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On Draghi's One Year Anniversary: Spanish Sacrifice, Banker Bonanza

Tyler Durden's picture


Since Mario Draghi's first ECB meeting in November 2011, the ECB balance sheet has expanded by 30% (including two rounds of LTRO which funneled $1.3tn into banks). What did we get for all that money? As Bloomberg's Chart of the Day shows, not much. Critically, as some European banks look to return that stigmatizing encumbrance, it is the banks that have benefited massively from Draghi's exuberance while the people (of Spain for example) have suffered. Using the spread between EURIBOR and OIS as a proxy for short-term liquidity (funding costs), since Draghi began his ex-Goldman stint, bank funding costs have plunged (as also shown below with CDS spreads). Meanwhile, European governments' funding costs have gone nowhere - and in most cases are considerably higher. Draghi even admitted that LTRO was not expected to reach 'the people' when he dismissed inflationary fears this morning on the back of expectations that the banks haven't used the cash - is it any wonder Nigel Farage is fuming and Greeks and Spaniards are rioting? Just wait til the Irish are told 'no' to retroactive OMT...

The true benefactors of Draghi's Dream...


and CDS spreads also show the optical improvement in bank risk since Draghi took over...


As Bloomberg notes:

The point of the LTROs was to ease the refinancing pressure on the financials, and liquidity is still abundant,” said Gianluca Ziglio, a strategist at UBS AG in London. “The big announcement of the bond-buying has now been neutralized. Unless that power is unleashed in the market there is no way,” yields will fall, he said.

Source: Bloomberg

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Thu, 11/08/2012 - 14:49 | 2961400 Thecomingcollapse
Thecomingcollapse's picture

When will the music stop?

Thu, 11/08/2012 - 15:15 | 2961515 Kitler
Kitler's picture

When all the bankers are made whole and the maximum sustainable tribute streams possible are syphoned off from the real (non-financial) economy.

Or until the fat lady stops singing.

Thu, 11/08/2012 - 14:51 | 2961418 GraveyardSpiral
GraveyardSpiral's picture

...whenever it does, I've got my "physical" chair to sit on!!!

Thu, 11/08/2012 - 15:06 | 2961488 azzhatter
azzhatter's picture

My "physical" chair is getting to be a sofa. May need more insurance from Smith and Wesson

Thu, 11/08/2012 - 15:02 | 2961465 ShorTed
ShorTed's picture

...it is the banks that have benefited massively from Draghi's exuberance while the people (of Spain for example) have suffered.

Much like here in the U.S.

!@#$%^&* you Bernanke, !@#$%^&* you Draghi


Thu, 11/08/2012 - 15:04 | 2961475 Essential Nexus
Essential Nexus's picture

Can we clone Nigel please?

Thu, 11/08/2012 - 16:03 | 2961750 Ghordius
Ghordius's picture

Whatever you do don't get me started on the honorable Member of the European Parliament, Fellow of the City of London and BFF of the Hyperhypothecating Society Mr. Nigel Farage. Though I do hope that his UKIP finally conquers a few seats in Westminster


re: "the ECB balance sheet has expanded by 30% (including two rounds of LTRO)"

this is manouvering potential. the LTRO are basically 3-years loans. of course they might be extended, but they can also be - as central bankers say - "mopped up"

Thu, 11/08/2012 - 22:42 | 2963115 shovelhead
shovelhead's picture

Whatever else he may be, Nigel's right about the EMU.

And the most fun is his acerbic wit that only the English can pull off in that certain style.

You just know that he would like to call certain fellow members 'arseholes'.

Fri, 11/09/2012 - 04:43 | 2963688 Ghordius
Ghordius's picture

meaning he is right about a club to whom his own country does not belong? nevertheless I agree he is fun to hear

Sun, 11/11/2012 - 14:58 | 2970325 reload
reload's picture

UK is a member of the EU,but Not a user of the Euro. Still I agree that NF has ties to the city of London which make me suspicious of him. His bombastic style looses him a lot of potential support in the UK, I wonder if this is accidental. Daniel Hannan looks more sincere to me.



Thu, 11/08/2012 - 15:05 | 2961479 irishlink
irishlink's picture

do not count on the Irish to behave like the Greeks. The apathy is shocking and if the December Severe budget does not raise the ire of the population nothing ever will. Instead of being the poster boy for AUSTERITY , we can be the poster boy for SHEEPLE.

Thu, 11/08/2012 - 15:11 | 2961502 Kitler
Kitler's picture

The Irish seem to have a national obsession with needing to embrace misery for some reason.

Thu, 11/08/2012 - 15:53 | 2961702 X86BSD
X86BSD's picture

Perhaps but I think if anyone deserves a pass in having to fight to restore freedom when the SHTF it's the Irish. We've been fighting for a 1000 years for freedom I think the Emerald Isle can sit this one out. Now if only the world worked that way. :)

Thu, 11/08/2012 - 15:18 | 2961518 q99x2
q99x2's picture

Stimulus for Irish playwrights.

Thu, 11/08/2012 - 15:22 | 2961534 lolmao500
lolmao500's picture

Here we go folks...

Pentagon Confirms Iran Fired on US Drone Last Week in Intn'l Airspace over Persian Gulf

CNN says Iran fired on a U.S. drone in int'l space a few days ago. Host asks, "Is this an act of war?"


Two Iranian Su-25 fighter jets fired on an unarmed U.S. Air Force Predator drone in the Persian Gulf last week, CNN has learned.

Funny this happened LAST FUCKING WEEK and it's just reported NOW...

Thu, 11/08/2012 - 19:59 | 2962628 asteroids
asteroids's picture

Eh? What if the Pentagon is lying?

Thu, 11/08/2012 - 15:47 | 2961683 Toolshed
Toolshed's picture

This is somewhat, or maybe totally, off topic, but I vote for this article to be today's most laughable ( or something). Academics.......sheesh.



Thu, 11/08/2012 - 16:34 | 2961849 falak pema
falak pema's picture

in this global fight between continental oligarchs, divided and united as the issue commands, scared of the meltdown and rabidly resistant to be the one who loses the musical chair in each round of frantic speculation/asset attrition, we see these oligarchs play out their ponzi hands. Like Karl Rove now the devil's advocate who lost the game in rich man's bonanza ticket race.

They don't want to go to the hell of 1930s scenario, so they think Keynesian, as they have no alternative except going deeper into the mire of kicking the can...and biting at each other's Caymanista stash, like rotweillers snapping at the other's ankles. "YOu go first, no you go, this thing is unsustainable"... but who is prepared to start free fall? SKYFALL...???

Nobody volunteers, waiting the other to slip, feeling last one left standing picks up ALL the chips...

What an illusion... Chinese, Russians, divided Euro losers, and hubristic AMericans upto their gills in cumulative debt...

Where is Kayser Sozee to blow this up, like the ship that is going nowhere in Gotham berth, before it HAs to sail away, for need of vital momentum and from the dire consequences of accumulative, debilitating inertia... and then it hits the fatal iceberg, as that is nemesis inexorable.

Usual Suspects, inevitable denouement. The ship is on course... but to where?

Don't look round the corner.

Norman Bates awaits you there. What a merry-go-round.

You have to admit if Hitchcock wrote this scenario it would not be as dumb as these TPTB and the TBTF cabal. 

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