EFSF – A Flowchart
Here is our best attempt at a flow chart for the EFSF that tries to capture everything it does. If it looks complicated, that is because it is complicated. Member States There are 17 Member States who provide Guarantees to the EFSF. Ireland, Portugal, and Greece have “stepped out” and are actually not providing guarantees. […]
Grand Plan 2 or Grasping at Straws?
Is break-up and default the equivalent of Armageddon? A big reason the market wants to rally on any positive noise is the firm conviction that default or break-up is the equivalent of Armageddon. The belief is that without a bazooka or magic bullet, the markets
EFSF Guidelines Analyzed
The EFSF released: EFSF Guideline on Primary Market Purchases EFSF Guideline on interventions in the secondary market EFSF Guideline on Precautionary Programmes Maximising the capacity of the EFSF (capitalization and spelling direct from the EFSF). If the crisis could be ended by the creation of acronyms and the use of the word “modality” then we […]
Sovereign CDS – Hellenic Republic CDS
Reports came out on Friday that Greece was now negotiating directly with creditors regarding some form of restructuring. We believe that this increases the risk of a Credit Event occurring, but ultimately it will still have to be a Failure to Pay Credit Event because any agreement with the bondholders would still be considered “voluntary” […]
From The Mess Of Headlines Today
The only logical conclusion is that we are further away from a solution or agreement in Europe than we have been in a long time. The “Grand Plan” has failed and this time, it is not a matter of creating “bigger and better” versions of prior plans, they need to do something new. Germany in […]
(BFW) Greece Wants 25% NPV of New Bonds, Banks Want High 40s
The good news is that the head of the IIF probably had his 15 minutes of fame and it can go back to being a cushy lobbying group rather than pretending it has real influence over the banks. The bad news is generally bad though. This goes back to being a very piecemeal and bank […]
The Bull Case For JEF
JEF’s year-end is November 30th. They aren’t scheduled to provide year-end results until Dec 20th, but I wouldn’t be surprised if they announced at least preliminary numbers much sooner than that. First, I think they will be able to show a much much lower leverage position than the market expects. As of August 31 (last […]
(NS5) Irish Times: Euro zone ‘may drop private sector role in bailouts’
We should not be rallying on this news. This to me is bad. Of the 3 big proposals of the “Grand Plan” that the EU was in some control of, all 3 have failed to materialize. The banks basically rejected capital infusions because they didn’t want to dilute shareholders (which I think will turn out […]
With MF And JEF Hogging All The Financial Institution Airtime
With MF and JEF hogging all the financial institution airtime, MS (and BAC and Citi) are deteriorating and heading back to end of September levels (which may be too high). In September, the slide in MS was blamed by many on CDS. I am not sure that one leads the other, they are co-incident, but in any case they […]
EFSF, We Hardly Knew You…
EFSF is supposedly going to have trouble getting even 2:1 leverage! Yes, that should have been obvious to everyone. We have tried to explain why none of the leverage ideas would work. We even took the step of trying to make it work and showing how many problems there were. Leveraged EFSF has always been […]