This should have been yesterday's, but I had another fight with Google. I lost again.
Anyway, after a brutal weekend in Riga, yank Tsapris finally pulled the plug and sat the Rock Star, yanks Varoufakis. He's still around so ordinating efforts but the day to day work will be done by Euclid Tsakslotos, an Oxford training economist of leftist leanings, assisted by Georgos Houliarkis about whom I know nothing; then again I don't know much about Euclid either except that he wears a tie and appears to bathe regularly which would not altogether be bad things. The Rock Star? He was dead meat and had been in the sun too long. Then, too, the not-so-secret-secret that the Euro-boys (and girls) had already drawn up the terms of separation with Greece made this sort of move inevitable as despite the lack of appetite for a separation on either side, with the lack of progress and the increasing lack of comity, it was becoming a sure thing. One of the best lines, however, came from the Great Art Cashen on CNBC who mused as to whether the Rock Star, a well known "expert" in game theory was playing a game all along. No Art, he was just a jerk and lost the game.
Anyway, on the news of the change, the market for Greek bonds went through the roof. Either hope springs eternal or there is one born every minute. You choose. But as you know I am a bit of a history buff when it comes to these things and have often said that we have seen most of this before. In the dark days early in the Mexico crisis of 1982, President Jose Lopez Portillo--or "Ho Lo Po" to his...ah...buddies--tilted left and replaced his cabinet with supposedly radical leftists. Wall Street shuttered but through the short period until the next administration, soothing words kept coming from Mexico not to worry, this too shall pass. Sure enough, in came the new "moderate" administration with who most felt comfortable if not enraptured, negotiations went forward and the restructuring were completed, money was lost and normalcy returned except for that period of about ten years which were not the best for the people of Mexico. The alternative? Well, let's not go there. I was a banker, remember.
When it was revealed last week that Lee Buchheit was again seemingly in the midst of the Greek talks I wondered whether something was up. You see, back in 1982, one of the advisors to Mexico was a guy named Buchheit. The same Buchheit? Could there be another? This isn't his first rodeo boys and girls. There may be a chance here for the Greeks albeit a slim chance as the numbers simply don't work but with the change there is now a chance. This weekend there was none. We shall see.
And remember that radical government in Mexico? The short-lived finance minister was a fellow by the name of Carlos Tello a self-styled socialist economist by trade. After the new government arrived in office, I decided it might not be a bad idea to keep up with the "loyal opposition" and had a meeting arranged with Mr. Tello a bit on the sly. It was to be lunch at a hotel in the Zona Rosa in Mexico. I arrived early and decided to have my shoes shined (greatest shines in the world are in Mexico). In the middle a young child with his mother came begging. The man in the next chair asked them not to disturb me and they stepped back. It was a sad sight. When I was finished, I bought an ice cream from a street vendor, for about fifty cents, gave it to the child and a few dollars to his mother. It was the day of Mexico's first devaluation and four dollars would probably have bought two weeks worth of tortillas. Mom tried to kiss my hand. Things were awfully hard. My neighbor at the shoeshine looked at me and said in perfect English, "that was a very kind thing you just did. She should not be begging." "Yes, I said, " but she has no choice." He nodded, and I went into the hotel for lunch.
Five minutes later my guest arrived. Carlos Tello had just finished his shoe shine. We talked and laughed and had a hell of a lunch to include two bottles of a de Vogue '69 Musigny that because of the devaluation cost $28...for both! Having never seen a devaluation the hotel didn't know enough to change the prices.
We kept in touch for a while and then lost track of one another. He went on to a career in the foreign service serving as ambassador here and there. I guess there is a lesson in there somewhere. Beats me as to where or what it is
Showing posts with label Buchheit. Show all posts
Showing posts with label Buchheit. Show all posts
Tuesday, April 28, 2015
Monday, April 13, 2015
MONDAY, MONDAY...
...so bad to me. There is zippo of interest happening anywhere. Given the lack of current events I though I just might touch on one of the more bizzar things playing out in that singularly dreadful political spot called Argentina.
It all goes back to the famous Griesa ruling which banned the payment of interest to the restructured bonds through the enforcement of the parri passu payments provision of those bonds subject to U.S. law (the Law of the State of New York actually). But what happens when a banking institution, subject to that ruling, operates in Argentina and gets precisely the opposite instructions from the Argentine government? Wait, it gets worse. What happens when the same institution is the trustee and paying agent for Argentine bonds governed by Argentine law? In the banking business it's known as buggered.
Anyway, that is precisely the case in which Citibank found itself. It petitioned the court in New York to allow them to obey the request of the Argentine government and was told nothing doing. So what did the Argies do. They fired the head of Citibank! I mean, have you ever hear of nonsense such as this! I haven't, but in the mean time, some very interesting issues are raised.
The bonds under Argentine law are not subject to the ruling of the court in New York. But the currency of the bonds is the U.S. Dollar. Now ever since I was a pup it was assumed that the place of payment of a U.S. dollar obligation was the United States irrespective of governing law or the nationality--or domicile--of the institution making the payment. Indeed, that was the original definition of a Eurodollar: an obligation to pay dollars from an account in the United States to a person not resident in the United States or to reverse the thought, a claim upon a deposit in the United States. So come on, what's a girl to do? If that is correct, Citibank is clearly at the mercy of Judge Griesa and the poor manager, who is damned if he does and damned if he doesn't is on food stamps (not quite). Well, I thought that this was simply and amusement as Graham Greene might have called it until I got a call from my Really Smart Friend, Larry who asked, "What's a place of payment clause?" Stumped.
It turns out that The Great Buchheit of whom I have oft spoken has come up with a little gem to avoid the effects of a parri passu clause on agreements written under the laws of the State of New York or other such dastardly jurisdictions. He is arguing that if the docs make not statement as to where any payment should be made it can be made anywhere designated by the borrower which of course has the effect of...well, you get the picture. This came about not as a result of Argentina but in regard to Cyprus. Fancy that.
Now I am going to stop right here before I get into real trouble, but I am going to find out more about this. Keeps me out of trouble but then again I still have this feeling that we all would be better off if people payed what they owe...especially to banks who as we all know do God's work.
It all goes back to the famous Griesa ruling which banned the payment of interest to the restructured bonds through the enforcement of the parri passu payments provision of those bonds subject to U.S. law (the Law of the State of New York actually). But what happens when a banking institution, subject to that ruling, operates in Argentina and gets precisely the opposite instructions from the Argentine government? Wait, it gets worse. What happens when the same institution is the trustee and paying agent for Argentine bonds governed by Argentine law? In the banking business it's known as buggered.
Anyway, that is precisely the case in which Citibank found itself. It petitioned the court in New York to allow them to obey the request of the Argentine government and was told nothing doing. So what did the Argies do. They fired the head of Citibank! I mean, have you ever hear of nonsense such as this! I haven't, but in the mean time, some very interesting issues are raised.
The bonds under Argentine law are not subject to the ruling of the court in New York. But the currency of the bonds is the U.S. Dollar. Now ever since I was a pup it was assumed that the place of payment of a U.S. dollar obligation was the United States irrespective of governing law or the nationality--or domicile--of the institution making the payment. Indeed, that was the original definition of a Eurodollar: an obligation to pay dollars from an account in the United States to a person not resident in the United States or to reverse the thought, a claim upon a deposit in the United States. So come on, what's a girl to do? If that is correct, Citibank is clearly at the mercy of Judge Griesa and the poor manager, who is damned if he does and damned if he doesn't is on food stamps (not quite). Well, I thought that this was simply and amusement as Graham Greene might have called it until I got a call from my Really Smart Friend, Larry who asked, "What's a place of payment clause?" Stumped.
It turns out that The Great Buchheit of whom I have oft spoken has come up with a little gem to avoid the effects of a parri passu clause on agreements written under the laws of the State of New York or other such dastardly jurisdictions. He is arguing that if the docs make not statement as to where any payment should be made it can be made anywhere designated by the borrower which of course has the effect of...well, you get the picture. This came about not as a result of Argentina but in regard to Cyprus. Fancy that.
Now I am going to stop right here before I get into real trouble, but I am going to find out more about this. Keeps me out of trouble but then again I still have this feeling that we all would be better off if people payed what they owe...especially to banks who as we all know do God's work.
Thursday, February 7, 2013
ODE TO JOY
"Read you friend Buchheit's comments yesterday?" Gerry called today bright and early.
"Yep. Quite something." For the few of you not in the know, Buchheit refers to Lee Buchheit, Partner of Cleary, Gottleib, rescheduling guru and he who has terrorized financial institutions on behalf of sovereign clients (all deadbeats) for over 30 years. When Buchheit speaks, if you have a brain in your head you should listen.
"What the hell is he getting at, Charlie? You know him as well as anyone. Issuing warnings now about hidden risk in emerging markets." Did he switch sides or something?"
"I am sure not, but you have to understand Lee. There is a wonderful line from Shakespeare...I forget where...but it is '...and do as adversaries in the law; strive mightily but eat and drink as friends.'
That's the way he practices law and there are damn few like him...more's the pity. The representation of the client is one thing at which he is singular in purpose but that doesn't mean he will divorce himself from friends or reality outside of the client relationship. And frankly, when he warns that there are hidden risks particularly in the banking sector where so much debt has been guaranteed by sovereigns, that is a statement that hopefully cause both sides to think about before doing something stupid believing this credit thing is in the barn and dry."
"You think he is right?"
"Of course he's right. Look, this is about silly people having made really dumb decisions when all of the evidence they needed to avoid making those decisions was staring them right in the face. Now I've heard Lee say, 'He that sues my client is my friend,' but believe me, part of his job as he sees it is avoiding more debacles such as those in the past five years. Nevertheless, I think he is pretty sure that there is a lot more business coming his way given recent history. I also think he is not disturbed by the prospect. Got it?"
"Got it."
As I have said before, I've been on both sides with Brother Buchheit and for him I have nothing but the greatest respect. And in Euroland it is still about the banks in ways that we Over Here cannot imagine. The interconnections between the political forces and the financial institutions remain unrelenting. A prime example of this is Monte di Paschi de Sienna, much in the news these past weeks.
I have absolutely no knowledge as to the rumors surrounding the bank and Mario Draghi and what did happen or what may have happened during Draghi's involvement. Suffice to say Draghi has been hurt by some very vague allegations and the last guy you want hurt at this time is Draghi. Further, I am willing to bet a good deal of money (my idea of a "good deal" is probably a good deal less than yours) that not all the governmental involvement warned of by Mr. Buchheit is there in plain sight. If the growth enhancer ever hits the fan again, after the past couple of years some ugly stuff is going to burst into light. Keep watching this space.
Another large cloud on the horizon which might come under close scrutiny very shortly is the continued complete disagreement between Frankie and David on the European budget which the Brits consider dead on arrival unless modified ("reduced"). The financial risk to the region is enhanced by the political atmosphere which right now is not good. Finally, the Same Sr. Draghi warned today that economic conditions are nor looking up with a not-so-veiled threat that the strength of the Euro will probably reduce economic prospects in the coming year. Over Here, the reaction was. "What! You mean all is not well Over There?" Stocks fell as a result. Frankly, I would have thought that the markets would have collapsed upon learning how dumb are the people in charge, but that's just me. Anyway, the cat is out of the bag and at the same time here comes the sequester which is no big thing if one stops and thinks about it, but then again, there aint much thinkin' going on these days. This could be a rocky ride beginning in a few weeks but if you had the idea that Over There was about to end on a happy note, you might want to think again. It may have just started.
"Yep. Quite something." For the few of you not in the know, Buchheit refers to Lee Buchheit, Partner of Cleary, Gottleib, rescheduling guru and he who has terrorized financial institutions on behalf of sovereign clients (all deadbeats) for over 30 years. When Buchheit speaks, if you have a brain in your head you should listen.
"What the hell is he getting at, Charlie? You know him as well as anyone. Issuing warnings now about hidden risk in emerging markets." Did he switch sides or something?"
"I am sure not, but you have to understand Lee. There is a wonderful line from Shakespeare...I forget where...but it is '...and do as adversaries in the law; strive mightily but eat and drink as friends.'
That's the way he practices law and there are damn few like him...more's the pity. The representation of the client is one thing at which he is singular in purpose but that doesn't mean he will divorce himself from friends or reality outside of the client relationship. And frankly, when he warns that there are hidden risks particularly in the banking sector where so much debt has been guaranteed by sovereigns, that is a statement that hopefully cause both sides to think about before doing something stupid believing this credit thing is in the barn and dry."
"You think he is right?"
"Of course he's right. Look, this is about silly people having made really dumb decisions when all of the evidence they needed to avoid making those decisions was staring them right in the face. Now I've heard Lee say, 'He that sues my client is my friend,' but believe me, part of his job as he sees it is avoiding more debacles such as those in the past five years. Nevertheless, I think he is pretty sure that there is a lot more business coming his way given recent history. I also think he is not disturbed by the prospect. Got it?"
"Got it."
As I have said before, I've been on both sides with Brother Buchheit and for him I have nothing but the greatest respect. And in Euroland it is still about the banks in ways that we Over Here cannot imagine. The interconnections between the political forces and the financial institutions remain unrelenting. A prime example of this is Monte di Paschi de Sienna, much in the news these past weeks.
I have absolutely no knowledge as to the rumors surrounding the bank and Mario Draghi and what did happen or what may have happened during Draghi's involvement. Suffice to say Draghi has been hurt by some very vague allegations and the last guy you want hurt at this time is Draghi. Further, I am willing to bet a good deal of money (my idea of a "good deal" is probably a good deal less than yours) that not all the governmental involvement warned of by Mr. Buchheit is there in plain sight. If the growth enhancer ever hits the fan again, after the past couple of years some ugly stuff is going to burst into light. Keep watching this space.
Another large cloud on the horizon which might come under close scrutiny very shortly is the continued complete disagreement between Frankie and David on the European budget which the Brits consider dead on arrival unless modified ("reduced"). The financial risk to the region is enhanced by the political atmosphere which right now is not good. Finally, the Same Sr. Draghi warned today that economic conditions are nor looking up with a not-so-veiled threat that the strength of the Euro will probably reduce economic prospects in the coming year. Over Here, the reaction was. "What! You mean all is not well Over There?" Stocks fell as a result. Frankly, I would have thought that the markets would have collapsed upon learning how dumb are the people in charge, but that's just me. Anyway, the cat is out of the bag and at the same time here comes the sequester which is no big thing if one stops and thinks about it, but then again, there aint much thinkin' going on these days. This could be a rocky ride beginning in a few weeks but if you had the idea that Over There was about to end on a happy note, you might want to think again. It may have just started.
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