When is a default not a default?
What do you make of this, via Rossa?
The International Swaps and Derivatives Association determines what a credit event or default is. So, by all accepted measures, if there is a default, an insolvency situation in our financial system, then surely the system collapses, no?
No, this organization called the International Swaps and Derivatives Association decides if something is a default or not. So logically, as everyone in the game is into credit default swaps, such as caused the MF situation, with OTCs etc and as anyone who’s using other people’s money to speculate is in this position – all these people are in a high risk situation at this point because they’re at the mercy of the ISDA.
This makes the ISDA more powerful than a government. In fact they are, at least on the financial side, a government. They can bring it down as and when they redefine what is happening. You and I are to be swept along by the speculators.
Cue Greece and five major US banks which by any normal measure, has gone into default since late January. So why haven’t you heard about it? Well, the MSM has a blackout. Why hasn’t the bust occurred? Because this body has declared there is no default. So, the banks who have defaulted declare there is no default and therefore trading goes on.
Feeling safe?
Filed under: Politics & economics, Rossa
Same goes for the MF Global situation. When is a bankruptcy not a bankruptcy? When the SEC deliberately uses the wrong section of the US Bankruptcy laws so that clients lose all their money. MF Global was a brokerage but the SEC has treated them as an equities/investment house instead. No client monies were protected at all. But JP Morgan got their money out before the collapse.
No-one’s money is safe in any bank or financial institution.
From the clip:
You’re marching forward to a point where there is nothing further you can do.
So unlike 2008, where the QE was a big news story, this one won’t be?
This will be a news story but it will be a news story as if everything has been made relatively OK again becuase the ISDA will declare the credit event about to take place not a default, which further weakens the system.
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QE is good for your equity markets and the reason the equity markerts aren’t performing is that there are enough people around who understand what, in fact, is taking place … but QE is extremely good for equities.
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The grease of the wheels of the equity market has always been liquidity … and will always remain liquidity. What’s good for gold right now is equally good, if not better for general equities. The fact that general equities are not performing spectacularly, after an announcement that we are head back to a global QE3 and an insular national QE3 is concern over how the ISDA will define the credit event about to take place, the greater haircut of the Greek debt.
Because it’s an election year and because it’s too much to think of that you would call into service the default swaps which are not financed to service – you’d have to go through another bank rescue.
Eventually, it’s going to have to happen because eventually, this can-kicking down the road is not going to witness a major economic recovery in Europe that finances the government’s ability to meet their deficit responsibilities.
Well, this bank rescue couldn’t possibly happen during 2012, could it?
Well, put it this way – if it had to happen it would but every single thing would be done not to let it happen … such as the financing of the rollovers which has already taken place – the Fed has announced the swaps and the IMF has come out with their emergency line, the combination of which equals the rollover for the first quarter, without any more financing required. As you bought into the second quarter, it’s a different story.
The general equiteis of the world, the Netflix, the Googles, the Facebooks, not the gold shares, OK [?] are strongly supported by the return to QE. so why aren’t they going through the roof today?
Because a credit event is about to take place.
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You have to understand the critical nature of today. The return to QE is an event which impacts liquidity. Historically and into the future, the motivator of the general equities market … is liquidity. The reason we came out of the bear market in 2009 was QE.
The reason we’ve been able to hold the general equity levels at a relatively high level, circling around that 1200 on the Dow is, without any question – liquidity … QE is good for gold, good for the GE markets, it’s negative for the dollar and positive for other than dollar items.
However, QE is not a solution to anything. QE or the creation of money out of thin air is the bubble making mechanism that you saw in real estate … in asset values, it puts money into the hands of people who have to makeinvestment decisions and will make them generally along the lines of what they’re most familiar with and what they’re most used to dealing in.
Today, we are standing on the threshold of a credit event that is the determination of how the Greek debt will be handled among the Euro nations. the people who will define what that credit event is the ISDA … In the most practical sense, we’re in an election year. Recognizing that 5 of the US banks hold 97% of the obligations on credit default swaps – i.e. that they have guaranteed the buyer of this instrument agaisnt the default of an instrument, primarily Euro debt.
So the CDS is actually an insurance policy that broker firms issue and the organization which oversees that, which wrote the master agrement … [is the iSDA].
It’s the body which [backed the bailouts] and will determine whether a sovereign nation has defaulted.
[This was transcribed rapidly from the clip and I'll not go through and correct the typos.]
Now, my understanding is that these people need QE for the reasons given and this means liquidity but how can you have liquidity when there’s no money?
Simple, you create it out of thin air. Not only that but these games, upon which the whole structure and future of these people depends, is also placing the whole world in general into jeopardy if it goes wrong.
And will it go wrong?
Well, if you’re stuck in the mindset of markets, then when Greece repayment falls to zero, called “not default” by the ISDA, then what happens when it’s clear that no one is paying back anything?
Simple – the PTB introduce a new financial paradigm which doesn’t work as a market at all. It’s “I don’t want to play this game any more – let’s play this one.”
And tied to that is the heavy movement towards micro-control of people’s lives going on at this time.
The implications for us are pretty obvious.
The BoE have already said they’re going to ‘print’ another £50bn to put into the market but I noted that it was the 6th time they’d done this. Don’t know about you but I wasn’t aware that our MSM had even mentioned rounds 3, 4 and 5. The total to date is £325bn.
And as most of it is just going straight onto the banks’ balance sheets or being deposited at the ECB then there is no more liquidity. Trying to stuff fingers into the holes in the dyke is the scenario that comes to mind. They’re running out of fingers
And no mention of the devaluation of our currency.
As for Greece, that appears to be a managed default forced on Athens by Berlin.
http://hat4uk.wordpress.com/2012/02/10/exclusive-sources-suspect-berlin-power-play-in-schauble-brinkmanship/
Which won’t stop it spreading to Italy or Portugal, Spain, Ireland and eventually France.
http://www.zerohedge.com/news/sp-downgrades-34-37-italian-banks-full-statement
And if anyone expects the LTRO to be the answer then….
http://www.zerohedge.com/news/proof-ltro-bank-stigma-or-why-mario-draghi-lying