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...


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


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?


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?


In other words, we will buy whatever is falling?

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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...

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.

hedgeless_horseman's picture



Privatize the gains, and socialize the losses.

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

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.

JRobby's picture

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

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

Manthong's picture

I think the ECB should get into the fragrance business.

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.

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.......

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.

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 ;-)

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.

Shad_ow's picture

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

ThroxxOfVron's picture

Everything is kosher until they are fishing somone's dead daughter out of the pool.

open-range's picture
open-range (not verified) hedgeless_horseman Feb 15, 2016 2:16 PM

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...

silverliberty's picture

The government will do what the markets won't or can't do.

buzzsaw99's picture

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

waterwitch's picture

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

NotApplicable's picture

"Just sign right here, sir."

NoDebt's picture

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

surf0766's picture

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

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! ;-)

nmewn's picture

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

And they call us crazy over here at the

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.

nmewn's picture

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

Bonuses all around, well done board members!

ThroxxOfVron's picture

Cash for trash.

Hash and dash.

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.

NoDebt's picture

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

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! ;-)

Publicus_Reanimated's picture

Your complaint has been voiced for centuries:

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.

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

Winston Churchill's picture

If they can make a horse SoS, why not ?

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...


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!

Panic Mode's picture

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

Squid Viscous's picture

sucks for PM's as priced in US toilet paper

Panic Mode's picture

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

Seasmoke's picture

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

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.

silverliberty's picture

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

Racer's picture

The man is totally insane - using NPL as collateral


Flying Wombat's picture

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

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Feb 15, 2016 10:42 AM

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

Caviar Emptor's picture

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

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.

moleson1965's picture

Could you find out whether they (ECB) are really allowed to buy non-performing loans or loans with a low rating? I doubt it. It would just weaken the quality of the balance sheet of the ECB. What is the ECB really going to do and what valuation standards (of the loans the consider buying) and discounts are they going to apply?