Four or five guilty men may hold the fate of the global finance system in their grubby hands
An excellent piece of investigative journalism by Jesse Westbrook and Julie Cruz at Bloomberg has put flesh on the reality of Greek debt outlined over the last two days by The Slog via a source involved in the negotiations.
The Bloomberg story specifically notes that: (my emphasis)
‘Saba Capital Management LP, founded by former Deutsche Bank AG (DBK) credit trader Boaz Weinstein (pictured), York Capital Management LP, the $14 billion fund started by Jamie Dinan, and London-based CapeView Capital LLP are among managers that now hold Greek bonds, according to people with knowledge of the transactions who declined to be identified because they weren’t authorized to speak publicly about the trades. They’ve amassed the holdings as the government lobbies investors to accept a swap that would cause losses of more than 50 percent for bondholders. For the deal to avoid triggering credit-default swaps that could cause losses for more of the region’s banks, the agreement has to be voluntary. Hedge funds are unlikely to accede, analysts say.’
“I would expect to see some holdouts,” said Sudeep Singh, a hedge fund manager at Matrix Group Ltd. who doesn’t own Greek debt. “The industry breaks down into guys who want to keep on fighting and into guys who just want to get the best deal and move on. It’s all a question of what price you got in at.”
This is, as The Slog posted yesterday, the key to it: the main hedgies got into the sector after September 2011, clearly with a view to maximising their discounts – most of which, I understand, were in the region of 40%. I would dearly love to know who they bought the bonds from – was it Trichet’s ECB? – but that’s not data I have access to, sadly….and intermediary activity would blur the analysis anyway.
But today, the Greek finance minister Evangelos Venizelos will hold talks with the Institute of International Finance (IIF) about the ‘voluntary’ 50% haircut he wants them to take on the value of their Greek bond holdings. Three days ago, his boss Lucas Papademos tried to position this as a done deal. As we now know, it is anything but.
How on earth did we get to the stage where half a dozen MoUs have this much power? Where were the watchdogs to ensure that Hedge Funds couldn’t maneouvre themselves into profiting from madness? When will the blind, neocon globalists finally face facts, and see that the system not only stinks – it’s nihilistically destructive?
Related: How The Slog first questioned the Papademos account
The Slog 