Does Anyone See This Emergency As An Emergency, Or Is A Half Trillion Euro Pay Day Loan Bullish?

Reggie Middleton's picture


Today's big headline from Bloomberg: Euro-Area Banks Tap ECB for Record Amount of Three-Year Cash

Euro-area banks tapped the European Central Bank for a record amount of three-year cash in an operation that may boost bond and equity markets.

The Frankfurt-based ECB said today it will lend 800 financial institutions 529.5 billion euros ($712.2 billion) for 1,092 days. Economists predicted an allotment of 470 billion euros, according to the median of 28 estimates in a Bloomberg News survey. In the ECB’s first three-year operation in December, 523 banks borrowed 489 billion euros.

So, basically, nearly twice as many banks are in trouble now as compared to just three months ago. This is bullish, right???!!!

“The astonishing number this time is the number of banks participating, which signals that a lot more small banks looked for the money and it is likely they will pass it on to the economy,” said Laurent Fransolet, head of fixed income strategy Barclays Capital in London, who estimates about 300 billion euros of the total is new lending. “So the impact may be bigger than with the first one.”

I'm not familiar with the quality and/or strength of the shit they smoke over there in London, but from the looks of things it appears to be potent enough. Let's take this bloke's comment to heart, "it is likely they will pass it on to the economy,” . Okay, now where do I begin? Exactly how much of first LTRO made it into the actual economy versus being hoarded by the banks? Is the "pass[ing] it on the the economy" the reason why there is now so much liquidity in European CRE? Here's a quick reminder of where I stand on this...

So, it's safe to say that all of those European REITs and real estate concerns with property mortgages coming up for renewal while underwater will definitively see most of that LTRO 2 money, right? Let's all take a deep breath and hold it as we wait for that one to happen. Ready? One... Two... Three... What do you think, pray tell, happens when the liquidity starved, capital deprived, over leveraged banks fail to roll over all of that underwater Eu mortgage debt?


Investors seeking safety in Germany, the UK and France may truly be in for a rude awakening!



Reggie Middleton Featured in Property EU, one of Europes leading real estate publicatios

Those who wish to download the full article in PDF format can do so here: Reggie Middleton on Stagflation, Sovereign Debt and the Potential for bank Failure at the ING ACADEMY-v2.

'Nuff said! Subscribers, as (not if, but as) this breaks, these are
the companies trading at the valuations that are most
shortable/profitable in my opinion...


European Insurance

European CRE (this one is a bit dated)

European banking

And the cat that was already let out of the bag...

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Thu, 03/01/2012 - 09:14 | 2211984 jomama
jomama's picture

that looks like some sticky icky dank O_O

Thu, 03/01/2012 - 08:24 | 2211807 Bahamas
Bahamas's picture

It would be nice to know the detail of how much each individual bank got.

Does anyone know where to look, in case such data is leaked to sheeple.

Thu, 03/01/2012 - 08:17 | 2211793 waterdude
waterdude's picture

taking down LTRO funding does by definition imply financial distress.  You'd have to have your head examined as a Euroland bank CEO if you didn't get as much 3year funding at 100bps as possible.  It's not a difficult concept to grasp.  Over course for the average Zerohedge reader, it may well be.


Thu, 03/01/2012 - 09:05 | 2211943 Reggie Middleton
Reggie Middleton's picture

So, i guess it never occurred to you to ask why teh ECB is giving out 100 pb funding like candy at Halloween? Is it because banks are so healthy that they need the margin boost?

Thu, 03/01/2012 - 07:29 | 2211745 Moe Howard
Moe Howard's picture

Kleptocracy. We cannot beat them unless we have a printing press as well.

Thu, 03/01/2012 - 05:12 | 2211663 uranian
uranian's picture

if i understood it right, the fed took away 100 billion, the ecb created 500 billion, and gold was manipulated downwards to make it look like +400 billion new liquidity is actually -100 billion. curtain twitching. gold is already almost back at 1300€.

Thu, 03/01/2012 - 07:08 | 2211725 covert
covert's picture

netherlands does stand some chance of survival, the rest seems doomed.


Thu, 03/01/2012 - 07:39 | 2211754 strannick
strannick's picture

Dont forget the mystery buyer that appeared on COMEX and sold a million ounces (of paper gold of course) at market. Not the way to get the biggest bang for your bullion, but the best way to crash the price. Im sure the CFTC will be as forthcoming with the info on the sale as they have been with info on why no one at MF Global got prosecuted.

Thu, 03/01/2012 - 07:39 | 2211752 Moe Howard
Moe Howard's picture

Geocities wants that website back.

Thu, 03/01/2012 - 04:36 | 2211639 sessinpo
sessinpo's picture

Banks gorge on 530 billion euros of ECB funds

"FRANKFURT (Reuters) - Banks grabbed 530 billion euros at the European Central Bank's second offering of cheap three-year funds on Wednesday, fuelling expectations that credit will flow to businesses and borrowing costs will ease for governments hit by the euro zone crisis."


I wonder how much of the funds the banks will park in ECB accounts at a loss as they have before.

Fri, 03/02/2012 - 09:42 | 2216467 sessinpo
sessinpo's picture

Thank you ZH for answering my question.

What Carry Trade? Euro Banks Deposit Entire LTRO 2 At ECB, Bring Total To Over $1 Trillion This was pretty much as expected as was the ISDA. The ISDA is the fox guarding the chicken coop. At some point the chickens will be gone. It's anyone's guess as to when that happens. Germany will make that decision. I also find it ironic that Germany is being blamed by Greek population as being the cause of Greece's problems when Germany would rather Greek default such as Iceland did. However, Germany, which has higher exposure to the other PIIGS, will not want the same result - Italy, Spain, and Portugal. What a tangled web that is weaved.


In the end, I guess it will all come down. Blame game and war is the next step once this phase ends.

Thu, 03/01/2012 - 03:52 | 2211587 ivars
ivars's picture

It is a prediction of EUR/USD long term trend, which was made in October 2011 and which starts to resemble reality relatively well just now. In essence it says that while PM's in USD will be going up, so will be USD value vs EUR, or in EUR PM appreciation in 2012-2013 will be about 20% more than in USD. I suppose that means in general that USDx is moving up for few years.

The reason I see USD doing fine vs. other USDx currencies is that despite losing its value vs. commodities, it will still be the most wealth preserving currency due to its partial nature of being  commodity itself (which is right now of course being eroded slowly but surely with printing, and will be gone with the USA partial default).

The USDx chart I made in October proposes dramatic upswing right now. Need more time to check against reality, even though so far it has been correct. You may disregard comments I made around the topic in the post, they were reflecting ideas I had at that time.

I will make a new EUR/USD slightly squeezed on time axis prediction chart once it becomes clear that the top at 1,35 was the right one. Or not.

Thu, 03/01/2012 - 03:17 | 2211553 MayerRothschild
MayerRothschild's picture

I was high when I read the "Payday Loan" headline and it made me giggle.

Than I see the article... lmao


thanks I need that

Thu, 03/01/2012 - 03:08 | 2211524 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

They smoke hash in London, Reg, and it ain't usually that good unless the've got a connect.

Thu, 03/01/2012 - 02:35 | 2211505 mt paul
mt paul's picture

squid hunting 101

curry calamari ...

long silver

Wed, 02/29/2012 - 23:42 | 2211044 Grey-Ghost
Grey-Ghost's picture

As long as they pile up a gazillion over a trillion over a billion while sharing the loot they are not going to create a problem (aside billions starving in the third world and the western world decimation of the middle class) a war or two is not going to resolve.

The rulers will always be the rulers for the people are idiots. I am only sorry that I am one of them (idiots).

Wed, 02/29/2012 - 22:49 | 2210876 hyper-critical
hyper-critical's picture

Trust me, the weed over there sucks. And it's grown by the young children North African immigrants, so you feel bad about smoking it.

It's the thousands of years of inbreeding that's fucked them up over there...

Thu, 03/01/2012 - 01:46 | 2211401 MrSteve
MrSteve's picture

You're right, what would they know about hashish or pot? The US is in a race to catch up with stupidity everywhere! Winning!

Wed, 02/29/2012 - 21:56 | 2210691 rsnoble
rsnoble's picture

btw that little baggie is some high quality stuff.  You can tell, I can actually see the red spots. One of those joints would seriously fk you up.  You won't be buying that on the street.

Wed, 02/29/2012 - 22:13 | 2210764 gimli
gimli's picture

Up 43% today --- voting to legalize weed in Colorado.

Rocky Mountain High ................ : )

Thu, 03/01/2012 - 02:47 | 2211526 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Obama will shut that shit down.  They legalize, then they can grow hemp.  They grow hemp, they comprimise the oil industry.  Ain't gonna happen till the Fattypacalypse hits the doellar.


Thu, 03/01/2012 - 00:01 | 2211114 Goldtoothchimp09
Goldtoothchimp09's picture

dude....PR Newswire companies are a scam!!!!

Wed, 02/29/2012 - 21:45 | 2210606 Zero Govt
Zero Govt's picture

listen Reggie, so the banks 'lost' rather alot of zeros in various property and political bubbles, so the ECB simply prints some more zeros to replace them... where's the problem?

i think it's very sweet of the ECB to produce more zeros and give them to those 400, no sorry 800, zeros in banks across the socialist republic of Euro barmy land

You're obviously not smoking enough to relax fully as we inevitably go up in smoke

Wed, 02/29/2012 - 21:09 | 2210528 falun bong
falun bong's picture

a man of exquisite tastes. Though you should try either Martell or Hine cognac next time. Winston Churchill's brand.

Wed, 02/29/2012 - 20:58 | 2210494 Joebloinvestor
Joebloinvestor's picture

Spoiling some perfectly good dope by mixing it with tobacco.

Must be French....

Wed, 02/29/2012 - 20:37 | 2210445 rsnoble
rsnoble's picture

I want the crash/reset now while I can still run around in my yard with a gun and not be in a wheelchair having to rely on something that's not going to be there.

Wed, 02/29/2012 - 20:51 | 2210470 Buck Johnson
Buck Johnson's picture

They will go through Hyperstagflation, just like the US will be doing in the near future.

Thu, 03/01/2012 - 08:23 | 2211802 j0nx
j0nx's picture

Agreed Buck. Hyperinflationistas always make me laugh. What we get is much worse. We get the massive inflation in commodities (food, oil, gas) with no corresponding increase in paycheck or asset values. At least with hyperinflation you get to pay off your house or car in a month. With hyperstag or hyperbi you get fucked. I don't think America has ever truly gone through what's about to occur here in the next 3 years. May you live in interesting times. Better prep now suckas if you haven't already because the multi-cultural entitlement zombies will be banging on your door soon.

Wed, 02/29/2012 - 20:46 | 2210460 rsnoble
rsnoble's picture

btw I have a cold I wouldn't mind trading some of this beer for that bag of green stuff. 

Wed, 02/29/2012 - 20:26 | 2210420 sodbuster
sodbuster's picture

Pppphhhhtttt.........................................that is some really good shit!!

Wed, 02/29/2012 - 21:08 | 2210520 Withdrawn Sanction
Withdrawn Sanction's picture

Dont Bogart that bailout my (bankster) friend...pass it over to me

Wed, 02/29/2012 - 20:22 | 2210414 Benjamin Glutton
Benjamin Glutton's picture

Follow the swaps?


nothing is an emergency when you can create currency at the press of a button.


more like a symphony...

Wed, 02/29/2012 - 20:17 | 2210405 Joebloinvestor
Joebloinvestor's picture

More dilution of a fiat currency and the price of gold drops $90.

I ain't selling.

The only way to fix the runaway printing of fiat currencies is to hit reset or get rid of LYING politicians (I know, oxymoron).

Hitting reset will happen before the latter.

Wait till the manipulation of gold gets away from "them".

Will be some fun!

Wed, 02/29/2012 - 21:00 | 2210502 lasvegaspersona
lasvegaspersona's picture

When the banks have infinite money with which to manipulate the gold markets it CAN'T get away from them. Gold will always be at their mercy until the big time suppliers decide not to supply. Wait til you see what happens on THAT day.

Wed, 02/29/2012 - 20:18 | 2210401 JohnKozac
JohnKozac's picture

Record Bank Bonuses to be had this year in Euroland--TARP multi-million dollar style bonuses--that will trickle down into meaty 9-course dinners, nice yachts, and summer palaces along the Med......aaahhhhhh.

Wed, 02/29/2012 - 20:06 | 2210376 Ungaro
Ungaro's picture

I am no economist and I suck at forecasting. But I have no trouble seeing the consequences of the ECB giving Europe a $712B enema.

Wed, 02/29/2012 - 19:56 | 2210360 surf0766
surf0766's picture

It is a payday loan !!!!!!!!!!!!!!!!!

Wed, 02/29/2012 - 19:59 | 2210359 Xkwisetly Paneful
Xkwisetly Paneful's picture

It is not a contagion, that implies that they are not alread sick as hell.

and another thing overlooked was how big of borrowers same Euro banks were fr the US fed originally:

UBS, Switzerland’s largest bank, was the biggest borrower from the Commercial Paper Funding Facility, tapping the program 11 times for $74.5 billion.

Six European banks were among the top 11 companies that saccumulated the most debt overall -- a combined $274.1 billion .

Dexia tapped the US government for $53.5 billion. Other European users included Barclays Plc in London at $38.8 billion; Royal Bank of Scotland Group Plc at $38.5 billion; and Paris-based Natixis at $27 billion.

The Fed listed borrowing for Paris-based BNP Paribas at $41.8 billion.

Commerzbank of Germany borrowed $350 million at the Fed’s discount window.


BTW the new normal and it is not a whole lot different from the old normal-don't fight the fed-

QE=everything goes up

QE OVER=everything comes down.



Wed, 02/29/2012 - 19:50 | 2210337 a growing concern
a growing concern's picture

chronic, bitchez!

Wed, 02/29/2012 - 19:55 | 2210357 CharlieSDT
CharlieSDT's picture

gotta get my chronic, remy martin and soda pop for this one...

Wed, 02/29/2012 - 22:42 | 2210855 illyia
illyia's picture

Its the weed. Makes them dead heads. Not in a good way.

Or else they're just scared shitless lying scum corrupt idiots.

Either way :o/

Thu, 03/01/2012 - 04:07 | 2211607 Sudden Debt
Sudden Debt's picture

don't do weed!



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