Sunday, 15 May 2011

Mutually Assured Destruction (MAD)

Yesterday Eurostat disclosed that in order to hide its debt over the past decade, Greece had entered into not one, not two, but a total of 13 different currency swap contracts with Goldman Sachs, all based on the exchange of assorted currencies against the euro as well as one involving a dollar-CHF swap. This was a topic that was all the rage back in early 2010 when it was unclear just how deep the Greek insolvency runs, and was pushed into the open after Zero Hedge first exposed Titlos PLC, an SPV securitization deal by the National Bank of Greece which not took a shady "off the books" currency swap and then securitized it. Since then this story has died down as it has become all too clear just how insolvent not only Greece but all other European countries are, and it no longer matter to haggle over pennies when entire countries subsist day to day purely due to the generosity of the ECB. Yet while Eurostat disclosed the number of the swaps it did not provide detail into just what was contained within these swaps. Which is why back in December, Bloomberg, which recently won a lawsuit against the Fed and achieved release of top secret bank bailout documents, sued the ECB, asking "the European Union’s General Court in Luxembourg to overturn a decision by the ECB not to disclose two internal documents drafted for the central bank’s six-member executive board in Frankfurt this year. The notes show how Greece used swaps to hide its borrowings, according to a March 3 cover page attached to the papers obtained by Bloomberg News." Yet even now that it is all too clear just what the true fiscal situation of Greece and the periphery is, the ECB is still scrambling to hide its secretive and potentially fraudulent practices.

So let's get this straight: the ECB's decision-making process relies on shady transactions that involve the use of currency swaps? Interesting. So while we know that the Fed uses curve options to sell volatility and keep rates low, we wonder if the ECB is doing a comparable off-market intervention using the same mechanism that "nobody" knew was being used by Greece for nearly 10 years.

"Releasing the papers could damage the commercial interests of the ECB’s counterparties, hurt the region’s banks and markets, and undermine the economic policy of Greece and the EU, the central bank said." And so the mutual assured destruction pantomime continues unabated,
 The rest is here at ZeroHedge.

The Eurozone is on the cusp of a shady, covered up, financial shitstorm (as news comes to hand that IMF's Strauss-Khan, and French presidential favourite is fond of oral sex with unwilling couterparties) but 100 million Euro idiots are having an oragasm tonight as Azerbaijan's Ell and Nikki win the village idiot musical eisteddford.


IMF Managing Director Dominique Strauss-Kahn was taken into custody on Saturday at JFK airport in New York and was being questioned in regard to a sexual assault, a New York police spokesman told Reuters.

Spokesman Paul Browne said the woman who filed the complaint against Strauss-Kahn, 62, was a 32-year-old chambermaid who fled the room after the incident.

Strauss-Kahn, a possible Socialist candidate in the French presidential election next April, left the hotel after the incident and boarded an Air France aircraft scheduled to depart for Paris, the police spokesman said.

"The NYPD realized he had fled, he had left his cell phone behind," Browne said. "We learned he was on an Air France plane. They held the plane and he was taken off and is now being held in police custody for questioning."
"Around noon today, a maid at the hotel [the Sofitel by Times Square] knocked on the door of Strauss-Khan’s room. After letting the maid in, Strauss-Khan allegedly threw the maid on the room’s bed and forced her to perform oral sex on him, said police sources. Strauss-Khan let the maid leave — and soon afterward, headed off to Kennedy Airport for his flight to Paris."
From ZeroHedge, BBC, CNN etc etc.

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