Miroslav Singer is the Governor of the Czech National Bank. He gave a speech to members of the European Parliament yesterday and managed to show the EFSF for what it is, a unclear and unorganized facility destined to fail. During his speech Singer mentioned that some nations of Europe and their respective banking corps may run into liquidity problems that would not be easily solved by obtaining funds from the open market. He points out regarding the EFSF that, it is not clear what benefit we expect from the EFSF or how it is supposed to generate them. Many objectives have been hinted at in the more than 18 months since it was created, but nothing specific has been implemented so far. Continuing on with his speech which lays out the lack of progress being made by the moneychangers Singer talks about the sociopath nature of these bankers and how they promote the "do as I say not as I do" adage.
Discussing who would pay the difference between the insured loss and the actual loss experienced if the Greek scenario (60% losses on nominal debt) were repeated in other countries, Singer says it is not clear how freely tradeable protection certificates would be traded, priced, settled and, in the event of default, enforced if they were to be introduced. Such certificates would de facto be quasi CDS instruments underwritten by the official institution of a community of countries that are simultaneously waging a campaign against credit derivatives because they regard them as one of the causes of the crisis. All one would have to do to claim Sovereign Default Immunity, thus transferring responsibility and capitalizing on litigation arbitrage, is utilize the FRBNY liquidity facility for the vaguely defined purpose of "public acts".
He continues, calling the lack of coordination of resources for supporting European countries disturbing. Assuming outside interests want to help Europe there is confusion as to whether the funds ought to be sent to the IMF or use it to purchase EFSF bonds, a senior tranche of the SPV, or the peripheral countries debt, i.e. with no intermediation. It's no surprise there have been ever changing headlines about what is going on. There are so many unorganized people running around, thinking/acting irrationally, scared, and fearful of the pending collapse of their Ponzi system that it makes sense these simple yet seemingly key aspects of the Messiah of Facilities has been over looked.
