Tuesday, March 6, 2012
A Hard Rain's Gonna Fall
Oh, they will say, "What is happening?... What is going on?"
"We thought Greece was bailed out.. We thought everything was a foregone conclusion.. We thought no matter what, someone or something would come to the rescue and kick the can.."
Sounds like someone who gets their news from CNBC, or didn't fully quite get the lesson of 'Peter and the (Can-Kicking) Wolf'...
If you read A&G regularly, you were not one of them.
As of 1:15p, the market is down over 207pts at 12,755
People including professional traders have been so lulled to sleep over the continual non-stop pollyanna optimism headlines about Greece (as well as this non-existent, Presidential re-election driven "recovery" dupe) that many have been asleep to the economic bubbling cauldron which is the the Eurozone.
We explained yesterday that while major banks were saying they accepted 70% losses on Greek bonds (because the losses would be far less than when credit swaps [insurance] was triggered resulting in enormous payout), they also put on a posture or 'front' that they held 50% of Greek bonds. They don't-- its only 20%
It simply will not happen. We're talking about Hedge Funds here.
Let me explain...
On the whole, the larger bondholders represented by the (IIF) Institute of International Finance's Charles Dallara need the Greek restructure bailout to work. The Hedge Funds don’t. The larger banking institutions can try all they might to create some form of impetus towards acceptance, but this is not like a US election race where some folks want to be with the winner – and thus hype becomes a self-fulfilling prophecy: the media roll being attempted will roll off the backs of the Hedgies like water off a rainjacket.
Yesterday, big banks did some trumpeting. We’re still hearing nothing from the most entrepreneurial and risk-taking sector: the hedge funds and similar carpet-baggers. See, they are chiefly in this cliffhanger to make something rather than save something. For these people, there are no pro’s and con’s to weigh, and no con job to force acceptance will work.
Hedge fund people don’t do soundbites and go on CNBC or Bloomberg: these people hire PR’s to keep them Out of the news, not in it. They have sector representatives to dissemble, to send out disinformation via third parties, and to underestimate their power. To a Hedgie, surprise and discretion are everything.
"Investors in Greece’s Swiss franc bonds have formed a group to fight for their rights as the country seeks to pare about 106 billion euros ($139 billion) of debt as part of an international bailout. The group is concerned by the terms of the restructuring and is “exploring means to address its concerns and to protect the rights of holders of the bonds,” ... The group holds the 650 million Swiss francs ($708 million) of 2.125 percent notes due 2013."
They are not alone...
And trust us, Germany knew this going into the process.
The US government knew too.
For a better understanding of the secret interworkings which is pushing Greece into default, read the following link entitled "The Secret Plot to Derail the Greek Bailout", written a couple weeks ago:
Unless there's some surprising twist or shock event, such as Germany getting last-second cold feet and bailing out Greece no matter what happens this week, the nation IS going to default, whether those gutless cowards in Athens like it or not.
And the markets are going to drop hard... A correction long in the waiting.