LOOKING BRIGHTER

Not the international financial situation of course, but for a blogger things are really beginning to look up.  In the morning, the International Swaps and Derivatives Association, "ISDA",  announced that they were to decide whether to meet to decide as to whether the loss of 70%  on Greek bonds by investors who would be forced into the restructuring as a result of the retroactive effect of the Collective Action Clause inserted into all Greek Law bond debentures after the fact amounted to an event of default.  Honest to God.  Hours later they said they would on Thursday.  You can't make this stuff up.  Of course it's a default unless they say it isn't.  Got it?  Now if they say it isn't what does that do for CDSs in general, the market and pricing thereof and the risk assessments by managers who though they had things hedged by way of CDSs and suddenly wake up to find out that they my well be geared well above agreed-to covenants and considerably short of regulatory capital?  Please Lord, make them say no.  The blogisphere has material for months.

Oh, remember that agreement all the Euro states came up with...the gang of 17...to get and keep their fiscal house in order?  Well, this afternoon, the Taoiseach--that's Prime Minister in the Irish--told his parliament that upon the advice of counsel, the decision to ratify what had been agreed would have to be put to a referendum.  Now for the other Euros that's no big deal because only 12 states are needed to bring this thing into force...it's sort of like a collective action agreement...but if a member state ops out, the European bail out facility will not be made available if needed and that for Ireland could be a very big deal indeed  The early polling as to whether this thing passes is slightly less than 50-50.  Depending upon how much time is available to scare the populace, I think the referendum fails, so here's to you Carter, for suggesting that next up in the short the hell out of the sovereign debt game is Ireland.  And things were going so well in the sense that Ireland was making slow but steady progress flying under the radar.

On top of all this the Euroland ministers postponed a meeting that was supposed to be held today to discuss the disbursement to 130 billion to Greece until Friday for reason that were unclear to say the least.  Dissention in the group?  Most probably.  Remember, the money is supposed to go into a suspense account and dribbled out as Greece met it's targets.  It seems that there has been no agreement as to what those targets might be so we're all working on those so we can get this ball rolling.  Sure.

Anyway, things were really looking up until Massimo called around noon.

"You see the numbers from the banks today, Charlie?  I tell you so, no?"

"You tell me so, yes, Massimo. The Italian banks borrowed big time from the ECB and bought Italian Bonds."

"And whatta that do, eh?  The banks they make a fortune!  For free. No capital!.  It's what I tell you, no?"

"Yes Massimo, it's exactly what you told me."

"And we do it again for sure.  I tell you Charlie, Mario do the right thing and we take care of Italia.  Look at the yields.  I tell you, no?"

"Massimo, for the last time, YES, YOU TOLD ME!"

"Eh, Charlie.  You listen to your friend.  You learn.  How you say, we take care our own.  Ciao, Charlie."

Massimo has been a friend since I got into this business...an insufferable friend sometimes but always a friend.  I hate to admit it but he got this one right.