ECB Intervention Continues: Trichet Accelerates Portuguese Bond Buying, Forces Short Squeeze

Tyler Durden's picture

Jean Claude Trichet has finally learned the Bernank's lesson #1 on Central Bankering: when all else fails, buy it all. The FT reports that according to traders the ECB was on Thursday buying Portuguese and Irish bonds in €100m tranches – four times bigger than previously, which in turn sharply brought down the cost of borrowing for Lisbon and Dublin and sparked a euro rally. Just like in the US, this means that virtually no assets reflect their true value, as the ECB is now monetizing debt, without even having formally announced it is doing so, either in a sterilized or unsterilized fashion. This means that next week's update of the ECB SNP programme will demonstrate a surge in bond buying. This is especially the case when factoring in that Trichet is currently out in the market waving every Portuguese Bond in. It is a sad day that the only way the ECB, just like the Fed, can create an upward move in an asset class only by forcing a short squeeze.

The chart below shows today's ECB intervention in PGBs:

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Mongo's picture

Hey JC Trichet... keep buying that shit and drag down the Euro... and I will keep buying that silver & gold.

MaximumPig's picture

uuhhh the euro rallied like a motherfucker. why?

T Rex's picture

That's a some spicy hot potato.

Turd Ferguson's picture

Wow. You think back 5 or 10 years, I'd have never imagined a world like this.

Mongo's picture

That makes two of us. But imagine living NOW and not knowing... now that is scary to me.

TradingJoe's picture

Same here T but still, we will all be witness to a MEAN reversion to the mean! Soon!

Buck Johnson's picture

I totally agree with you, when this reversal happens it will take 80% of the Dow, and European market share wit it.  They are monetizing debt, in essence printing money also.  They are falling into the trap that Bernanke (before being selected to the Fed) and other economists have talked about.  When you start monetization, you end with monetization.  What happens is that you can't stop once you start, because if your last bullet is to monetize and you do it then you have already lost the battle.  Like a junkie or person stranded on a a raft in the middle of the ocean with a bottle of water.  You hold off but then decided to take very very small sips to sustain yourself.  Then those small sips turn into drinks which turn into long swallows.  And thats because once started you can't stop.

Eventually the EU will break apart, and to be honest with you the US may break apart also.

Tense INDIAN's picture

think abt those billions who have no idea what the hell is going on

Leo Kolivakis's picture

About time the ECB got with the program! Monetize away!

firstdivision's picture

Why junk him on that comment?  Even Leo knows this will speed up the end game of the world as we know it. 

AccreditedEYE's picture

I didn't junk him broseph..   I hope you got out of your DIS short before this BS hit the fan 2 days ago. (not sarcastic)

Rainman's picture

......reminds me of my beloved Mama's ongoing inquisition...." If all your friends jumped off a cliff, would you follow them ?? "

MrTrader's picture

JCT has sent a message : you don´t with me, I don´t you !

knukles's picture

Now that's just downright fucking wrong.  Low as it can get.  Sleazy.  Unethical.  Outside the bounds of reasonable business practice.... something that one might expect GS to be involved in.

Getting the whole fucking street net short, and to the Central Bank, no less.

So when the dealers can't make delivery, they can go to the ECB to borrow the crap, re-hypothecate it to the ECB for a loan, buy in their own counterparty and then the dude with the original short in turn goes to the ECB for a loan.
Fucking magic, I say, Magic.

And does naught to stimulate any real economic activity.  Same fucking paper shuffling got us here in the first place.



AccreditedEYE's picture

Paper to solve other problems with paper. Public paper or private paper, losses exist and will refuse to not be recognized... be they European or U.S. variety. What a waste of resources.

unum mountaineer's picture

imo way too many bases to cover to keep this bile down..yea yea squiddie has tentacles every where, but last time I checked  there are a finite amount of tentacles on a squid too..anyway, doesn't change a thing...TGIF

Ignorance is bliss's picture

So what is the long-term fall out? If they don't monetize the debt., then Germany would eventually pull out of the EU as they become a beast of burden to EU bailouts. I don't know a lot about the long-term ramifications of monetizing the EU debt, and I would appreciate some input from those that can flesh out potential ramifications.

AndrewJackson's picture

There is NO integrity in these capital markets. How can one go short a clusterfuck security or bond with Bernanke and Trichet ready to pull out the money vaporizer should "financial market stress" kick in (especially when now of days this seems to be a default). I can't wait for the day when the source of the manipulation is put into question and the Fed/ECB with every other garbage fiat goes to its true value of zero. Kind of hard to put down unlimited monetary stimulus & bailout when traders finally wake up and start questioning the fiat sovereign debt bombs. This will happen, its only a matter of time. Yes TPTB will make it last as long as possible, but in the end the will crash with a vengeance making 2008 look mildly bearish.

trav7777's picture

just try to ignore it...what we're up against isn't a monetary phenomenon

Josephine29's picture

Whilst Mr.Trichet's tactics appear to have been a success he faces several new problems now according to notayesmanseconomics blog.

We are back to central banks interfering in markets again and in the short-term this can give the appearance of success. But as time goes by I feel that more and more will ask the question what is the endgame? You can suppress symptoms creating what are false markets along the way by this route but you do nothing for the underlying problem. You also create an additional moral hazard because for those not in power creating a false market is illegal.

What will Trichet do buy them all?

Tense INDIAN's picture

some scary VERTICAL moves seen everywhere in the markets .....

Amsterdammer's picture

This is just kicking the can

Shortsqueeze the sovereigns,

longsqueeze the noose around

those countries' neck, the UE

is 'unknown legal territory' and

Trichet having a ballgame choking

his virtuous cycle of austerity

( UE growth Q3 published yesterday:+0,4%)

down their throats

LeBalance's picture

Credibility SNAP day is now much closer.

For certain populations that has already taken place.


qussl3's picture

This is going to sound damn old but eventually everyone is just not going to bother and just go after hard assets.

Something the tards cant print.

Dismal Scientist's picture

Its like trying to herd cats.

f16hoser's picture

Trichet see's Bernanke as a role-model. Interesting.......

Kaiser Sousa's picture

wow this reminds me of a Public Enemy lyric...

"if u kill my dog im'o slay yo cat"...

debt coupons for everyone.....

Cone of Uncertainty's picture

This is not going to end very well.

Monetizing now, is like strapping extra bundles of tnt to the outside of the Hindenburg, after spray painting it with nano thermite.



Cone of Uncertainty's picture

The Tri-chet, meet The Bernank.

GottaBKiddn's picture

The Bernanke and Tricochet both work for the same masters, whose present objective is to perform a "balanced collapse".  Ideally, for them, all the "sovereign" sheeple will gladly accept their global monetary solution for the sake of global economic peace and safety.

GFORCE's picture

Never get high on your own supply Jean-Claude.

Founders Keeper's picture

[...this means that virtually no assets reflect their true value...]---TD

Given the fact derivative bets are recorded off-book, it's safe to assume "true" corporate asset values have been hidden from investors years before the Fed was pumping the market via PDs. 

Off-book derivatives killed Fundamentals practice of investing. 

Technicals practice of investing was killed by the Fed's direct and indirect intervention these past 18 months. 

That leaves Momentum investing as the last man standing.  Jack be nimble, Jack be quick....

Thanks for the article, TD.

Live_Free's picture

Is this really a planned end game of controlled demolition? Can the 'elites' whoever they are really be this well organized and powerful to bring down the entire global financial system in a false flag styled overthrow of the soverign nation state model resulting in 'a global monetary solution?'

Or are we just giving them far too much credit? Could it be that these are the desperate actions of desperate men staring down the death of a system that is the very foundation of their power and wealth? Will the collapse of the financial system be coupled with excelerating natural disasters, solar flares and the collapse of post modern society with all its decadence a'la 2012 end of the Mayan calendar apocolypse?

Is there hope that the beginning of the end will bring revolution, change, freedom? Or is this all planned and is there no hope as the next stage of global slavery is already in the works?