnings of a
woman by the name of Brooksly Born in the
90's, the world would not be in this mess. Pars

[bduke]

Cottonpicken... Similar to the MF Global situation previously reported.

Lawyers will argue on technicalities of contractual content.

Were results more influential... or predictable.. far, far fewer high risk
deals would be done.

Another risk of over the counter...OTC... deals is the unknown quantity of
the values at risk..VAR.

ISDA has only a percentage of the trading reporting...no one knows the
actual amount.

Nor is anyone insured when the counter party becomes bankrupt, and
counter party risk is Sinclair's reasoning that the ISDA will deem haircuts
"non default".

If the 5 US banks he claims are holding most of the swaps had to pay
their guarantees, they could/would collapse.

I agree that derivative dealing is is a root cause of the global financial
mess, and.. IMHO... the rating agencies are their cohorts.

Had ratings of the structured credit products, bonds and debt instruments
actually reflected the risk, the Swaps...insurance.. would have mostly been
unaffordable. Hence much fewer deals.

This global "financing" bs has allowed citizens to live far above their
affordability, and financial "traders" to live far above their "productive"
value.

IMHO...neither have produced net tangible value to their societies which I
believe is unsustainable.

Unfortunately, we all pay for this non productive nonsense.

End of rant.

Cheers... BIll

[bduke]

Parsley... Brooksley Born was appointed to the Commodity futures and Trading
Commission in 1994 by President Clinton.

She identified "swaps" as being problematic but was overruled by Greenspan,
Rubin and Summers.

However, the amount of trading and financial dealing growth was steadily
increasing and mostly without major problems.

This trading was politically rewarding Pres Clinton via pacs and high profile
support.

IMHO she was too early in her warnings... visionary indeed, but... I believe..
timing is critical to the success of prognostications and rain dances.

Had she been able to raise her concerns with her 1994 profile in 2006, she
might well have been heroic.

I could be wrong.

Cheers... Bill

[cottonpicken]

I'm not completely sure of the implications(is
anyone?)but if this what was propping up the bond
market,and now its gone because those who make
the rules are going to go broke,so they change the
rules, the entire value of the cds market is what?And
where does current and future capital of the bond
market go now?

A few weeks ago i was a key stroke away from
jumping in that pool but decided to think it over
during the holiday,glad i did lol.

[bduke]

Cottonpicken.... I doubt anyone is completely sure of the implications.

My understanding is the Credit Default Swaps were mostly purchased to protect
balance sheets because the swaps were deemed insurance.

However,the cost of insuring Greek and Portuguese bonds is apparently now
prohibitive... approaching 65% of the value. My latest info.

That is for a 10 million Euro bond the Swap cost 39% up front and 5% per year
for the duration of the bond.

These bonds are probably not being insured.

Hence the actual bond interest rates of Portugal, for instance,are rising to over
16%.

Your question of where current and future capital goes is,IMHO, to the bonds
where the market deems the real return is reasonable for the risk.

Higher interest rates in over indebted countries and much lower rates in lesser
indebted countries.

China will start its Renmimbi (Yuan) exchange in Shanghai in 2014 I think.

This why I can not foresee Greece and Portugal staying in the Eurozone without
tremendous subsidization.

Also corporate bonds are very attractive... if profitability matters.

My conclusion is the resulting variability in debt servicing costs and
global uncertainty will keep unemployment very high.... almost everywhere.

Corporations are stashing cash and buying back their own shares, purchasing
newer technology but hiring very few people.

Finally... regarding your concern about the CDS uncertainty... it seems to me this
business will be greatly diminished if rules and their interpretations are
uncertain.

Why pay for phantom protection?

There are many others places.... countries, corporations, precious metals,land
and buildings etc.... to risk capital.

Also .. the world does have capital in this recession/depression... whatever.

Hedge funds, China, and Major Corps... Apple apparently has over $90 billion US
in cash .. do have money.... trillions of US$ equivalents.

Trick will be to increase/maintain the value of their cash.

Uncertainty seems to be the "certainty".

I could be wrong.

Cheers... Bill

[parsley]

Interesting piece:

http://www.breitbart.com/article.php?
id=D9SJJTM00&show_article=1

An interesting turn of events, cotton, is that the
Czechs just lined up with Britain in pushing back
from EU fiscal overseers. More will get in that
line I'll bet. Pars

[bduke]

Parsley.... 25 of the 27 EEC countries did agree.

I think sovereignty will be more of an issue if the "have" countries quit
bailing the troubled countries.

When countries must leave to greatly devalue because the Euro won't drop
enough, we will hear much talk about sovereign necessity.

I think Greece could well vote communist if they are not greatly subsidized.

This is why Merkel is treading on a high wire. She hates bailing out a
hopeless case, but the legacy of precipitating communism is also
distasteful.

IMHO Margaret Thatcher had it figured out.

I could be wrong.

Cheers... Bill

[parsley]

Those who not only understand how derivitives
work, bduke, must also understand what the
*responsibilities* of derivitives-gambling
requires..and act responsibly, and that means
always listening to good advice , even if it is
premature, if that is was what you claim
Brooksley Born's advice was.

After all being responsible is what risk
management IS. And risk management, once a
basic pillar of banking, is a premise no longer
acknowledged or practiced in a responsible way,
by any of the the major G8 banks. IMHO

In order to present a good idea, any Brooksley
Bond or Elton john should not have to time it,
dime it, or wrap it in lingerie. ; )
Pars

[parsley]

There is not enough money. It's paper.

Each country can telephone each other quoting
the transactional number on the IOU they just
traded that has no collateral backing it. Rather like
children on the playground.

There is not enough money. It's paper

Once countries realize how truly stupid they look,
they'll quit trading transactional notes that mean
nothing.

There is not enough money. It's paper. And the
banks are ridiculous.
Parsle

Parsley