EUR Tumbles As Draghi Admits ECB Will "Buy" Busted Bank Loans

Tyler Durden's picture




 

EURUSD is down over 120 pips this morning and accelerating as Mario Draghi drops all kinds of tapebombs in his Q&A with his Brussels overlords. Most crucially, slamming EURUSD 70 pips and breaking Wednesday lows, was his admission that while The ECB would "not buy" non-performing Italian bank loans, it would (confirmed by Italy's Treasury) allow the busted deals as repo collateral (how close to par?) allowing Italian banks to kick the can just a little further.

So to clarify...

  • *DRAGHI SAYS ECB NOT TALKING ABOUT BUYING ITALIAN BAD LOANS

But, as Italy's Treasury confirms, will allow Italian banks to post them as repo collateral (who knows what haircut)

  • *DRAGHI SAYS DEALING WITH BAD LOANS REQUIRES TIME

So - to translate - we'll burden the European taxpayer with all these busted loans, give you cash (probably with no haircut) because all it needs is some time and these loans will all be money good?

  • *DRAGHI SAYS NO DIFFERENTIAL TREATMENT OF BAD LOANS IN EURO ZONE

Oh and what we are doing with Italy's NPLs, we will do for all EU nations.

No wonder EUR is dropping...

 

Is EURUSD tumbling from this apparent "easing" or from the incredulity of Draghi's hubris in destroying any semblance of ECB balance sheet strength? Or both?

  • *DRAGHI SAYS QE IS FLEXIBLE ENOUGH TO ADAPT TO MARKET CHANGES

In other words, we will buy whatever is falling?

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Mon, 02/15/2016 - 11:28 | 7187739 hedgeless_horseman
hedgeless_horseman's picture

 

 

The ECB would "not buy" non-performing Italian bank loans, it would (confirmed by Italy's Treasury) allow the busted deals as collateral...

Mon, 02/15/2016 - 11:39 | 7187806 Caviar Emptor
Caviar Emptor's picture

Oh the ECB (Fed) will cover any damages if banks make bad decisions and lose tons of money. Like after any rich kid party where things get busted up, daddy comes over in the morning with enough to soothe raw nerves.

Mon, 02/15/2016 - 11:41 | 7187810 hedgeless_horseman
hedgeless_horseman's picture

 

 

Privatize the gains, and socialize the losses.

This is the foundation on which our financial system is built.

Mon, 02/15/2016 - 11:47 | 7187844 JohnGaltsChild
JohnGaltsChild's picture

 Exactly!! Well said.

Mon, 02/15/2016 - 11:56 | 7187872 Pinto Currency
Pinto Currency's picture

 

 

They'll be buying DB's $60 trillion derivatives book.

Just buying the bad loans means massive money printing.

That is terible news for gold.  Wait.

Mon, 02/15/2016 - 11:58 | 7187885 JRobby
JRobby's picture

What!?!? What!? What Bad Loans!?!?

Put those back into performing right now!!!!!!

Mon, 02/15/2016 - 12:17 | 7187958 Manthong
Manthong's picture

I think the ECB should get into the fragrance business.

https://www.youtube.com/watch?v=acv8XUg6jiU

Mon, 02/15/2016 - 12:00 | 7187886 hedgeless_horseman
hedgeless_horseman's picture

 

 

When a currency is backed by nothing, then even a pile of shit is something.

Give me a long enough lever and I will move the world.

Give me enough leverage, and I will recapitalize DB with a pile of dog shit wrapped in cat shit.

Mon, 02/15/2016 - 12:44 | 7188061 jaxville
jaxville's picture

  That is exactly what most OTC derivative products are....little bags of dog turds.  The bankers can swap them among themselves and value them at millions per bag.  It provides a strong foundational asset for the rest of their operations.

  The problem arises when one of those little bags winds up on Ebay.......

Mon, 02/15/2016 - 12:15 | 7187945 Seasmoke
Seasmoke's picture

I thought massive money printing was great for Gold. That's exactly why the physical was bought in first place.

But I am starting to understand 2+2 really does = 5. Don't be mad at me ZH. I tried. But I give up. It's time for me to become someone famous. Right after I eat this piece of steak.

Mon, 02/15/2016 - 11:50 | 7187855 nmewn
nmewn's picture

I believe I've made this point over and over as to what central banks REALLY are and it certainly has nothing to do with capitalism.

Unless we're talking about re-capitalizing the socialist losers in life so they can lose a few billion moar ;-)

Mon, 02/15/2016 - 14:19 | 7188430 MachoMan
MachoMan's picture

I believe I've made this point over and over as to what central banks REALLY are and it certainly has nothing to do with capitalism.

True.  However, since capitalism has nothing to do with reality (rational actors refuse to accept marginalized profits), I hope you don't expect anything to materially change.  Our present reality is that social competition dictates the exploitation of central banks.

Mon, 02/15/2016 - 13:26 | 7188219 Shad_ow
Shad_ow's picture

Excellent!  Concise and so accurate even Trump and other Democrat voters could get it.

Mon, 02/15/2016 - 11:40 | 7187812 ThroxxOfVron
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Everything is kosher until they are fishing somone's dead daughter out of the pool.

Mon, 02/15/2016 - 11:43 | 7187824 hedgeless_horseman
hedgeless_horseman's picture

 

 

Her name was Mary Jo Kopechne.

Mon, 02/15/2016 - 11:46 | 7187839 Poundsand
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Hedgeless on a roll today.

Mon, 02/15/2016 - 15:16 | 7188670 open-range
open-range's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.wallstreet34.com

Mon, 02/15/2016 - 11:27 | 7187749 silverliberty
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The government will do what the markets won't or can't do.

Mon, 02/15/2016 - 11:28 | 7187751 buzzsaw99
buzzsaw99's picture

While The ECB would "not buy" non-performing Italian bank loans, it would buy non-performing German bank loans. fixed it.

Mon, 02/15/2016 - 12:11 | 7187926 waterwitch
waterwitch's picture

Sure. I got $70T right here in my pocket. 

Mon, 02/15/2016 - 13:17 | 7188183 NotApplicable
NotApplicable's picture

"Just sign right here, sir."

Mon, 02/15/2016 - 11:28 | 7187753 NoDebt
NoDebt's picture

Was there some part of "Whatever it takes" that was unclear?

Mon, 02/15/2016 - 11:29 | 7187756 surf0766
surf0766's picture

I am going to start sending bags of crap for them to buy.

Mon, 02/15/2016 - 11:31 | 7187763 bamawatson
Mon, 02/15/2016 - 11:33 | 7187774 nmewn
nmewn's picture

I knew hanging on to those old paper Bear Stearn bonds would pay dividends, got em for sub-penny on the dollar. I'm a fucking millionaire now! ;-)

Mon, 02/15/2016 - 11:30 | 7187758 nmewn
nmewn's picture

Because non-performing loans are actually...an asset...and can be held as collateral!

And they call us crazy over here at the Hedge...lol.

Mon, 02/15/2016 - 11:33 | 7187769 buzzsaw99
buzzsaw99's picture

turning chinese. as long as the revenue from the asset book covers the bank's overhead everything is cool. the rest is swept under the central bank rug.

Mon, 02/15/2016 - 11:35 | 7187785 nmewn
nmewn's picture

lol...hey the banksters gotta eat too ya know!

Bonuses all around, well done board members!

Mon, 02/15/2016 - 11:39 | 7187805 ThroxxOfVron
ThroxxOfVron's picture

Cash for trash.

Hash and dash.

Mon, 02/15/2016 - 11:33 | 7187775 E.F. Mutton
E.F. Mutton's picture

I'm starting to understand this game now.  I'm going to round up a bunch of stray cats and "repackage" them as Kentucky Derby prospects, then use this as loan collateral.

Mon, 02/15/2016 - 11:40 | 7187813 NoDebt
NoDebt's picture

Hence the genesis of the phrase "There's gotta be a pony in here somewhere."

Mon, 02/15/2016 - 11:42 | 7187818 nmewn
nmewn's picture

Yeah man, this is the way its done now.

The worth of something is not relevant to the actual value because the value is whatever we say it is! Its sorta like law these days, it doesn't have to be fair or just or impartial, it just has to be declared THE LAW and wallah! It suddenly becomes fair and just and naturally impartial because they say it is!

Ebadah ebadah thats all folks! ;-)

Mon, 02/15/2016 - 12:18 | 7187965 Publicus_Reanimated
Publicus_Reanimated's picture

Your complaint has been voiced for centuries:

Cade:
I thank you, good people—there shall be no money; all shall eat
and drink on my score, and I will apparel them all in one livery,
that they may agree like brothers, and worship me their lord.

Dick:
The first thing we do, let's kill all the lawyers.

Mon, 02/15/2016 - 11:43 | 7187825 Winston Churchill
Winston Churchill's picture

If they can make a horse SoS, why not ?

Mon, 02/15/2016 - 11:47 | 7187837 hedgeless_horseman
hedgeless_horseman's picture

 

 

I'm going to round up a bunch of stray cats and "repackage" them as Kentucky Derby prospects, then use this as loan collateral.

Here is a good book about J.T. Lundy, who did something very close to that...

.

Mon, 02/15/2016 - 13:43 | 7188268 ThroxxOfVron
ThroxxOfVron's picture

MOAR WHORESMEAT !

 

Mon, 02/15/2016 - 17:31 | 7189351 Omen IV
Omen IV's picture

Your missing the end game - once those assets are sequestered in the ECB the "local" politics of foreclosure are eliminated

Hence - the bid wil be made by Rothchild cronies - at 15 cents of accrued value

The former "owners" are now "employees"

Massive world consolidation

Gruisa Ruling will be means for Massive Roll Up!

Mon, 02/15/2016 - 11:50 | 7187850 Panic Mode
Panic Mode's picture

We call this "circular backdoor entry" performed by the group of bankers.

Mon, 02/15/2016 - 11:33 | 7187779 Squid Viscous
Squid Viscous's picture

sucks for PM's as priced in US toilet paper

Mon, 02/15/2016 - 11:34 | 7187784 Panic Mode
Panic Mode's picture

Don't worry, he will clarify tomorrow that he said "Bye", not "Buy".

Mon, 02/15/2016 - 11:35 | 7187786 Seasmoke
Seasmoke's picture

Every day this Slimy. Greasy. Shitstain motherfucker opens his garlic fucking mouth Gold goes down $20USD.

Mon, 02/15/2016 - 11:40 | 7187811 silverliberty
silverliberty's picture

What's the difference between a Whore and a banker?

John fucks the whore.  The banker fucks John.  Thus, the circle of life is complete.

Mon, 02/15/2016 - 11:41 | 7187815 silverliberty
silverliberty's picture

Why is it the longer I stay on Zhedge the more I use profanity?

Mon, 02/15/2016 - 11:47 | 7187843 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

I symphatize.

Mon, 02/15/2016 - 12:06 | 7187913 holgerdanske
holgerdanske's picture

monkey see monkey do,

Mon, 02/15/2016 - 11:41 | 7187817 Racer
Racer's picture

The man is totally insane - using NPL as collateral

 

Mon, 02/15/2016 - 13:51 | 7188308 Flying Wombat
Flying Wombat's picture

Cornered rat, perhaps...  I think he mostly knows what he's doing and is just buying time.

Mon, 02/15/2016 - 11:42 | 7187820 TradingIsLifeBrah
TradingIsLifeBrah's picture

Crash can never happen if assets are always marked to fantasy.  Sell gold, buy stocks - Derp

Mon, 02/15/2016 - 11:43 | 7187823 Caviar Emptor
Caviar Emptor's picture

Reagan proved that deficits don't matter.
Obama proved that debt doesn't either.
Soon your currency won't

Mon, 02/15/2016 - 13:57 | 7188330 Kprime
Kprime's picture

benake proved that assetts don't matter,

I say build all future planes with no wings. wings don't matter.

if peter pan says it can fly, it will fly.

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