Mr. Corzine, I actually am too big to fail.
George Soros just bought $2 billion in mostly Italian bonds from KPMG, MF Global’s bankruptcy administrator. Soros is betting on the survival of the Euro.
Soros thinks that Italy won’t default on it’s debt before the bonds mature in December of 2012. This should be fun to watch.
Soros is about as tapped into European (and probably American) policy makers as anyone and he thinks the European experiment will continue on, or if it doesn’t he thinks Italy will be bailed out. Then again he may have an escape hatch already engineered in Brussels, but that is pure conjecture on my part.
Soros is a smart guy and knows how he will exit this position even if the market were to overwhelm the bureaucrats in Europe. One way or another Soros has a way out. He won’t be going the way of Corzine who in relative terms was small potatoes. Soros just plays by different rules. He gets to talk directly to the central banks and more importantly has ready access to the central banks’ resources if need be. (Through various means.)
Interestingly Soros’ concept of “reflexivity” is especially evident here. The fact that Soros made this move sends a message to the market about the stability of Italian debt. If Soros is moving in he must know something because Soros never moves without knowing something, especially in Europe. Guess things are better in Italy than we thought. Or are they?
Who knows, other than George Soros? And hopefully even he doesn’t know for sure. But he might. Or maybe he wants us all to think that he does. Mirrors reflecting on mirrors reflecting on mirrors.
One thing we can solidly bet on is that Soros isn’t going down on this trade one way or another. That is almost for sure. Or is it?
Nick Sorrentino 12-11-2011