shalab Posted October 27, 2011 Share Posted October 27, 2011 Finally. Looks like Greece private investors have to take a write down of 50%. Didnt some one here mention FRFHF has greek bonds? http://money.cnn.com/2011/10/26/news/international/european_union_crisis_summit/index.htm?hpt=hp_t1 Link to comment Share on other sites More sharing options...
prunes Posted October 27, 2011 Share Posted October 27, 2011 What does this mean for the CDSs on Greek debt? Link to comment Share on other sites More sharing options...
Packer16 Posted October 27, 2011 Share Posted October 27, 2011 This may be good for the banks but how does it solve the southern european overspending issue? Packer Link to comment Share on other sites More sharing options...
alertmeipp Posted October 27, 2011 Share Posted October 27, 2011 can kicking. Link to comment Share on other sites More sharing options...
Santayana Posted October 27, 2011 Share Posted October 27, 2011 What does this mean for the CDSs on Greek debt? They said these will be "voluntary" writedowns so as not to trigger the CDS. Makes me wonder if they've really got everybody to go along with that yet. Link to comment Share on other sites More sharing options...
Myth465 Posted October 27, 2011 Share Posted October 27, 2011 This may be good for the banks but how does it solve the southern european overspending issue? Packer I dont think this is the problem. Link to comment Share on other sites More sharing options...
Guest misterstockwell Posted October 27, 2011 Share Posted October 27, 2011 They don't have anything close to a solution.... Link to comment Share on other sites More sharing options...
Viking Posted October 27, 2011 Share Posted October 27, 2011 I am getting the sense that Europe has finally hit the debt wall. The key question is how much Germany is willing to pay. If they are willing to pay lots they may make a difference to how this plays out. The south will not change their ways (how can we rip off the government) and France will not shrink its civil service. I do not see this crisis resulting in European culture coming together; I see the opposite as the losers (i.e. Greece) develop a new level of hatred to the northern countries and a rise in nationalism. Right now we have positive reports about a 50% cut in Greek Debt etc. Who is it that is paying the bill (which countries)? I am reading that Europe is going into recession. Recession plus austerity Greek style (coming to more countries) does not look good to me. This does not look like the end to me... perhaps the end of the begining. Link to comment Share on other sites More sharing options...
Parsad Posted October 27, 2011 Share Posted October 27, 2011 I am getting the sense that Europe has finally hit the debt wall. The key question is how much Germany is willing to pay. If they are willing to pay lots they may make a difference to how this plays out. The south will not change their ways (how can we rip off the government) and France will not shrink its civil service. I do not see this crisis resulting in European culture coming together; I see the opposite as the losers (i.e. Greece) develop a new level of hatred to the northern countries and a rise in nationalism. Right now we have positive reports about a 50% cut in Greek Debt etc. Who is it that is paying the bill (which countries)? I am reading that Europe is going into recession. Recession plus austerity Greek style (coming to more countries) does not look good to me. This does not look like the end to me... perhaps the end of the begining. They are doing exactly what they need to do to stabilize the banking system, and remove the risk of a domino effect occurring from counterparty liability through credit default swaps. It isn't a cure...it's the equivalent of a respiratory intubation. Now they can breathe, but the long, arduous task of reforming soverign fiduciary responsibility begins. No different than what happened in the U.S. The risk of a depression in Europe has decreased signficantly...the risk of a Greece default has been reduced. The banks will be on board with the 50% hit because they simply have no choice. It's either a 50% hit, or you fail! Greece will actually have a real chance of paying its debt back over time. Not a solution, but it creates the opportunity for reformation and change. Cheers! Link to comment Share on other sites More sharing options...
onyx1 Posted October 27, 2011 Share Posted October 27, 2011 The risk of a depression in Europe has decreased signficantly...the risk of a Greece default has been reduced. The banks will be on board with the 50% hit because they simply have no choice. Yet they deem the haircut as "voluntary" to try and avoid the CDS default trigger. Will ISDA go along with this charade? Link to comment Share on other sites More sharing options...
nwoodman Posted October 27, 2011 Share Posted October 27, 2011 Yet they deem the haircut as "voluntary" to try and avoid the CDS default trigger. Will ISDA go along with this charade? Couldn't agree more. Trust the Europeans, the masters of fashion, to set a new standard in terms of the "Emperor's new clothes". Link to comment Share on other sites More sharing options...
StubbleJumper Posted October 27, 2011 Share Posted October 27, 2011 Hard to see how a voluntary haircut will work. We tried all types of schemes like that to fix the asset-backed commercial paper freeze-up in Canada three years ago, and it only takes a small percentage of self-interested participants to dig their heels in. Why shouldn't an investor tell Greece where to shove their "voluntary" haircut? Everybody "sucker" who accepts the haircut just increased your likelihood of an eventual 100 cent recovery.... And if they try to strong-arm you, then they face the risk of default! SJ Link to comment Share on other sites More sharing options...
Guest misterstockwell Posted October 27, 2011 Share Posted October 27, 2011 This bit from Royal Dutch Shell says it all: There were corporate doubters, too. Oil giant Royal Dutch Shell said it planned to curb its investments in the European Union in future due to doubts about the bloc's chances of recovering from the crisis. "Europe's macroeconomic position can only recover and the sovereign debt crisis can only be addressed through underlying economic growth," Simon Henry, chief financial officer, told reporters on a conference call on Thursday. "We do not see the European Union creating the conditions for that, in fact quite the opposite," he said. Link to comment Share on other sites More sharing options...
biaggio Posted October 27, 2011 Share Posted October 27, 2011 "The leaders agreed on two ways to increase the firepower of the EU bailout fund, known as the European Financial Stability Facility. The methods will each leverage the fund by four or five fold, the statement said, boosting its resources to about €1 trillion." Where is this going to come from? Sovereign wealth funds? That's a lot of cash. Who has that amount of cash to lend these guys? I think I can hear the printing of money. Link to comment Share on other sites More sharing options...
Valuebo Posted October 27, 2011 Share Posted October 27, 2011 Yet the EURUSD climbs like crazy. ;) Link to comment Share on other sites More sharing options...
alwaysinvert Posted October 27, 2011 Share Posted October 27, 2011 can kicking. Yup, and making the system even more fragile in the process. Link to comment Share on other sites More sharing options...
beerbaron Posted October 27, 2011 Share Posted October 27, 2011 I really don't understand the voluntary haircut?? Unless it's voluntary that banks take the writedown in one shot (maybe they could amortize the writedown... Really not clear. BeerBaron Link to comment Share on other sites More sharing options...
Eric50 Posted October 27, 2011 Share Posted October 27, 2011 It's "voluntary" so that it does not trigger any CDS on the Greek debt. Link to comment Share on other sites More sharing options...
rijk Posted October 27, 2011 Share Posted October 27, 2011 a little gimmick to protect french banks who sold cds protection, imagine you purchased these cds instruments...... looks like there could be some lawsuits.... regards rijk Link to comment Share on other sites More sharing options...
ERICOPOLY Posted October 27, 2011 Share Posted October 27, 2011 I guess I don't see all the pessimism. They've managed a 50% default without any CDS payouts. Link to comment Share on other sites More sharing options...
dwy000 Posted October 27, 2011 Share Posted October 27, 2011 I can't wait to see how the CDS aspect plays out on the bank P&L. Most of the banks in reporting their Greek exposures give a "net" number after hedging. If they're taking a 50% haircut on the debt but can't get that 50% back on their so-called-hedges it could be a massive loss. Or a massive gain for anyone who'd been selling the CDS and shorting the bonds. Link to comment Share on other sites More sharing options...
biaggio Posted October 27, 2011 Share Posted October 27, 2011 there saying that there will not be any CDS pay outs because haircut was "voluntary". Link to comment Share on other sites More sharing options...
vinod1 Posted October 28, 2011 Share Posted October 28, 2011 1. The only concrete thing that has been achieved is to take a disorderly greek default off the table. That is the good news. Now we have to see which of the European financials are swimming naked i.e. who cannot take a 50% haircut on Greek debt and stay solvent. 2. There is no agreement on how much EFSF would be leveraged. Two general solutions agreed upon are (a) Making available insurance on new sovereign debt. They dont have the capability for complete protection so we have to see what % of the losses would be covered by this and which countries debt would be guarenteed. (b) Vague refrence to private/public paternership. I dont know which private investor would participate in this. Overall I dont see much of substance that has been achieved with respect to how contagion would be contained beyond Greece. I am unimpressed with the recapitalization plan of their banks ($150 billion) as well. I am surprised that the market reacted so positively to such a small step. The policy statement is an entertaining read however: http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/125644.pdf "All other euro area Member States solemnly reaffirm their inflexible determination to honour fully their own individual sovereign signature and all their commitments to sustainable fiscal conditions and structural reforms." Vinod Link to comment Share on other sites More sharing options...
Myth465 Posted October 28, 2011 Share Posted October 28, 2011 Europe is like GW Bush. The bar was just extremely low. The market is simple impressed there is an agreement, I am as well. Link to comment Share on other sites More sharing options...
claphands22 Posted October 28, 2011 Share Posted October 28, 2011 I don't know if Kyle Bass still owns those Greek CDS, but if does, he must be steaming right now. Link to comment Share on other sites More sharing options...
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