Tuesday, February 28, 2012

On Thursday decision making by the ISDA begins for naming the Greek sovereign debt default! (Jim Sinclair interview)

Breaking news, March 1, 2012: The ISDA has determined that as of now a "credit event" on Greek sovereign debt has not occurred and therefore the CDS, or insurance taken out to protect the bondholders from an event of default, have not been triggered.

Who sits on the decision-making committee? Many of the same players who would have to pay off if the CDS contacts were triggered.

Conflict of interest perhaps?

Greece sovereign debt, a "credit event", CDS and the ISDA!

On Thursday the International Swaps and Derivatives Association, or ISDA, is reportedly going to begin work on its decision for what the Greek sovereign debt "credit event" will ultimately be called, and therefore what it will be considered as per the arcane legal parlance of the bond official statements.

This decision will go a long way in determining whether the outstanding insurance on Greece sovereign debt, aka Credit Default Swaps (CDS), will be triggered and have to pay off.

That, as they say, would be no small deal although the actual impact won't be known until it happens!

And now for an encore presentation of the article at TPC February 1, 2012: "A Greece bond haircut definitely won't look like this!

Jim Sinclair on a Greece default, the pending ISDA decision and the insolvency of the five largest U.S. banks!

So who is Jim Sinclair, what is the ISDA and what do either one have to do with the Greece sovereign debt crisis or the solvency of banks in the U.S.?

Because the way that the Greece sovereign debt crisis will ultimately be handled by the EU has implications far beyond either Greece or the EU, the pending decision by the ISDA (see below) on what a Greece sovereign bondholder haircut will be "called" has potentially devastating global implications.

Due to the existence of these potential "unintended consequences" that could spark an even worse global banking crisis along with everything associated that would follow, it is likely that whatever this Greece event is called it will be done in such a way as to not trigger the CDS or credit default swaps that have been sold on that country's sovereign debt.

But there are no guarantees of that fact.

The players in this article!

Jim Sinclair - "... From 1981 to 1984, Mr. Sinclair served as a Precious Metals Advisor to Hunt Oil and the Hunt family for the liquidation of their silver position as a prerequisite for the $1 billion loan arranged by the Chairman of the Federal Reserve, Paul Volcker.

He was also a General Partner and Member of the Executive Committee of two New York Stock Exchange firms and President of Sinclair Global Clearing Corporation (commodity clearing firm) and Global Arbitrage (derivative dealer in metals and currencies)..." (Source)

ISDA (International Swaps and Derivatives Association) - "... is a trade organization of participants in the market for over-the-counter derivatives. It is headquartered in New York, and has created a standardized contract (the ISDA Master Agreement) to enter into derivatives transactions..." (Source)

An interview between Ellis Martin and Jim Sinclair

The interview at The Ellis Report makes for extremely interesting reading as it gives some of the details regarding the ISDA, who the players are, what the ramifications of their decisions concerning Greece sovereign debt could be and why then it can be assumed with a fairly high degree of certainty that whatever decision they come to will not include any language that could trigger a CDS event.

Read the interview at The Ellis Report here.

Photo source

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