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ECB Prepares To Subsidize Small/Medium Businesses Next

Tyler Durden's picture


EU President Barroso proclaimed this morning that Europe is "through the worst of the crisis" and yet the ECB's policy transmission channels are so fragmented - and the economies of the disparate union so in need to help - that Draghi and his fellow planners are re-discussing ways to directly lower the interest-rate burden for small-to-medium-sized businesses (SMEs). Germany's Die Zeit reports that the concept of the ECB lowering its standards once again to accept SME loans as collateral for lending to its member banks since, as we noted here, the ECB is basically impotent with regard juicing anything in the real economy. So the ECB is willing to step in and sacrifice its balance sheet (and the taxpayers of Europe - Germany - that implicitly backstop it) to ensure SMEs get funded at sub-market rates that banks are unwilling to accept on a risk-adjusted basis? What could possibly go wrong?


Via MNI,

The European Central Bank is considering ways to lower the interest rate burden for small-to-medium sized businesses in the Eurozone's struggling periphery, German weekly Die Zeit reported Wednesday.


Among the options being considered is accepting some SME loans as collateral for banks to participate in ECB operations, the paper reported.


It remains unclear whether any measures will already be taken during Thursday's monthly rate-setting meeting of the ECB Governing Council.


The central bank has repeatedly expressed concern that EMU financial markets remain fragmented and monetary transmission channels broken. ECB President Mario Draghi has noted that even solid SMEs based in peripheral nations are struggling to gain access to cheap credit, despite record low interest rates.

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Wed, 04/03/2013 - 09:10 | 3402742 BaBaBouy
BaBaBouy's picture

As The EU Has "Fixed" Everything Up To Now, They Will Fix All Going Forward...

Wed, 04/03/2013 - 09:26 | 3402803 MillionDollarBonus_
MillionDollarBonus_'s picture

Honest question: Why do we even need small businesses anymore? Large corporations provide pretty much all the goods and services that we will ever need. New businesses create huge amounts of paperwork for regulators and the IRS. Why can't we simply consolidate the provision of basic products under a small and manageable group of larger companies? From a regulatory view, this makes far more sense.

Wed, 04/03/2013 - 09:34 | 3402835 bnbdnb
bnbdnb's picture

Your sarcasm is logically inconsistent. Read it again and figure out why.

Wed, 04/03/2013 - 11:03 | 3403294 microp
microp's picture

That is how Lenin thought! Let's make a comunist world, yeahhh!!!!!

Wed, 04/03/2013 - 16:38 | 3405301 theprofromdover
theprofromdover's picture

why do we need small businesses?

Tall oaks from little acorns grow.

Rotten, diseased, corrupt, bloated, inefficient oaks needs to fall and be replaced by healthy, innovative, efficient, motivated young trees.

Large corporations generally only survive by buying up all the competition, and throttling it.

Wed, 04/03/2013 - 21:39 | 3406469 MeelionDollerBogus
MeelionDollerBogus's picture

Oh, so you want the biggest tax-payer there is, the medium & small business to be gone, so only the tax-evading large businesses & non-tax-payer EBT citizens are left? So, that’s far-right-wing austerity care of MillionDollarBonus_ ? OK… before long we can actually cut the IRS completely out of existence since there will be no more taxes to collect. Good call!

Wed, 04/03/2013 - 09:30 | 3402814 sbenard
sbenard's picture

Yea! "Fixed" like I "fixed" my dog! More like NEUTERED FOREVER!

Wed, 04/03/2013 - 15:41 | 3404838 Sudden Debt
Sudden Debt's picture

nice savings account mister Anderson... and I see you've been saving for you... pension....




Wed, 04/03/2013 - 09:08 | 3402746 TotalCarp
TotalCarp's picture

Subsidies rolling down the food chain, eh? I hope i am next! Pls pls pls let it be me!

Wed, 04/03/2013 - 09:12 | 3402757 kliguy38
kliguy38's picture

Not subsidies........they're trying to stem the bleeding from the implementation of more capital controls. Once started the genie cannot be put back in and one of the "unintended consequences" of capital controls is crushing commerce from small businesses............gl central bankers putting that one back in the bottle

Wed, 04/03/2013 - 09:14 | 3402766 aint no fortuna...
aint no fortunate son's picture

and another in an endless series of charts depicting the crocs waiting for lunch on the Maru River

Wed, 04/03/2013 - 09:08 | 3402748 orangedrinkandchips
orangedrinkandchips's picture

Cut to the chase already!


Tired of this crap....



Wed, 04/03/2013 - 09:14 | 3402765 GolfHatesMe
GolfHatesMe's picture

They are superglued to the seat.  Plates will keep spinning, until the definition of "fall" and "break" are changed.  Totally frustrating!

Wed, 04/03/2013 - 09:09 | 3402751 TJ00
TJ00's picture

So the businesses in Cyprus that just had their money stolen by the EU can now get an ECB loan to replace it? Even Orwell and Kafka discussing ideas while on acid couldn't think up anything this crazy.

Wed, 04/03/2013 - 09:15 | 3402771 SheepDog-One
SheepDog-One's picture

Yea we'll steal all your money over the weekend, but don't worry, we'll loan it back to you at 10%!

Wed, 04/03/2013 - 16:43 | 3405324 Gief Gold Plox
Gief Gold Plox's picture

Orwell, Kafka and acid trippin' all in one sentence. You, Sir, deserve my utmost respect.

Wed, 04/03/2013 - 09:10 | 3402754 eclectic syncretist
eclectic syncretist's picture

 How can they possibly be through the worst of the crisis when it's their business model, printing value based on nothing, that is causing the problem and being proposed as the solution?  They will only create a series of bigger and bigger crises this way until the business model has to be scrapped.  Duh.

Wed, 04/03/2013 - 09:12 | 3402761 SheepDog-One
SheepDog-One's picture


Wed, 04/03/2013 - 09:13 | 3402763 williambanzai7
williambanzai7's picture

First there was no crisis, then the crisis was over, now they are through the worst of the crisis.

What next?

Wed, 04/03/2013 - 09:17 | 3402772 SheepDog-One
SheepDog-One's picture

The swirling around the bowl will be called a 'service' and be charged as a utility for all swirling down the bowl.

Wed, 04/03/2013 - 10:06 | 3403001 Bicycle Repairman
Bicycle Repairman's picture

A tax on crises. 

Wed, 04/03/2013 - 10:59 | 3403272 UK debt marsh
UK debt marsh's picture

Go back to Go
Do not collect €200

(I would say Go to Jail, but let's be realistic here!)

Wed, 04/03/2013 - 09:19 | 3402768 ekm
ekm's picture

It could be a propaganda piece, but if true, my question is when is ECB going to understand that business and consumers need gasoline, raw materials etc to function and consume, not eletrons.

Wed, 04/03/2013 - 09:29 | 3402810 TJ00
TJ00's picture

14:28 GMT ECB STATEMENT - The ECB stands willing to provide extraordinary amounts of electron liquidity for ekms gasoline, raw materials etc if ekm matches it with the necessary protons and neutrons going forward.

Wed, 04/03/2013 - 14:05 | 3404326 ekm
ekm's picture


Wed, 04/03/2013 - 09:22 | 3402781 Downtoolong
Downtoolong's picture

What could possibly go wrong?

Who cares, as long as I can securitize it and flip it to a pension fund for a profit.

Larry Fink

Wed, 04/03/2013 - 09:21 | 3402782 Urban Redneck
Urban Redneck's picture

And what sort of stupid strings are the idiots going to attach to the Devil's handouts- more housing and windmills in Spain?  It's not like they learned any proper lessons subsidizing unprofitable boondoggles in Germany.  Solar?  Really, has a single fucktard from the ivory towers of Berlin and Brussels ever even walked outside, much less among the serfs, and noticed THE UTTER LACK OF SUNLIGHT IN NORTHERN EUROPE?  A Eurocrat is the only species on the planet capable of making Obama look intelligent.

Wed, 04/03/2013 - 11:16 | 3403387 Non Passaran
Non Passaran's picture

The banks don't let them out much lately. It's too dangerous among the serfs.

They need the idiots alive - someone needs to sign all the nice crisis-solving spending and easing measures.

Wed, 04/03/2013 - 12:24 | 3403783 TPTB_r_TBTF
TPTB_r_TBTF's picture

The Eurocrats face a tough decision:


  1. Solar Power
  2. Chemtrails


They cannot have both.

Wed, 04/03/2013 - 09:24 | 3402788 LawsofPhysics
LawsofPhysics's picture

Not such the monetary union after all.  One for you, two for your, one two for me, three for you, one two three for me...

Wed, 04/03/2013 - 09:27 | 3402797 Joe A
Joe A's picture

SMEs are collapsing left and right.

Wed, 04/03/2013 - 09:28 | 3402805 sbenard
sbenard's picture

I had no idea Barroso was a comedian too! Where can I go see him perform?

Wed, 04/03/2013 - 09:32 | 3402828 The Dancer
The Dancer's picture

Most don't seem to get it yet. And I do understand that the cooking pot is heating up very slow so as you will get distracted like the many from the "END GAME". A few frogs have caught on and have hopped out, but most of us are hooked on our egos and some on hope. So, one more time, it's all about total control of the planet...by who, how can I be sure since I'm not an insider. But I have my thoughts. Look, if ya take away folks means to provide for themselves independently and then replace that with food stamps and subsidies, you've got most of the population under control. You are slowly being cooked, my friend. Divide and conquer is also a main stay.But enough! If each individual waits for some great leader to step up and ring the bell, nothing will change. It's going to require brave individuals willing to sacrifice maybe ALL to stop the erosion of rights. But courage seems to be lacking everywhere I go. So, in the end, you will get IT in your rear-end. Just what we deserve for not having any guts and stepping up and taking your place in history. You are "the masses"! Just go look in the mirror and you'll see what I mean. Go!

Wed, 04/03/2013 - 09:54 | 3402941 bentaxle
bentaxle's picture

This dumb shit obviously thinks things just couldn't possibly get any worse! Yet that is exactly what keeps happening. Only every time it does they roll this fucker out to tell everyone, [Europe is] "through the worst of the crisis."

Get Nigel Farage out to have another word with Barroso. (What is it with people who have manuel in their name?)

Wed, 04/03/2013 - 09:59 | 3402957 pashley1411
pashley1411's picture

Having run out of other people's moneyinterest-rate manipulation is the new Baskin Robbins.   48 flavors, for every size and taste.

Wed, 04/03/2013 - 10:19 | 3403051 Mark Urbo
Mark Urbo's picture

Please help, I lost track of how many times it has been...

"proclaimed this morning that Europe is "through the worst of the crisis"

..is it 14 or 15 times ?

Wed, 04/03/2013 - 10:41 | 3403172 NotApplicable
NotApplicable's picture

Those are actually typos. They meant to say "the worst of today's crisis."


It's no crisis, just you having fun!

Wed, 04/03/2013 - 21:45 | 3406487 MeelionDollerBogus
MeelionDollerBogus's picture


31 flavors of boot-polish care of Big Brother at Barroso Robbins!

Wed, 04/03/2013 - 09:59 | 3402962 Sandmann
Sandmann's picture

It is not Interest Rates but provision of Liquidity to SMEs and Debt-rollover. If the Banks are not solvent how can you expect to get Liquidity to SMEs when the Banks are extracting Liquidity in an effort to stay solvent ?

Wed, 04/03/2013 - 10:18 | 3403048 Fruitcake
Fruitcake's picture

I also lower my standards when very drunk, so can't fault the ECB for doing similar.

Wed, 04/03/2013 - 10:23 | 3403068 11811
11811's picture

EU President Barroso proclaimed this morning that Europe is "through the worst of the crisis"


In other news, it is reported that tractor production is at an all-time high......

Wed, 04/03/2013 - 11:44 | 3403556 GreatUncle
GreatUncle's picture

If you were wondering to start or develop an SME by borrowing think this.

What do you expect to happen when central banks, goverments are all cash strapped?

They will devour whatever is left that provides them sustenance and that would be the newly formed, actually doing rather well SME's. That's the problem, when the current problems are left in and not purged from the system, the decay has an impact on all good and healthy things eventually.

Wed, 04/03/2013 - 11:50 | 3403582 The Continental
The Continental's picture

It's all about control. The brain-trust in Brussels cannot imagine a world where they do not dictate everything. Interest rates must be set by the free market. Discounting interest rates is what has destroyed the western developed economies - they are all dead economies walking.

The funny thing about mathematical modeling is that it can look really good within specific parameters for a while. Then as soon as you edge towards reality, it spins wildly out of control. The Van Der Waals equation works quite well indeed, until it doesn't wherein the breakdown is catastrophic. The centrally planned western economies are disintegrating before our very eyes and the central planners cannot see it, too busy with the nip and tuck game. It's amazing to behold the juxtaposition of towering ego and infinite stupidity.

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