1. We have entered a turbulent time band as the first Solar Eclipse have proven and worse is to come as things go ugly on a daily basis now. The Greece bailout 2.0 is a very difficult one as the hidden restructuring will not work out smoothly at all. The bad news from the US economy gains momentum as they want to prepare for the QE3 plus versions but that is not a good idea either. Market is now in a reality check mode as the bull-campaign hoax is running out of fume. At the same time a lot of smoke and mirrors as Netun went stationary this weekend as Jupiter entered the sign of Taurus. The dynamics are shifting away from bullish to cautious if not even fear. Today is the big Apple showdown as S. Jobs will show personally the latest Apple gadgets with one highlight being ICloud with ITunes shifting into a new dimension but if that does not create a hype the pullback of Apple may drag down the whole market.
Greek Bailout #2 Is Dead On Arrival: A Few Good Hedge Funds May Have Called The ECB’s Bluff, And Hold The Future Of The EUR Hostage
Submitted by Tyler Durden on 06/05/2011 23:22 -0400
Even as the general market, dumb as a doorknob, had been following every headline out of Europe, soaking up the BS that Greece may after all end up being bailed out in some miraculous way, there were those who wondered about the legal basis of the Greek bailout #2, also known as a redux of the “Vienna initiative.” The problem with the second “Deux Ex Machina” bailout is that there is absolutely nothing Deus about it, no Ex, and most certainly no Machina. In fact, as it now clearly appears, the whole rescue package is flimsier than a house of cards and a quick read through the indenture makes it all too clear. The key reason why the voluntary Vienna Initiative worked back in 2009 is that the alternative was the end of the world, and nobody would profit from not going along with the herd. This time things are diametrically different. The key phrase (or two) in the proposed package: “Voluntary” and “Collective Action Clauses”… Well as the following excerpt from Citi explains, both of these critical (as in binary: without them, Greece is dunzo) assumptions are unworkable, and explains why every single Greek bond in recent weeks has been purchased by hedge funds who have remembered that the economics of “nuisance value” when the upside of bluffing the EUR printer is virtually unlimited. Which means that not only is Bailout #2 in jeopardy of not passing the Greek parliament, but that we may suddenly find ourselves in the biggest “activist” investor drama, in which voluntary restructuring “hold out” hedge funds will settle for Cheapest to Delivery or else demand a trillion pounds of flesh from the ECB in order to keep the eurozone afloat. In other words, the drama is about to get very, very real. And, most ironically, a tiny David is about to flip the scales on the mammoth Goliath of the ECB and hold the entire European experiment hostage…