(BN) *S&P: ‘ALMOST CERTAIN’ EFSF’S AAA GOVS TO PROVIDE NEEDED SUPPORT
So the details boil down to this – the AAA guarantors cap the size of exposure the EFSF can take. So the EFSF can borrow, insure, guarantee, or otherwise take on risk up to about 452 billion. So now we know the size has been constrained by the AAA guarantors. It seems like some of […]
Grade 3 Math Assignment
Tom has 1 apple. Tom has promised to give Robbie, Jim, Anne and Mary, half an apple each. How does Tom get 4 half apples from 1 apple? Bonus Question: While Robbie, Jim, Anne, and Mary are waiting for their half apple, Tom gets hungry and takes a couple bites out of the apple. How […]
Default, Credit Event, And Too Big to Fail
It looks like Fitch would declare a 50% write-down a default. And yes, it is a default. No matter how anyone wants to spin it – restructuring, PSI, etc., it is definitely a default. It is NOT a Credit Event. Maybe the name should be changed from Credit Default Swaps to Credit Event Swaps because […]
Italy – Weak; But How Would A First Loss Insured Auction Have Worked?
Well, we are now into the second day of the new Era. We continue to wait for details on the exact IIF plan. We wait for details on what the EFSF will look like, particularly the leveraged guarantee portion. We are also waiting to fully understand who will be doing the secondary market activity – […]
EFSF As A First Loss Insurance Provider (reposted from Oct 21)
Based on the fast and furious headlines, it is hard to tell whether EFSF providing first loss “wraps” is still one of the myriad of possible outcomes, but it is worth looking at just in case. The flying headlines obscure an important issue. While the different proposals sound like completely different solutions, they in fact […]
Believe It Or Not, Restructuring Is Acting As Designed
There seems to be a lot of chatter still over whether this should be a Credit Event or not. As strange as it may seem, it shouldn’t be, because it is very difficult to determine why someone may agree to an exchange that they are not contractually forced into. If the banks announced that they […]
Banks Get Bailouts, They Don’t Give Them
From the moment the IIF proposal first came out I have argued that it is a good deal for banks – no accounting loss – a highly rated zero coupon bond – and higher coupon payments – in exchange for extending maturity on debt that couldn’t be paid back. Banks were winners. The fiction of […]
Will They Hold Hands?
The only real question remains, is whether Merkel and Sarkozy will hold hands to add emphasis to their “we saved the world” announcement. We will get an announcement and it will sound positive. Unless they did a lot of work in the past 24 hours, it seems unlikely that any details will come out. We […]
ECB Bond-Buying Should End With New EFSF, German Motion Says
ECB Bond-Buying Should End With New EFSF, German Motion Says (1) I think this is one of the most important bits of news on the day. This and the fact that the Dutch finally said something – and it wasn’t positive. I have been arguing that the solutions create contagion rather than prevent it. I’ve […]
Guilt, Growth, Lies, Laziness, and Liquidity
We are getting closer and closer to some actual details. Eventually EFSF will be only one or two things. We will see how much or how little outside money gets contributed. Guilt: I attended a presentation yesterday and the one thing that surprised me the most, was the apologetic tone of the Germans. They seemed […]