Peak Heist

ilene's picture

Note: The link the wsj article that was mentioned, but since failed and got replaced, is here:  Or try google searching on the title: "Just Don't Call It a 'Bailout'." ~ Ilene

Peak Heist

Courtesy of Russ Winter of Winter Watch at Wall Street Examiner  

The latest bank heist (LTRO)  totaled $641 billion as European banks passed on collateral in exchange for a 3 year, 1% loan.  In return the ECB just was handed a gigantic can of worms. The ECB balance sheet is now up to $3.5 trillion USD and at this point an undetermined amount of PIGGS plus Belgium debt.

Illustrating the nature of this circular transaction, Bloomberg reports that Unicredit and Intesa, two insolvent Italian banks are using “state guaranteed bonds” as $52 billion collateral to throw at the ECB. So rather than even using actual Italian sovereigns, the ECB accepts something more nebulous down the food chain. If anybody knows exactly what this collateral is, I’d love to know. It can’t be good, you can’t make this stuff up.

Marketwatch described the complex scams governments are using to just hand money over to banks without going through democratic considerations. Of course at each step along the way transactions can be inflated to benefit banksters. Incredibly these privatizations (and that’s what they are) can be securitized, and pledged as collateral to borrow from the ECB. Explains why a Goldman Sachs crony has taken over in Italy and elsewhere. We are at peak loot.

As part of a broader deficit-reduction tangled web program in Portugal, the government essentially is borrowing money from bank pension funds and could use some of the funds to help state-owned companies repay bank loans. Elsewhere Commerzbank AG is negotiating with the finance ministry to transfer its troubled real-estate finance unit into a government “bad” bank. The bank and government are in talks about ways to structure the deal so it isn’t “considered” a bailout. These Governments can ill afford this at this point.


There is a story that a deal to haircut and restructure Greek debt is in the works.  This is a default and a big story and yet the markets are ignoring it. The amount of the haircut in net present value terms (uses about 4.25% coupon over eight years) is 65%. That number makes some sense, but Greece is talking about a 10% deficit for the current year.

Euro banks are shedding U.S. mortgage-backed securities (MBS), and depressing their prices along the way. Deutsche Bank estimates that Euro banks hold about $100B in MBS not backed by Fannie or Freddie.

Looks like the Old Maid Card holders used the rally to unload Spanish and Italian 2 year bonds. Spanish 2-years are up 12 bps to 3.47% after falling as low as 3.23%. Italian 2-years up 25 bps to 5.22 after sinking all the way to 4.73%

In the US finance and insurance makes up an outsized 8.4% of GDP. Bankrupting half the governments of the world to maintain this? Matt Taibbi: Obama and Geithner Government Enron style.  Way overdue on the time to kill the parasites.



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oleander garch's picture

Fortunately, the ECB has provided much needed and massive new liquor injections to the Christmas bonus punchbowl.  Since everyone I know depends on massive monetary flow in order to siphon off a tiny percentage of the flow for personal compensation, both the timing and the volume of the flow are deeply appreciated.  Ho! Ho! Ho!   

ChasVoice's picture



For those who can’t remember $2.50 oil and 25 cts gas or $35 gold.
Oil is not the eagerly sought after treasure it is postured to be. It's gold.

jimmyjames's picture

If anybody knows exactly what this collateral is, I’d love to know. It can’t be good


The collateral is good-it is the only real wealth in the world and they got it all by trading toxic paper that will not be in existence in a few years-

They have a legal copyright on the worlds resources and the labor it takes for extraction- courtesy of the next 3 or 4 generations -

non_anon's picture

Mission Impossible

Georgesblog's picture

These days, the only word you see "collateral connected with, is "damage". The subterfuge and perjury in the bailout process is matched only by the recent history of the mortgage industry. I was right 40 years ago, in high school. Government kills everything it touches.

oldschool's picture

And yet, if you present any of this to the citizens on whom the so-called democracy supposedly depends, you get nothing more than a faint buzzing sound beween the ears before the circuit breakers trip and they default to disucussions of the weather or some vapid tv show (redundant, I know).  Bodes well for peak ponzi.

AndrewCostello's picture

Banking has become the crime of the Century as they try to maintain the entire paper fantasy that our economy has become.  But beware, the elite and central banks are forcing the price of gold down and buying as much physical product as they can, which suggests that 2012 may be the year they let the entire world go down in flames.



the grateful unemployed's picture

the Italians don't have Ben Bernanke, whose Fed powers would allow him to buy those government buildings in exchange for bonds, which would serve as collateral. its a pretty desperate move on either side of the Atlantic.

San Diego Gold Bug's picture

Can't take my phyzz gold......turning more fiat into gold today!  Thanks to the ZH reader who mentioned  Saved me some money lately!

Gromit's picture

Nice to see Russ here.

He was a great support to me during 5,6 and 7 when I placed my OTM leap put bets on WAMU (early) New Century and GE (caught the wave those times) and many more with his careful and reasoned assessment of the weakness of the structured finance subprime cowboys.

Cheers to you Russ!

Kali's picture

GE Settles U.S. Investigation Into Muni-Bond Bid Rigging
The settlement will bring to $743 million the amount that banks have paid to end the case, some of which is being returned to localities that were overcharged in the scheme. Bank of America Corp., JPMorgan Chase & Co., UBS AG and Wells Fargo & Co. previously settled similar cases.

"Structured" finance my ass, these people are thieves and should all be in jail.  Or hanging from a tree.


Seize Mars's picture

I don't know. Maybe I thought that TPTB are smarter than this.

This is just obvious, and unseemly.



TruthHunter's picture

As I understand it, if the Greek haircut was 100% they still couldn't balance their budget. It was just a few weeks

ago that the talk was of a 40% haircut.

So the real question is how much time does this buy? What are the terms?

The sky is falling, but how fast? Is it acorns or coconuts?

Yes We Can. But Lets Not.'s picture

I think this widespread hoax will lead to a hoax of a world gubmint.

monopoly's picture

How can anyone possibly Not own gold. Beyond comprehension.

PulauHantu29's picture

Kudos to you Ilene for the explanation. The ECB just printed up over $600 Billion euros from thin air and flooded European banks with it and thus, devalued the currency in circulation with this flood of newly printed money.

Here is Bill Bonner's colorful explanation:

"The euro-feds have opened the valves... turned on the spigots... and let nearly a half trillion euros worth of liquidity flow directly into the very same banks that have proven they can’t be trusted with a penny.

But that’s how a zombie system works. The living give. The monsters get.

And since, at this stage of the credit cycle, the living don’t have much to give, the feds turn on the printing presses.

Then, from whom does the money come?

Gotta come from someone, no?

That’s right... When you borrow it, it comes from the people who lend it. When you tax it, it comes from the taxpayers. But whom does it come from when you just print it up?"

"...we further infer that the value of the new money must have been stolen out of the value of the old money. What else can you call it but theft? People who had euros previously now have less purchasing power (at least theoretically). They never agreed to let their money be clipped. They never even knew what was happening to them."

Bonner at The Daily Reckoning is my second favortie reading after ZH.

ilene's picture

Thanks, I've been trying to figure out where the money comes from and "printing" is about all I've come up with, except I thought (maybe wrongly) that the ECB wasn't supposed to "print." ??

KickIce's picture

Maybe they're using imagination as collateral.

These pricks need to go.

dcb's picture

sorry, but many of the links provided do not work. I can't access the tabbi article at all. The wsj article goes to market watch.

ilene's picture

There's something wrong with the wsj link, so maybe Russ replaced it with the Marketwatch article and forgot to update the text.  I think it worked for me yesterday in email but doesn't work today. Thanks!

Here's the Taibbi article (that link works for me):

Here's the Greek debt article:

The Reuters (actually Bloomberg) article is here:


Thanks for letting me know the problems and I'm gonna fix the article to reflect the changes.


bank guy in Brussels's picture

Collateral: Tom Cruise getting his 'Collateral' briefcase back with a semi-automatic pistol ... fabulous 35 seconds of cinema.

For those who have never heard gunfire on real city streets (Long ago I lived for a time in a couple rough cities of the United States) this is what gunshots in the streets are really like ... LOUD:

toadold's picture

Back in ye olden days there were tests for our understanding of electrical circuits called "black box" tests/exercises.  You would be given the inputs into the box and the out puts from the box when you varied the inputs.  You would then have figure out an scetch what you deduced was in the box.  Judging from the inputs and outputs of the current acronym boxes of the EUro machine they contains, crooks, fools, and combinations.  The out puts seem to consist of bull feces and the blood of taxpayers.  The outputs become inputs in a circular fashion as the bad output from one box becomes the input for the next box added to the schematic.

 Here in the US there seems to be a stream of stagflation starting to form a pool. Wages when you can get them, are low but prices keep climbing.  Jimmy Carter ina box. 

Wakanda's picture

"Way overdue on the time to kill the parasites."

Way overdue - our time is now.

Zero Govt's picture

Cash for Trash

The super pooper scoopers of Western central banks - Bernanke, Mervyn King and Trichet/Dracula - are certainly bizzy bizzy bees out on the trail of picking up the banking dogs doo-doo

When does the productive part of the economy get some State Nanny nappy changing?

"The WSJ is also on a roll describing the complex scams governments are using to just hand money over to banks without going through democratic considerations."

It's called 'democratic Government' and the game hasn't changed in Centuries...maybe one day through the dizzy stupor of the people they will wake up and notice Govt is nothing more than monopolistic greed and the real/actual definition of anarchy

AnAnonymous's picture


US citizenism is about keeping the face. The appeareances. Dont lose the face, keep the face, keep the face.

Once again, the only worth question is: will the end product allow to buy something in the end?

So they get Euros with that trick, Euros buy that many oil, milk galleons, that many gold, diamonds, food tons...

That is what matters.

US citizens run a business of extortion of the weak, farming of the poor.

So what? As long extorted have something to yield, as long as farmed have something to be cropped, the system wont collapse.

The path taken by the extortion, farming scheme does not matter.

What matter is whether or not the euro gets renegated by people who trade it for something concrete or if those people have still something to trade for.

As people can not renegate euros (casus belli, direct invasion of countries who try that, albeit the US, the partner in theft), the only question is:

how much matter is left for US citizens living in Europe to get for free?

You cant extract blood from a dry stone. Known for centuries.

LowProfile's picture

Vote up if you think these are all just attempts to reflate wherever the shadow banking system happens to be imploding at the moment.

Zero Govt's picture

it's not just shadow banking that's imploding but in-your-face (mortgages, loans gone sour etc) banking

the whole Govt-Banking shitshow is crumbling it sets on 'Repeat' throughout history when these two bedfellows get together to ruin nation after nation, time after time