With gold and silver plunging, today King World News interviewed legendary Jim Sinclair’s chartist Dan Norcini. Norcini told KWN that sell-stops and fresh speculative shorting are putting short-term pressure on both gold and silver. Here is what Norcini had to say: “Eric, the reason gold is getting hit so hard and by consequence silver as well, has to do specifically with the action in the bond market. To start the year, I told KWN readers and listeners the most important market in 2012 was going to be the bond market. The bonds have had a massive breakdown.”
Dan Norcini continues:
“A huge amount of selling has entered the bond market. Bonds had a big down day yesterday and we have had an even bigger debacle today, particularly on the long end of the curve. The ten year rate is now up to 2.25%, it’s up 7.4% today alone
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14 March 2012
Embry - Gold & Silver Manipulation, Greece, Oil & Contagion
With continued volatility in gold and silver, oil holding above $106 and ongoing worries about the Greek CDS situation, today King World News interviewed John Embry, Chief Investment Strategist of the $10 billion strong Sprott Asset Management. Embry told KWN contagion in Europe is a major risk because of the situation in Greece, but first he had this to say about gold, silver and oil: “Jim Sinclair hit it on the head the other day when he said the central banks are scared stiff of the gold market because of their very aggressive monetary policy. They can say anything they want, but they have no choice but to follow quantitative easing to infinity. The amount of money they will create will be astounding.”
John Embry continues:
“Eventually the gold market is going to realize this and it’s going to go berserk, but in the meantime the central planners can use market manipulation to keep a lid on gold. I guess it’s discouraging in the short-run, but in the long-run it means nothing.
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John Embry continues:
“Eventually the gold market is going to realize this and it’s going to go berserk, but in the meantime the central planners can use market manipulation to keep a lid on gold. I guess it’s discouraging in the short-run, but in the long-run it means nothing.
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Richard Russell - More QE After 40 Year Monster Bubble
With gold trading near the $1,700 level, today the Godfather of newsletter writers, Richard Russell, had this to say in his latest commentaries: “I have been writing my ‘stuff’ for about 54 years. They say that you can't teach old dogs new tricks, but I'm an old dog and I’m still learning. Many people in this line of work ask me how in the world I stay in business. I tell them, I really don't know, I write about what's on my mind, and most subscribers evidently like it.”
Richard Russell continues:
“There are more things on this earth than money and profits (or losses), and one must develop a philosophy of life. The reason I say this is because sooner or later everyone runs into seemingly impossible trouble, and one must have a way of surviving those troubles until the sun rises.
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Richard Russell continues:
“There are more things on this earth than money and profits (or losses), and one must develop a philosophy of life. The reason I say this is because sooner or later everyone runs into seemingly impossible trouble, and one must have a way of surviving those troubles until the sun rises.
MORE
13 March 2012
SilverDoctors: 132 Million Ounces of Paper Silver Dumped in 30 Mi...
SilverDoctors: 132 Million Ounces of Paper Silver Dumped in 30 Mi...: Massive paper silver dumping continued with today's March FOMC statement. Beginning exactly at 2:15 pm EST, 90 million ounces of paper si...
Farage - Yes, Germany & Switzerland Want Their Gold Back
With Europe desperately trying to stabilize the Greek crisis, today Nigel Farage told King World News that despite European leaders pretending everything is okay, there is total denial and the ceiling is falling in. He also said the Germans and Swiss want their gold back. But first, here is what Farage had to say about the ongoing crisis in Greece: “It was very odd, I mean we had Mr. Van Rompuy, President of the European Council and Mr. Barroso, the Commission President, in Parliament this morning and it was remarkable. Two speeches from the two big bosses, both saying everything is absolutely wonderful. We have no difficulties at all and the recent Greek agreement has all gone off very smoothly. There is absolutely nothing to worry about.”
Nigel Farage continues:
“Mr. Van Rompuy said the euro crisis had now been through a turning point and everything is going swimmingly. Nothing to worry about chaps, it’s all absolutely fine. I did, in response, take the mickey a little bit and I did allude that I was taking part in some giant, comic farce, where we try to pretend the world is great even though the ceiling is falling in as we’re saying it.
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Nigel Farage continues:
“Mr. Van Rompuy said the euro crisis had now been through a turning point and everything is going swimmingly. Nothing to worry about chaps, it’s all absolutely fine. I did, in response, take the mickey a little bit and I did allude that I was taking part in some giant, comic farce, where we try to pretend the world is great even though the ceiling is falling in as we’re saying it.
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Rule - $150 to $170 Oil, Gold, Fraud & Dangerous Times
With continued volatility in gold, silver and oil, today King World News interviewed Rick Rule, CEO of Sprott USA. Rule told KWN the world is out of $60 oil and maybe out of $70 oil. He also said the circumstances in Greece bring up the issue of moral hazard and the situation is extremely dangerous. Here is what Rule had to say: “I don’t know if it spins out of control, but it’s clearly fraud. Greece had an engineered default, which they chose not to call a default. This is just plain fraud and if you and I tried to do this, in the context of a private issue, we would go to jail. The fact that people who operate under a sovereign do it is very strange and very dangerous.”
Rick Rule continues:
“This situation brings up the issue of moral hazard. This causes people’s behavior to change. We are now living in the era of payback for moral hazards. The idea that you have this broadly sanctioned fraud, which holds harmless the idiots who bought Greek debt, this encourages the same type of behavior.
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Rick Rule continues:
“This situation brings up the issue of moral hazard. This causes people’s behavior to change. We are now living in the era of payback for moral hazards. The idea that you have this broadly sanctioned fraud, which holds harmless the idiots who bought Greek debt, this encourages the same type of behavior.
MORE
John Hathaway - 9 Key Points for the Gold & Silver Markets
With continued volatility in the gold and silver markets, today King World News reached out to 40 year veteran John Hathaway. Hathaway is the prolific manager of the Tocqueville Gold Fund and he has achieved a 5-star rating from Morningstar. Hathaway sent KWN, exclusively, an outline of 9 key points in the gold and silver markets. Here is a portion of one of the 9 key points (all 9 points below): “The fact that gold has survived the negative news flow from the monetary and economic front is encouraging. If gold can withstand the apparently changing narrative that had underpinned a bullish stance on gold, it will be a sign of enormous strength.”
John Hathaway’s 9 key points sent to KWN:
Brief comments on recent market action and outlook for precious metals:
1.The recent sharp decline appears to have been another test of the December low of $1532/oz intraday. Gold fell to $1675 on March 9th from $1788 including a drop of $72 on February 29th. So far, the downside was contained near the 200 day moving average. From a purely technical standpoint, the uptrend in gold seems intact.
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John Hathaway’s 9 key points sent to KWN:
Brief comments on recent market action and outlook for precious metals:
1.The recent sharp decline appears to have been another test of the December low of $1532/oz intraday. Gold fell to $1675 on March 9th from $1788 including a drop of $72 on February 29th. So far, the downside was contained near the 200 day moving average. From a purely technical standpoint, the uptrend in gold seems intact.
MORE
Turk - Why Army of New Buyers Will be Entering Gold & Silver
With many investors worried about the recent action in gold and silver, today King World News interviewed James Turk out of Spain. Turk told King World News that an army of new buyers is going to enter the gold and silver markets. But first, here is what Turk had to say about the situation in Greece: “Greece remains a mess. All the bailout means is that the country has increased its debt by $30 billion euros. The Greeks couldn’t repay what they already owe and there is no way this new debt is going to be repaid either. Greece’s problem, as well as other over-indebted countries, means that we should continue to focus on precious metals.”
James Turk continues:
“Whether or not the CDS payouts on the Greek default lead to a full blown contagion, only time will tell. But one thing is certain, every party that owns a CDS on Greece and other sovereign debts is looking at them closely to determine if they will be paid and how they will be paid.
MORE
James Turk continues:
“Whether or not the CDS payouts on the Greek default lead to a full blown contagion, only time will tell. But one thing is certain, every party that owns a CDS on Greece and other sovereign debts is looking at them closely to determine if they will be paid and how they will be paid.
MORE
12 March 2012
Barron: Greek Situation Catastrophic, Expect More Black Swans
Today one of the legends in the gold world told King World News the Greek situation will be catastrophic as it plays out over time. Keith Barron is responsible for one of the largest gold discoveries in history and consults with major gold companies around the world as well as international brokerage houses. Barron also said investors should expect to see more black swans on the horizon. Here is how Barron described the situation: “As I predicted, there have been massive payouts due to default insurance kicking in. The banking industry has been looking at this and the individuals involved must be thinking they are going to have the same situation the next time Greece defaults.”
Keith Barron continues:
“All they did was kick the can down the road. They have had a lot of time to try to get these contracts worked out. This is what they should have been doing over the last several weeks, working very hard to unwind a lot of these situations.
MORE
Keith Barron continues:
“All they did was kick the can down the road. They have had a lot of time to try to get these contracts worked out. This is what they should have been doing over the last several weeks, working very hard to unwind a lot of these situations.
MORE
John Williams - Intensifying Crisis & Staggering Unemployment
John Williams just warned that the ongoing financial problems have horrendous implications for the markets and systemic stability. Williams, who founded ShadowStats, also noted that U6 unemployment levels are not being reported by the mainstream media and they are at staggering levels. Here is what Williams had to say about the situation: “The outlook for the broad economy remains bleak, despite relatively upbeat February payroll data. Deterioration in the January trade deficit and related revisions suggest negative impact on first-quarter 2012 GDP reporting, along with increasing downside pressure on the U.S. dollar from underlying economic and political fundamentals.”
John Williams continues:
“Systemic-solvency and liquidity issues continue to plague the Fed and to restrain U.S. economic activity. Bank lending remains impaired, while household income has taken a new hit, as indicated in recent reporting. Separately, as detailed in the Hyperinflation Watch, annual and monthly growth in the broad money supply appears to be stalling, again. That likely is a further indication of mounting difficulties in the systemic-solvency crisis.
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John Williams continues:
“Systemic-solvency and liquidity issues continue to plague the Fed and to restrain U.S. economic activity. Bank lending remains impaired, while household income has taken a new hit, as indicated in recent reporting. Separately, as detailed in the Hyperinflation Watch, annual and monthly growth in the broad money supply appears to be stalling, again. That likely is a further indication of mounting difficulties in the systemic-solvency crisis.
MORE
11 March 2012
Pento - Inflation to Rapidly Increase Around the World in 2012
Today Michael Pento told King World News that Europe’s economy is falling off a cliff, along with other parts of the world, as inflation continues to take a toll on global GDP. Pento, who founded Pento Portfolio Strategies, also noted that one of the largest corporations in the world is seeing a global slowdown. This is what Pento had to say about what is taking place: “Back in early 2011, I was one of the few economists to warn that global GDP growth would slow dramatically in the near future and that the emerging market economies would not be immune from that upcoming contraction. My prediction was based on the premise that the then incipient sovereign debt crisis in the developed world would cause the export-driven BRIC economies to stall.”
Michael Pento continues:
“We now know that the Japanese economy is contracting, while Europe’s GDP is falling off a cliff. And just last week we received more concrete evidence that emerging market economies are starting to feel the pinch from the developed world’s debt crisis.
MORE
Michael Pento continues:
“We now know that the Japanese economy is contracting, while Europe’s GDP is falling off a cliff. And just last week we received more concrete evidence that emerging market economies are starting to feel the pinch from the developed world’s debt crisis.
MORE
10 March 2012
Sinclair - Greek Tragedy Part of $37 Trillion, Not $3.5 Billion
Today legendary trader and investor Jim Sinclair told King World News the “credit event” in Greece totals much more than the $3.5 billion which is being reported by the mainstream media. Sinclair also said if the CDS’s are in fact made to pay, this could require the rescuing of eight international banks, through Fed swaps that could total in the trillions of dollars. Here is what Sinclair had to say about what is happening : “The release made by the International Swaps & Derivatives Association (ISDA), for the average Mensa member or genius, is totally incomprehensible. The press is using the word default, but the ISDA is using the word ‘auction.’ Clearly, the amount of CDS’s outstanding is infinitely more than the $3.5 billion that is being quoted.”
Jim Sinclair continues:
“The BIS confirms, in the area of CDS’s the total outstanding is approximately $37 trillion. So I believe the reports being given about this just being a small and modest market event is false. As a market observer and having more than 50 years in the business, the real number is at least 50% or more of the existing $37 trillion that is related to Greece.
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Jim Sinclair continues:
“The BIS confirms, in the area of CDS’s the total outstanding is approximately $37 trillion. So I believe the reports being given about this just being a small and modest market event is false. As a market observer and having more than 50 years in the business, the real number is at least 50% or more of the existing $37 trillion that is related to Greece.
MORE
Eveillard - All Hell May Break Loose & Gold is Way Undervalued
Today legendary value investor, Jean-Marie Eveillard told King World News all hell could break loose and gold is nowhere near fair value. Eveillard, who oversees $50 billion at First Eagle Funds, had this to say about the situation, “I think they bought some time, not so much because of what happened with the Greek bonds but because the head of the ECB decided to lend the commercial banks whatever they needed. This happened in December and again in February and it totaled over one trillion euros.”
Jean Marie Eveillard continues:
“As I said, this has bought the Europeans some time, maybe a few months. The Greek situation is really beyond repair, but everyone is afraid of contagion so they just keep kicking the can down the road.
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Jean Marie Eveillard continues:
“As I said, this has bought the Europeans some time, maybe a few months. The Greek situation is really beyond repair, but everyone is afraid of contagion so they just keep kicking the can down the road.
MORE
Caesar Bryan - Physical Buying in London Reverses Gold Market
Today 25 year veteran Gabelli Gold Fund manager, Caesar Bryan, told King World News the Southern periphery countries of Europe will experience a turbulent period that will be worse than the Great Depression. Gabelli & Company has over $31 billion under management and Caesar Bryan has managed the gold fund since its inception in 1994. Caesar also said physical buying in London helped turn the gold market around. Here is what Bryan had to say about the situation: “Well, I think the gold market was looking fine from yesterday. Then we had reasonable payroll numbers here in the US and that took the gold price down. But then we had a sudden reversal which is quite interesting. My understanding is the PM fix in London saw some physical buying and was fixed a few dollars higher than gold was trading on a spot basis.”
Caesar Bryan continues:
“Then there was some good follow through (to the upside). On a longer-run basis, we are sitting on the moving averages and gold is fine. We are in a bull market. We’ve suffered a number of nasty corrections since 2001. I believe we have had about seven corrections of over 20%. One of 30%, at the time of the Lehman crisis.
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Caesar Bryan continues:
“Then there was some good follow through (to the upside). On a longer-run basis, we are sitting on the moving averages and gold is fine. We are in a bull market. We’ve suffered a number of nasty corrections since 2001. I believe we have had about seven corrections of over 20%. One of 30%, at the time of the Lehman crisis.
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You Can’t Beat Silver as an Investment
Friday, 09 March 2012 00:00
Silver Antibacterial Bandages
Silver has germicidal effects that kill many lower organisms. The colloidal or ionic silver is a silver solution that is an antibacterial product now sold on special band aids. For years, burn wards have soaked bandages in low concentrations of silver solution in order to prevent infection. Silver has been used to preserve and help save the skin of burn victims. Silver also promotes the production of cells, helping to heal wounds faster.
Washing Machines
Not what you are thinking, so please don’t start taking apart your old washing machine looking for silver. The silver we are talking about is in the new Samsung washing machines that inject silver ions into the rinse cycle in order to kill 99.9% of bacteria that causes odors. By using about 1 ounce of silver, these Samsung washing machines can sanitize over 3,000 loads, this means no hot water or bleach necessary, just a dash of silver.
Food Processing
Silver based food packaging liners that preserve food quality made by Agion. Using an active ingredient of silver zeolite, which is a delivery system that dispenses silver metal ions in a controlled release over time, the silver is able to disrupt microbe growth by interrupting ribonucleic acid that is needed for an organism to reproduce.
Water Storage
According to David Eaton, secretary of The Institute of Water Ionization Technologies in the UK, silver based water purification systems offer the most reliable and cost effective alternative to chlorine. In fact, both Russian scientists and NASA concluded that the best method for long term water purification was using silver as the purifying agent. Silver kills bacteria in the water and is able to help maintain the purity over a long period of time.
Have you ever wanted to store water? Put a few drips of colloidal silver and kill over 650 known bacteria that can grow in your stored water. On cruise ships and airplanes, they often make sure there is some silver in their water tanks for this very reason.
Silver was even used in the 1980’s in the United Kingdom to help stop the spread of Legionnaire’s disease, a disease named after Legionella pneumophilia, an aquatic organism.
Oxygen Machines
Since silver will not ignite, if you want to avoid a spark turning into an explosion, then you need to use silver. When it comes to hospitals handling pure oxygen at high pressure in liquid form, in order to avoid it becoming dangerous, the equipment used to transport the oxygen is made at least in part with silver.
MORE
We can make a great argument that platinum is a great investment with soaring industrial demand. We can argue that gold is a great investment with soaring monetary demand. However, silver is the only metal in the world where both arguments can be made, silver is an industrial metal, jewelery, and a monetary safe haven just like gold.
What most people don’t know is that right now there is less above ground available silver than there is gold, that’s right, there is less silver than gold. This trend of consuming silver and saving in gold isn’t going to stop, the above ground supply for gold will continue to grow, while the above ground supply for silver will continue to move us towards a physical silver shortage.
Silver is without at doubt the most important metal in the world, yet most people when they think about the uses for silver, think of jewelry, silverware, and photography. However, this barely scratches the surface for the uses for silver, in fact, we could write an entire book on just the different applications silver is involved in.
Below are some of the uses for silver that will help continue to grow demand for physical silver. FutureMoneyTrends.com wants everyone to understand that silver is all around you, whether you are talking on the phone, driving in your car, or looking for something to eat in your refrigerator, silver is in more products than you can imagine.What most people don’t know is that right now there is less above ground available silver than there is gold, that’s right, there is less silver than gold. This trend of consuming silver and saving in gold isn’t going to stop, the above ground supply for gold will continue to grow, while the above ground supply for silver will continue to move us towards a physical silver shortage.
Silver is without at doubt the most important metal in the world, yet most people when they think about the uses for silver, think of jewelry, silverware, and photography. However, this barely scratches the surface for the uses for silver, in fact, we could write an entire book on just the different applications silver is involved in.
Silver Antibacterial Bandages
Silver has germicidal effects that kill many lower organisms. The colloidal or ionic silver is a silver solution that is an antibacterial product now sold on special band aids. For years, burn wards have soaked bandages in low concentrations of silver solution in order to prevent infection. Silver has been used to preserve and help save the skin of burn victims. Silver also promotes the production of cells, helping to heal wounds faster.
Washing Machines
Not what you are thinking, so please don’t start taking apart your old washing machine looking for silver. The silver we are talking about is in the new Samsung washing machines that inject silver ions into the rinse cycle in order to kill 99.9% of bacteria that causes odors. By using about 1 ounce of silver, these Samsung washing machines can sanitize over 3,000 loads, this means no hot water or bleach necessary, just a dash of silver.
Food Processing
Silver based food packaging liners that preserve food quality made by Agion. Using an active ingredient of silver zeolite, which is a delivery system that dispenses silver metal ions in a controlled release over time, the silver is able to disrupt microbe growth by interrupting ribonucleic acid that is needed for an organism to reproduce.
Water Storage
According to David Eaton, secretary of The Institute of Water Ionization Technologies in the UK, silver based water purification systems offer the most reliable and cost effective alternative to chlorine. In fact, both Russian scientists and NASA concluded that the best method for long term water purification was using silver as the purifying agent. Silver kills bacteria in the water and is able to help maintain the purity over a long period of time.
Have you ever wanted to store water? Put a few drips of colloidal silver and kill over 650 known bacteria that can grow in your stored water. On cruise ships and airplanes, they often make sure there is some silver in their water tanks for this very reason.
Silver was even used in the 1980’s in the United Kingdom to help stop the spread of Legionnaire’s disease, a disease named after Legionella pneumophilia, an aquatic organism.
Oxygen Machines
Since silver will not ignite, if you want to avoid a spark turning into an explosion, then you need to use silver. When it comes to hospitals handling pure oxygen at high pressure in liquid form, in order to avoid it becoming dangerous, the equipment used to transport the oxygen is made at least in part with silver.
MORE
Greece Has Defaulted: Here Is Where We Stand
Submitted by Tyler Durden on 03/09/2012 19:33 -0500
After reading this, everyone should have a fairly good grasp of what happened not only today, but ever since the great (and quite endless) European financial crisis took center stage, and what to look forward to next...
From Chindit13
In a nutshell---okay, a coconut shell---this seems to be where we are:
1) Greece was able to write off 100 billion euros worth of debt in exchange for a 130 billion rescue package of new debt, of which Greece itself will receive 19%, or about 25 billion, so that it can continue to operate as an ongoing concern. Somehow Greece is in a better position than before, with more debt and less sovereignty and still---by virtue of sharing a common currency---trying to compete toe-to-toe with the likes of Germany and the Netherlands, kind of like being the Yemeni National Basketball team in an Olympic bracket that includes the US, Spain and Germany. At least a "within the euro" default prevented bank runs in Portugal, Spain, Italy et al.
2) As a result of the bond haircuts, Greece has many pension plans that can no longer even pretend to be viable, at least according to the original contracted scheme, but pensionholders still working can take heart in the fact that their current wages will be cut, too.
3) CDS buyers will have to sweat bullets, jump through hoops, and be forced to endure every cliche known to man, but they might end up getting something for all their trouble, provided their counterparty is solvent and that counterparty itself is not heavily exposed to an insolvent party or a NTBTF institution, otherwise known as a Lehman Brothers. Expect the legal profession to be the prime beneficiary of this "event", as any new CDS contract will be at least a hundred pages of boilerplate longer in the future.
4) Good luck to any less than AAA rated sovereign who wants to issue debt from now on out. That contracts can now be unilaterally abrogated, as Greece' bonds were with the retro-CACs, bodes ill for attractive pricing from here on out. Peripherals in the EU will suffer most, as they face the added indignity of being subordinated to the ECB at any point the ECB chooses to exercise its divine right of seniority. The thing that used to be called the risk free rate no longer exists. Bill Sharpe take note.
MORE
After reading this, everyone should have a fairly good grasp of what happened not only today, but ever since the great (and quite endless) European financial crisis took center stage, and what to look forward to next...
From Chindit13
In a nutshell---okay, a coconut shell---this seems to be where we are:
1) Greece was able to write off 100 billion euros worth of debt in exchange for a 130 billion rescue package of new debt, of which Greece itself will receive 19%, or about 25 billion, so that it can continue to operate as an ongoing concern. Somehow Greece is in a better position than before, with more debt and less sovereignty and still---by virtue of sharing a common currency---trying to compete toe-to-toe with the likes of Germany and the Netherlands, kind of like being the Yemeni National Basketball team in an Olympic bracket that includes the US, Spain and Germany. At least a "within the euro" default prevented bank runs in Portugal, Spain, Italy et al.
2) As a result of the bond haircuts, Greece has many pension plans that can no longer even pretend to be viable, at least according to the original contracted scheme, but pensionholders still working can take heart in the fact that their current wages will be cut, too.
3) CDS buyers will have to sweat bullets, jump through hoops, and be forced to endure every cliche known to man, but they might end up getting something for all their trouble, provided their counterparty is solvent and that counterparty itself is not heavily exposed to an insolvent party or a NTBTF institution, otherwise known as a Lehman Brothers. Expect the legal profession to be the prime beneficiary of this "event", as any new CDS contract will be at least a hundred pages of boilerplate longer in the future.
4) Good luck to any less than AAA rated sovereign who wants to issue debt from now on out. That contracts can now be unilaterally abrogated, as Greece' bonds were with the retro-CACs, bodes ill for attractive pricing from here on out. Peripherals in the EU will suffer most, as they face the added indignity of being subordinated to the ECB at any point the ECB chooses to exercise its divine right of seniority. The thing that used to be called the risk free rate no longer exists. Bill Sharpe take note.
MORE
Moody's: Greece has defaulted
Published: 10 March, 2012, 03:49
Edited: 10 March, 2012, 21:00
Moody's Investors Service considers Greece to have defaulted per its default definitions. The announcement comes despite Athens reaching a deal with private creditors for a bond exchange that will shave €107 billion from its €350 billion debt.
The agency pointed out that even though 85.8 per cent of the holders of Greek-law bonds had signed to the deal, the exercise of collective action clauses that Athens is applying to its bonds will force the remaining bondholders to participate.
Eventually, the overall cost to bondholders, based on the present net value of the debt, will be at least 70 per cent of the investment, Moody's explained.
"According to Moody's definitions, this exchange represents a 'distressed exchange,' and therefore a debt default," the US rating firm said. "This is because (i) the exchange amounts to a diminished financial obligation relative to the original obligation, and (ii) the exchange has the effect of allowing Greece to avoid payment default in the future."
Ahead of the debt deal, Moody's had already slashed Greece's credit grade to its lowest level, "C," and so there was no impact on the rating.
MORE
Edited: 10 March, 2012, 21:00
Moody's Investors Service considers Greece to have defaulted per its default definitions. The announcement comes despite Athens reaching a deal with private creditors for a bond exchange that will shave €107 billion from its €350 billion debt.
The agency pointed out that even though 85.8 per cent of the holders of Greek-law bonds had signed to the deal, the exercise of collective action clauses that Athens is applying to its bonds will force the remaining bondholders to participate.
Eventually, the overall cost to bondholders, based on the present net value of the debt, will be at least 70 per cent of the investment, Moody's explained.
"According to Moody's definitions, this exchange represents a 'distressed exchange,' and therefore a debt default," the US rating firm said. "This is because (i) the exchange amounts to a diminished financial obligation relative to the original obligation, and (ii) the exchange has the effect of allowing Greece to avoid payment default in the future."
Ahead of the debt deal, Moody's had already slashed Greece's credit grade to its lowest level, "C," and so there was no impact on the rating.
MORE
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