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Easter Egg Out Of The BIS: US Banks Are On The Hook To The PIIGS By Over $350 Billion

Tyler Durden's picture


Last night, the BIS released its latest quarterly review, as always chock full of useful information. The one major item that caught our eye was the updated exposure toward the PIIGS countries by various foreign banks. And specifically the brand new category that had never been disclosed before by the BIS, namely the "other exposures" category, which per a rather closeted footnote is defined as: "other exposures consist of the positive market value of derivative contracts, guarantees extended and credit commitments." This is exposure that appears for the first time in an official BIS document. And it is sizable: while total foreign claims stood at $2,281 billion, the newly disclosed category accounts for a whopping two thirds of a trillion: $668 billion. How generous of the BIS to share this data which as recently as 2 years ago may have been considered as material, and these days is merely dismissed with a laugh. After all who cares unless the potential loss has at least 12 zeroes in it. Yet what is most significant for the US taxpayer, who is now dead set on proving that St Sebastian was an amateur when it comes to (in)voluntary martyrdom, is that US exposure to the P(I)IGS (Italy excluded, for the time being - give it a few months), has just tripled as a result of this revelation. While before it was "common knowledge" that US banks have nothing to lose should Europe go down the drain, it has now been revealed that US banks actually have $353 billion in exposure, of which $233 billion is of this newly revealed "other category."

And now that it is pro forma common knowledge that should the PIGS fails, that at least a few domestic banks would be wiped out, it also should be appreciated why the ECB will do everything to prevent an impairment to bondholders: with just under $2.3 trillion in potential partial or full losses on total exposure, the domino effect would blow up Europe overnight, then promptly wipe out the US and the rest of the world with it.

The country with biggest exposure to the PIGS is not surprisingly Germany with $513 billion, followed by France at $410 billion, Great Britain at $370 billion, and... the US at $353 billion. As for the next two dominoes to drop, Portugal and Spain, the countries whose banks are most at risk are Spain, France and Germany for Portugal and Germany, France and the US for Spain. Which explains why the Fed is now collaborating fully with the ECB from preventing the Portugues rout from hitting Spain, and makes us wonder just how many Spanish bonds the Fed may have been buying in recent weeks. As we disclosed previously, it is certainly under the Fed's current mandate to buy Greek bonds if it chose to do so. But, as above, who really cares: everyone now knows the banker cartel is merely doing everything to delay the inevitable, day by day, with absolutely no follow through plans on what happens later. Unfortunately for the middle class it will be them, and not Ken Langone, bailing out these very same banks when the shit hits the fan once again, which it absolutely will as neither has anything changed, nor has the Fed's response of fixing bubbles with more bubbles been modified.

Here are some pretty charts that show just how screwed Europe (and America) is:

Total relative exposure by country:

Detailed exposure by country:

And total exposure by any country's banks. The US has been conveniently highlighted.



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Mon, 12/13/2010 - 15:21 | 802218 CheapKUNGFU
CheapKUNGFU's picture

Jebus, cant we get through xmas before we start talking EASTER!

Mon, 12/13/2010 - 15:23 | 802226 SheepDog-One
SheepDog-One's picture

Nah, next few years already rolled over and priced in....DOW 39K priced into the computers, now we're talking about what might happen in 2015 since everything until then is already baked in the cake.

Mon, 12/13/2010 - 15:32 | 802259 Temporalist
Temporalist's picture

The Resurrection is here to stay...

Mon, 12/13/2010 - 15:36 | 802270 ShankyS
ShankyS's picture

Nope - mandates pull everything forward. Even holidays.

Mon, 12/13/2010 - 15:53 | 802333 pamriallc
pamriallc's picture

this remains yet another incredible reason to own equity and not debt.  the bonds, as they are sold, then generate cash and equity is the only answer to a guaranty of loss if we're to believe in inflation.

yes in a "hyperinflation" many things initially collapse, but interestingly enough, the stock market will be "safe" by comparison to real-estate in its current leveraged state of affairs.  there's a ton of bonds out there to sell, and equity to be incrementally purchased before we have to correct "materially" to the downside. 

shawn a. mesaros, pamria, llc

Mon, 12/13/2010 - 16:05 | 802380 AccreditedEYE
AccreditedEYE's picture

I'm not so sure moving down the capital structure in times of severe stress is ever really advisable.  

Mon, 12/13/2010 - 17:50 | 802753 trav7777
trav7777's picture

um...debt is senior to equity.  Debt gets converted to equity and equity gets converted to bagels

Tue, 12/14/2010 - 04:25 | 803999 chopper read
chopper read's picture


he's such a pompous horse's twat, isn't he?  he comes here to learn, then he does, then pretends like he doesn't, then lectures anyone who pays attention to his relentless self-promoting. 

any chance that equities experience serious inflation-adjusted headwinds?  any chance we are in a 'risk-off' environment where profits are secondary to wealth preservation?

Shawn, i gave you some advice some time back to place your clients is food and gold.  its nice to see you are coming around to some degree.  you've still got a ways to go. 

p.s.  you must be married to some superficial bitch, because no woman would buy into your bullshit unless you were paying her.  Of this i am certain.  

Mon, 12/13/2010 - 19:24 | 802955 kaiserhoff
kaiserhoff's picture

In hyperinflation, debt gets laughed at, and paid off at a couple of pennies on the dollar.  Think durable goods.  Think - how can I borrow to buy PMs?

Mon, 12/13/2010 - 22:00 | 803413 unununium
unununium's picture

Gotta run home and look for another 0%, 15mo credit card offer!

Mon, 12/13/2010 - 15:24 | 802225 traderjoe
traderjoe's picture

I'm not sure how anyone can look at this sort of information and believe we are in a "sustainable economic recovery". Banks lending to governments at interest rates higher then the GDP growth, with expanding entitlement issues, etc., etc.

It will just take one default, somewhere, sometime. One rat to jump the ship. It's a global Prisoner's Dilemma. 

Mon, 12/13/2010 - 15:27 | 802237 SheepDog-One
SheepDog-One's picture

Everyone got their rose colored Lasik, and chuggin the Kool Aid. The futures so bright, apparently, we gotta wear shades.

Mon, 12/13/2010 - 15:40 | 802281 Spalding_Smailes
Spalding_Smailes's picture

FedEx Corp. said it expects to ship 16 million packages Monday in what will likely be the busiest day in company history. The Memphis, Tenn., company said shipments would be nearly 13 percent higher than its busiest day last year, and double the volume that FedEx handles on an average day."...

Mon, 12/13/2010 - 16:07 | 802395 chopper read
chopper read's picture

...i wonder what those FedEx package numbers look like when we take out shipments from online coin dealers. 

Mon, 12/13/2010 - 16:09 | 802403 HarryWanger
HarryWanger's picture

Excellent post, Spalding! These are the bits of information that are undeniable proof that the economy is stronger and gaining momentum. Thanks for bringing reality to ZH forum.

Mon, 12/13/2010 - 16:26 | 802478 traderjoe
traderjoe's picture

Speaking of reality - now that you've been outed as a *professional* troll - when does your experiment on us perma-bears end?

Mon, 12/13/2010 - 17:45 | 802740 simonsito
simonsito's picture

troll? yes.... professional? he might not be worth the money hiring him.

at least what I see is that he is either pointing to some kind of very personal, lets say, experience... - or at some piece of data that looks just ridiculous when set in context.....

I think he is funny, and i would really appreciate a link to where he has been used as a contra indicator.

Mon, 12/13/2010 - 19:18 | 802940 dnarby
dnarby's picture


Mon, 12/13/2010 - 22:36 | 803489 Spitzer
Spitzer's picture

when do you think the US will start gaining jobs monthy ?

Mon, 12/13/2010 - 16:22 | 802462 Iam Rich
Iam Rich's picture

Is this the impact of on-line shopping?  Still need to look at overall sales via state tax revenues...well what do you know our very own Bruce K has the answer:



Mon, 12/13/2010 - 18:09 | 802802 Kali
Kali's picture

Also, online retailers are subsidizing the shipping costs by offering free shipping with orders.  How much of that crap would be shipped if the consumer had to pay the shipping costs?

Mon, 12/13/2010 - 19:37 | 802987 prophet
prophet's picture

pms and cardboard!  TIN et. al.

Mon, 12/13/2010 - 16:00 | 802364 pamriallc
pamriallc's picture

remember that there's a great story of as guy during the Weimar Republic who had no investment expertise but knew he couldn't trust his banker.  the guy--- not being into music--- but appreciating fine furniture, acquired "6 Grand Pianos" and kept them during the hyperinflation, figuring that high quality musical instruments like these would retain value.  of course he was proven correct.  this isn't about weather or not the Fed or the Treasury are doing the right thing.  the job, if there's one that I have--- is to simply find things that retain purchasing power.  when you can look at the world that way, understanding--- and rejectingt the "antiquated notion" that paper-money is somehow supposed to be a "forever store of value" you have some unusually cool opportunities that open themselves up to you.  either that or hire a pro.

shawn a. mesaros, pamria, llc

Tue, 12/14/2010 - 04:29 | 802401 chopper read
chopper read's picture

yes, there are some unique opportunities right now, but not in the stock market.  your piano example was a good one.  so, how are you leeching a commission from your dumbfuck clients by recommending vintage pianos, Shawn?  

Its amazing how a bit of arrogance and declining interest rates can allow for an asshole like you to build a business.  How much have you learned from the ZH forums and message boards, and how much do you condescend to compensate for your feelings of uselessness?

if only there were not so many fools in the world, you would have to get a real job instead of living as a professional parasite atop of widows and orphans.  ...disgusting.

"a pro", he calls himself.  what a fucking turkey. 

Mon, 12/13/2010 - 16:31 | 802502 traderjoe
traderjoe's picture

Hire a pro? Ahhh, a "money-changer". Someone that belongs to/believes in the world of inflation - which strips the middle classes of their purchasing power and robs them of their stored/saved excess labor, and then hopes to benefit from charging them fees, commissions, and interest for the use of THEIR money. 

Create a system of inflation ==> charge parasitic fees and create the hope that people can out-earn inflation ==> rig the game so the little guy never makes any money through bid, ask, taxes, etc. 

Great system for you. No thanks. I have removed my consent. My PM's will store my value without any of your siphoning thank you very much. 

Mon, 12/13/2010 - 15:29 | 802246 francismarion
francismarion's picture

US Fed 1.0 T. USD > BIS > ECB.


Mon, 12/13/2010 - 15:32 | 802258 jus_lite_reading
jus_lite_reading's picture


Mon, 12/13/2010 - 15:36 | 802268 SheepDog-One
SheepDog-One's picture

When someone does something about it! Until then its just day after day of monetizing madness.

Mon, 12/13/2010 - 15:34 | 802265 RobotTrader
RobotTrader's picture

No problem.  Steel stocks are running hard today.

Lots of IBD mo-mo chart monkeys will be jumping all over these today...

"AK Steel broke out of a six month long flat base on 3x normal volume", yada, yada, yada

Mon, 12/13/2010 - 15:48 | 802286 Spalding_Smailes
Spalding_Smailes's picture


I told you I would sell my US Steel to Kyle Bass at $70-$100 .... Lol'


* Cramer giving out bear stew recipes now......CNBC Lol''

Mon, 12/13/2010 - 16:01 | 802372 pamriallc
pamriallc's picture

china has no desire to slow down--- and they have the reserves to back themselves up.  steel got way too cheap.  "GSI" is a fave for the people who want to own China Steel more directly.  usual "no's" apply.

Mon, 12/13/2010 - 15:35 | 802267 aint no fortuna...
aint no fortunate son's picture

anybody got any more BUY tickets? I ran out again...

Mon, 12/13/2010 - 16:10 | 802405 chopper read
chopper read's picture


Mon, 12/13/2010 - 15:42 | 802292 bbtrader
bbtrader's picture

Off topic, but at the moment the Total Put-Call Ratio @ 0.63 - the most bullish since mid-April.  Also, who's making up the increasing number of NYSE new lows (over 80 today)???

Mon, 12/13/2010 - 16:29 | 802490 erik
erik's picture

bb, it's likely to get even more stretched over the next 2 days as the Euro may climb to 1.36.  however, the stock market reaction today to the massive Euro move was quite muted so the current leg of this rally is starting to run on fumes.

Mon, 12/13/2010 - 17:07 | 802621 bbtrader
bbtrader's picture

Well today's leg pretty much ran out of gas the last 30 minutes.  /DX was looking shaky most of the day but managed to rally a bit into the close.  BTW U-Dub in your blood?

Mon, 12/13/2010 - 19:25 | 802956 erik
erik's picture

if you mean purple, yes.

i don't think we see a clean one-off top here.  i think it'll take a couple days, but it looks like 1250 will contain the S&P.  the USD is so close to the 50 day it might as well go test it.  the first half of this year it tested it 3 times and held.  between that and the 50% re-trace of EUR-USD ~1.36, i like the set up for a trade.  also, Ireland vote on Wednesday could provide the last lift for the EUR-USD to get it to 1.36. 


Mon, 12/13/2010 - 15:44 | 802301 AnAnonymous
AnAnonymous's picture

Explicitly confirming the smokes and mirrors show put out by GB about the Euro.

Look at Ireland, if they go under, the City is going to be blown harder than by an invasion of Reapers.

The theater of illusion: GB barkings are all about hiding that if the piigs go down, GB will take a massive hit and that in fact, GB will be bailed out by the Euro surviving this crisis. 

Mon, 12/13/2010 - 15:45 | 802302 cheesewizz
cheesewizz's picture


Mon, 12/13/2010 - 15:51 | 802325 Sudden Debt
Sudden Debt's picture

we already broke the human moral, dignity and spirit.

I didn't know there was anything left...

Mon, 12/13/2010 - 15:48 | 802311 Sudden Debt
Sudden Debt's picture


Mon, 12/13/2010 - 15:48 | 802312 dhussey
dhussey's picture

Well, the bull market of the last 60 years had the Nuke as its M.A.D. device... I guess CDS's are the next bull markets adaptation of this method of leverage? 

Makes alot of sense when you consider, in the end, we are all screwed anyway... might as well guarentee the survival of 1 by leveraging it against the survival of all... touche Bernake... touche...

Mon, 12/13/2010 - 15:52 | 802329 MsCreant
MsCreant's picture

Folks, why add this stat now when it would have been relevant to know it lots earlier? They don't do this for nothing. What game is afoot? What are they going to justify with this? Or who's ass is being covered.

Just asking.

Mon, 12/13/2010 - 15:58 | 802356 Hansel
Hansel's picture

I was also wondering why now.  There is probably a plan, the majority of people are probably on the losing end of it, and no one is going to tell us anything.  SSDD.

Mon, 12/13/2010 - 19:12 | 802928 MsCreant
MsCreant's picture

Yup. Working on mysteries without hardly any clues. Night moves.

Mon, 12/13/2010 - 16:07 | 802389 KickIce
KickIce's picture

Good question.


According to Beck’s formula,  it’s top down (get the right people in government), bottom up (create civil unrest), inside out (The people ask for help from the government who they think is there to help them)   Well, they’re ready to help us all right.


Everything this admin has done; from its stance on immigration, terror and some degree finances has been done to piss off the average American.

Mon, 12/13/2010 - 19:17 | 802937 MsCreant
MsCreant's picture

While I am not a conspiracy theorist, manipulating public opinion so that we will beg for something even bigger than TARP, and damn the consequences for the future, yeah, that seems about right.

"Help me, help me, the system is going to blooowwww..."

If I had a dick, I'd tell it to blow me...

The men of ZeroHedge have taught me well.


Mon, 12/13/2010 - 19:48 | 803007 prophet
prophet's picture

I guess he figures he was pretty good at helping poor people, so the more poor people there are the more people he can help.

On the other side, he did say in no uncertain terms to buy stocks in MAR09.  

Mon, 12/13/2010 - 15:53 | 802334 The Rock
The Rock's picture

Green Eggs (Easter) and Ham (PIIGS)

Not in a box.
Not with a fox.
Not in a house.
Not with a mouse.
I would not eat them
here or there.
I would not eat them anywhere.
I would not eat green eggs and ham.
I do not like them, Sam-I-am.

Mon, 12/13/2010 - 15:56 | 802347 KickIce
KickIce's picture

Time to throw them all in the streets and let them burn their fiat currency to keep warm.  Should last them through the next couple of winters and by that time maybe my cash will be worth something.


Mon, 12/13/2010 - 15:56 | 802349 Sean7k
Sean7k's picture

Someone should be discussing scarcity. That seldom used word that rears it's ugly head when fiat currencies lose so much value, people refuse to sell product- regardless of price. 

Dow to 39,000? So what, the bigger question is: will you be able to buy anything? 

The loss of faith in currencies will create a hyperinflationary global economy and scarcity will rule the markets- making monetary substitutes with tangible value the only mechanisms for exchange. 

The CB's will play it out, they will attempt to institute a single currency, but what if no one believes the lie anymore? Many already question the system of fiat money, what happens when the wealthy themselves repudiate it? 

Mon, 12/13/2010 - 16:16 | 802430 chopper read
chopper read's picture

yes, i too am waiting for fractures amongst the global elites.  might one of them break the ranks and risk their papered fortunes?  ...time will tell.

Mon, 12/13/2010 - 17:16 | 802646 traderjoe
traderjoe's picture

Scarcity is the element that the deflationista's don't acknowledge. They can't imagine a time when people will refuse to accept FRN's. 

Tue, 12/14/2010 - 03:41 | 803982 AnAnonymous
AnAnonymous's picture

They are right. Enough nations are ensnared so that they do not have another option but accepting to sell.

For the others, it is all about participating to the loot or rejecting participation. If they dont participate, well, too bad for them... So  far, nations are more likely to fight to be the looters than anything else.

Time to face facts.

Mon, 12/13/2010 - 15:58 | 802354 Calculated_Risk
Calculated_Risk's picture
US Taxpayers Are On The Hook To The PIIGS By Over $350 Billion



Mon, 12/13/2010 - 16:06 | 802393 LawsofPhysics
LawsofPhysics's picture

Please let it blow up while we still have some fresh water and oil/coal reserves.

A "do over" may be the only way to save the U.S.

Mon, 12/13/2010 - 16:09 | 802404 Cdad
Cdad's picture

Sweet!  I was hoping something even more outrageous would happen today!  Good to know we are chasing good counterfeit money after bad real money dumped into a failed economic model backed by a soon to fail currency with The Bernank leading the charge. 

It distracts me from the tome I was writing in response to the previously posted Apple essay by Mr. Black, which, I might add, is a story about how pretty soon certain segments of American society are going to discover that they have a strange hankering for human flesh.

Thank you, Tyler, for diverting me back to the subject of Ken Langone, to whom I apologize for my previous misspelling of his name, as surely he would never short the American citizen, which was his comment this morning on CNBC, which literally made blow coffee through my nose as he said it, which, curiously enough turned out to be a great way to wake up while being simultaneously hard on my keyboard.

And as the train wreck of Europe continues, and the Apple zombies trundle through malls, many of which are almost certain to be closed come March 2011[which makes that whole RIET rally doubly curious], I am going to refocus my efforts to properly and fervently despise criminal syndicate Wall Street Bankers even more than Apple zombies as we all head for our obvious and deserved end... 


I just added .30/.30 ammunition to my Santa list because my almost entirely short portfolio [plus a couple double super secret micro cap long gambles] is up despite another whiz bang rally in the DOW...which leads me to the conclusion that the etfs are rallying alone today while the criminal syndicate bankers vomit the underlying into their gaping, manipulated maws...but that is another story all together.


Mon, 12/13/2010 - 16:19 | 802441 chopper read
chopper read's picture


Mon, 12/13/2010 - 17:14 | 802641 traderjoe
traderjoe's picture

Thanks for the read. Nicely put. 

p.s. I need more boxes of liquor for the bunker. I think they will appreciate nicely when SHTF. 

Mon, 12/13/2010 - 16:21 | 802460 DavidRicardo
DavidRicardo's picture

Listen, Saint Sebastian was an optimist: he didn't want anything up his bottom.

Mon, 12/13/2010 - 16:22 | 802464 TexDenim
TexDenim's picture

US bank exposure to the PIGGS won't be determinative, in the sense that it's minuscule on a percentage basis. It's the European exposure that will bring banks down and create headlines. That won't happen here.

Mon, 12/13/2010 - 17:37 | 802724 tony bonn
tony bonn's picture

correction - us tax payers are on the hook fro 350b usd....

being a bankster means never having to take responsibility for a bad loan...that's what suckers are for....

Mon, 12/13/2010 - 18:08 | 802801 SilverRhino
SilverRhino's picture

My paranoia is up on this one ...

What is the exposure of the US banks to failures of the Euro Banks?  

Specifically, we see exposure of US banks to sovereign defaults above.   If those countries default, they will take at least one European bank with them.

Just how bad is the exposure in case of Euro corporate bank defaults?

Mon, 12/13/2010 - 18:25 | 802833 Cdad
Cdad's picture


This exposure is the kind of thing that really makes me worry, but I am pretty much alone out here shorting the crap out of stuff that looks absurd to me.  So take it with a grain of salt.

I think you should sell longs, go short, and thank God for this opportunity that you have been given.  The criminal syndicate known as Wall Street wants you to know that no matter how many US banks lose money [and in whatever amounts], when Europe implodes and the Euro collapses...ripples in the water will be non material.  You're fine.  Go long Ann Taylor and such.

At least this is my read so far when I am not almost vomiting morning beverages, or sitting stunned at the crap certain criminal investment bankers whose initials are K.L. have the nerve to say on tv and such.  I'm just an outlyer, probably, and I may well actually be traveling in a parallel universe that has no bearing on yours.  I'm still trying to figure it out.

Good luck out there, though.

Mon, 12/13/2010 - 18:30 | 802836 Squid Pro Row
Squid Pro Row's picture

I am surprised that ZH has not been shutdown.  Reports this lucid and enlightening must be considered a threat by those holding the reins.

By now it should be clear that our "bailouts" are nothing more than a scheme to bailout dumb private investments with public funds.  Central banks, the IMF, and other funds are being used like an insurance policy.  It seems plausible that once all of the private money is safe, then the bad assets (now publicly owned) will be written down.

Thanks for doing such diligent work Tyler.  We appreciate your efforts.     

Mon, 12/13/2010 - 19:51 | 803013 MsCreant
MsCreant's picture

Not "dumb" private investments friend. Guess again. If not dumb then...

Mon, 12/13/2010 - 22:37 | 803491 Spitzer
Spitzer's picture

There is a plan B.

It is the Euro and freegold

Tue, 12/14/2010 - 16:21 | 805826 hugomarch
hugomarch's picture

Since when is the cradle of western civilization, ie: Greece- referred to as 'PIIGS"?! Which facist bankster came up with this terminology?

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