CDS Implications Of A Greek Default

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While the ECB has been busy using LTRO to capitalise european banks in preparation for a Greek default, are they sure that the contagion can be contained. One thing is for sure and that is nobody knows for sure. Keith Barron gave an interview on KingWorldNews and spoke about the insurance of these Greek bonds and explained potentially a Greek default could be disastrous.

“There are basically three times the amount of bonds out there, existing in contracts, to insure those bonds.  Now you have to remember that a lot of these contracts were signed when all of these bonds were considered AAA rated.  People didn’t believe they would default.

So their is huge exposure in these dangerous contracts.  There was one contract I saw that was going to pay 500 to 1 for the loss.  These things are incredibly toxic contracts confronting the system right now.  We don’t know who the counterparties are, and in many cases it’s hypothecated two or three times and it’s something that’s worldwide.

We are looking at financial Armageddon.  This is just awful, Lehman times 1,000.  This is why they are going to all of these crazy extremes and calisthenics to make it seem like Greece is not defaulting so the bond insurance doesn’t kick in.  They are trying to call it ‘an organized settlement.’  But a default is a default.  This will ultimately end up in the courts.  

 Based on Barron’s experience of watching currencies collapse, he added

You have to consider that if Europe is going down, then the euro is going to turn into Monopoly money.  It’s going to be rubbish.  I would avoid anything that is euro denominated like the plague.  The Americans could be left holding the bag with a lot of this.  The current administration in America has doubled the money supply since taking office, but that’s nothing compared to what’s going to happen.

You have the potential here to see multiple Weimar type hyperinflations.  People may say I’m alarmist or crazy talking about this, but I’ve lived in many countries in South America and I have seen various currencies go to zero.  I’ve seen it many times.  I was in Russia when they re-stamped all of the currency from one to one hundred.  In Kazakhstan I saw the same thing.  I saw the Brazilian cruzeiro become worthless.  I watched the Argentinean currency go to zero.  This is something that can happen.

It’s extremely important to have physical gold in this environment.  It’s not good enough to own gold in an ETF.  You need to have something you can put your hands on.  You need to have gold and you need to have silver, something that will protect your wealth if the whole system goes down.

The bottom line is this may not happen.  But even if things get very stressed in the system, it will be incredibly difficult for people to get their hands on physical gold or silver.”


German Plan To Replace English As Official EU Language

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The European Commission has just announced an agreement whereby English will be the official language of the European Union rather than German, which was the other possibility.

As part of the negotiations, the British Government conceded that English spelling had some room for improvement and has accepted a 5- year phase-in plan that would become known as “Euro-English”.

In the first year, “s” will replace the soft “c”.. Sertainly, this will make the sivil servants jump with joy. The hard “c” will be dropped in favour of “k”. This should klear up konfusion, and keyboards kan have one less letter.

There will be growing publik enthusiasm in the sekond year when the troublesome “ph” will be replaced with “f”.. This will make words like fotograf 20% shorter.

In the 3rd year, publik akseptanse of the new spelling kan be expekted to reach the stage where more komplikated changes are possible.

Governments will enkourage the removal of double letters which have always ben a deterent to akurate speling.

Also, al wil agre that the horibl mes of the silent “e” in the languag is disgrasful and it should go away.

By the 4th yer people wil be reseptiv to steps such as replasing “th” with “z” and “w” with “v”.

During ze fifz yer, ze unesesary “o” kan be dropd from vordskontaining “ou” and after ziz fifz yer, ve vil hav a reil sensi bl riten styl.

Zer vil be no mor trubl or difikultis and evrivun vil find it ezi TU understand ech oza. Ze drem of a united urop vil finali kum tru.

Und efter ze fifz yer, ve vil al be speking German like zey vunted in ze forst plas.

$6 Trillion in Fake Bonds Found Down The Back Of The Sofa

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Bloomberg have run a story of Italian authorities arresting 8 people in relation to $6 trillion of US Treasury bonds found in Zurich as you do. The bonds dated back to 1934.

The bonds were found hidden in makeshift compartments of three safety deposit boxes in Zurich, the prosecutors from the southern city of Potenza said in an e-mailed statement. The Italian authorities arrested eight people in connection with the probe, dubbed “Operation Vulcanica,” the prosecutors said.

The financial fraud uncovered by the Italian prosecutors in Potenza includes two checks issued through HSBC Holdings Plc (HSBA) in London for 205,000 pounds ($325,000), checks that weren’t backed by available funds, the prosecutors said. As part of the probe, fake bonds for $2 billion were also seized in Rome. The individuals involved were planning to buy plutonium from Nigerian sources, according to phone conversations monitored by the police.

The fraud posed “severe threats” to international financial stability, the prosecutors said in the statement. HSBC spokesman Patrick Humphris in London declined to comment when contacted by telephone.

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