The CDO At The Heart Of The Eurozone Just Became Europe's Plunge Protection Team

Tyler Durden's picture

There is only one section of the proposed European Bailout draft statement that is relevant to traders: Section 7, bullet 3 which says: "To improve the effectiveness of the EFSF and address contagion, we agree to increase the flexibility of the EFSF, allowing it to intervene in the secondary markets on the basis of an ECB analysis recognizing the existence of exceptional circumstances and a unanimous decision of the EFSF Member States." Everything else is noise. Europe just legalized its own Plunge Protection Team and off balance sheet Quantitative Easing program with one signature. Good luck trading in this, or any, market which even the politicians now admit is nothing more than a central banking policy tool.

Full draft statement.

Since the beginning of the sovereign debt crisis in the euro area, important measures to stabilize the euro area, reform the rules and develop new stabilization tools have been taken. The recovery in the euro area is well on track and the euro is based on sound economic fundamentals. But the challenges at hand have shown the need for more far reaching measures. We reaffirm our commitment to the euro and to do whatever is needed to ensure the financial stability of the euro area as a whole. We also reaffirm our determination to reinforce convergence, competitiveness and governance of the euro area.

Today, we agreed on the following measures:

1.    We welcome the measures undertaken by the Greek government to stabilize public finances and reform the economy as well as the new package of measures recently adopted by the Greek Parliament. These are unprecedented, but necessary efforts to bring the Greek economy back on a sustainable growth path.

2.    We agree to support a new program for Greece and to provide an additional amount of up to [xx] euros. This program will be designed, notably through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of Greece. We call on the IMF to contribute to the financing of the new Greek program in line with current practices.

3.    We have decided to lengthen the maturity of the EFSF loans to Greece to the maximum extent possible from the current 7.5 years to a minimum of 15 years. In this context, we will ensure adequate post program monitoring. We will provide EFSF loans at lending rates equivalent to those of the Balance of Payment facility (currently approx. 3.5 percent) without going below the EFSF funding cost. This will be accompanied by a mechanism which ensures appropriate incentives to implement the program, including through collateral arrangements where appropriate.

4.    We call for a comprehensive strategy for growth and investment in Greece. Structural funds should be re-allocated for competitiveness and growth under a European “Marshall Plan”. Member States and the Commission will mobilize all resources necessary in order to provide exceptional technical assistance to help Greece implement its reforms.

5.    Greece is in a uniquely grave situation in the Euro area. This is the reason why it requires an exceptional solution. The financial sector has indicated its willingness to support Greece on a voluntary basis through a menu of options (bond exchange, roll-over, and buyback) at lending conditions comparable to public support with credit enhancement.

6.    All other Euro countries solemnly reaffirm their inflexible determination to honor fully their own individual sovereign signature and all their commitments to sustainable fiscal conditions and structural reforms. The Euro area Heads of Statesor Government fully support this determination as the credibility of all their sovereign signatures is a decisive element for ensuring financial stability in the Euro area as a whole.

Stabilization tools:

7.    To improve the effectiveness of the EFSF and address contagion, we agree to increase the flexibility of the EFSF, allowing it to:

    - intervene on the basis of a precautionary program, with adequate conditionality;

    - finance recapitalization of financial institutions through loans to governments including in non program countries;

    -  intervene in the secondary markets on the basis of an ECB analysis recognizing the existence of exceptional circumstances and a unanimous decision of the EFSF Member States.

Fiscal consolidation and growth in the euro area:

8.    We welcome the progress made on the implementation of the programs in Ireland and Portugal and reiterate our strong commitment to the success of these programs. The EFSF lending conditions we agreed upon for Greece will be applied also for Portugal and Ireland. In this context, we note Ireland’s willingness to participate constructively in the discussions on the Consolidated Common Tax Base draft directive (CCTB) and in the structured discussions on tax policy issues in the framework of the Euro+ pact framework.

9.    All euro area Member States will adhere strictly to the agreed fiscal targets, improve competitiveness and address macro-economic imbalances. Deficits in all countries except those under a program will be brought below 3 percent by 2013 at the latest. In this context, we welcome the budgetary package recently presented by the Italian government which will enable it to bring the deficit below 3 percent in 2012 and to achieve balance budget in 2014. We also welcome the ambitious reforms undertaken by Spain in the fiscal, financial and structural area. As a follow up to the results of bank stress tests, Member States will provide backstops to banks as appropriate.

10.    We will implement the recommendations adopted in June for reforms that will enhance our growth. We invite the Commission to enhance the synergies between loan programs and EU funds in all countries under EU/IMF assistance. We support all efforts to improve their capacity to absorb EU funds in order to stimulate growth andemployment.

Economic governance:

11.    We look forward to the rapid finalization of the legislative package on the strengthening of the stability and growth pact and the new macroeconomic surveillance. Euro area members will do their utmost to help reaching agreement with the EP on voting rules in the preventive arm of the Pact.

12.    We commit to introduce legally binding national fiscal frameworks as foreseen in the fiscal frameworks directive by the end of 2012.

13.    We agree that reliance on external credits ratings in the EU regulatory framework should be reduced, and look forward to the Commission proposals in this respect.

14.    We invite the President of the European Council, in close consultation with the President of the Eurogroup, to make concrete proposals by October on how to better organize crisis management in the euro area and improve working methods.

We call on the Eurogroup to implement expeditiously and as a matter of priority the decisions taken today.

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Ahmeexnal's picture

the road to another world war has been laid out

Oh regional Indian's picture

Hey Ahmeexnal, did you follow CPL on the other thread on the impending nuclear something somewhere he could not tell?

I must say, everyone, it's really that charged, this time. History is replete with great moves occuring in this period. Empires crumbled (Holy Roman, supposedly, though I see it in it's last hurrah now, via the much compromised Vatican), Independence's granted (Jamaica, India, again, surface, face-wash independence), big births (Obama, 4th August, again suppsedly), the annual flooding of the nile, helical rising of sirius.... on and on..

the time between growth (Spring) and fall.... 

War indeed. Most of the pieces are in play. As someone pointed out recently, lil old India is one of the world's largest defense spenders now,  signs civilian nuclear deals with the US early this year and 2 days ago, discover's the world's largest Uranium Deposit!!! Yeah right!

New moon for Pluto.... on and on.... really a good time to be ready for anything.


espirit's picture

ORI - I was following CPL until I'd figured he's been short waaaaay too long.

Just saying.

Oh regional Indian's picture

Hey espirit, but see below? Anonymous hacks NATO.

He was right, and it's probably nuclear.


Ahmeexnal's picture

ORI, didn't read up on CPL's post. Do you have the link?

You are right ORI, India has been militarily propped up by the "enlightened" democracies of the western world. India is facing east (China) in sacrifice. The power elite found no better way to reduce global population (and hence energy consumption) than having both India and China nuke it out in all out mutually assured annihilation.

The pieces of the puzzle are already in place.


edit: ORI, thanks for reposting CPL's posts below.

ZeroPower's picture

Whats the exact beef btw Indians and Chinese? Is it simply an innate dislike towards one another due to the (unsustainably) vast population growth or is there something else?

ORI how are Chinese viewed in India? Are they the Mexicans of N.A?

Oh regional Indian's picture

ZP, this is at the heart of the matter


And the Chinese presence in India is very Chinatownish. They are a real minority though. It's in the North East that they are constantly pushing pushing.


ZeroPower's picture

Cheers for the info. Will be visiting S India and the Northern region in a few months so will give a shout then.

Oh regional Indian's picture

Awesome. Do give that shout. ZHer's welcome (Goodfellas that is!!!)



StychoKiller's picture

Methinks someone's tin-foil beanie was screwed on too tight!

oogs66's picture

EFSF is now a SIV.  Remember how well the SIV's worked out for Citi?

Ahmeexnal's picture

script kiddies have hacked into NATO mainframes and now have plenty of compromising information:



Oh regional Indian's picture

Holy smoke, this is what CPL was talking about yesterday. 

by CPL 
on Wed, 07/20/2011 - 17:40

Doesn't matter they are all getting all, I mean in a couple of days by another anon project.  This one...I'm a vulgar man and I find it disgusting on what all of them have done.


You will all be speechless, by promise I don't mean by speechless disgusted, by speechless you are all going for pitch forks and guns.

by Oh regional Indian 
on Wed, 07/20/2011 - 17:44

holy Smoke Cpl. Say more Seymore!

Such tension.....


by CPL 
on Wed, 07/20/2011 - 17:49

Nope another anon has it under control with team Big Bertha.    It involves nukes but not in power generation.  Quick and rapid strike without anyone in the civil servant core of electorate involved in the decision..


Think Chernobyl and the complete rejuvenation of the landscape around it.  The animals survived, the trees grow and no humans bitching and complaining.


Anyone with a nuke has been studying the area for years and it is a template now, not a study case.


Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Very coincidental all this hacking going on just when congress is trying to pass the so called "Cyber Security Act".  Remember The "Patriot" Act!?


Tuco Benedicto Pacifico Juan Maria Ramirez

dogismyth's picture

I call bullshit!  But time will tell.  Just like Assange was going to release a megatron bomb on the financials...and it never happened.  I have a hard time believing their is a mysterious group called anonymous that has hacking powers and is not traceable. 

Why make the announcement of a hack job?  Just release the details...or STFU.

IMO Anonymous falls into the same category as the Elenin/Niburu/end-of-days bullshit.

MayIMommaDogFace2theBananaPatch's picture

Is it the next phase in the evolution of "reality" entertainment perhaps? 

Designed to capture the attention and imagination of a particular segment of people who largely do not watch TV?

Just a thought.  Any way you slice it, it sure ain't boring!

(I'm waiting for the TPTB meme about chaos on the internets to start getting conflated with Black-Mask Anarchy -- that seems like it would be a decent tell)

ZeroPower's picture

Why make the announcement of a hack job?  Just release the details...or STFU.

+1. That shit is old. I just say 'cool story bro' everytime something similar comes up.

Edward Fiatski's picture

Assange is a C.I.A. asset, and I'm still waiting for those BAC files. :) The current false-flag ops are being run against mass gatherings of people like online forums, games, social networks with the goal of drawing attention to the anonymous, 'lawless' part of the Internet, which eventually makes an Internet Kill Switch (of all services, bar Dancing with the Stars and World of Warcraft) possible in the society.

/tiphat to spooks

treemagnet's picture

Before you throw the anchor, its always a good idea to make damn sure the line isn't wrapped around your ankle.  Just saying.

GoinFawr's picture

I like the cut of your jib, definitely not three sheets to the wind.

Zero Govt's picture

so you're saying these guys could all drown being attached to the same anchor chain? it sick to say I like the thought!

I'm seeing Trichet, Barruso and Van Ratboy as Bay Watch lifeguards in red swimmies running (in slow-mo) down the beach. The 3 dive into the waves and swim out to save 7 struggling drowners. Instead of giving them bouys Trichet et al dish out lead weights (more debt) leaving them struggling even harder and deeper underwater 

The drowners soon cotton on they're not being 'Saved' and think "WTF" and "What the Hell" and all grab Trichet, Barruso and Van Ratboy by the shorts and take them down with them. My fantasy has a happy ending though because with the beach now clear of hysterical stupid Suicide Socialists and the shambolic scene now quiet I get to snog Gina Lee Nolan for a roll in the sand

Now how could anyone call that sick eh!

Xibalba's picture

What's the problem with socialism, anyways? 

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

This is not "socialism".  We live under a "corporate fascist" state.



NotApplicable's picture

Let's see, it relies on violent coercion to enforce, and is funded with stolen goods. If you believe this is a proper way to achieve a healthy society, well, look where it's gotten us so far.

StychoKiller's picture

The problem with socialism is socialism, because there are no socialists.  Socialism is a system based upon an assumption about human nature that simply isn't true.  I can design a perfect canine community in which dogs never chase squirrels or groom their nether regions in an indelicate manner.  But the moment I take that idea from the drawing board to the real world, I will discover that I cannot get dogs to behave against their nature--at least not without inflicting a terrible amount of punishment. Likewise, it's easy to design a society that rewards each according to his need instead of his ability.  The hard part is getting the crooked timber of humanity to yield to your vision.

And it's also why the problem with capitalism is capitalists.  Some people will always abuse the system and take things too far.  Some will do it out of the hubris of intellect.  Some will do it out of the venality of greed.

I bring all of this up because many in Washington seem convinced that the solution to the problem with capitalists is always less capitalism.  To be sure, a free-market society is in some sense a government program.  The government must prosecute criminality, enforce contracts, and demand that the rules be observed.  Few lovers of free markets are so laissez-faire as to want to strip the government of its role as REFEREE.  But few should want the REFEREE to suit up and play the game.

Global Hunter's picture

they are confident the law of unintended consequences is on summer vacation or they failed to consider anything with a longer time horizon of 48 hours.

Zero Govt's picture

the "law of unintended consequences" will certainly rear its head at some point in this political clown show but it's not illegal

...i thought price manipulation was illegal however, silly me now we have politicians funded to rig prices (as the Fed has been doing to interest rates) when either they don't like what the market is telling them or presumably also to pump it into some dream world LaLa Land fantasy

Europe has effectively been bankrupted by politicians throwing other peoples money at (socialist) ideaology to keep its nonsense afloat (eg. healthcare, social security, public transport etc). They've learnt nothing. Now these cretins are starting of debt and stock markets

more absolute politico loony bollocks, the cancer is spreading

jtmo3's picture

To the moon with their markets too. No drop allowed anywhere anymore. Buy stocks.

Are these people running the world just fucking nuts or what?

SheepDog-One's picture

So now the world is just based upon various 'teams' that prevent things from 'plunging', of course ignoring that every time they do that they further weaken the remaining foundation but WHATEVER its all good until the total complete collapse.

Spitzer's picture

No, the ECB announces and discloses by the amount, every time they expand the Euro money supply.

The Fed does not.

Who has a stronger hand ? A central bank presiding over the biggest debtor nation in history with no gold ? (Treasury has most of the gold, not the Fed)

Or the ECB, who has no connection to any nation state yet presides over the biggest gold hoard in the world ?

King Euro

Ahmeexnal's picture

And how is that "biggest gold hoard in the world" protected?

Another Maginot line?

Spitzer's picture

Protected form what ?

Don't give me this bullshit about the bankrupt US military. The Soviets had the big bad military too and how well did that work out for them ?

espirit's picture

Rule change in mid-stream, buy the rumor / sell the news.

Sounds bullish.

sarc on/off, I forget which.

Archimedes's picture

additional amount of up to [xx] euros? Does that mean unlimited? ;-)

And they want to "reduce" the role of rating agencies..ha! How is this bullish for the Euro?

The desperation is so palpable. But hey, do you really expect nations to just give in and have their economies implode? 

oogs66's picture

seriously, the EFSF has carte blanche to do what it wants?  Germany must be providing a 100% guarantee

SWRichmond's picture

Nah; it looks like it's all off-balance sheet, bottomless pit of money kind of accounting.  Or leverage.  Either way, I'm sure it'll work out just fine.  No worries!

wsmith's picture

Fuck Europe.

I've decided I'd rather masturbate to the lovely image of Becky Quick giving head to Steve Lisman.


I've tuned in, turned on, and dropped out.

Anyway, so long.

And God bless all you Marxist cocksuckers.

Quintus's picture

I've noticed from your postings recently that you appear to have a bad case of Tourette's syndrome.  You should try to control that.

Cognitive Dissonance's picture

Just keep purchasing PMs and ignore all the noise in the background folks. It's all just various screeches and groans of a dying fiat paper empire.

wsmith's picture

Paper isn't dying, my friend.

The power-brokers love paper.  And when they go broke, they get rescued.

It's a fixed game.

When gold goes over 2000, you'll see the government step in to control the price.

You can't win.

Anyway, so long.

And God bless all you Marxist cocksuckers.

Cognitive Dissonance's picture

You keep on saying you are leaving, as in "so long".

So when can we expect you to actually leave?

Whalley World's picture

Before you split, you should know that government has been fixing the gold price for decades.  Check out GATA for evidence.  They may continue to use derivatives to slow the price increases but as far as holding it down, not possible.

Mr Lennon Hendrix's picture

Welcome to the party Europe!  Time to sell calls and buy puts on oil/gold/silver, eh Junker?  Oh and hey, anyone know who makes up the European PPT?  Tyler?  Do you know what the board is?

Version 7's picture

Greece is in a uniquely grave situation in the Euro area.

They do not know what is the Euro area.

Gringo Viejo's picture

Like sitting at a poker table where the other 7 players are house shills.

HungrySeagull's picture

I'll be your cooler. They wont be at the table long heh.

20% of your take deal?

oogs66's picture

seriously, the EFSF has carte blanche to do what it wants?  Germany must be providing a 100% guarantee