European Rescue Fund Insufficient To Rescue Italy, May Be Doubled To Over $2 Trillion

Tyler Durden's picture

The latest italy contingency stunner comes from Die Welt which has just reported that the European rescue fund will be insufficient to bail out the latest biggest loser in the game of musical ponzi chairs, Italy. As Reuters translates: "The existing rescue fund in Europe is not sufficient to provide a credible defensive wall for Italy," the central bank source was quoted telling the newspaper in an advance text of an article to appear on Monday. "It was never designed for that," the source added." The newspaper said that the rescue fund might have to be doubled to up to 1.5 trillion euros. But it was not clear if it was the central bank source calling for the increase." Doubling the bailout fund is not a new idea and was previously proposed by Nout Wellink of the Dutch Central Bank, although as Die Welt explains, the decision will ultimately be not that of the ECB but of the separate governments. Germany, as a reminder, is already the biggest backstopper of Europe, and is on the hook for €211 billion euros as the primary funder of the EFSF: which just happens to be the CDO at the heart of the eurozone. Should Germany have to add another 200 billion euros to its rescue commitment, Merkel can forget any and all reelection chances, which is funny since just today it was announced that "Chancellor Angela Merkel has stated publicly that she wishes to run again in 2013. This comes as polls show she would face strong challengers from the opposition Social Democrats." Her chances would be roughly zero if German taxpayers learn that the fate of a failed monetary experiment is increasingly more reliant on their direct labor even as the populations of "austere" countries refuse to work and merely subsist on existing entitlements.

More from Die Welt on what tomorrow will be an unpleasant day for UniCredit longs, and why the Eurozone is imploding: even central bankers now admit the bureaucrats in charge are full of (sh)it:

It is the money politicians not only to increase, but also to a more flexible design of the rescue. "The European central banks are no longer willing to buy bonds of other states," it said in central bank circles. "This should enable the Treasury rescue package." Moreover, one must be able to intervene quickly, without waiting for long program negotiations. In addition, be a better crisis communications required: Euro Group President Jean-Claude Juncker "While talking constantly, but nobody listens to him more," said a central banker.

Especially important was immediately take to the participation of private sector involvement in crisis plans on the table: The damage is already enormous, without giving it a benefit. Above all, the German Federal Government is therefore strongly criticized in ECB circles.

But fear not: the Dow Transportations index is at an all time high.

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66Sexy's picture

"We must go forward, cautiously, and consolodate each acquire position, because already the 'inferior social stratum of society' is giving unceasing signs of agitation.

Let us make use of the courts...When, throught the laws intervention, the common people shall have lost their homes, they will be more easy to control and govern, they shall not be able to resist the strong hand of government acting in accordance with the control of the leaders of finance."

US Bankers Magazine, 1892.

"We must keep the people busy with political antagonisms. We'll therefore speed up the question of reform for the democratic party, and protection for the republican party.

By divinding the electorate this way, we'll be able to have them spend their energies at struggling amongst themselves on questions that have no importance to us."

United States Bankers Magazine, 1892.

Milestones's picture

Banker today are just as charming as ever. Good grief Charley, when in the hell will we learn?     Milestones

ratso's picture

Well, the problem is that 1.5 trillion euros will not be enough.

The cost of the ECB structure that allowed the exploitation of the thrifty countries by the spendthrift countries is now coming home to roost.  The size of this avalanche may well be more like 3 trillion euros or more before this wave of the crisis calms.

Ahmeexnal's picture

I'd buy Venezia for a dollar!

Reptil's picture

Indeed. 1,5 trillion is now, 3 weeks after this number was "leaked" to the press, likely to be doubled in juli, I totally agree. Though that is just to keep the whole thing liquid, not a solution in itself.

thunderchief's picture

They don't print that stuff in high school history books, and they never will.

macholatte's picture

THanks 66

Just for fun I googled one of your quotes and got this....


and this


After some research, the original source we found was listed as the United States Bankers' Magazine in 1892, republished later in the New Era and in the Social Crediter. 

Following is the article in its entirety:


Michael's picture

They never envisioned the Ron Paul movement back then.

Misean's picture

Is there no ink?!? No paper?!? Surely there is no surfeit of debt that cannot be solved by more!

wandstrasse's picture

Print the pain away!

BTW, in German MSM neither the US debt ceiling, nor Italy has been mentioned in recent days. Political headlines are some tanks sold to Saudi-Arabia and tax reduction. EU contagion, death of Euro? Waaahhhh, go away, too complicated, too boring.

Cheeky Bastard's picture

"But fear not: the Dow Transportations index is at an all time high."

But the BBG Tanker index is about to hit a multi-year low (and then surpass it) ... 

Rally on ...

Urban Redneck's picture


The theater of the absurd, is it a divine comedy or tragedy - central bankers blaming other central bankers, because their private sector banker counterparts smell blood in the water and are hungry for a fresh kill and more profits... which will in turn necessitate another taxpayer bailout for the sharks arranged by the central bankers themselves.


DeadFred's picture

Wouldn't it be cheaper to just write checks to the bank owners and skip the charade?

wandstrasse's picture

DeadFED, exactly this I have been asking myself for a while. Why do they not print as much money as any banker wants at any point of time? What are all the trading desks, conference rooms etc good for? it does not change the result of the entire banking exercise at all.

Urban Redneck's picture

It might have something to do with the lack of scalps to pin on the wall- last time they got Fuld's and Caine's, or put another way- the satisfaction of banker masturbation isn't as satisfying as banker fornication (black widow style). 


EDIT - Prior examples include Soros vs dickless John Major (who went on to Carlyle Group), and Soros vs the Thai Baht, his sociopathic behavior has definitely been legitimized in the intervening years.

Urban Redneck's picture

As much as I detest postponing the inevitable.  There is a simple solution, and less expensive in the case of Italy than the model used in Greece.  The "Jean-Claude-Zhou Put" come out of the emergency meeting tomorrow- before the US markets open, and announce that the ECB and PBoC will buy at par (or equivalent depending on the vehicle) whatever Italian crap is being targeted - and in the process BANKRUPT the specific bankers responsible.   

macholatte's picture

Don't forget stealing. It has a lot to do with stealing.

Politicians wring their hands looking for their own personal bailout (ie: Barney Frank "Nobody could have seen this coming" therefore everybody is absolved of blame) so they have an excuse to use to get re-elected and are available for more bribes and the Brokers/Bankers/Lawyers get huge "fees".

IMHO there is nothing about Italy that is a surprise to anyone inside the circle of kleptocrates. All the maneuvering is about power and stealing and then move the show to the next country.

Well, if crime fighters fight crime and fire fighters fight fire, what do freedom fighters fight? They never mention that part to us, do they?
George Carlin

john39's picture

won't work. its not about money. world wide hostile takeover by the dark side. its about power. They plan to take away your rights, literally, human cattle. 1984 was not fiction, it was a prediction.

Vampyroteuthis infernalis's picture

Even though QEx works in the short term as printing money, it still is debt. In the long term, it is worst since taxpayers will someday have to pay it back. As long as they just keep buying debt, the QE infinity is limited in nature. If they really go Zimbabwe style, it will be hell to pay.

To answer your question why the banks don't print like mad? They have to pretend like the Ponzi is legitimate. Most on ZH understand that it is not and just a foolish game till collapse.

hedgeless_horseman's picture

Why do they not print as much money as any banker wants...?

That is exactly what is happening.

ISEEIT's picture

Short AUD/USD.

That's all I gotta say.

To much fun in my house to play here right now.

docj's picture

Hope Italy is still there why I arrive for my conference in mid-September. I was rather looking forward to briefly visiting the place of my Mother's birth (Venice).

BTW, doesn't this call for the "It's On Like Donkey Kong" pic?

Djirk's picture

how much debt does Italy have to roll over in the next 5 years......are they not able to pay interest......the ECB doesnàt have to backstop the whole 1.5B now.....someone want to drive up yields....tired of negative yield

A Man without Qualities's picture

Italy needs to raise €500 billion by the end of 2013

Make no mistake, this is not about getting paid a few more basis points.  There's nearly €2 trillion of public debt in Italy, the Republic, regions, cities, plus all sort of financing structures and bizarre derivatives (many of which are currently the subject of court cases, which may have something to do with this.) which are off balance sheet debts.

All I know is that the banking community knows that Italy is too big to bail out and too interconnected to isolate, and will hurt everyone.  There is no way they would consider this a money making opportunity.  

I always expected to get a sense when the US was really fucking screwed by the decision to turn on Italy, as this would be hugely bullish for Dollars and Treasuries.  It's surprising to me how events have been kept quiet to now, it's like we're slowly being told not to panic, but we have a big problem.

Djirk's picture

Thx for the data, 500B is a big nugget and I bet there is more due to creative the Italian press they called it a debt vortex (translated)...nasty

A Man without Qualities's picture

It reminds me of the famous buconero from Parmalat.


The question is whether Parmalat will be the foretaste of an Italian banking crisis in the same way Enron was a US one.. 

PulauHantu29's picture

"Senor, would you like spaghetti or stromboli with yoru debt?"

Got Gold?

SDRII's picture

but but but AA is going to blow out the EPS and Klaus is set to reiterate those inventories are locked up for life in financing deals

Atomizer's picture

"Earth Days (2009)" in which Dennis Meadows explains exponential growth, overshoot and collapse of society- from the 1972 study/book "The Limits to Growth.

Monsanto is on the case. Government food subsidies continue to be on the rise. Central planners are simply reinforceing behavior changes under (UN Codex Alimentarius Commission Food).

Again, doomers like myself simply pass along information.

United Nations Publications prepared by the Division for Ocean Affairs and the Law of the Sea, Office of Legal Affairs

Leave no bleeding turnip behind!

Vampyroteuthis infernalis's picture

The bailout wall will soon be hit. Is Italy the proverbial Achilles Heel?

Atomizer's picture

We knew about this well in advance. The elected carnival blokes are having puckered asshole syndrome. I'm almost certain, the new universal health care will cover this aching problem.

Clarke and Dawe ask the million dollar questions

knukles's picture

Daddy, explain to me again what happens when they figure out it's all futile.

Son, there's no pile of debt too big that can't be fixed with loads of paper and barrels of ink.

Is that true, mommy?

Don't listen to him son, he may be your father, but he's a fucking idiot.  Here, go bury this gold coin in the back yard where dipshit can't see it.

boyplunger's picture

Lets have Italian.

snowball777's picture

Never double-down on a hand that can bust with 1 card.

snowball777's picture

Anytime someone claims they need the freedom to act quickly  (Hi, Hank!) you should immediately punch them in the mouth and walk away.

equity_momo's picture

When the camels back finally breaks the liquidations of items not deemed necessary to live will be a thing of such epic destruction , you wont be able to log onto ebay for the gazillions of LV handbags , LULU lemon hotpants and Porsche matching luggage blocking up their search engines.

If you have something you dont need , like a sportscar ,a spare house or two , overpriced trinkets ,  think about finding a chinese or Wall st sucker to sell them to now. And put the cash into the usual suspects. 

We are getting to the bare essentials. Theres a bubble in consumer discretionary stocks that will rival the tech boom of 99.

Monedas's picture

Extend the Space Shuttle program and use it to deliver FRNs to the Europeons ! Maybe for once we'll get a full (50,000 lbs) payload ! This last mission carried a "whopping" 7,000 lbs (15% capacity) payload ! Can't cram any more stuff into the space station ! Isn't the space station (built by Russian kerosene rockets at $20 mm a pop) smaller than the much heralded Shuttle ? The most expensive pizza delivery vehicle in history ! Monedas 2011 The flagship of a Keynesian Super Nova New Deal ! PS You would think they would fly a full crew on the last "Sentimental Journey" ? No takers ?

snowball777's picture

With current luck, an O-ring would cause a DXY pop.

Monedas's picture

With a full crew (10?) and a re-entry wardrobe failure.....the fatality rate curve would surpass the Corvair curve ! Monedas 2011 What ? It already has ? Where's Nader Numbnuts ? An "O" ring failure is the rocket science equivalent of a burst condom !

buzzsaw99's picture

Just have Moody's stamp Italy's bonds "AAA" and sell them to the norway teacher retirement system for a profit. Problem solved.

Problem Is's picture

Put CalPERS down for $20 or $30 Billion...

Problem Is's picture

Maybe The Bernank can make his first profit as Chairsatan by selling the ECB some Bernanke Buck Green inkjet cartridges...

disabledvet's picture

Here it comes. 2008 was just a prelude and indeed Europe and Dexia more than likely caused the collapse of Wall Street just like Creditanstallt kicked off the Great Depression. "This time is different" in the sense that Europe is far more complicated and interconnected and our Fed was "all over dees pooh" once Greenspan was escorted out.

Franken_Stein's picture


Let me translate this from Die Welt correctly:


In doing so, the politicians involved in monetary affairs are not only putting emphasis on an increase but also on a more flexible design of the rescue fund.

"The European central banks aren't willing to buy additional sovereign bonds anymore.", so the talking goes in central bankers' circles.

"This ability should be transferred to the rescue fund by the respective finance ministers."
Apart from that, one would have to be able to react quickly, without waiting for drawn-out negotiations on details.

Furthermore, a better PR strategy on the crisis is necessary:
While "Euro group boss Jean-Claude Juncker is talking all day, no one is listening to what he has to say anymore", a central banker said.


It would be of utmost importance to take private sector participation in the contingency plans off the table immediately:

Already now the damage caused by that would be enormous, while yielding nothing.

It is therefore especially the German government which is being heavily criticized in ECB circles.


The Count's picture

It does not matter if Merkel is in power or some other meat puppet. Why is it so hard to get this? The string pullers in the shadows know, and will, exert any pressure necessary to keep the ball rolling. 2 trillion? so what, they would play along if it was 20 trillion. Its all bogus anyway.

No different here either...if the Obamatron doesn't get re-elected, so what. Who is stupid enough to think the reps will kick the banksters asses? The dems are just stupid and dont' get a market economy...the reps think businesses have to be allowed to screw everybody over. We are doomed.

janus's picture

you know that part in Beck's masterpiece Odelee, on, i wanna say track 7, where you just feel the first "NOVACAINE!!!!" is about to drop.  That's sort of the feeling that's gripping me right now.

Yen Cross's picture

 Spain and Ireland better go DSK in Manhattan before its too late. That must be good for another 3 Trillion...? Alice in Wonderland...All Aboard!!!


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