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After Cyprus, Who Is Next?

Tyler Durden's picture


Short answer: we don't know.

We do, however, know something we have been pointing out since early 2012 - when it comes to the funding structure of European banks, there is a dramatic difference between the US and Europe. In the US, as we showed most recently two months ago, the Big Three depositor banks (JPM, Wells and Bank of America, excluding the still pseudo-nationalized Citi), have a record $858 billion in excess deposits over loans.

Extending the above to cover the entire US financial system, shows more of the same: according to the Fed, in the latest week ended March 6, there was a total of $9,283 billion in consolidated deposits, covering just $7,255 billion in commercial bank loans, a record $2+ trillion in excess deposits over loans.

How is it possible that there is a record amount of deposits in the US financial system, while the notional outstanding of total commercial loans is less than at the time Lehman filed? Simple - the delta has been filled by the Fed's excess reserves, which amounts to... drumroll... just over $2 trillion, which via circuitous ways make its way back to the bank deposit ledger - this was explained in "A Record $2 Trillion In Deposits Over Loans - The Fed's Indirect Market Propping Pathway Exposed."

In other words, by becoming America's indirect "bad bank", the Fed has mitigated the concern of a deposit run, or at least within the US traditional banking system, however in the process making the US $14 trillion shadow banking system (where it was been soaking up safe collateral at an epic pace) breathtakingly fragile.

However, shadow banking is a topic for another day. For the time being, the take home message is that at least superficially, there is a record $2 trillion in deposits which are not encumbered by loans, and which incidentally are used by banks such as JPM to fund the operations of its prop trading desks, such as the CIO, and ramp stocks and risk in general, higher (as also explained previously) at least until these investments go horribly wrong and we get the usual theater of Senatorial hearings and the like.

So what about Europe? Here things get bad. Very bad. So bad in fact that we covered it all just one short year ago, in "A Few Quick Reminders Why NOTHING Has Been Fixed In Europe (And Why LTRO 3 Is Not Coming)."

Sure enough LTRO 3 didn't come (for the reasons we explained), and a year after the above post was penned, nothing has still changed in Europe, as Cyprus' bank depositors just learned to their humiliation and savings losses.

What is the reason for this? Well, as readers can surmise based on what just happened in Europe, it once again has to do with deposits, and specifically the loan-to-deposit ratios of European banks. Because if the US has an excess of deposits over loans, Europe is and has always suffered from the inverse: a massive excess of loans (impaired assets) compared to the most critical of bank liabilities - deposits. This goes back to centuries of capital formation in Europe, which unlike the US has always relied far more on secured bank loans than on unsecured corporate debt as can be seen on the chart below.

One doesn't have to be a rocket scientist to figure out that in a world in which European loans are massively mismarked relative to fair value, and where bad and non-performing loans are an exponentially rising component of all "asset" exposure, it will be the liabilities that are ultimately impaired. Liabilities such as deposits.

This happened in Cyprus overnight, where the non-performing asset side of the consolidated bank balance sheet was just forced to collapse to allow the continued operation of the country's financial system, however with a far smaller corporate bond and loan liability matching (there was only €2 billion in bond outstanding in Cyprus which made any realistic bail-in impossible) the only way to shrink the liabilities of the consolidated balance sheet - inevitable when one is terminally impairing assets - was to impair the most sacrosanct of bank liabilities - deposits.

This is precisely what just happened. The reason it happened first in Cyprus was for two reasons: i) the primary bank liability was deposits, and ii) a key source of deposit funding was those "evil" oligarch Russians: after all they deserve to be taught a lesson, or so the populist thinking in Germany and the Netherlands goes. Well, that may be the case, but at least half of the impaired deposits ended up belonging to the local population, which was neither oligarchic, nor "evil", not stole (allegedly) to make their money.

Of course, those who had read Zero Hedge a year ago would have known all about this. This is what we said in March of 2012:

The chart below explains why not only is Europe's severely asset constrained, it is also running out of funding, in the form of depositor cash: the most critical bank liability. Remember: without incremental deposits, banks can not invest in new assets, unless they generate cash from operations, and thus grow shareholder equity. There is a problem: as the final chart below shows, Europe, and especially Scandinavia which has consistently remained off the radar, is literally off the charts when it comes to LTD ratios.


With banks such as Danske, SHB, Swebank, DnB, and Nordea literally at 200% Loan-to-Deposits, but most other European banks too, even the tiniest outflow in deposit cash (ala what is happening in the PIIGS) will send the system into yet another liquidity spasm. Only this time, since what little unencumbered assets remaining have already been pledged to the ECB, there will be no quick LTRO collateral-type fix this time.


One year after we warned Europe that it was only a matter of time before deposits become impaired to "grow into" the European bank balance sheet, Cyprus has drawn the short stick.

And yes: we don't know who will be next, but we do know that nothing has changed in the one year since we wrote our warning a year ago (because guarantees - not actions - of unlimited funding by the ECB not only do not help the actual underlying problems, they exacerbate them) and the last thing we want is to be accused by Europe of spreading the evil truth. But we do know that the unprecedented asset-liability mismatch in Europe is very unsustainable, and the lower the funding deposits in a given bank, the greater the eagerness will by management, regulators and politicians to impair, and confiscate said deposits, allowing a parallel collapse in bad assets and a gradual progression to a viable banking system. The only problem is said viability will be on the backs of savers and depositors once more who will have no choice but to lose much more than just 9.9% of their savings before it is all said and done.

So for those who really want to know who is next - look to the left side of the chart above: that's where the loan-to-deposit ratio among European banks is highest, and thus most unsustainable.


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Sat, 03/16/2013 - 14:43 | Link to Comment czarangelus
czarangelus's picture

Sorry Tyler. For a precious metals enthusiast, this last year has been anything but short.

Sat, 03/16/2013 - 15:15 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

N N Taleb and Nate Silver have written two books recently that have given this Bearing no more desire to make predictions.  Both of these guys say that (most) predictions are a mug's game, that you are better off plugging leaks (risks & vulnerabilities) in your personal situations rather than trying to predict the next "Black Swan".

Taleb: Antifragile

Silver: The Signal and the Noise

Highly recommended, both are not technical, but ARE instructive.  Both from late 2012.

Sat, 03/16/2013 - 18:55 | Link to Comment WayBehind
WayBehind's picture

All EURO banks are screwed. There will be a run on every bank in Europe next week. 

Sat, 03/16/2013 - 19:44 | Link to Comment MSimon
MSimon's picture

That does seem pretty obvious. Which should make US banks stronger.

Sat, 03/16/2013 - 21:21 | Link to Comment Prisoners_dilemna
Prisoners_dilemna's picture

I'm blown away by the facts, insights, and writing style used to convey this info offered here by Tyler, all for free. The coverage of the Cyprus event with the accompanying analysis is a premier example of what causes me to spend 75% of my internet time reading zerohedge.

Post a BTC address tylers. I'm sending you some funds.

BTW Bullish for bitcoin!

Sat, 03/16/2013 - 21:21 | Link to Comment WmMcK
WmMcK's picture

Post a BTC address tylers ...

Even some of us who don't believe in it

will then contribute (more) in that case.

Sun, 03/17/2013 - 13:15 | Link to Comment All Risk No Reward
All Risk No Reward's picture

This is the automatic outcome of debt based money.

Debt Money Tyranny

How to be a Crook

Sat, 03/16/2013 - 14:47 | Link to Comment Sudden Debt
Sudden Debt's picture

Same set of conditions apply for their banks vs. economy

Sat, 03/16/2013 - 15:30 | Link to Comment bank guy in Brussels
bank guy in Brussels's picture

Luxembourg, ha! ... No wonder Juncker instantly criticised the Cyprus confiscation

Seriously I think they are doing a test as to how much dirt EU citizens will eat

The € 7 billion they are stealing from Cyprus depositors is trivial to the Troika

Ben Bernanke prints that up with his morning coffee ... Mario Draghi could have that done after his luncheon linguini

But they are trying to see how much abuse they can inflict without revolution

If the EU banks are blowing up by Tuesday from Mediterranean-wide bank runs, they can go into full reverse, say 'our bad!', and pay the depositors 100% with printed money


It is kind of like how in the USA now in California, they are confiscating the guns now from the military veterans and their spouses, if anyone has seen a mental health professional or been arrested etc ...

They are seeing that it is working out well, people are giving up their guns to the police and SWAT teams, just like they did in New Orleans after Hurricane Katrina

Seems like there is very little 'Molon Labe' or 'out of my cold, dead hands' ... the US police seem ready to accept that latter offer ... and the US citizens, even war veterans who have killed people, are rolling over

Now we will see how much Europe has the spirit of the French Revolution rising, as Beppe Grillo has himself labelled it ...

Sat, 03/16/2013 - 16:10 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

bank guy wrote:

"Seriously I think they are doing a test as to how much dirt EU citizens will eat"

That may be it, + 1.

Mmm, eating dirt...  

But, not in a bearing of course.

Sat, 03/16/2013 - 17:00 | Link to Comment outofideas
outofideas's picture

The Japanese are way ahead of the curve I guess:

Sat, 03/16/2013 - 16:16 | Link to Comment Seer
Seer's picture

And add another angle: Cyprus, squeezing out the Ruskies.

This shit is always easy to figure out...  ALWAYS look for the invisible hand of the US...

Consider also (source:

Discoveries of large quantities of natural gas in offshore Israel and Cyprus, and the likely discoveries of deposits in offshore Greece, present the most obvious direct threat to Russian federal receipts, because the most likely market for this gas is Europe. Gas production in Norway, the second largest exporter of gas into Europe, is gradually declining as its fields mature. With regard to natural gas from Iraq, Iran and the Caspian, the Nabucco pipeline to deliver this gas to Europe may never be built. Due to the membership of Cyprus and Greece in the Eurozone and to the enormity of their probable reserves, it is in Russia’s national interest to seek to participate in developments there – but not in ways to promote maximum production quickly.


EVERY set of activities are under-girded by energy concerns.  The US is very interested in all of this because it wants to keep energy costs down for the EU countries so that they have more disposable income to spend on US goods.

Sun, 03/17/2013 - 02:06 | Link to Comment Lore
Lore's picture

Excellent links. Thank you.

Sun, 03/17/2013 - 07:24 | Link to Comment Element
Element's picture



EVERY set of activities are under-girded by energy concerns.  The US is very interested in all of this because it wants to keep energy costs down for the EU countries so that they have more disposable income to spend on US goods.

Doesn't it seem to you that triggering a pan-European bank run and deposit destruction, potentially triggering a second global financial heart-attack, may be taking such methods to engender US export demand just a tad too far, possibly likely to do just the opposite, by several orders of magnitude?

Don't over think it.

Tue, 03/19/2013 - 16:24 | Link to Comment Lore
Lore's picture

It's not even about capital flows; it's just CONTROL.  You agree?

Sun, 03/17/2013 - 01:02 | Link to Comment angel_of_joy
angel_of_joy's picture

Over the next months, a number of Cypriot bankers might have some unfortunate accidents.

Stealing people's money is one thing.

Stealing money from the Mob however, will turn out to be a tad riskier...

I'm sure certain Russian "investors" will be less than impressed by all this "ECM made as do it" explanation...

Sat, 03/16/2013 - 15:34 | Link to Comment faustian bargain
faustian bargain's picture

You may be on to something... Whoever's next, it to the Euro planners' advantage that there be a significant 'bad guy' to launderers, drug smugglers, terrorists...

Sat, 03/16/2013 - 15:35 | Link to Comment faustian bargain
faustian bargain's picture

...or some bankster sacrificial lamb they don't mind throwing under the bus...

Sat, 03/16/2013 - 18:52 | Link to Comment The Big Ching-aso
The Big Ching-aso's picture

Ok, what this world needs is one helluva nice World War to calm everybody down and help them focus.



Sat, 03/16/2013 - 14:48 | Link to Comment Zero_Sum
Zero_Sum's picture

Here's the domino effect that I foresee over the next 72-120 hours:

-First, Cyprus is no longer the story. What's happened there has already happened. For Cypriot(Cyprian? Whatever) savers, it's all over but the cryin'.

-Next, starting tonight and tomorrow, there will be bank runs in Spain and Italy. Possibly Portugal and Ireland as well, though their circumstances are different. I'd include Greece, but no one in Greece has any money to steal anymore. France may be affected too. If France sees ATM runs this weekend, things will be even worse than I predict

-Cyprus has an ordinary holiday on Monday. But if there are runs over the weekend, affected countries will also declare bank holidays.

-On Monday, European markets will get monkey-stomped. US Markets will open up down 2% or more. It gets uglier from there.

-EUR/USD tanks. USD Spikes. US Treasury yields plummet. 

-Gold/Silver could go either way. They could tank on USD strength or rise in the face of it on a flight to safety. We'll know the real state of things by watching online dealers for 'sold out' products this weekend. 

-This doesn't pop up on the MSM radar or the American public's overall consciousness until the market impact on Monday. I do not predict any significant US bank runs. MSM will be working overtime to calm the sheep down. The market drop will be labeled as "the long-awaited pullback. Buy the dip!". Cramer will be in rare form on Monday night.

-If PMs spike, CME will respond by Tuesday with a margin hike on futures contracts. They will hike margins as high as necessary to crush the surge. One way or another, any potential spike will reverse by the end of the week due to blatantly coordinated, repressive manipulation. CFTC will look the other way. The biggest threat to the status quo in this situation is that a surge in PMs is allowed to go unanswered, so it will not be. Don't step in front of this steamroller. There will be better buying opportunities when the dust settles.

-The part I'm chewing on right now is Russia's reaction. This is a little less clear to me. this is obviously a shot across the bow at Russia from the EU. Russia may:

a. Threaten military action by staging "exercises" with their fleet in the med.

b. Retaliate economically via natural gas supply rate hikes.

I think 'b' is more likely, but I'm not sure. What's clear is that Russia was left in the dark about this move, and right now they are PISSED.

More to follow. Strap in for a fun week ahead.

Sat, 03/16/2013 - 14:55 | Link to Comment centerline
centerline's picture

My bet here is the Russians are going to play this calmly.  Option B most likely if anything.  They really don't have to do much except sit back and watch the fireworks.  The EU is toast.  Has been.  Technically was from it's flawed inception.  Just takes awhile for it to all unfold.

I agree with the USD spike.  Money is going to try and find a better home when the EU shits the bed.  Here in the US I bet it will look and feel like a recovery.  That capital is going to find it's way into everything here.  High unemployment serving as an inflation shock absorber.

Sat, 03/16/2013 - 15:29 | Link to Comment fonzannoon
fonzannoon's picture

My bet here is the S&P is up 9 points monday and we spend all day celebrating new records. Expecting reality to assert itself now is crazy.

Sat, 03/16/2013 - 15:33 | Link to Comment toys for tits
toys for tits's picture



The 10B Euro shortfall in Cyprus banks is if all things are normal.

That upper limit hair trim of 9.9% changes everything regarding the 68B on deposits. This changes everything.

People will be lucky to get 50% of their deposits out after the runs are through.

Sat, 03/16/2013 - 16:22 | Link to Comment francis_sawyer
francis_sawyer's picture

My prediction is that in the US... People will drink green beer all day tomorrow & try to stay awake long enough to watch SELECTION SUNDAY...


Then on Monday ~ ALL of the MSM will breathlessly await [& devote their entire journalistic teams] to cover the ceremony of Obama filling out his NCAA BRACKETS...

By Thursday ~ March Madness will have started [which will keep everyone occupied until the Masters]...

Sat, 03/16/2013 - 16:23 | Link to Comment Seer
Seer's picture

I feel humbled by your powers to see the future :-)

Sun, 03/17/2013 - 10:05 | Link to Comment francis_sawyer
francis_sawyer's picture

Just put it into the category of one of my crazy whacked out theories...

Sun, 03/17/2013 - 14:49 | Link to Comment kchrisc
kchrisc's picture

Your are a prophet sir!     hujel

Sat, 03/16/2013 - 17:13 | Link to Comment GreatUncle
GreatUncle's picture

Wait till the banks open up for trading Monday and not just the Cypriot ones.

After this most people are just going to want to remove their money full stop and stash it under the mattress.

The banks in Cyprus are now dead in the water because nobody is going to deposit money with you and first chance everybody gets and I mean everybody they are going to try and remove whats left. 

Sat, 03/16/2013 - 18:03 | Link to Comment AbbeBrel
AbbeBrel's picture

Banks are closed for "Green Monday" - this gives the programmers more time to tie down the Sheeple's "Greenbacks".

Sat, 03/16/2013 - 16:22 | Link to Comment Seer
Seer's picture

While Russia will likely play this calmly I still believe that it's VERY active here.  See my above posting with links that show why this is so important to Russia.

Sat, 03/16/2013 - 15:21 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture
@ Zero_Sum
We have seen MANY situations in recent years that could have been VERY SCARY.  That's why I have been trying to be as prepared as possible!  One day, something like you lay out IS LIKELY to happen.  Next week?  Next year?  10 years from now? N N Taleb and Nate Silver have taught me to get OUT of the prediction business!

Sat, 03/16/2013 - 16:26 | Link to Comment Seer
Seer's picture

"Prediction" is really about risk assessment, about planning.  If one were to toss it out the window completely then one might as well say that it doesn't matter to plan...

Spending too much time predicting, or in reading/listening to others do so, I would agree, is NOT a good idea...  all things in moderation...

Sat, 03/16/2013 - 17:32 | Link to Comment Zero_Sum
Zero_Sum's picture

Yeah, but making predictions on the internet is like gambling with other people's money. No consequences if I get it wrong, but I'll look really smart if I'm right.

Sun, 03/17/2013 - 00:43 | Link to Comment tooktheredpill
tooktheredpill's picture

no way that you can always get it right unless you are God. Amazing what you will say if you don't put your face up.

Sat, 03/16/2013 - 17:31 | Link to Comment Juggernaut Nihilism
Juggernaut Nihilism's picture

Someone with sense. A prophet is someone who senses underlying currents, and can judge the inherent fragility of a particular path. A forecaster is a dipshit who takes things too literally and has to keep revising his predictions for the date of the Rapture.


Predictions are for suckers. Make yourself anti-fragile to the approaching storm of volatility, then go drink a bottle of wine and laugh at all the schmucks scrambling around making up stories about exactly what will trigger it and how it will play out. Our track record in such matters is somehow less than random, God knows how we manage that statistical trick.

Sat, 03/16/2013 - 15:30 | Link to Comment SKY85hawk
SKY85hawk's picture

Your prediction has been in my radar for 6 months+.  My Big mistake was to ignore the FED support.

I don't consider myself smart enough to do options with/without margin.


If you're right, I'll be real glad that I have some FAZ & ERY.



Sat, 03/16/2013 - 15:42 | Link to Comment Navymugsy
Navymugsy's picture

There won't be any electronic bank runs here in Cyprus this weekend as the ATM's are empty and no transfers are being allowed between Cyprus banks and the rest of the world. The bank run on Tuesday when the banks open will be amazing! I'm taking my camera with me when I leave the house Tuesday morning. Just in case...

Sat, 03/16/2013 - 18:21 | Link to Comment machineh
machineh's picture

With a big enough bulldozer, you could open your bank on Monday.

Sat, 03/16/2013 - 16:04 | Link to Comment DCon
DCon's picture

Monday is also a bank holiday in Ireland


Sat, 03/16/2013 - 16:18 | Link to Comment Seer
Seer's picture

+1000 for understanding Russia's play in all of this.

Sat, 03/16/2013 - 17:01 | Link to Comment optimator
optimator's picture

MSM won't bother with this little unimportant little news item, they won't cancel the bit they plan on the blind dog that found his way home trotting 300 miles to find his family.

Sat, 03/16/2013 - 14:50 | Link to Comment Not Too Important
Not Too Important's picture

BofA has $65 trillion of derivatives exposure on their retail books, against $1 trillion of deposits.

Are we including this in the equation? What derivatives exposure do all the banks have, US vs. EU? Weren't the bulk of derivatives written in the US?

I think something is missing in this article.

Sat, 03/16/2013 - 14:56 | Link to Comment Tyler Durden
Tyler Durden's picture

What you may be missing is the part that says discussion of shadow banking in the US will be left for another day

Sat, 03/16/2013 - 15:27 | Link to Comment Not Too Important
Not Too Important's picture

Once the $65 trillion of derivatives exposure was transferred to the retail bank, doesn't that make it no longer 'shadow banking'? It should be under the purview of the FDIC now, with full disclosure under GAAP.

I know, I know . . .

Sat, 03/16/2013 - 16:00 | Link to Comment falak pema
falak pema's picture

lol, too funny; bank balance sheets and nun's mop up the mess as agents of the Lord in Sin City of WS after clean up of OK Corral in old Cyprus.

The new Pope has his work cut out to make the Curia the governance of the poor!

The biggest bunch of Borgias now have to act humble like those naked nuns of Cyprus, poetic concoction high on Commanderia wine. Makes the stuff of legends.

Derivatives and shadow banking are alike the shadow of complacency hanging like a dark cloud, over the unbridled hubris of "we are the capitalist port of last resort...Anybody with any money comes here when all else burns; land of greenback!"

Is that a whiff of 'intellectual sclerosis' ? Twin sin with complacency, that condemns  the happy few to unhappy tommorows?

Bloody Morgan and the pirates flag of the banksta cabal, does it rule over the star and stripes?

We'll soon find out. 

Meanwhile the EU has created a precedent by imposing a banking tax at source on private deposits, legally outside their reach; in a sovereign nation treated like pirates paradise! That or its AUsweis for Cyprus from Eurozone!

Humble pie and sicilian kiss for land of Venus bliss!  No wonder the Oligarchs love it.

Sat, 03/16/2013 - 16:31 | Link to Comment Seer
Seer's picture

Yeah, capitalist port of last resort because if you don't funnel your money here our military will drone your ass.  And, really, your options are?  Russians?  Chinese?  Saudis?

Never ends well for junkies...

Sat, 03/16/2013 - 15:26 | Link to Comment Atomizer
Atomizer's picture

The LIBOR Scandal: Prosecutors Have a New Plan


Would you mind fluffing the ZeroHedge group? I remember this story, we were travelling to Marco Island house last year. Watched this huge scandal via Airplane TV. My ranting and raving landing me no blogging privileges for 12 hours. I have never been so pissed off in my life. We spent that time cooling off at the beach/house. LIBOR still jacks up my blood pressure today.

Sun, 03/17/2013 - 07:32 | Link to Comment Element
Element's picture

If you get a parking fine here and won't pay it they'll put you in the slammer.

TSEP - Too Small to Escape Prison.

Sat, 03/16/2013 - 14:51 | Link to Comment CaptainAmerica
CaptainAmerica's picture

Death by 16 trillion cuts...

Sat, 03/16/2013 - 15:28 | Link to Comment Anusocracy
Anusocracy's picture

And not one in the Federal Budget.

Sat, 03/16/2013 - 14:52 | Link to Comment OutLookingIn
OutLookingIn's picture

Almost all pundits are in agreement...

It will be some "small" event, occuring in some "backwater" location that will be the pre-cursor to the much larger reaction that will take place globally, because of this action.

Could this be it?

Sat, 03/16/2013 - 15:13 | Link to Comment Manthong
Manthong's picture

Well, if you shit in the wrong Communist’s mess kit, you might get more than a little natural gas blowback.

The bank run might not be from aboriginal (EU) Europeans.

Sat, 03/16/2013 - 15:22 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ 1 for a creative use of a Southern saying...   :)

Sat, 03/16/2013 - 14:58 | Link to Comment Why Not
Why Not's picture

LTD is high in Europe because the corporate bond market is not as deep and developed as the US, though corporate Treasurers are scrambling to diversify funding. Is a high LTD dangerous (~80% is the preferred limit in the US, but is not hard and fast), of course it is. If deposits want out and a bank does not have unecumbered liquidity on hand to meet the withdrawl, then: a) go to the repo of capital markets for unsecured (ha) or secured funding (no collateral left to pledge, other than computer systems and branch networks to the ECB); b) call loans, which is depression inducing and is slowly occurring in southern Europe anyway; and/or c) force depositors and other creditors accept a haircut, though this in of itself does not create liquidity to meet a withdrawl demand--it only creates equity that perhaps gives new lenders confidence to lend to the troubled bank.

Sat, 03/16/2013 - 16:47 | Link to Comment hooligan2009
hooligan2009's picture

exactly right...^5

the only safe investment these days is a still

self medication will never die 

Sat, 03/16/2013 - 15:02 | Link to Comment tony bonn
tony bonn's picture

so the french are fleeing to scandinavia, land of the high ltdr banks....hmmm.....

as far as what is next, i still think that the piigs are more vulnerable than scandinavia....and if those depositors were smart, they would pull their savings out....but since they are not, they will get trampled in an even worse way due to the acute nature of the piigs problems...i suspect greek depositors could ignite the fire of '13....europe will be a towering inferno before this year is out - all thanks to the bankster scum who ruin these nations with deliberation and contempt...

Sat, 03/16/2013 - 15:02 | Link to Comment savagegoose
savagegoose's picture

so a %20  deposit tax, could take that excess $2 trill and   pay it straight off the debt?  hmm i shouldnt give em ideas.

Sat, 03/16/2013 - 15:15 | Link to Comment magpie
magpie's picture

it isn't a valid idea for one wants to pay off debt. But they would still take the money.

Sat, 03/16/2013 - 15:25 | Link to Comment savagegoose
savagegoose's picture

ok so all their  managers  get double  their  bonus'  this year.

Sat, 03/16/2013 - 16:44 | Link to Comment hooligan2009
hooligan2009's picture

and that would still leave 14 trillion (16 -2) in treasury debt, then there are all the other state and muni debts, plus fraudie and funny..i think the banksters would be thinking 200% not 20% and they have figured out that they have to do this over a 20 year period rather than all at once (via charges, loss of time value and inflation, so a 10% cost per annum of holding deposits! voila!)

Sat, 03/16/2013 - 15:05 | Link to Comment Peachfuzz
Peachfuzz's picture

Now my crystal ball is in the shop, so please help if I get this wrong. Now that the cat is out of the bag in Cypress the contagion will spread in the EU and a flight to 'safe paper (i.e. US dollar and Tres) will ensue. In the states this week we have already had failures to deliver in the bond market. What happens when there are more failed auctions this week upcoming? Doesn't this remove the mechanism by which the fed sterilizes money being pumped into the economy, forcing them to by mbs thereby driving up inflation on this side of the pond?

Sat, 03/16/2013 - 15:11 | Link to Comment know-zilch
know-zilch's picture

is that Cyprus? 


Sat, 03/16/2013 - 15:19 | Link to Comment Peachfuzz
Peachfuzz's picture

It should be. Some dumbasses don't know the difference between trees and countries ya know. So since you're good with your spelling, what else do you know about this?

Sat, 03/16/2013 - 15:14 | Link to Comment Dareconomics
Dareconomics's picture

Cyprus won't even have a sustainable debt load by 2020.  In order for Cyprus to achieve a 100% debt ratio by 2020, it will have to grow at over 3% per year with a balanced budget until then.



Sat, 03/16/2013 - 15:14 | Link to Comment magpie
magpie's picture

Somehow knew the EU was entering full delusion territory when they shot down the budget

Sat, 03/16/2013 - 16:42 | Link to Comment hooligan2009
hooligan2009's picture


so let's see...the troika says that someone putting money in a bank has to suffer the losses the bank makes on its loan portfolio, a loan portfolio that represents large and small company debt with an average BBB rating on unsecured debt, covenants, a floating rate and a direct claim over the assets of the borrower?

where exactly has the money gone? i know the power station blew up a few years ago, but come on, a population of 900,000 people did not make losses of €5.8 billion plus whatever shortfall the russians will make up.

does this mean that all loans made to cypriot companies have been reduced to zero value, effectively wiping out the cypriot company sector in its entirety or are depositors being asked to make whole losses incurred elsewhere?

this is so dumb it has to be illegal. 

i expect a citizens group to challenge the legality of the troika (ECB, EU and IMF) to take money from their bank accounts, for that case to be upheld and for the EUrozone to collapse under the burden of the fraud being perpetrated on its citizens.

and by the way, although the US bank loan market represents a smaller percentage share of total debt raised by companies, the European bank loan market is only half the size of the us bank loan market.

also, i know you will cover the shadow banking system at a later date, but really, the fact that US banks have a higher deposit to loan ratio than european banks does not alter the fact that most of the US loans are commerical, industrial or house mortgage related and the value of these loans is nowhere near par (100 cents in the dollar). 

i do not think that europe should follow the example of the US and make the tax payer the "bad bank" of the economy by using the smoke and mirrors of money ciruclated in and out of banks to the fed(eral reserve, fraudie and funny and the repo market) and back to the banks so that it can say it has a high deposit to loan ratio (or low loan to deposit ratio if you wish).

if loan values are 65 cents in the dollar, no amount of fed funds on one side of the banks balance sheet is going to alter the fact that banks have lost 35 cents in the dollar on a 3 trillion dollar loan book...or 1 trillion dollars if my 35% loan loss guesstimate rate is correct.

Sat, 03/16/2013 - 17:23 | Link to Comment Winston Churchill
Winston Churchill's picture

A little low,more like 50% +.

Just do the math,why else does the FedRes have create $45bn pcm for RMBS ?

A back door bail out of the bad/phantom loans.

Sat, 03/16/2013 - 21:04 | Link to Comment hooligan2009
hooligan2009's picture

thought they were diversifying their risk into floating rate assets with a higher credit rating than treasuries!

Sat, 03/16/2013 - 15:26 | Link to Comment savagegoose
savagegoose's picture

hey didnt turd  mention gold up %100 by friday? maybe in Euros, he may hve called it.

Sat, 03/16/2013 - 15:34 | Link to Comment IridiumRebel
IridiumRebel's picture

Who is next? Shitloads of PIIGS taking "their" money outta banks.

Sat, 03/16/2013 - 15:41 | Link to Comment toys for tits
toys for tits's picture



This is the Archduke Ferdinand assination moment of 1914 unless the EU comes back and says 'just kidding', no haircuts on depositors.

Sat, 03/16/2013 - 15:42 | Link to Comment Bingfa
Bingfa's picture

Greed begets greed....

The bloodsuckers want it all

            They'll suck the life out of everything and leave it for dead

            Everyone in America should show solidarity and remove every penny from banks here

Sat, 03/16/2013 - 18:34 | Link to Comment Totentänzerlied
Totentänzerlied's picture

Capitalism and individualism do not permit solidarity. Hypothetically that's okay because no one needs solidarity while they're a rich capitalist individualist. That works, until it doesn't.

Sat, 03/16/2013 - 18:36 | Link to Comment akak
akak's picture

I suspect that what you (probably erroneously) call "solidarity" I would label as collectivism, coercion and enforced conformity.

Sat, 03/16/2013 - 18:46 | Link to Comment Bingfa
Bingfa's picture

We should all stand together like the bankers are....

Turn the tables on em... (I know it's a reach)

Sat, 03/16/2013 - 15:43 | Link to Comment Racer
Racer's picture

And did I miss Barclays on the chart that Barclays produced?

Sat, 03/16/2013 - 17:49 | Link to Comment Winston Churchill
Winston Churchill's picture

Damn,thought it was just me.

I looked and looked  for Barclays on that chart.

Got a little something  in their Manx branch.

Sat, 03/16/2013 - 15:44 | Link to Comment Joebloinvestor
Joebloinvestor's picture

Simple answer is anyone with money in a EU bank.

Wait till they pounce on safety deposit boxes.

Sat, 03/16/2013 - 16:02 | Link to Comment css1971
css1971's picture


So the bankers loaned money out to people who can't pay it back. The people who have to take the hit to pay for this are the depositors of said banks? And bond holders are kept whole to prevent a credit event...

I do believe the EU have found a way to save both the banks and the bondholders thereby preventing CDS from kicking in and nuking the financial system... Screw the depositors.

Watch this spread like wildfire.

Of course the morality of it...

Sat, 03/16/2013 - 16:04 | Link to Comment swissaustrian
swissaustrian's picture

Spanish banks seem to be primary candidates: Not only is their LTDR high, a large part of the L's are toxic mortgages which haven't been written down yet.

Sat, 03/16/2013 - 16:06 | Link to Comment put_peter
put_peter's picture

in the scandinavian countries most of the loans are secured which in this case might make some difference. However should the 'forced liquidation' phase come to nordic markets it really does not matter whether the loans are secured or not...

Sat, 03/16/2013 - 16:11 | Link to Comment kevinearick
kevinearick's picture

Toys, Guns, & Bombs

Toys in one time were working instruments in a previous time. It’s time to put the toys away and go back to work. Don’t expect the majority to follow suit. It never does. The majority of the past will become broken toys themselves. It always does. Where is Napoleon now? Old-timers like myself just prefer to work on old stuff, stuff built before the fifty-year-rule.

The blame game is a waste of time. Just take all the discarded crap and make something of it. When the manufacturers start building toys for adults, it’s time to replace the manufacturers. Drones are toys and the sheriff gets paid in drug money, created and laundered by government agency, certified accordingly. The old economy has more food, clothing, housing and transportation than it knows what to do with, and it’s dying off rapidly.

You can train your mind to do anything you want. Learning doesn’t occur in school. School is about social contracts on their way to the churn pool, who gets to be high school quarterback. Reactionary medicine and economics are the most irrational subjects accordingly. Don’t participate in certification and expect government not to grow, into a virus. Government is just the ground floor, gravity.

It’s a big universe out there. Go, or don’t. I am a dinosaur, but I was not always a dinosaur. I learned to make a living out of a dumpster when I was nine. We are old and gone by, but we have left you more than you need to make the journey. We did not leave what you need where the majority can find it.

How much time do you spend in the past, serving government, the present, serving yourself, and the future, serving your children? The future belongs to those living in the future. Buffet serves government and government serves Buffet. Why would you expect anything else?

If you want to make lots of money, get to the churn pool as quickly as you can and sell tickets, for psychographic distribution into monopolies. That’s what Buffet does. Of course he likes newspapers; he needs something to wrap the fish in, and to wipe the windshield with.

Government doesn’t want you to obtain a fishing pole, or fish, so it gives you FDA certified fish sticks. Whether you are talking about sex, drugs, technology, or anything else, it’s all the same. Don’t give a gun to someone raised on fish sticks, on either side of the law, and expect a happy outcome. That’s why guys like me build bombs, but don’t expect us to respond if government nukes San Francisco, Seattle, Chicago, or DC. We have much better things to do than protect fish stick populations from themselves.

Government says I have all the wrong skills, and, for its purpose, I do.

Sat, 03/16/2013 - 16:40 | Link to Comment Seer
Seer's picture

I'm thinking that you know who Derrick Jensen is.

Sat, 03/16/2013 - 17:43 | Link to Comment negative rates
negative rates's picture

And he's lovin it!

Sat, 03/16/2013 - 18:11 | Link to Comment Seer
Seer's picture

Can't speak for Derrick, but I can state that I won't necessarily be filled with glee.  I just know where things are going (regardless of human hands) and try to adjust.  Many people are going to suffer, and while I won't care too much about this happening to the bastards, I DO care about all the others.  Really, the best that we can hope for is that we learn a valuable lesson, enough so that we don't start up the circus again...  It's not nice to (try to) fool Mother Nature (play god)...

Sat, 03/16/2013 - 16:40 | Link to Comment q99x2
q99x2's picture

A fine article.

As the collapse nears I'm beginning to get cold feet.

Sat, 03/16/2013 - 18:11 | Link to Comment Seer
Seer's picture

Careful lest TPTB provide you with a nice toasty set of leg shackles...

Sat, 03/16/2013 - 16:59 | Link to Comment Stanley Lord
Stanley Lord's picture

Holy Crap.

Thanks Tyler I have to get my money out of M&T Bank

Sat, 03/16/2013 - 18:06 | Link to Comment Poqit
Poqit's picture

LOL I wouldn't make banking decisions based on this chart alone.  JPM is to the far right.

Sat, 03/16/2013 - 19:39 | Link to Comment Stanley Lord
Stanley Lord's picture

I am joking, but I am in JPM also, and that is not funny. I figure M&T/Buffett will be 'protected"


Sat, 03/16/2013 - 17:31 | Link to Comment earleflorida
earleflorida's picture

an 'atm' electrode stimuli litmus test using the ecb's electronic cash register as a conduit via continuity [carrot or stick each with abundant k-y] is but a fool's errand... short circuiting an already overloaded binary construct where fiat ignites, whereas... gold, the raison d`etre is but the ultimate ground-fault-- the sangfroid fail-safe outside the ecb's laboratory of ill-gotten pseudoscience, this papyrus junk 'dna'- financial paralogism`ism's?

thankyou Tyler

Sat, 03/16/2013 - 17:43 | Link to Comment Seer
Seer's picture

Got me thinking about Pavlov and his dog...

The ringing of the bells on the stock markets...

Maybe just brownouts and then blackouts rather than direct circuit faults.  Six of one, half dozen of the same...

Sat, 03/16/2013 - 17:39 | Link to Comment Tom Green Swedish
Tom Green Swedish's picture

Any country with over 85 percent debt to GDP, so basically the USA and Europe are in 1 big mess of shit.  And oh yea Mr. Bass Japan has 45 percent external debt to GDP.  It's alot easier when you don't have to make debt payments to a black hole.  Usa spent 360 billion dollars on interest on the debt to foreign countries yet they can't even give their own citizens (to big to fail a 2 percent CD). We'll be spending 1 trillion a year by 2020, which really blows - Thanks GOVT (you are going to have to cut the defense spending in half (minimum for this to work) - now you have really fucked us. That is appoxiamately 8,000 dollars per year per taxpayer.  Fuck you GOVT.

Sat, 03/16/2013 - 17:49 | Link to Comment Seer
Seer's picture

"Defense" spending will never be cut 50%.  The US will hold on to it's terror apparatus until the day that the "defense" vanishes (100% cut).  TPTB will cling to it as it kills most.  The only sadness I'll experience is in knowing that most will never make the connection, resulting in a new round of nationalism popping up (led by, of course, the same basic warlords who run the show today- same as it ever was...).

Sun, 03/17/2013 - 07:46 | Link to Comment Element
Element's picture

What do you expect when the kiddies have sausage stuffed between their ears for 12 years, are taught that the nail that stands up gets hammered down, and then they are declared 'educated', and immediately the govt is offering them a military 'career'?

Infants to Infantry ... works every time.

Sat, 03/16/2013 - 18:28 | Link to Comment deepsouthdoug
deepsouthdoug's picture

Well I've got cash in TCF, which is #2 in the USA - more accurately a claim on the cash I've deposited!

Sat, 03/16/2013 - 18:34 | Link to Comment WmMcK
WmMcK's picture

+1  - Deep south and Twin Cities Federal ...

Sat, 03/16/2013 - 19:32 | Link to Comment WallowaMountainMan
WallowaMountainMan's picture

so, first, does this mean those who are short bonds in the U.S. of A. are...uh...screwed?

second, why, when the deposit ration is so 'good' is the fed telling jpm and gs to raise capitol?

methinkest that those who shortchange the brains on the side that really understand that bad banks are really bad, and that the really bad banks are being soft targeted for being broken up because they are 'worth more' to share holders that way, do not understand the pathway of the super deep game i like to call 'fuck the tbtf'.

perhaps i am dreaming, but at least its a dream in which real people have a chance to win.

(p.s. a balmy 46.2 degrees on the north side of the ol' spruce does that feel good....

:) )

Sat, 03/16/2013 - 20:13 | Link to Comment Yen Cross
Yen Cross's picture

     I went shopping earlier. Just picked up a few things at the grocery store. I have another market that I buy my Meat and Produce from.  Thirty cents seems like a small amount of money. (I'm sure we can all agree)

     I like the freshly baked small [French Bread] rolls that most grocery stores sell. My particular 'Grocery Store" sold those 'French Bread' rolls for $1.69 a week ago. Today the same 'French Bread' roll was $1.99.  Two months ago the same 'French bread role was $1.49.

      Thirty cents every 2-3 months, is substancial.  Food for thought, when non core inflation is avoided every Thursday and Friday in the CPI prints !

Sat, 03/16/2013 - 23:58 | Link to Comment ak_khanna
ak_khanna's picture

The foreign banks and lenders being backed by politicians of bigger and stronger countries and global financial institutions are insisting that the Cyprus banks repay them in full even though this is likely to push the Cyprus economy in recession in the foreseeable future.

Moneylending to Cyprus by the foreign banks and lenders was a commercial decision whereby they received a higher interest rate to compensate for the risk they took in lending to Cyprus. The losses of this mess ought to be borne by lenders who enjoyed supernormal profits in good times and knowingly took the decision to lend to Cyprus banks. The losses should not be borne by the depositers and taxpayers of Cyprus or the taxpayers of other European countries by funding endless bailouts.

The best way out of this mess for the citizens of Cyprus is default.

Sun, 03/17/2013 - 00:29 | Link to Comment carefreemanjoe
carefreemanjoe's picture

For a long time, bad news has been good news (because aha, now the Feds will enter the picture and act becuse of the bad news) and good news has been, well, good news. Any news is good news for the market to keep going up. Lets see what this event brings? Certainly an interesting Monday coming up. 

Sun, 03/17/2013 - 00:30 | Link to Comment carefreemanjoe
carefreemanjoe's picture

For a long time, bad news has been good news (because aha, now the Feds will enter the picture and act becuse of the bad news) and good news has been, well, good news. Any news is good news for the market to keep going up. Lets see what this event brings? Certainly an interesting Monday coming up. 

Sun, 03/17/2013 - 07:39 | Link to Comment Element
Element's picture

Awesome work Tyler.


EDIT: BTW, what's your current estimate of the worth of the ECB's guarantee?

Sun, 03/17/2013 - 23:52 | Link to Comment chindit13
chindit13's picture

Great article.  Not only is the loan/deposit ratio for the EU troubling, there is also the absolute size of the EU banking sector relative to the zone's GDP.  In the US, commercial bank assets/GDP is about .9x, and loans/GDP about .5x.  The ratios in the EU are assets/GDP about 2x, and loans/GDP about 1.2x.  The US finance sector is big, in Europe it is huge.

One more thing...half a world away....those "low" ratios in Japanese banks are low because major Japanese banks are loaded up with JGBs, issued by a government with 220-250% debt/GDP.  What's worst:  exposure to EU corporates and mortgagers (EU), exposure to CDX IG9 like JPM (US), or exposure to the Government of Japan?

As for bail-in-ability, it's tough to find any advantage in any of the zones.  The US corporate sector relies much less on bank borrowings and more on the bond market, but the owners of those bonds are the firms that insure American's lives, homes and assets.  Thus, if bondholders take the hit (which is still the most fair), nothing is insured anymore.

I don't know where we're going, but it seems we must pass Cerberus before we get there.

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