Endgame ahead

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Big brother, French Edition

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Since nowadays everybody is doing it, why not go with the flow and spy on your citizen? That’s probably what the French external intelligence agency was thinking when they started monitoring the French public’s phone calls, emails and social media activities in France and abroad. And it only costs a measly 600-something million Euros as well, what a bargain!

France’s external intelligence agency spies on the French public’s phone calls, emails and social media activity in France and abroad, the daily Le Monde said on Thursday.


“All of our communications are spied on,” wrote Le Monde, which based its report on unnamed intelligence sources as well as remarks made publicly by intelligence officials.

“Emails, text messages, telephone records, access to Facebook and Twitter are then stored for years,” it said.

Source: Reuters / Le Monde

So where do we stand now? United States, check. Britain, check. France, check. Soon to come: Germany, Italy, Spain, Australia, Canada, … And of course pretty much self explanatory: China, Russia and all the smaller dictatorships sprinkled around the globe.

Turns out George Orwell was just off by a couple years.

Written by mo

July 4th, 2013 at 2:43 pm

Posted in Europe

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Greece has been safed… again?

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I’m not going to write a long and witty post on the latest Greek rescue package, since it’s getting kinda boring. I think by now even the EU bureaucrats have lost count how many times exactly Greece has been rescued.

The announcement came in the early morning hours, after weeks of failed talks and was rewardet by a 1 or 2 bps “spike” in the EURUSD, just to fade away within hours. Of course the markets in Europe opened with a another rally, which turned out to be… modest and short lived (a couple hours that is). The US markets didn’t even bother to rally, since by the time they opened, people managed to find their calculators and read the Eurogroup’s “plan”, just to figure out it really doesn’t make much sense. Surprise! Who’d have guessed?

Then again, the whole package isn’t finished anyway, since it still has to be ratified by every nation involved. And (among other things) assumes a “voluntary” haircut of 70% on Greek debt by private investors holding it. All within the next two weeks.

Good luck with that…

Then again, let’s just assume for some reason (magic!) creditors agree to those terms and everything will go as planned. How much exactly will those cuts matter? Thanks to, here’s something nice to look at:

We’re talking about the red part. The official sector debt can’t be cut, since the German Bundesverfassungsgericht (among others) would most likely throw a hissy fit the second anyone would suggest that. For now that is – in a couple years the recent ruling will probably be forgotten since nobody cares about laws and contracts anymore anyway and a official sector “forgiveness” seems inevitable. If the whole EU / Euro conglomerate still exists by then that is…


But in case they really pull it off and flush another 40 billion Euro down the toilet, here’s what the rescue package assumes the Greek economy will do during the next 10 years:

And here’s how their past projections turned out:

Yeah… I’m sure that will work just fine.

UPDATE, less than 24 hours later – fresh from Bloomberg:

Really? REALLY? Well that’s what I call a completely unpredictable turn of events!

Written by mo

November 27th, 2012 at 5:26 pm

Posted in Europe

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FrAAAnce no more, here comes FrAa1nce

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Oh well, it was only a matter of time anyway… As Bloomberg reports, Moody’s just took away the oh so beloved AAA rating from France.

  • Long-term economic growth outlook negatively affected by multiple structural challenges
  • Fiscal outlook uncertain
  • Predictability of France’s resilience to future euro area shocks diminishing

Just a few hours after an completely inexplicable day-long market rally, taking equities higher across the board in Europe and the US. Not even another leak to blame it on.

Now, let’s see what the next couple hours and days will bring.

Written by mo

November 20th, 2012 at 12:17 am

Posted in Europe

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Kyle Bass on Europa, tearing apart at the core

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157 well-spent seconds to summarize just what is going in Europe, as he concludes with Milton Friedman’s quote on Europe: “when they hit a bump in the road, it will tear them apart at the core.”

Written by mo

November 17th, 2012 at 12:44 am

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Spain downgraded… again

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Just a quick note, since it was just a matter of time anyway…


  • The deepening economic recession is limiting the Spanish government’s policy options.
  • Rising unemployment and spending constraints are likely to intensify social discontent and contribute to friction between Spain’s central and regional governments.
  • Doubts over some eurozone governments’ commitment to mutualizing the costs of Spain’s bank recapitalization are, in our view, a destabilizing factor for the country’s credit outlook.
  • We are therefore lowering our long- and short-term sovereign credit ratings on Spain to ‘BBB-/A-3’ from ‘BBB+/A-2’.
  • The negative outlook on the long-term rating reflects our view of the significant risks to Spain’s economic growth and budgetary performance, and the lack of a clear direction in eurozone policy.

Rating Action

On Oct. 10, 2012, Standard & Poor’s Ratings Services lowered its long-term sovereign credit rating on the Kingdom of Spain to ‘BBB-‘ from ‘BBB+’. At the same time, we lowered the short-term sovereign credit rating to ‘A-3’ from ‘A-2’. The outlook on the long-term rating is negative.

Oh well… So, who’s next?

Written by mo

October 10th, 2012 at 11:17 pm

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Meanwhile in Spain…

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Meanwhile in Spain, people don’t seem to get that Europe is once again saved… Oh those silly Spaniards.

As Spain announces more austerity, the country has erupted in violence. This report, which dives into the heart of the violent protests, reveals a shockingly deep divide between government and people.

“The government is trying to scare the people,” one protester says, following the government’s dubbing of a protest outside the congress as a possible coup d’etat. It ramped up the already tense mood among a people that blame the right wing government for Spain’s economic problems. As protesters refuse to leave and sit down in non-violent protest, the police break off into small groups and chase them down. “The police started to charge indiscriminately toward anyone. We are returning to fascist repression.” Rubber bullets and bricks fly back and forth in street exchanges of a shocking intensity. “We are not animals! We are people!”, one woman pleads with the police. But the police don’t wait long before storming down the streets, shooting rubber bullets at close range into fleeing crowds. The streets may be clear for now, but as the crisis in Spain deepens with no end in sight, popular resistance towards the government and it’s austerity project is only intensifying.

Jihan Hafiz

Written by mo

October 1st, 2012 at 3:06 pm

Spain’s Stock Exchange halted

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Due to “a technical glitch” (riiiiiiight) Spain’s stock exchange is currently down and has been for some hours now. According to a spokesman for the operator, there’s currently no estimate for the resumption of trade nor any kind if further information on the nature of the “glitch”.

Nothing to see here, move along.

Written by mo

August 6th, 2012 at 12:55 pm

Lights out in Greece

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According to Reuters chances are Greece will soon become a much darker place… at least at night that is, since apparently their electricity infrastructure is about to collapse as well, just like their banking system, their hospitals and pretty much everything else.

ATHENS (Reuters) – Greece’s power regulator RAE told Reuters on Friday it was calling an emergency meeting next week to avert a collapse of the debt-stricken country’s electricity and natural gas system.

“RAE is taking crisis initiatives throughout next week to avert the collapse of the natural gas and electricity system,” the regulator’s chief Nikos Vasilakos told Reuters.

RAE took the decision after receiving a letter from Greece’s natural gas company DEPA, which threatened to cut supplies to electricity producers if they failed to settle their arrears with the company.

Written by mo

June 11th, 2012 at 10:21 pm

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Spain gets a bailout

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Who’d have thought – looks like Spain will get a bailout for their banks as well:

The Eurogroup supports the efforts of the Spanish authorities to resolutely address the restructuring of its financial sector and it welcomes their intention to seek financial assistance from euro area Member States to this effect.

The Eurogroup has been informed that the Spanish authorities will present a formal request shortly and is willing to respond favourably to such a request.

The financial assistance would be provided by the EFSF/ESM for recapitalisation of financial institutions. The loan will be scaled to provide an effective backstop covering for all possible capital requirements estimated by the diagnostic exercise which the Spanish authorities have commissioned to the external evaluators and the international auditors. The loan amount must cover estimated capital requirements with an additional safety margin, estimated as summing up to EUR 100 billion in total.

Following the formal request, an assessment should be provided by the Commission, in liaison with the ECB, EBA and the IMF, as well as a proposal for the necessary policy conditionality for the financial sector that shall accompany the assistance.

The Eurogroup considers that the Fund for Orderly Bank Restructuring (F.R.O.B.), acting as agent of the Spanish government, could receive the funds and channel them to the financial institutions concerned. The  Spanish government will retain the full responsibility of the financial assistance and will sign the MoU.

The Eurogroup notes that Spain has already implemented significant fiscal and labour market reforms and measures to strengthen the capital base of the Spanish banks. The restructuring plans in line with EU state-aid rules and horizontal structural reforms of the domestic financial sector.

We invite the IMF to support the implementation and monitoring of the financial assistance with regular reporting.

What’s that? Only 100 billion Euro? Hardly worth mentioning then…

Of course it’s just for the banks, not for the government. After all, as everyone knows, it’s only the banks that are broke, not the country itself. Rest assured, your bonds are totally safe and not just a bunch of paper, worth hardly more than any other empty promise. But why safe the banks then? Why of course so they can continue buying those government bonds, as nobody else in their right mind would buy them…

Update, June 11th 2012: Guess what? Looks like the bailout already starts to fall apart

Nothing like figuring out your hare-brained bailout attempt was a failure from the beginning. Ok: Here are the problems with this band aid:

  1. Unfunded
  2. Temporary, and eventually will be replaced by the ESM. Markets can, luckily, still discount.
  3. Negative pledge issue still exists as Finland made all too clear. Countries will demand extra security interest while under EFSF regime and until ESM priming comes in play.

Finally, all of this, is just semantics.

Well, that didn’t take too long.

Written by mo

June 9th, 2012 at 8:06 pm

Greek CDS triggered

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EMEA DC Statement

March 9, 2012

In light of today’s EMEA Determinations Committee (the EMEA DC) unanimous decision in respect of the potential Credit Event question relating to The Hellenic Republic (DC Issue 2012030901), the EMEA DC has agreed to publish the following statement:

The EMEA DC resolved that a Restructuring Credit Event has occurred under Section 4.7 of the ISDA 2003 Credit Derivatives Definitions (as amended by the July 2009 Supplement) (the 2003 Definitions) following the exercise by The Hellenic Republic of collective action clauses to amend the terms of Greek law governed bonds issued by The Hellenic Republic (the Affected Bonds) such that the right of all holders of the Affected Bonds to receive payments has been reduced.

The EMEA DC has resolved to hold an auction with respect to the settlement of standard credit default swaps for which The Hellenic Republic is the reference entity. To maximise the range of obligations that market participants may deliver in settlement of any such credit default swaps, the EMEA DC  has agreed to run an expedited auction process such that the auction itself will take place on March 19, 2012. In light of this expedited auction process, market participants should submit any obligations that they would like to include on the list of deliverable obligations to ISDA as soon as possible.

Written by mo

March 9th, 2012 at 9:18 pm

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