So, What's Next Step Towards The Eurocalypse?

By: Reggie Middleton | Fri, Mar 9, 2012
Print Email

Europe's Voluntary 50% Loss Scheme

Okay, as I have been warning since the first quarter of 2010, Greece has defaulted. What I mean by default is that Greece did not honor the payment terms of its debtor agreements. I really don't care what this or that association decides to call it, if you bought Greek bonds you ain't getting the money that Greece promised when they promised they will give it to you. Just to add something official sounding to it, Fitch has declared it so, Fitch Downgrades Greece From C To Restricted Default. Of course, if you are on BoomBustBlog of following me, your probably smarter than to take these guys words for anything even remotely resembling predictive since they declared default status about three hours before Greece actually made it official they would default - plenty of time for interested parties to do something about it, no? Reference Rating Agencies vs Reggie Middleton, Part 3 and What Is More Valuable, The Opinion Of A Major Rating Agency Or The Opinion Of A Blog? Go Ahead, I DARE You To Answer!

But as I said in Greece = Kaboom! But Now Many Misunderstand The Consequences, the media, pundits, sell side analysts and unfortunately many investors fail to see the forest due to many trees standing in their way. Interestingly enough, Greece used coerce, retroactively applied, unilateral clauses to coerce a voluntary bond exchange! Yeah, it does sort of sound like bullshit doesn't it? I commented on this foregone conclusion last year in The Banks Have Volunteered (at Gunpoint) To Get 50% of Their Money Taken - No Credit Event??? Irrespective of whether CDS are triggered or not, if Greece gets away with walking away from 74% of their debt obligations, what in the hell makes anyone who even remotely resembles a person who has neuron or two to jump start synaptic activity think that Portugal and Ireland will NOT jump in line to stiff their creditors? Come on now, have we suspended the rules of human nature now as well. Greece's Problem Is Shared By Much Of The EU & Can't Be Solved Through Parlor Tricks. The use of said parlor tricks will (have) simply make things worse. I have warned that Contagion Should Be The MSM Word Du Jour... not Greece. As Greece gets away with an economic stick up (at financial gunpoint), Ireland and Portugal are looking for their Glocks!

I walked through this scenario in explicit detail a year and a half ago in my "Guide to the Beginning of the Largest String of Sovereign Defaults in Recent History" or The Anatomy of a Portugal Default: A GraphicalStep by Step Guide ...

This is the carnage that would occur in the OPTIMISTIC if the same restructuring were to be applied to Portugal today.

On the Portuguese Haircut, Argentinian Style

Yes, it will be nasty. That 35% decline in cash flows will be levered at least 10x, for that is how much of the investors in these bonds purchased them. A 35% drop is nasty enough, 35% x 10 starts to hurt the piggy bank! As a matter of fact, no matter which way you look at it, Portugal is destined to default/restructure. Its just a matter of time, and that time will probably not extend past 2013. Here are a plethora of scenarios to choose from...

Debt/GDP Level

This is Portugal's path as of today.

This is Portugal's path as of today

Even if we add in EU/IMF emergency funding, the inevitability of restructuring is not altered. As a matter of fact, the scenario gets worse because the debt is piled on.

The free/cheap money is doing more damage than it is good, just Watch As Near Free Money To Banks Fails to prevent European CRE Nuclear Winter...

As is usual, you can reach me via BoomBustBlog or by the following means...



Reggie Middleton

Author: Reggie Middleton

Reggie Middleton

Reggie Middleton

Who am I?

Well, I fancy myself the personification of the free thinking maverick, the ultimate non-conformist as it applies to investment and analysis. I am definitively outside the box - not your typical or stereotypical Wall Street investor. I work out of my home, not a Manhattan office. I build my own technology and perform my own research - in lieu of buying it or following the crowd. I create and follow my own macro strategies and am by definition, a contrarian to the nth degree.

Since I use my research as a tool for my own investing to actually put food on my table, I can stand behind it as doing what it is supposed too - educate, illustrate and elucidate. I do not sell advice, I am not a reporter hence do not sell stories, and I do not sell research. I am an entrepreneur who exists just outside of mainstream corporate America and Wall Street. This allows me freedom to do things that many can not. For instance, I pride myself on developing some of the highest quality research available, regardless of price. No conflicts of interest, no corporate politics, no special favors. Just the hard truth as I have found it - and believe me, my team and I do find it! I welcome any and all to peruse my blog, use my custom hacked collaborative social tools, read the articles, download the files, and make a critical comparison of the opinion referencing the situation at hand and the time stamp on the blog post to the reality both at the time of the post and the present. Hopefully, you will be as impressed with the Boom Bust as I am and our constituency.

I pay for significant information and data, and am well aware of the value of quality research. I find most currently available research lacking, in both quality and quantity. The reason why I had to create my own research staff was due to my dissatisfaction with what was currently available - to both individuals and institutions.

So here I am, creating my own research for my own investment activity. What really sets my actions apart is that I offer much of what I produce to the public without charge - free to distribute and redistribute, as long as it is left unaltered and full attribution is given to the author and owner. Why would I do such a thing when others easily charge 5 and 6 digits annually for what some may consider a lesser product? It is akin to open source analysis! My ideas and implementations are actually improved and fine tuned when bounced off of the collective intellect of the many, in lieu of that of the few - no matter how smart those few may believe themselves to be.

Very recently, I have started charging for the forensics portion of my work, which has freed up the resources to develop the site to deliver even more research for free, particularly on the global macro and opinion front. This move has allowed me to serve an more diverse constituency, which now includes the institutional consumer (ie., investment turned consumer banks, hedge funds, pensions, etc,) as well as the newbie individual investor who is just getting started - basically the two polar opposites of the investing spectrum. I am proud to announce major banks as paying clients, and brand new investors who take my book recommendations and opinions on true wealth and success to heart.

So, this is how I use my background and knowledge in new media, distributed computing, risk management, insurance, financial engineering, real estate, corporate valuation and financial analysis to pursue, analyze and capitalize on global macroeconomic opportunities. I have included a more in depth bio at the bottom of the page for those who really, really need to know more about me.

Copyright © 2007-2017 Reggie Middleton

All Images, XHTML Renderings, and Source Code Copyright ©