The market is losing ground fast, which is not to be confused with trading down. The market never trades down, because the color red makes Obama disgruntled. Obama “predators” things that are red, like hot spots in Yemen.

So the market is only green. Sometimes, it ends flat green. Sometimes, it is very green. But it is always green, because green things don’t draw attention.

The Greek CAC trigger is sort of a non-event, in my opinion. The numbers we’re talking here are a pittance, compared to what have been getting thrown around lately. Are you telling me that a miniscule $50 billion in losses is going to derail things?

I didn’t think so.

Of course, if there’s $3 trillion in Greek credit coverage being taken up by counterparties across the planet, then it’s a whole different ballgame. But really now, these clowns have had almost two years to scope out the potential damage of a Greek default. In fact, they’ve had little else on their minds. I just can’t believe this will directly do anything.

That being said, we are way, way, way too high. Prices are unrealistic, compared to the performance of the real world. Things in the U.S. are static; things globally are deteriorating. We may not need so much a real cause to sell, as a real excuse to sell.

So, I remain hedged tight, short oil and energy through ERY and SCO, while staying long AEC, CLP, CCJ, and physical silver.

Have a good weekend, and keep your guard up.

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Let me put this out there before I get started: I do not have an opinion on how many people will participate in this wig wearing pig of a Greek default. I don’t know how many people will voluntarily (or involuntarily under the guise of voluntary action) agree to take the haircut.

I also don’t care how many people agree to take the haircut. It doesn’t change a thing, in my eyes.

But I can’t help but wonder, who’s counting the number of people who are agreeing to this, and against what?

Is it 90% of bonds they need? Or 90% of bondholders? As a case in point, those are very different numbers.

And who’s verifying these counts? Because I hate to be the one to point this out, but banks/governments have a very vested interest in lying about the actual participation rate, regardless of what it is.

That’s the route where they get to screw over more or less everyone who owns sovereign bonds and/or credit guarantees, remember?

How will any of you know what the real participation rate is? Do the Greek bondholders even know who each other are?

Or is this going to be one of those times when an official looking representative, of whom no one seems to recall exactly how they were appointed, gets on stage and assures everyone, “I have just returned from Athens, and let me tell you, there are flying pigs everywhere you go. And talking walnuts with thick Southern accents”?

How is any one of you going to audit these statements, as they are made? Particularly as it appears that most of these “insiders, highly integrated in the Greek bond swap process” are themselves contradicting one another in their claims of the exact participation level?

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What gives? Wasn’t it just last week or something that you lot were throwing a Strauss-Kahn styled party in honor of the mighty Greek PSI deal. You couldn’t get enough hookers and/or blow to justify how awesome everything was going to be.

Now there’s already speculation of a Greek default again. You lot can’t even successfully handle the smallest, most pathetic of countries in the EU for more than 200 straight hours. What are you going to do when one of the bigger ones starts scraping the bottom of their budget?

Personally, I don’t care whether Greece defaults technically, literally, or figuratively, because I’m not in this for the Greek citizenry. I’m in it for the run on the euro that’s going to be happening pretty much no matter what you do.

And I’m playing off the horrendous economic calamity that has refused to relinquish European countries for going on one and a half straight years now. The hits keep coming; they have austerity, huge unemployment, and inflation, all rolled into one big Amsterdam special, and smoked through a water pipe.

Now maybe tomorrow, somehow, the money manages to save the day and spark a continued run to this rally. But I won’t care. The heart of this move has long been torn from its chest, and cast aside. If we get another run higher tomorrow; or another after that; it won’t change much in the big picture.

We’re in the first week of March, and already big, lingering, unanswered questions are popping to the surface. Mind you, the first week of March isn’t even halfway to securing all the funding these EU characters need to stave off collapsing their economies.

Eventually, the buys will fail to show up. And then, where does that leave you?

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Do you even realize what these fucking imbeciles just accomplished? And no, don’t tell me that they bailed themselves out without triggering default. That’s just what they did on the surface.

Beneath the surface, what they’ve really managed to do is totally fuck any chance of having private market cooperation in rolling over their mountains of debt – which last I checked is all coming due, oh…now-ish.

By crushing CDS contracts, these myopic fools have undermined the entire game that is modern bond investors. And not just for Greece. Now, the validity of every CDS contract will be questioned in each scenario where a “special” government is involved.

Italy. Check.

Portugal. Check.

Spain. Check.

Etcetera, etcetera, etcetera.

Who buys insurance when the counterparty can just back out so easily? If this move is held up in court, you can guarantee that a big chunk of the current Credit Default Swap market will dry up and stay dead for the next three decades, at a minimum.

More importantly, who invests in the debt of these places without insurance? You going long Italian bonds when, should they default, you’ve basically just been handing money away to people who aren’t going to honor your claim?

Which leads us to the real problem here. By the ECB getting involved, they have simultaneously driven away all private money that might have otherwise invested in Europe. When a central bank becomes a player, it becomes the only player.

Plenty of the active market is not going to buy long dated bonds of these governments without some insurance. And without private markets stepping in sufficiently, the ECB is going to have to cover the short fall. Which means those who would be otherwise willing to go long bonds without insurance now have to ask, “but will I go long those bonds, naked, while the ECB is printing like mad?” Keep in mind that in the past three months, the ECB has already managed to add somewhere between 1-1.5 trillion euros. That’s more than doubling the number outstanding.

And that’s just to save Greece’s dumb ass while keeping the rest of the zone from the edge of the cliff. But without private money stepping up…well then, the most money they need to drop this year is another trillion. Let’s just leave it at that. It’s two trillion to get you to 2014.

And by then, you’re a year away from the EU banks needing to pony back up their LTRO funds. Assuming they haven’t been given any more, either.

I’d say, 1 trillion in LTRO outstanding, plus 2.5 trillion over the next four years when including the firewall they want (obviously some of the 1 trillion LTRO will go back into euro bonds). Just putting a broad guess out here, but by 2015, I’d say Europe will have dropped another 2-3.5 trillion euros – just to stay current. That’s before we factor in damage that inflation from that money will do to economies, which will harm tax receipts, which will of course make deficits worse. And there is no room in there for any form of “stimulus.” Not even governments backing off austerity (which is failing).

But the end result here is that true private money is not going to be investing much longer in the EU. They will have two varieties of bond buyers. People who have been given money by the ECB, and the ECB.

Which leads me to ask the great question: with the threat of such broad devaluation by means of people not wanting to buy euro denominated bonds, who the fuck wants to be exposed to euros?

Greece was to be the great experiment. It was the first country to be bailed out. And it was an appalling failure. The euro will now be subject to a most terrible burden – people giving up on it.

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Congratulations and exultations to everyone. The EU has officially defeated the menace of a sovereign debt crisis.

They are committed to bailing out Greece.

They did not invoke a massive credit default by triggering Greek CDS.

And after all of their meddling EU bond yields are all significantly lower. Except Portugal…but who cares about Portugal?

Why stand and fight for what is obviously not happening? The EU debt crisis has been defeated by the farsighted nature and bold leadership of Europe’s finest.

I applaud you, Europe. Touche. Touche.

So, let’s not be poor sports, fellows. Let us join together in celebrating the exit of the European Debt Crisis.

And now, ladies – gentlemen – help me…(to be continued)

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That’s the funny thing about austerity. When you cutting the budget destroys your cash flow, you can’t bail yourself out.

The problem in Greece (and more broadly, most of Europe) is one of expectations, not program costs. If the people weren’t planning on these programs, then sure you could cut them and save cash. But when half of Greece has spent through their savings counting on lucrative pensions beginning at 55…well then you have a real problem.

Now, please look at the situation; if they don’t cut spending they will have massive deficits for sure. If they do cut spending, then their people crumple and their revenues drop – and if recent history is any indication, they drop a hell of a lot more than potential savings.

An independent Greece would just print money to level everything out, without killing anybody off in the process. But what the EU is demanding is essentially that Greece crush a bunch of low income residents with ice cold austerity.

I’m sure that will be received warmly. And by warmly, I mean with Molotov cocktails.

The big joke here is that this deal is really for show. Their projections don’t account for the behavior change that will greet Greece making good on its end of the bailout deal. When they do…they will require another bailout.

Hahaha – it’s that stupid.

But as I’ve said before, the damage has been done. Euro depreciation or default. Those are your options if this horse and pony show doesn’t coax private money back to the bond markets in size, and willing to lend for decades.

No more of this one year junk. Greece, Italy, Spain, Portugal – they need 30 year loans at reasonable prices, and they need it quickly.

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