Chart Of The Week: European "Fear And Loathing" Hits Record $1.3 Trillion

Tyler Durden's picture

The topic of the European "Ice-nine"phenomenon is nothing new to regular Zero Hedge readers: every day we point out the increasing freeze in European interbank lending (in both the traditional and shadow formats), in various money markets, in commercial paper, in broad fixed income issuance, and in the overall collapse in market liquidity, so deftly masked for now by daily political and central bank rhetoric, which for all its market kneejerk reaction glory is merely unsubstantiated innuendo and lies - keep in mind that the last time the incoherent and disorganized Troika came to an actual decision was July 21, with the second Greek bailout, and even that has not yet been implemented! So while hopes still percolates faintly on the surface, the riptide just below it has grown to record proportions. Presenting the chart that everyone who has an opinion on Europe, one way or the other, has to see. Here, courtesy of Diapason's Sean Corrigan, is the epic "Fear and Loathing" in the European banking system, in all its $1.3 trillion glory, or nearly double where it was when Lehman filed for bankruptcy. Banks may say they trust each other, they may promise the system is viable, they may even submit bogus (if increasing) Libor indications to the collusive organization that is the BBA, but the truth is, in vivid color, presented below. Never before have European banks parked as much of their hard earned cash with the only two remaining pillars of "stability", the Fed and the ECB. And with Dexia about to be nationalized, and an unpredictable, and highly contagious, waterfall chain of events about to be unleashed on Europe all over again, will the worst case scenario transpire and the ECB's credibility be swept away? If so, prepare for all the money in the world to funnel into the binary number-based safety deposit box located in the servers of 33 Liberty street. Then the two ultimate questions become: how long before the Fed's own viability is questioned by the global vigilantes (who have finally started asking the right questions), and who will bail out the central bank tasked with bailing out the world?

Source: Diapason

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misterc's picture

Merkel & Sarkozy meeting scheduled tomorrow.
I wonder what the markets will do on monday if they don't come up with some magic trick on 5 pm (just in time for production of the evening news on TV).

DormRoom's picture

Germany is going to exit.


Here's the logic: 


If fiscal uninon -> crisis is averted -> optimizing group (EZ) benefit.


Merkel & German mandarins: "No fiscal union"


Therefore: Not trying to optimize group benefit.

C2: Trying to optimize individual benefit.

QED: German exit.


p.s.  The US can use war with China as a bailout.   If they win the war, they can force China to pay war reparations, thereby forfeiting the debt.  It's one reason why Nazi Germany lashed out @ Europe.


conspiracy theory  #1: US alledges drone & predator hacking attacks by Chinese.  First step in war escalation.


Pinto Currency's picture



At its core, the problem is a debt bubble that has been blown by central banks worldwide over the last 15 years in Europe, North America, China, and the U.K.  It is not strictly a European problem when we look at the fact that there is $50 trillion of total debt outstanding in the U.S. (Federal, state, municipal, corporate and consumer) 


See this excellent summary of the extent of the problem by Kyle Bass.


We need immediate debt write-down and currency reform in North America (read: gold and silve backed money) or we will see chaos. 


For total US debt level see:

max2205's picture

Isn't the spike related to the worthless QE that banks got that they parked at the Fed cause the fed is paying them. It's just money that just shouldn't have been created in the first place

Different this time?

Pinto Currency's picture

So much for the "millionaire's tax"


It will cover the deficit for a few months.

knukles's picture

But its so populistly politically correct.  And any Big Wage Earner subject thereto should be very happy with it.  OK, they've taken their pound of flesh from me (The thought being; I got away cheap, after all I do earn over $1,000,000, so I fucking pay another $50k, BFD) now go bitch. piss and moan to/about somebody else.  Look elsewhere, I've given more than my fair share to UncleShyster.

Ned Zeppelin's picture

The rich in America need to pay more - they're the only ones who can afford to, and by far the only ones who have benefited greatly from the Fed's and govt rescue programs funded directly or indirectly (via the low rates that have stolen untold billions from savers). But they deserve to have in place a US budget that does not "blow" their taxes on horseshit. 

mick_richfield's picture

I'm not rich, and I vote that the rich should not pay more taxes.  Certainly not because they have benefited from the federal 'government's' 'rescue' packages.

I vote that the federal 'government' should be prevented from enacting 'rescue' programs, should return to a pre-1913 tax policy, should roll back its world-wide empire, dismantle the foreign money power called the Federal Reserve (one name, two lies), and above all must be prevented from creating 'money' at will and forcing Americans to use it.

Their help doesn't help, their care doesn't care, their schools do not educate, their rescues are murder, their social engineering is genocide.


Pinto Currency's picture





The increase in debt really accelerated starting in the mid 1990s.


At that time, the central bank gold leasing scheme acclerated as well as Comex futures market interventions and the re-writing of the CPI to hide consumer goods inflation (Boskin-Greenspan work) was effected.  Also at that  same time, Robert Rubin started yodelling about a strong-dollar policy.


Then came the Nasdaq bubble.


Here's a total debt vs gdp graph:


css1971's picture

I'm sure I saw a Martenson chart whcih showed that the debt was increasing at a constant percentage per unit time with very high fit to an exponential curve. It only looks like it started accelerating in the 90s because that's the way it's plotted on the chart.

i.e. It started in the mid 1960s, then blew the US monetary system in 1971 and kept on going.

Pinto Currency's picture



But there is the problem - you cannot increase the money stock to infinity.  Especially when the money supply (annual growth of the money stock) greatly exceeds the real growth of the economy.


Here we can see that real economic growth was declining (when factoring-in the monkeying with the CPI index that occurred) while they just kept ramping the money supply.  That works until it explodes.

trav7777's picture

no, the problem is an entire system built on an unabated 400 year Era of Growth that cannot accomodate the fact that growth has stopped.

We have reached a new period in human events here and the systems built around extracting a vig on growth are unviable.

DormRoom's picture

We were getting growth from misallocation of capital.  But eventually the economy has to adjust,  and purge the excesses of over investment during the boom time, whether by deflation, or new innovation.


The era of growth hasn't ended.  It only seems to have ended because we're in an adjustment period from the Debt bubble/Greenspan's Great Moderation.

centerline's picture


Wrong.  You can google many different sites regarding population growth.  When done with that, google stuff on bacterial growth... as it is likely the best proxy for the outcome.  This is all about resources.  Economies are nothing more than dogma.  Growth therein is an illusion.  Smoke and mirrors.  The carrot on the stick to keep the hamsters on the wheel.

decon's picture

Yep, this economic shit is just a sideshow.  The main event is the fact that our little yeast colony is starting to bump up against the sides of the petri dish.

lincolnsteffens's picture

Capt. Wolf Larsen in "The Sea Wolf" by Jack London said "We are all just foaming yeast...." and essentially elaborated with a similar reasoning as you. "...yeast colony is starting to bump up against the sides of the petri dish." Each organism trying to get that last remaining bit off sustenance to survive and procreate.

Pinto Currency's picture




Your comments fit into the stuff happens, nobody could have done anything category.  That is not so.


Humans have through the ages been infinitely adaptable and, as prices rise, they have learned to adapt and  consume less.


Our ongoing and accelerating crash is not a crash from overconsumption but instead one spurred by rigging markets (gold and interest rates) and blowing bubbles until they collapse using central banks/fiat money as the core bubble generator.

tmosley's picture

ITT people who know nothing about microbiology try and fail at making microbiology metaphors.

Here's a hint--when you grow bacteria, there are several phases to the growth.  The first is the exponential phase, where planktonic growth is, you guessed it, exponential.  During this time, the bacteria begin colonizing surfaces, exuding substances that allow them to live there with greatly reduced need for nutrients.  They then enter a stationary phase, where growth stops.  They don't die (not en mass, at least), but rather they all settle into the biofilm.  In this form, they are able to take in the small amount of nutrient available and remain alive for a very long time, until a new source of food comes around, at which point they take in the greater amount of nutrient and begin sloughing off to go out and colonize other areas.

To those who don't understand what happened, the bacteria accumulated capital and used it to survive.  The bacteria did not need forever exponentially increasing resources to stay alive.  They continued to grow, but more slowly, and based on accumulated capital, not nutrient pumped out of the ground.  This happens naturally, as a result of signalling between bacteria and as a direct effect of lesser amounts of nutrients.  No high priest of bacterial death required, no need for mass sterilization programs.  Just simple economic decisions made by individuals having an emergent positive effect on the entire population.

The neat thing is that unlike bacteria, we can seek out our own new energy sources.  But some of the scum don't want to hear about that.

centerline's picture

And your point is?

IMO, we are entering our own "stationary phase" with systems designed for exponential growth.  Hence, the systems must change.  Further pressure on fixing, reviving, amplifying, etc. the current system is only going to aggrevate the transition.

Althouth not an ideal metaphor - do you have a better one?

I really like the last sentence of your response though.  Science is clearly our best hope.  But, we revere thug athletes, blow-hard actors/actresses, and other uselessness over what really matters.  Is is still not a given that we will survive our adolescence as a species.

DoChenRollingBearing's picture

Excellent comment tmosley. We can depend on you to give us clear thinking.

+ $55,000!

decon's picture

It was just a generalized metaphor, don't read too much into it.  Actually, I do have a degree in biology.

centerline's picture

It was a fair (and funny) statement.  Any metaphor here is going to be loose at best anyhow.  The simple point is that we simply cant continue to realize exponential population growth.  At some point there will be a slowing.  Over the long haul... well, the metaphor still works reasonably well.

Plus, it seems at time that bacteria might be smarter than some people.  LOL.

Fish Gone Bad's picture

Thomas Malthus.

He might be the original doom and gloomer.

Talleyrand's picture

Question: How would Malthus explain the fact that, today, well-fed people in rich countries reproduce at lower (now negative) rates than do hungry people is poor societies?

Humans - seems the better you feed them, the less they breed. Go figure.


Dugald's picture

Long years ago whilst on a mid-week Army Reserve training exercise in southern England a bunch of  us had stopped for lunch in a satellite town south of London, think it was called Harlow New Town, as we drank coke and munched on sandwiches and junk that young soldiers like, we noticed that practically all the women were either pregnant, and/or had kid/s  by the hand or in prams,or, in many cases all three. As we all pondered on this high level of local fecundity, one guy called hey,  look around.......NO TV antennas.

So there is your answer TV is a great way of population control......

Skid Marks's picture

I believe this subject has been studied and the answer is quite simply that wealthy people choose not to have as many children. Prosperity is a cure for population growth. Look at it like this, farmers get cheap labor out of their kids. Death rates used to be high in the "third world". Having a lot of kids meant a greater chance at having kids that lived and could help out.  Add to the mix the religeous dogma which gives its blessing to having lots of kids and condems birth control.

Medea's picture

Microbiology people fail at understanding what a metaphor is.

pods's picture

Except that bacterium do not have the problem of having to expand exponentially due to the P+I =Future P problem like us dumber animals.


NoClueSneaker's picture

Hmmm, just my 2 cents ...

When you talk about biofilms - the microorganisms shows much more intelligence then the "upper" species.

They cooperate to stay alive - kicking out the members of compound which r prone to attack from outside. Biofilm is an taxonomy ...

  "Mainly vicious" tactic anihilates all the other tactics in the prisoner's dillema.

Goverment Sachs kills us all ....



AnAnonymous's picture

The era of growth hasn't ended.


What does it mean? The sustainability of the current system no only requires growth to occur but a certain amount of growth.

Misallocation of capital? What does it mean? It is so stupid.

We have now a horde of thinkers who have sold the benefits of physical expansion as the result of their ideological charade, known as economics.

The current system has been the result of a period of fast and successful expansion.

As usual, expansionists bid against the future: their current expenditures will be covered by the future gains brought by their successful expansion.

Save this time, they have hit the limits to their expansionist scheme and contrary to previous cases, the limits are set by the physical Earth. The world is globalized. No where to run, no where to hide.

byteshredder's picture

Misallocation of capital = spending on unproductive assets

a.k.a. WELFARE

This is simple behavioral science; reward/subsidize a behavior and you're going to get more of it.

I don't blame the people on welfare; I feel pity for them -- they are just doing what they are encouraged/programmed to do.

Eeyores Enigma's picture

The accounting has been done by multiple organizations. The banking industry in the US and probably globally, have the assets to cover peoples deposits, merchant deposits and transactions, basically all of the "REAL ECONOMY's" money. 


Unfortunately this only represents a small portion of the banking and finance industries activities. The other 90% of what they have been doing, essentially gambling and fraud, is what is being bailed out, that is what is at risk if (when) banking collapses, NOT the real economy.


This is a bit over simplified as banking collapse would certainly effect all trade and therefore the real economy but not in the way that they are saying and recovery of the real economy would be possible and maybe even reasonable whereas what is happening right now is that the real economy where 99% of us live, is being sucked dry, thrown under the bus, raped, or what have you, in order to cover the bad gambling debts of the 1%.


It's not just banking and finance it is all big corporations most of which have been augmenting low and declining revenues from making and selling stuff by participating in the financial dealings (gambling and fraud) also.


 The politicians currently in charge (and those aspiring to be) got there positions and owe complete allegiance to BIG money. They will do what is best for the 1% NOT what is best for the 99%. In all fairness they are convinced that serving the 1% is whats best for the other 99%. I know this for a fact.


Money = a claim on the future.

1% controls all of the money.

99% have no future.


Bottom line This is a crisis of capitalism but this is where it gets tricky.


Debt driven Capitalism is and has been the optimal system to promote exponential growth. Resource depletion, over population, environmental degradation,  are just a few of the detrimental results. A version of capitalism is what every Country around the world uses to juice growth, even communist China. Silly people think they can control capital, LOL!


Capitalism functions like a pyramid scheme in that there are always opportunities for more and more people to acquire wealth but only as long as multiples of additional participants are constantly coming in at the bottom. Oh, yeah, capitalism also requires that there is enough cheap, almost free energy coming on line at a similar or greater multiple in order for those participants to generate excess profit$ to pass on up the pyramid.


Right now there are plenty of willing participants but due to the lack of cheap, almost free energy these participants are unable to generate "excess profit$" to pass up the pyramid. Low life bums. So instead of money flowing, being pushed up that is, the relentless, unquenchable demand that "capital" is simply sucks it up anyway it can even if it has to create virtual participants with virtual excess profits. There is no stoping capital…FEED ME SEYMOUR!


Capital has muscle too and is always looking for cheap, almost free energy. Is it any coincidence that last of the light sweet crude is in Iraq and Libya?


Even that is not enough so it just keeps on expanding debt/credit and skimming off the top.


Debt/credit expansion has continued on well beyond anything that this planet can ever support.


Problem is whenever you talk this way people scream "your a damn communist/ socialist".


Clearly humanity needs to operate from a base of support that includes healthcare for all. education for all, security in old age for all, in order to maintain dignity and humanity and this is socialism. Above and beyond that maybe we can have some form of capitalism that allows people to reach there aspirations BUT CAN NEVER INTRUDE ON THE BASIC SOCIALISTIC BASE SYSTEM. Truth is we kind of had this sort of setup here in the US for a while but then capital noticed this while heading out for some grub one day and…well the rest is history and here we are.


Maybe instead of Debt based Capitalism we should try Gift based Capitalism.







Stuck on Zero's picture

Fess up.  Are you an Obama mole?

Dingleberry's picture

Good post, but like quatum physics.....all theoretical and impractical for everyday living. Free health care? Try getting past HMOs, pharma, lawyers, etc.  Free education? Try getting past Sally, universities, etc. Even Dems oppose drugs from Canada, cuts to subsidies for student loans and discharging from BK, and on and on and on.....bottom line is the system we have will collapse on itself when it can't go on any longer, and not one nanosecond before. Bribery/lobbying has ensured that to be the case.  And once that happens, usually we get a BIG war to artificially grow out of the mess, and destroy the other half so they get to start over and population has declined.  Like an economic reset button, if you will.......

slewie the pi-rat's picture

yes, i agree; with stuckOnZero!

...the eeyore is a troll:
...1/2-dozen posts in 1/2-dozen weeks
...& is cutting & pasting

ice 9 + contagion = BiChflation

we are doomed
, BiCheZ!

stirners_ghost's picture

Clearly humanity needs to operate from a base of support that includes healthcare for all. education for all, security in old age for all, in order to maintain dignity and humanity and this is socialism.

Clearly, nothing.

Fucking vampire.

sschu's picture

Free Healthcare.  Free Education.  Human Dignity for all.  Utopia on Earth!

Sounds great!  I want some!  

What do we have to do?  Oh, give unlimited power to the "government" to make it so? Uh, let me think about it.

All this sounds great, until it collides with the reality of human nature.


knukles's picture

Right... and who the Fuck Pays For It?
I am so fucking tired of the liberal mentality that it will all be A-Fucking-OK, the Gubamint will provide and "the rich" will pay.

The same shit got us here with Ethanol.  Cleaner than thoust, decrease the dependency of foreign oil.  Only fucking problem is that it's an energy sink. 
Same with the fucking electric car.  Oh, the liberal feels like he's not fucking polluting but forgets two very critical metrics.  The power is being generated somewhere, creating a carbon footprint (assuming it's not nuke, for the clean alternatives don't count for shit) and second... that it is Humonguosly inefficient to ship energy over wires.  Called resistance... so much is lost.  The good old fashioned....  Oh never fucking mind.

Those peole should not be allowed to vote.  Not whether they're dems, repubs, etc, but oughta be an intelligence test to qualify for pulling the lever. 

StychoKiller's picture

Don't blame me, I voted for Comacho! :>D

bbq on whitehouse lawn's picture

No it would require time instead of money in the way of taxes. It wouldn't but Utopia it would be community work.

You wouldn't hire teachers, you would have to teach 1-5 days a year or sometihng like that.

For healthcare you would have to take classes and do all of your first aid, yourself, plus work at a hospital or other health program and donate time as well.

Could it work, maybe. Utopia not a chance.

Its small communities vs citys. Cities would die and small communities would thrive.

All governments would shrink as time and labor vs money system would develop.

Choose your poison i guess. Pay taxes or pay labor. But pay you will.

macholatte's picture

Oh, yeah, capitalism also requires that there is enough cheap, almost free energy coming on line at a similar or greater multiple in order for those participants to generate excess profit$ to pass on up the pyramid.


You're right!

Socialism and peons use practically zero energy so the solution to the Capitalist Pig is simply for everyone, including you, to wear cloths and live in a tent he made himself from native plants. NO computers, TV, cars, cell phones, internet, super markets, department stores, pharmacies, or any of that junk. Burning wood for cooking and to keep warm would polute so nobody would be allowed to do that. All the free medical care would be from witch doctors since Universities use energy they wouldn't be allowed to exist anymore either.

Where can I get some of what you've been smoking?




disabledvet's picture

you get it from your brain. LITERALLY. "The human brain produces an electro-magnetic field that exists outside the skull." Should be careful how you "tap that source" however. Sometimes you get a "solar flare."

DoChenRollingBearing's picture

+ 1 there macho.  I have to spell it out as the green arrow is not working...

dr.charlemagne's picture


After you have read all of Sowell, Hayek, Von Mises, Rothbard, Jefferson, and Locke drop by again



centerline's picture

Exactly.  Only takes one look at the parabolic rate of human growth during the industrial age to reach a conclusion that we are on a most unsustainable course that WILL change direction at some point.  In the case of our industrialization, it will most likely be resource scaricty (cheap oil rises to the top of this list) that tips the balance.  All current idicators point towards that moment having already begun over the last few decades and now picking up speed (de-acceleration per se).

Most econonies and systems within those economies are based on perpetual growth.  Thus, they cannot be "restarted."

Frankly, I am sick of the constant talk about getting the economy "growing again."  It is the greatest stupidity staring us right in the face.

Of course, here we are also at maximum social complexity and debt saturated at the same time.  Gasline meets open flame in the middle of a fireworks factory.

Newsboy's picture

Simply true, Trav.

Eeyore expands upon the concept.