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benwm
Registered: Mar 2008
Posts: 1309 |
11-09-11 02:31 PM
Quote from Martinghoul:
The raising of the haircuts on Italian repos, which was "pre-announced", strictly unofficially, last night and was finally made public this morning.
Thanks
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Ed Breen
Registered: Jan 2010
Posts: 484 |
11-09-11 02:40 PM
Martinghoul, you are spreading misinformation. There is no 'haircut' in the London Clearing House (LCH) move and there was no informal private then public disclosure...that is all crap.
They, as the clearing house for the trades, simply raised the capital reserve for dealers margin accounts on trading Italian debt...which was a predicted and prudent move as the spread between Italian debt and German debt exceeded 4.5%...It was known for days that if the spread reached that level the LCH would have to raise margin requirements and so they did. It was predictible to anyone who understood these markets. It is ridiculous and misleading to call that adjustment 'shenanigans.'
A 50 basis point reduction from the ECB would not help the PIIGS because it will do noting to make there debt attractive...but it will be good for the dollar and then after the margin calls, for gold.
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Martinghoul
Registered: Jan 2009
Posts: 5641 |
11-09-11 03:16 PM
Quote from Ed Breen:
Martinghoul, you are spreading misinformation. There is no 'haircut' in the London Clearing House (LCH) move and there was no informal private then public disclosure...that is all crap.
Huh? So how do you explain that all the mkt participants, including yours truly, heard of the coming changes yesterday afternoon, well ahead of the official announcement this morning? What the heck do you mean there is no haircut? You're not aware of the terminology used in the repo market for margin? Let me enlighten you... The sort of "margin/capital reserve" you're referring to is called "repo haircut" in the short-term funding mkt.
They, as the clearing house for the trades, simply raised the capital reserve for dealers margin accounts on trading Italian debt...which was a predicted and prudent move as the spread between Italian debt and German debt exceeded 4.5%...It was known for days that if the spread reached that level the LCH would have to raise margin requirements and so they did. It was predictible to anyone who understood these markets. It is ridiculous and misleading to call that adjustment 'shenanigans.'
LCH.Clearnet (along w/CCG) is (among other things) a repo clearing house. They have raised haircuts on Italian repo trades that clear through them. It was not "known" that they will do as their stated criteria include, but are not limited to, the yield spread (includes sov CDS levels, ironically). Finally, it's not 4.5% over German debt, but rather a spread to a basket of AAA Eurozone sovereigns (France, Holland, Germany, etc).
A 50 basis point reduction from the ECB would not help the PIIGS because it will do noting to make there debt attractive...but it will be good for the dollar and then after the margin calls, for gold.
Anything will help the PIIGS.
Generally, could you pls refrain from telling me things about my mkt that you clearly don't know and understand all that well?
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Ed Breen
Registered: Jan 2010
Posts: 484 |
11-09-11 03:54 PM
OK, I acknowledge that you have understanding, even if that is not immediately clear in the way you write. Still your perjorative use of 'shananigans' and the implied manipulation in comment is not justified. Margins should be increased on Italian Debt and its derivatives.
As far as public private...anyone watching CNBC would have understood the likelihood of a margin increase.
The only thing that will help the PIIGS is a plan for growth...more debt does not solve any problem. Austerity is not a plan for growth; its a result of not having a plan for growth.
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Martinghoul
Registered: Jan 2009
Posts: 5641 |
11-09-11 04:33 PM
Quote from Ed Breen:
OK, I acknowledge that you have understanding, even if that is not immediately clear in the way you write. Still your perjorative use of 'shananigans' and the implied manipulation in comment is not justified. Margins should be increased on Italian Debt and its derivatives.
I insist on my use of the word "shenanigans". I believe you may see FSA complaints on this in the not so distant future. Whether it's what should or should not happen is irrelevant. What happened is.
As far as public private...anyone watching CNBC would have understood the likelihood of a margin increase.
The only thing that will help the PIIGS is a plan for growth...more debt does not solve any problem. Austerity is not a plan for growth; its a result of not having a plan for growth.
I disagree... What will help PIIGS is austerity, a credible plan for growth plus low rates for a long time, as the intra-European iimbalances are allowed to correct.
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Random.Capital
Registered: Jan 2005
Posts: 3848 |
11-09-11 04:37 PM
Quote from Martinghoul:
I disagree... What will help PIIGS is austerity, a credible plan for growth plus low rates for a long time, as the intra-European iimbalances are allowed to correct.
I'm inclined to agree with that.
More to the point, austerity is going to happen no matter what, so better it be done in an intentional, somewhat controlled manner than as a cataclysmic "who, me?" surprise.
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