The Credit Crisis Financial Stocks Short Journal

I do not necessarily disagree. But it seems to me that if the 3 agencies were to junk that debt tomorrow, there would be a lot of selling

 

Surprise surprise
'Greek Bonds Tumble on Concern Germany May Hold Back on Bailout '
http://www.bloomberg.com/apps/news?pid=20601087&sid=aO.GqSp77qZo&pos=1

“Germany is playing hardball and until we see the money on the table investors will demand a higher premium to hold the debt.”

I was correct about this but wrong on its effects on libor, apparently the disruptions have declined and libor-OIS is stable, we will see how long this lasts

 

Well, USD LIBOR fixing is up 0.3 today. However, LIBOR/OIS is holding and is even a bit lower in EUR. As I said before, I am fading it a bit myself.

 

When you say you are fading you meanyou believe its going to blow out?

 

Nah, I believe that it won't...

 

Looks like Buffett is being fat tailed here, might have to post collateral against his SP short puts

'WSJ:Senate Democrats agree to strip out derivatives provision pushed by Berkshire Hathaway'

 

It seems to me that if the US government gets Buffett to post collateral that should spook the markets as every contract will not be set in stone and could be subject to change according to which way the political wind is blowing. The cost of financing should go up both for equity and the debt to factor that new risk

Furthermore it seems that there is a lesson in all of this, IIRC its written in the US constitution that laws aren't supposed to be retroactive and the congress had a good track record of following that, yet it appears now that they want to using 'its because of the magnitude of the crisis' excuse. To me the lesson is, never take the rule of law for granted, even in the US(something that Buffett always loved). Unless the politicians will lose votes if they change it, give them enough motives and they will bend the laws, not caring about principles or whats right

 

For most of his life, Buffet was the Tiger Woods of investing - the greatest talent ever in his field.

For several years now, he's become what so many other big businessmen have become - a rent seeker. He spends more and more of his time using his influence to bend gov't actions to his benefit. I don't know that it reflects poorly on Buffet as much as it points out how much power and control our gov't has over the private economy now. Sad to see.

 

If Greece’s lenders run out of collateral and suffer an outflow of deposits, the ECB would have “to reduce the minimum quality threshold on securities acceptable as collateral, currently BBB- or the equivalent, or refuse to lend to the Greek banks,” Citigroup’s Buiter said. That would spark “a funding crisis and possible bank failures,” he said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a9f2cr4QqJuM&pos=7

 

There's no question in my mind what they will do...

FYI, it's another total bloodbath in periphery today. Spain, Portugal, Italy are getting absolutely mullered, esp the short end.