What is truth?

Posts tagged ‘International Swaps & Derivatives Association’

“ECB is happy to let Irish banks go”


Image via Wikipedia


By David Mc Williams

David has a new posting and it is well worth a read!

Did you know that AIB defaulted on Monday? It did, and the people who internationally govern this type of thing announced yesterday that AIB is technically in default. AIB decided — rightly — not to pay some of its many billions of bonds. It began the process of burning the bondholders. Now, were we not told that if the banks defaulted then the sky would fall in? Wasn’t that the establishment line?
It’s not me who says AIB has defaulted, it is the following list of banks: Bank of America/Merrill Lynch; Barclays, Credit Suisse; Deutsche Bank; AG Goldman Sachs; JPMorgan Chase Bank; NA Morgan Stanley; UBS; BNP Paribas; Societe Generale; Citadel Investment Group LLC; DE Shaw Group; BlackRock; BlueMountain Capital and Rabobank International.
All these international investment banks that make up an august body called the International Swaps and Derivatives Association deemed officially that AIB has defaulted.
Now I don’t really care what happens to these bankers, but I do remember that they had said that if AIB or any of the Irish banks defaulted on anything, the world would cave in. So has it? Weren’t you told that by now the ATMs would not have any money in them?
Yesterday morning, I approached an ATM in Dalkey at the local AIB expecting to see lines and lines of frantic depositor’s queuing up to get their money out.
I was terrified as I put in my card because these usual suspects who come on telly and sound as if they know something warned that at the first hint of a default there would be no money in the hole in the wall. Now granted, these were the same lads who said we’d have a soft landing and who reassured us that the banks were “well capitalised”.

read full article at source : http://www.davidmcwilliams.ie/2011/06/22/ecb-is-happy-to-let-irish-banks-go-bust-by-stealth

Credit default swaps and treason in Greece

The revelations of Credit default swaps and treason in
Greece should start to flash red lights here in Ireland as there are enormous
movement in Irish credit default swaps spreads. With well placed insiders are
able to make huge money and nobody is calling for a public enquire, these financial
instruments of mass destruction are been used and nobody knows who’s benefiting
from them!

Are we not going down the obvious road to default because of
a conflict of interest by those that are charged with this decision??? How do
we know that special interests are not been looked after???

Can we thrust our politicians? I know what my answer is !

AIB has already defaulted see here

The International Swaps and Derivatives Association (ISDA) yesterday said that   a “credit event” had occurred on Allied debt, meaning the bank has   effectively defaulted on its debt, a situation the Irish government has gone   to extreme lengths to avoid.

Credit default swaps (CDS) sold on Allied subordinated bonds and, crucially,   its senior debt, have been activated by the decision of the ISDA   determinations committee that decides whether a borrower has defaulted.

The decision by the committee, which is made up of 10 major banks, follows the   announcement earlier this month by the Irish High Court of a “subordinated   liabilities order” that changed the terms under which junior debt in   Allied was originally sold, forcing holders of the bonds to accept an   extension in the maturity of the debt to 2035.

Allied had already missed a coupon payment on its Lower Tier 2 debt. However,   changes in the law enabled the bank to avoid being forced to be formally   placed in default.

For the market, ISDA’s decision renders this move largely irrelevant as it   means the bank will be categorised as in default in the eyes of investors.(source http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8590428/Allied-   Irish-Bank-has-defaulted-says-derivatives-body.html  )

Greece Reports: “Circular Reasoning Works Because Circular Reasoning Works” – Or – Here Comes That Default!!!

For all of those who felt I was too bearish on the Euro region in 2009 and 2010, thus far nearly every proclamation that I have made has come to light or shown a direct path to doing so. I believe I was unequivocally clear in my assertion that Greece will default at least a year or so ago (even if said default would be marketed by some other name for the sake of political expediency). I would consider this a must read for anyone in the mainstream media reporting on this topic, or any investor/stakeholder who may fear the Grecian domino effect, even if you feel you have seen some aspects of it before.

Well, now its time to call Greece out on its perversely circular  reasoning being used to justify its alleged stance that it will not default. I read a humorously crafted ZeroHedge article this morning which immediately cause the following image to pop into mind…

For more on the origin of said circle, I first refer you to an article ran yesterday in Bloomberg:

Fitch Cuts Greece to B+, Says Voluntary Maturity Extension Is Default:

Greece’s credit rating was cut three levels by Fitch Ratings, which said that even a voluntary extension of its bond maturities being studied by European Union policy makers would be considered a default.

Fitch cut its rating to B+, four levels below investment grade, from BB+ and said that the country could face a further reduction in its creditworthiness. The yield on Greek 10-year bonds rose 57 basis points to 16.6 percent, more than twice the level of a year ago when Greece accepted an EU-led bailout.

“The rating downgrade reflects the scale of the challenge facing Greece in implementing a radical fiscal and structural reform program necessary to secure solvency of the state and the foundations for sustained economic recovery, Fitch said in an e- mailed statement.

“The B+ rating incorporates Fitch’s expectation that substantial new money will be provided to Greece by the EU and IMF and that Greek sovereign bonds will not be subject to a ‘soft restructuring’ or ‘re-profiling’ that would trigger a ’credit event’ and default rating,” Fitch said.

… “An extension of the maturity of existing bonds would be considered by Fitch to be a default event and Greece and its obligations would be rated accordingly,” Fitch said.

Even if Fitch or other rating companies determined that extending maturities constituted a default, the ruling wouldn’t necessarily trigger credit swaps insuring Greek debt. That decision may be made by the determinations committee of the International Swaps & Derivatives Association.

Yeah, Okay! I guess then maybe when they default it won’t really happen?

The country missed its target for last year, reporting a shortfall of 10.5 percent of gross domestic product, versus a goal of 9.4 percent.

The country missed every target for the last four years. For those who read BoomBustBlog, credibility is done, trust (or the lack thereof) is a wrap – Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse!:

Let’s take a visual perusal of what I am talking about, focusing on those sovereign nations that I have covered thus far.


Notice how dramatically off the market the IMF has been, skewered HEAVILY to the optimistic side. Now, notice how aggressively the IMF has downwardly revsied their forecasts to still end up widlly optimistic. image018.png

Ever since the beginning of this crisis, IMF estimates of government balance have been just as bad…


The EU/EC has proven to be no better, and if anything is arguably worse!




and the EU on goverment balance??? Way, way, way off.


If the IMF was wrong, what in the world does that make the EC/EU?

The EC forecasts have been just as bad, if not much, much worse in nearly all of the forecasting scenarios we presented. Hey, if you think tha’s bad, try taking a look at what the govenment of Greece has done with these fairy tale forecasts, as excerpted from the blog post Greek Crisis Is Over, Region Safe”, Prodi Says – I say Liar, Liar, Pants on Fire!


Think about it! With a .5% revisions, the EC was still 3 full points to the optimistic side on GDP, that puts the possibility of Greek government forecasts, which are much more optimistic than both the EU and the slightly more stringent but still mostly erroneous IMF numbers, being anywhere near realistic somewhere between zero and no way in hell (tartarus, hades, purgatory…).

Now, if the Greek government’s macroeconomic assumptions are overstated when compared with EU estimates, and the EU estimates are overstated when compared to the IMF estimates, and the IMF estimates are overstated when compared to reality…. Just who the hell can you trust these days??? Never fear, Reggie’s here. Download our “unbiased, non-captured, empirically driven” forecast of the REAL Greek economy – (subscribers only, click here to subscribe) Greece Public Finances Projections Greece Public Finances Projections 2010-03-15 11:33:27 694.35 Kb. Related banking research can be downloaded here:

Greek Reporter (hat tip to ZeroHedge) reports: Government Finalizes Privatization List

The Greek government will proceed with the acceleration of the privatization of state property and companies, setting a target of at least €15bn by 2015. [Reference the highlights of the BoomBustBlog subscription document below.]
The decisions are expected during the week, probably on Wednesday, at the meeting of the Biministerial Committee on Privatization. The government will finalize a list of companies and property for utilization, which will be presented by Prime Minister George Papandreou to the European leaders in Brussels.
Special Secretary for Privatization G. Christodoulakis and bank representatives have been preparing the content of the list at a meeting yesterday.
National Bank and London-based CC&C Advisors LTD have been assigned the task of financial servicing related to planning, monitoring, coordination and implementation of the restructuring and privatization program.
The Committee will have to approve the award of the of the utilization program to the qualified Greek banks, but also to the consultants who will carry each project.

Sources note that consultants for Athens International Airport have already appointed, while the proposed list includes:
The concession of ports and airports with long-term contracts
• The extension of concession period for Athens International Airport

• The sale of a stake of Public Gas Corporation
• The sale of a 49% stake of Casino Mont Parnes
• The privatization of state lotteries through concessions
• Finding a strategic investor in Hellenic Post
• The sale of a stake of OTE, Hellenic Defense Systems and Larko
• Renewal of OPAP’s licenses
• Licenses for online betting and “slots”
• The concession of Egnatia Odos
• The sale of TRAINOSE
The sale of state stakes in banks (Hellenic Postbank, ATEbank, Consignment and Loans Fund)
• The privatization of water supply companies (EYDAP, EYATH)

This is a tragic Greek comedy. Professional/institutional subscribers should reference the Greece Public Finances Projections Greece Public Finances Projections 2010-03-15 11:33:27 694.35 Kb in its entirety. For those who chose not to subscribe, I am posting excerpts from pages 5 and 6 from said document, don’t read this while eating or drinking for fear of spitting up your lunch!

Full article at source and is well worth the read : http://boombustblog.com/reggie-middleton/2011/05/23/greece-reports-circular-reasoning-works-because-circular-reasoning-works-or-here-comes-that-default/



This is an excellent article and Reggie is again on the button, all concerned citizens should take note! If only we had such indebt analyzes for the Irish financial situation ,it’s only a matter of time before Ireland will go down the same sorry road to default.

Anglo Irish Credit Default Swaps ( So they do exist?)

Anglo Irish Bank Corp.’s offer to swap subordinated bonds for new notes may trigger payouts on as much as $420 million of credit-default swap contracts, according to BNP Paribas SA.

Anglo Irish offered investors a choice of trading 1.6 billion euros ($2.2 billion) of notes at 20 cents on the euro last week, or redeeming them for 1 cent per 1,000-euro face amount. Investors will have to approve changes to the terms of the bonds to exchange them, causing a so-called restructuring credit event on swaps linked to all of the bank’s debt, said BNP Paribas credit analyst Olivia Frieser.

The proposals come after Finance Minister Brian Lenihan vowed to “address the issue” of junior bondholders taking a loss on their investments in nationalized banks. The offer is “tantamount to a default,” and will lead to a downgrade of Anglo Irish’s non-senior ratings to D for “Default” after the switch, Toronto-based ratings firm DBRS said today.

“Most people will feel compelled to exchange,” London- based Frieser said. The Irish government is “facing enormous political pressure not to treat bondholders too well.”

Credit-default swaps insuring 10 million euros of Anglo Irish’s junior debt for five years cost 7 million euros in advance and 500,000 euros annually, BNP Paribas prices show. Contracts on the bank’s senior debt cost 1.35 million euros in advance and 500,000 euros annually.

Martha Kavanagh, an outside spokeswoman for the bank, declined to comment.

Bank Nationalized

Anglo Irish was nationalized in January after borrowing from mostly international investors and lending to property developers who couldn’t repay loans when the property market crashed. Commercial real estate prices in Ireland have fallen about 60 percent since peaking in 2007.

The first opportunity to trigger the swaps is Nov. 23, when holders of floating-rate lower Tier 2 notes due 2017 will vote on the debt exchange. The securities are trading at about 20.6 cents on the euro, according to data compiled by Bloomberg.

The decision on whether buyers of default protection can demand payment on Anglo Irish debt will be made by a committee of dealers and investors as members of the International Swaps & Derivatives Association. Auctions may then be held to determine the value of the debt and how much should be paid out.

A total 674 contracts protecting a net $420 million of Anglo Irish’s senior and subordinated debt were outstanding on Oct. 15, according to the Depository Trust & Clearing Corp., which runs a central registry for the market. Under the terms of the contracts, holders of swaps linked to both senior and subordinated debt can demand payment.

Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements.

To contact the reporter on this story: Abigail Moses in London at Amoses5@bloomberg.net

  Comment :

see my posting on derivatives here

I have been warning about these obscure financial derivatives now for a long time and the chicken are now comming home to roost now!






also place the word “derivatives” in the blogs search box for earlier postings on derivatives

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