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The Masked Tulip

Heads Up - Newsnight Tonight

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NN is apparently discussing the Eurocrisis tonight - may be worth a watch.

The last few on the Euro crisis I've seen were pretty doom laden. Should be worth a look.

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NN repoting that FT is reporting that bond holders are being asked to take a 60% haircut.

FT has some EU mandarin talking about being terrified of triggering a credit event.

Paul Mason mentioning something about kebab shops being banned somewhere in the EU for not being genuine kebab shops. Someone has lost it!?

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Paul Mason mentioning something about kebab shops being banned somewhere in the EU for not being genuine kebab shops.

I am rather partial to their Taco chip though... :D

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FT has some EU mandarin talking about being terrified of triggering a credit event.

That's the one to get the popcorn out for. A 'credit event' implies payouts on all of those CDSs written by European banks (e.g. SocGen) on Greek government debt. Some of it may be hedged, but I wouldn't bet on it. Oh, and whilst I think about it, that would likely trigger another round of mark downs on CDOs (synthetic and otherwise).

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... CDSs written by European banks (e.g. SocGen) on Greek government debt. Some of it may be hedged, but I wouldn't bet on it.

Why do you think CDSs wouldn't be hedged?

Personally, I expect the pass-the-parcel game has been played over-and-over again... IMHO, the question that matters is this: "With whom will the music stop - and can that be manipulated through politics?"

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That's the one to get the popcorn out for. A 'credit event' implies payouts on all of those CDSs written by European banks (e.g. SocGen) on Greek government debt. Some of it may be hedged, but I wouldn't bet on it. Oh, and whilst I think about it, that would likely trigger another round of mark downs on CDOs (synthetic and otherwise).

I am genuinely puzzled why these psudo insurance contracts are not simply declared void- they add no value, serve no economic purpose and exist in some weird 'over the counter' limbo of unregulated space.

CDSs are not traded on an exchange and there is no required reporting of transactions to a government agency.[5] During the 2007-2010 financial crisis the lack of transparency became a concern to regulators, as was the multi-trillion dollar size of the market, which could pose a systemic risk to the economy.

How could something that has no accountability to any state have any legally enforceable status? The Bankers just pulled this shite out of their backsides and now we all have to live with the stink?

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Gisela Stuart MP (Labour) was fantastic. She and Frank Field appear to be the only Labourites who have the intellectual capacity and electorate to get it

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I am genuinely puzzled why these psudo insurance contracts are not simply declared void- they add no value, serve no economic purpose and exist in some weird 'over the counter' limbo of unregulated space.

How could something that has no accountability to any state have any legally enforceable status? The Bankers just pulled this shite out of their backsides and now we all have to live with the stink?

plus, you would expect a payout in the event of an "event".

what they are "concerned" about, is that inspite of generous fees and charges for these things, there is in fact, no way they CAN pay out.

Sounds like a fraud to me.

And what is a "haircut"....is that another name for a default...and who is going to top up the pension funds that are taking these "haircuts", when in fact, a CDS, purchases in good faith from a AAA rated firm, was enough to enable the pension fund to purchase ccc crud in the first place?

And which bankers are going to prison for selling this stuff?

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And which bankers are going to prison for selling this stuff?

None, because the actual insurance was bribing our wonderful politicians and buying our democracy. Not voting for any of these chunts till the whole lot go to jail, and not just a few token small fry, much lower down the food chain.

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Why do you think CDSs wouldn't be hedged?

Personally, I expect the pass-the-parcel game has been played over-and-over again... IMHO, the question that matters is this: "With whom will the music stop - and can that be manipulated through politics?"

Some will no doubt be hedged but a lot of it will have been written on a pure insurance basis - i.e. sell enough diverse swaps and, when one goes pop, you just pay it out from the premium pool. The problem is that most of the business would have been written long enough back that people still fooled themselves there there's much less correlation between the different names than there actually is.

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It will be just like AIG, no assets.

The game is simple. You go to the drunk that lives under the bridge and say "I'll give you a fiver to insure my bonds". Of course he takes the fiver. You can now lend out more money because you have 'hedged' your risk. If the bond defaults, you ask the wino for a million pounds.

Of course its all done on a bigger scale. You set up a shell company, one with no assets, that takes in the premiums each year and rapidly pays them out. They used to call this earthquake insurance. Earthquakes are rare, but when they do happen the payouts are enormous. A smart operator could take in premiums for many years and pay out lots of dividends to the owners before the fatal event. Then it just declares bankruptcy.

You have to understand that the banks know all this. The purpose of the CDS was to reduce their risk profiles for the regulators, who knew the game too. The banks wanted to lend ever more money because that generates profit generates bonuses.

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  • 285 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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