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Breaking: ECB Reports Failed Sterilization Auction, Demand For Fixed Term Deposits Comes At 0.6 BTC
A week ago, when noting the increasingly weaker results of the ECB's Term Deposit Operation, better known as liquidity sterilization, we said, to the usual ridicule: "With another auction next week, and then many more, all dependent on the
amount of debt that Spain et al place "successfully", we expect the Bid
To Cover to decline consistently, until we hit a 1 BTC and the ECB
realizes its monetization program is a failure." It turns out we were right much sooner than expected: the ECB just reported a failed sterilization operation, attracting only €31.9 billion bids for the most recent, seventh sequential €55 billion auction, in which that amount of sovereign bond purchases had to be "laundered" through the system. Only 45 banks placed bids to take down €31.86590 billion or a 0.6 Bid To Cover, compared to the 67 bidding for €71559.9 billion in the prior week, and a "safe" 1.4 BTC. Furthermore, even this failed auction required a massive surge in the rate on the auction: the weighted average allotment rate for today's
operation was 0.54%, compared to 0.31% in last week's operation. The
lowest rate was 0.25% and the highest rate accepted, or the marginal
rate, was 1% -- the highest allowable under the rules of the term
deposit program. This also is a surge from a week ago, when the lowest rate was 0.25%, or the same, and the highest
accepted rate was 0.4%, less than half of today's high rate.
Market News summarizes the catastrophe all too well:
Today's disappointing term deposit tender result will also raise
questions about the ECB's vow to sterilize all government bonds it
purchases since there are, for now at least, about E23.13 billion worth
of unsterilized bond buys still in the system.
Here is a chart of what failed quantiative easing looks like:
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Right on. You deserve to bask in your unadulterated "I told you so.."
As much as well all love & appreciate ZH, Tylers' (plural possessive intended) various prognostications & predictions aren't really that difficult. You see, the entire conundrum in which our global community currently find itself has to do with economic growth, or the lack thereof.
Sort of like a Chinese laundry saying "no tickie, no washie", the credit-money system developed, implemented & maintained by the power-elite some 300 years ago is entirely & utterly dependent on "growth".
Whether driven by true underlying productivity or simply papered over by monetary expansion (inflation), the system must continually expand at a compound annual growth rate (to service compounding principle+interest), or die.
Right now, the entire credit system (see Z1) is contracting, hence it is in the irrevocable process of death. It is the extent & lengths the power-elite are taking, via their bought & paid-for puppets in the public sector, which violate all known Constitutional provisions & previously understood legal precedents that has fueled the rise of ZH.
The deflation/inflation game is tiring; the end result is the same. We either figure out a way to regain economic growth, or this fucker is coming down. Real simple, see?
+77
in other words, you're jealous of TD and want everyone to listen to you repeat the obvious?
I typically don't respond to trolls, but you provide a useful handle in which to hang & characterize another analogy.
Imagine a passenger car traveling at 100mph crashing head-on into a sold concrete wall. It's all over in seconds, with the predictable results of gore, dismemberment & death.
Yet with a very high-speed camera, this event can be filmed & captured @ over 1,000 frames per second. Right now, people who should know the inevitable outcome are mesmerized by watching one frame per day. This shit's been going on now for over 3 years, so we're only just getting past the first second.
As for jealousy, I've been around since the first few weeks on the old blog site. Who knows which Tyler it was, but I was exhorting him via a series of email exchanges to become the Deepthroat of our day.
Like almost everyone else, I'm amazed at both the lengths of what the power-elite have been able to pull off, and the amount of back-channel information that is being fed (pun intended?) to ZH.
CogDis frequently writes about, well, cognitive dissonance. One aspect of this phenomenon is rarely discussed however: what if you are a manufacturer of lies, but you still want the truth to reach certain readers? ZH is that chosen medium. One can only imagine the lengths taken to hide/shield indentities. Crap, Bernanke himself is probabaly a key contributor. LOL
Now, back to the original analogy. Many of us should know better, but here we are, collectively watching one-frame-per day. The end always repeats the same way, friend against friend as each engages in a mad scramble for scarce resources, but still, we can't break our gaze from the daily dance of suspended death.
"CogDis frequently writes about, well, cognitive dissonance. One aspect of this phenomenon is rarely discussed however: what if you are a manufacturer of lies, but you still want the truth to reach certain readers? ZH is that chosen medium.One can only imagine the lengths taken to hide/shield identities. Crap, Bernanke himself is probably a key contributor. LOL"
B9K9,
Very astute of you.
I'm becoming more convinced on a daily basis that at the very least there are many people in corporate, governmental and military positions that are doing everything they can under cover of darkness to expose the insanity and bring this Ponzi down.
Including some in high positions that feel trapped in their "positions of responsibility" which prevents then from publicly talking. But they still feel they can anonymously leak information to undermine this out-of-control dump truck.
What do you do if you wake one day to the realization that you are part of the problem. After recognizing that to shout from the top of your building would only destroy yourself economically and politically, you then begin to understand you might be able to help slip the camels nose under the tent flap.
The devastating depth of this crisis is the reason why I feel that political action at this juncture is not only warranted and necessary but actually has a chance at genuine change, for reasons including those you cite.
And Yet, No plan devised by the EU is ever too stupid to abandon ....
I'm waiting to see Germany just bail on the EU to save it's own skin.
They can if they want to but this will be the end of fiat Euro.Still its not a big problem for their future.
In the short term they may suffer, but in the long term Germany is very lucky, they will be the richest country , they have second biggest gold deposit in the world, its 8,000 tons.
The US Congress is STILL subsidizing the production of mohair for Allah's sake!
The ONE thing in seemingly limitless supply right now is stupidity!
OK all you smart kids out there....this shit is getting real...how soon to a total rout and bank panics?
Perhaps it's time to go pick-up my custom AR.
I'm going to go with... not long and quite a while. Most people don't have money what would they go to the bank for? If they did and they have outstanding debts, the bank would likely try to confiscate monies owed (not legal but can't hate the player, hate the game). If you do have a lot of money there's a good chance you've already made the right moves to prevent getting caught in the middle.
Rut roh.
Who ya gonna call..............now?
http://www.youtube.com/watch?v=g4uxIo4t7xM
http://www.youtube.com/watch?v=cyRqR56aCKc&feature=related
Do the personnel of the CFR, FRB, and Oligarchy in general look like a bunch of brain sucking trans-galactic zombie freaks from the eighth dimension to you?
And you are just not allowed to answer that rhetorical question. Just not.
Brain sucking? Is that better than.....oh never mind.
We're at that point in the movie where the nubile (and well endowed) young lady can sense that something else is in the house with her. We see dark shadows moving in darkened rooms and we hear creaking floor boards (in a house built last year) from the second floor.
The audience knows the young lady will soon be screaming her silly blond head off for this is an old script. Yet we're all on pins and needles. So, who ya gonna call? :>)
An itinerant group that gets on wait staffs at all the most posh hotels and resorts used exclusively by the Oligarchy for their exclusive meetings?
http://www.youtube.com/watch?v=xWVxI6XZAuE&feature=PlayList&p=FCBF8F2E28...
Sounds good to me. What's that number again? I seem to have misplaced it.
Oh, here it is.
1 - 800 - Fight - Club
And then she runs and falls down. Happens all the time in movies,
It was probably the forum PhDs with their usual verbage: WILL...NOT...IS...etc...
Again, if arrogance was truly intelligence.....
ECB's Term Deposit Operation operators: "we want our old life back."
Time to call up Paulson for his bazooka.
http://en.wikipedia.org/wiki/The_Great_Moderation
An example of the confidence of the economic profession in this period given by Robert Lucas, in his 2003 presidential address to the American Economic Association, where he declared that the "central problem of depression-prevention [has] been solved, for all practical purposes."
Oh yairs. How silly of me, with no economics PhD, to take the other side of that trade.
The Coming Euro Collapse- Germany and France examine 'two-tier' euro
A European official has told The Daily Telegraph the dramatic option was being examined at cabinet level.Senior politicians believe their economies need to be better protected as they could not cope with another crisis on a par the one in Greece. View from the lab: continental driftThe creation of a "super-euro" zone would initially include France, Germany, Holland, Austria, Denmark and Finland.
The likes of Greece, Spain, Italy, Portugal and even Ireland would be left in a larger rump mostly Mediterranean grouping.The official said French and German officials had first spent months examining how to exclude poor-performing states from the euro but decided it was not feasible. A two-tier monetary system in the 16-member euro zone is being examined as a "plan B".
"The philosophy is the stronger countries might need to move away from countries they can't afford to bail-out," said the official. " As a way of containing the damage, they may have to do something dramatic, though obviously in the short term implementation is difficult.
Maybe they can then move to a three-tier, four-tier, and so on. As a final touch, they could then pick names for the tiers--like Marks, Francs, etc. What a novel idea--I like it...
+100- my first laugh of the day
+100. thanks a lot for the post, its was really funny, you made my day:)
I'm willing to consider one-tier: Virginia. All you others can have any tiers you want. Virginia's ratification resolution for the U.S. Constitution contains this language:
"We, the delegates of the people of Virginia, duly elected in pursuance of a recommendation from the General Assembly, and now met in Convention, having fully and freely investigated and discussed the proceeding of the federal Convention, and being prepared, as well as the most mature deliberation hath enabled us, to decide thereon, Do, in the name and in behalf of the people of Virginia, declare and make known, that the powers granted under the Constitution, being derived from the people of the United States, be resumed by them whensoever the same shall be perverted to their injury or oppression, and that every power, not granted thereby, remains with them, and at their will; that, therefore, no right, of any denomination, can be cancelled, abridged, restrained, or modified, by the Congress, by the Senate or House of Representatives, acting in any capacity, by the President, or any department or officer of the United States, except in those instances in which power is given by the Constitution for those purposes; and that, among other essential rights, the liberty of conscience and of the press cannot be cancelled, abridged, restrained, or modified, by any authority of the United States."
We reserve the right to assert and retain our rights, even when they are jeopardized.
You know it is funny, that these are the types of stories CNBC needs to be, and should be, running for the public. Yet, they are more worried about getting their ad dollars cut by badmouthing companies. CNBC is nothing but entertainment news, not business news and it hasn't been for many many years.
This situation we stand upon throughout the world, is dire. There is nothing they can do to stop the collapse. Hopefully, the rules will be changed in order to get more honest accounting by governments and businesses. Accounting fraud needs to be punishable by death going forward to prevent these crooks from cooking the books and lying to their citizens. I say we start with Bernanke and Geithner, as they are the masterminds behind the latest fiasco.
This is business as usual, when did you arrive at the party?
Change the SOP? /hahahahahahahahahaha/
If you don't have that "custom" AR already... go get it. Hit up the discount supermarket on the way home to round out the pantry.
<ghetto> Shit's getting real, yo. </ghetto>
To all: top-notch training and your grandpa's 22 beats a shiny new AR-15 and a book on how to use it. Really.
+22 and CCI Stingers, hollow points
Plus them squirrels is good eatin' on a stick. Just sayin'
Having eaten my share of squirrel I should warn you to be careful of the very tiny bones. They are tasty, though. It's almost like picking crab: a whole lot of careful and work for a little bit of meat.
Got 14 yrs behind an AR (and other weapons systems) via uncle sam...I'll keep my AR thank you. Though yes my grandfathers .22 drops squirrels with amazing accuracy. An ancient .22 Winchester bolt action with the wonderful smell of Hoppes #9
No need to choose. Buy a .22 upper receiver for your AR. You'll have the same rifle, the same trigger, the same ergonomics, just a much cheaper round to shoot. Great for practice or small game that doesn't require the power of a .223. And swapping between the two only takes a few seconds. One of the advantages of an AR is the wide variety of accessories and configurations available. It would be a shame not to take advantage of that flexibility.
It's also a good idea to have .22 conversion kits for your handguns.
.22 ammo is cheap, compact to store, and versatile (good in rifle or pistol).
Most common cartridge = best for barter
Good for small game (the large game will disappear within a month)
A .22 with a scope is the most bang for buck, by far, whether for hunting or defense.
You might want a shotgun for birds and close-in defense.
Of course, this is why gold has sold off $30 in the past 24 hours! Now I get it...
oh boy!
So: what happens to gold, as interest rates converge on zero worldwide?
OT: Did anyone else see this? Or should I say miss this?
"June 28 (Bloomberg) -- NYSE Euronext and Nasdaq OMX Group Inc. canceled trades that briefly sent shares of Boeing Co., the aircraft maker that’s one of thirty Dow Jones Industrial Average stocks, down 44 percent this morning.
The errant orders sent Chicago-based Boeing down to $38.77 at 7:14 a.m. New York time today from $68.77 at the end of last week, with 800 shares changing hands on NYSE Arca and 200 on Nasdaq. They fetched $68.50 in the next trade, at 8:06 a.m., and were at $67.30 as of 4 p.m."
http://www.businessweek.com/news/2010-06-28/boeing-trades-that-drove-shares-down-44-are-canceled.html
you have to wonder what will happen when someone really wants to sell shares and they can't - because the nyse thinks the orders are a "mistake".
FOrex live is offering a counter perspective on this news
http://www.forexlive.com/115947/all/a-little-perspective-2
MNI says banks are hording cash this week in anticipation of the expiration of the E442 bln LTRO on Thursday.
Tensions, tensions on the Euro-bank market:
how to sterilize an open wound ?
A comment over last week's take:
Divyang Shah, over at IFR Markets has some comment:
. . ." Unlike the covered bond program the ECB has not given us details of the final destination of the bond intervention in terms of ultimate size and end date. Thus the continued reluctance from the market to park their deposits over the 7- day term will need to be addressed if the ECB wants to continue to intervene on a sterilized basis.
The most likely option is to extract this liquidity with an operation that has a longer maturity. Last week’s “test” from the ECB suggested the likelihood of a 3-month operation but this failed to be confirmed either on the day or at the ECB meeting."
I await Kartik's middling perspective on this development.
"A majority of Germans wants to scrap the euro and bring back the old currency, the deutschemark, according to a new poll published on Tuesday." - http://news.smh.com.au/breaking-news-world/most-germans-want-to-ditch-the-euro-20100629-ziwp.html
Why is the Euro so important anyway ? Freetrade agreements can exist without a common currency and this mess probably would have been avoided . Also the economic treaty has been an epic fail anyway IMO. (example : french phone companies dont compete with spanish phone companies or italian or german for that matter, or internet providers don't compete with internet providers . The economy of European union is still very very closed when compared to the US and it doesnt really benefit anybody except the biggest players .
No need to wreck the Euro (unless the member states want to): all you need to do is default on debt owed to the parasitic, bailed-out banks.
They thought by doing the Euro they could strengthen political union, i.e. avoid more european style quasi genocidal wars, thus their conviction to do this kind of thing, and persist in it, against all logic. Full disclosure: Long EUO.
I find it very interesting that the actual dollar amount of Euro denominated debt has falled quite dramatically. it reminds me of New York State where actual revenue is now in absolute decline and indeed has been for some time due to "fuzzy math." what other answer can there be other than default? all these clown posses are doing is like Jake and Elwod Blues "riding the elevator one final time before they pay the tax bill on the Church."
Revenues are in decline everywhere, because the tax base is eroding every day.
The Austrian solution to this, of course, is to accelerate starvation and death to preserve the market. They Keynesian solution is to keep inflating to infinity with funnymoney.
Neither pay any mind to the destruction of the earth. And neither are plausible if ones interest is in the future of humanity and the planet.
Good old "Mish" Shedlock: a social parasite who does nothing other than spending all day, every day railing against those who work for a living. Never mind the CONTRACTS workers negotiated according to the silly laws of the captialist system (see 'pension plans'). In spite of the promises made by the liars who employed them, workers must starve to death to save the system and bankroll his useless existence.
Sorry, Mish. it don't work that way: when the day of reckoning comes, useless eaters like you will be dumped into a shallow grave.
While I don't always agree with Mish, calling him a social parasite is way over the top. And while pensions are contracts, both sides negotiated those contracts knowing they could never be fulfilled. Which makes those, and plenty of others, void and without enforceable conditions.
Both the corporations and unions understood that they were back loading contracts to please the union members and shareholders today while both knew it would be damn near impossible to actually fully fund them without 5% GDP growth and 2% inflation for the next 50 years.
There is plenty of blame to go around without singling out any one blogger. There is a lot of anger in your statement. Maybe it's time you look at where the anger is coming from. I know many people who knew deep down inside for the past 20 or more years that the system could never be sustained and yet went with the flow and never even questioned or pushed back. Now that the wheels are coming off, they are crying foul.
Sorry but we all made this bed, not just a few bad guys. While there are certainly people who should be singled out for that special hell, Mish isn't one of them.
I agree: these stupid agreements, made by the workers UNIONS (not the workers, who never really had a say in the matter) are the 'original sin', where the pathetic collusion between bosses and union leadership - even down to presidential candidates - which results in only 'austerity' for those who actually DO.
Historically, pensions were CONCESSIONS granted to workers by the bosses in lieu of paying them higher wages.
So, the bosses lied through their teeth to keep the cost of labor lower at that moment. Now that's psychopathic, by definition, but it's also perfectly logical for the capitalist. Now you assert that since the boss KNEW it was a lie, that it doesn't matter. That's bourgeois law in a nutshell. I disagree.
Mish, the useless eater, agrees with you - so that's something.
These concessions were won by the workers over many decades at great cost. And when this FRAUDULENT CONTRACT was offered, many workers - the smart ones, at least - knew it was a scam because they understood how capitalist law 'works'. But they can do very little about it, structurally or institutionally.
It's idiotic to suggest that pensions must inevitably be destroyed due to bank malfeasance. All that's needed is the same kind of temerity that Turbotax Timmy showed this week! With all the gusto in his little body, he made damn sure that the $1 quadrillion in borrowed Federal Reserve Notes wagered on spread bets between jackass futures and billiards balls, made from any Blackberry in any Dubai opium den, remain sacrosanct, with a federal guarantee!!
With such silliness, all the nonsense about fait accompli austerity must die. It's not a question of "can" and "can't". It's a question of "will" or "won't". TurboTax Timmy WILL ensure that bankers keep getting bonuses. And right now, that means machinists who've worked 40 hrs/week for 30 years doing a REAL JOB (i.e., not sitting at a computer using someone else's oil and someone else's money) get screwed.
"Now you assert that since the boss KNEW it was a lie, that it doesn't matter."
No where did I say it doesn't matter. Nor did I imply it doesn't matter.
I'm saying we are all in this boat together, that there are no innocent victims in this mess and until we come to grips with this ugly fact, nothing will be done by anyone to move us towards sanity. The system is collapsing. The financial elite are raping and pillaging. This is wrong from every possible point of view. Wrong, wrong, wrong.
Do you think the government should print up the money to make good on all the unfunded pension liabilities? Do you have any idea how huge that number is? The system is collapsing. The system will never be able to pay those pensions. Period. That's wrong and unfair. But it's still a reality. There is nothing that can be done to the system that will make sure those pension promises are paid, at least in "real" dollars.
I agree that the government is supporting everyone except the people. What are you going to do about it? What are we going to do about it? What am I going to do about it? Instead of bitching about it, answer the question. What are you/we/us/I going to do about it?
wow this seems like some pretty heavy shit not to be getting any other press coverage...
I think the final comment on your post should read:
"This is what successful quantitative easing looks like."
Sterilization means no quantitative easing.
Failed Serilization means quantitative easing.
However bad it is for the citizens of Europe, quantitative easing is the
only way out of the current mess. With failed sterilization, the real
quantiative easing will now begin.
With failed sterilization, the real quantiative easing will now begin.
Liquidity crisis 3.0 in 3....2....1....
"Whaddya mean you want the money back?"
Would you like a side of Epic with your Fail?
Goddamn it all these garooogas are wearing out my klaxons. Fall over and die already, ECB.
Now hear this and mark it well: It is FRANCE which has no clothes. Nor even a pot to piss in, net.
They'll still have fine whine.
so what does this mean? the various banks are hoarding cash?
As first suggested on June 23, looks like the equity counter trend rally has ended.
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1