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Charting The Simple Reason Why Every 'Bailout' In Europe Will Be Faded

Tyler Durden's picture


The bailout bullishness half-life is shrinking - dramatically - as it appears traders have become more aware of reality (and unreality). As we have noted again and again, the self-referencing, self-aggrandizing, self-pleasuring European government and banking systems are becoming more and more symbiotically linked. As JPM CIO Cembalest notes for Spain, Plan A was the 2010 announcement of government austerity targets. Plan B was the 2011/2012 ECB lending program to Spanish banks - to the point where Spanish banks now own around 50% of Spanish government debt. Neither plan worked and so on to Plan C - recap Spanish banks to cover the expected losses forthcoming. Recapitalization of the banks versus funding the sovereign is of course a semantic issue given the nature of the interplay. As Credit Suisse noted this weekend... "Portugal cannot rescue Greece, Spain cannot rescue Portugal, Italy cannot rescue Spain (as is surely about to become all too abundantly clear), France cannot rescue Italy, but Germany can rescue France.” Or, the credit of the EFSF/ESM, if called upon to provide funds in large size, either calls upon the credit of Germany, or fails; i.e., it probably cannot fund, to the extent needed to save the credit of one (and probably imminently two) countries that had hitherto been considered 'too big so save', without joint and several guarantees."

Spain's reach-around is clear...

Source: JPM


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Mon, 06/11/2012 - 15:49 | 2515799 mrktwtch2
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see you at parity in 3 nice if it happens before the election to get the spx down 18% from would ensure that mister bo jangles is tossed and mittens takes over the helm..

Mon, 06/11/2012 - 15:51 | 2515814 GeneMarchbanks
GeneMarchbanks's picture

Terrific, can't wait. Mittens, parity, SPX... that joke had something for everyone.

Mon, 06/11/2012 - 16:19 | 2515843 The Big Ching-aso
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Europe is more screwed than we are which is hard 2 get your mind around kinda like infinity.

Mon, 06/11/2012 - 16:39 | 2515950 Muppet Pimp
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Kind of funny watching the corrupt spendthrift governments and crooked banks cling tight to one another as they go down in flames.  Its as though they have made a pact that they will have one anothers back until the bitter end, the consequences to their citizens be damned.  Hell, they have the cash and the military.  Sad watching as they move all teh bad bets to their respective taxpayers.  Bailouts for the connected, higher taxes for the people.  The beatings shall continue until morale improves, YAR.  Pony up your tribute proles (bitchez). 

Mon, 06/11/2012 - 19:28 | 2516341 Ricky Bobby
Ricky Bobby's picture

To all my fellow peasants - Take Cover: From the "Seven Samurai"

What do you think of peasants? You think they're saints? Hah! They're foxy beasts! They say, "We've got no rice, we've no wheat. We've got nothing!" But they have! They have everything! Dig under the floors! Or search the barns! You'll find plenty! Beans, salt, rice, sake! Look in the valleys, they've got hidden warehouses! They pose as saints but are full of lies! If they smell a battle, they hunt the defeated! They're nothing but stingy, greedy, blubbering, foxy, and mean! God damn it all! But then . . . who made them such beasts? You did! You samurai did it! You burn their villages! Destroy their farms! Steal their food! Force them to labour! Take their women! And kill them if they resist! So what should peasants do?

Tue, 06/12/2012 - 03:08 | 2516841 IBelieveInMagic
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Who are the spendthrift governments spending on -- Martians? Isn't all this 3 card monti, just an attempt to keep afloat the financial system that has been beneficial to the people of OECD countries (on the backs of the commodity/third world countries) going? Else, the system would have been allowed to collapse long back...

Mon, 06/11/2012 - 16:43 | 2515973 EscapeKey
EscapeKey's picture

Keep in mind, that if it weren't for the sheer level of ridiculousness that is that the banks can at will decide when CDS should trigger or not really is the only thing which tips the balance in favour of the US.

Otherwise, US banks would actually have to *gasp* make good on their promises, which would lead to a large scale increase in US public sector debts, as the banks continuously would need bailing out.

Mon, 06/11/2012 - 18:00 | 2516086 The Big Ching-aso
The Big Ching-aso's picture



I'm sensing CDS's don't mean shit becuz courts R owned by those that think CDS's won't be honored if it makes them pay up.

Mon, 06/11/2012 - 16:30 | 2515917 BandGap
BandGap's picture

Short of someone with an "S" on their chest becoming the next president, this goose is coooked, the fat lady is clearing her throat.

There's nothing to put in the dam to stop the cracks from spreading, "every man for himself day" coming soon enough.


Mon, 06/11/2012 - 15:49 | 2515800 Cognitive Dissonance
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"the self-referencing, self-aggrandizing, self-pleasuring European government and banking systems are becoming more and more symbiotically linked."

May they all die from fast acting self inflicted VD.

Mon, 06/11/2012 - 15:57 | 2515826 carbonmutant
carbonmutant's picture

If this keeps up some of them will die from lead poisoning...

Mon, 06/11/2012 - 16:21 | 2515904 disabledvet
disabledvet's picture

and a full metal jacket. "copper" i believe.

Mon, 06/11/2012 - 16:18 | 2515833 CClarity
CClarity's picture

Can hope.

As the Spanish banks own 50% of Spanish sov. debt let's look to the pensions plans in the US and consider what they're holding.  Gonna be an ugly bye-bye for many many people as this inevitable implosion plays through.  Debt saturation is a bitch, and she's been growing for 40+ years.

Mon, 06/11/2012 - 16:38 | 2515943 ZerOhead
ZerOhead's picture

When the Spanish banks own 100% of the Spanish debt and the Spanish government owns 100% of the Spanish banks they can call it 'tiesies'.

Mon, 06/11/2012 - 16:16 | 2515849 ZerOhead
ZerOhead's picture

A bad case of 'Goner'ea perhaps?

Will the ECB in Brussels sprout new hope or some other kind of 'green shoots'...

Just askin'...

Mon, 06/11/2012 - 16:36 | 2515938 SilverSavant
SilverSavant's picture

How about Goner-euro

Mon, 06/11/2012 - 16:40 | 2515952 ZerOhead
ZerOhead's picture

That's an oxymoron amongst morons...

Mon, 06/11/2012 - 16:07 | 2515869 fuu
fuu's picture

Having them all die from auto-erotic fixation would probably be too much to ask for. Meh, either way a rope around the neck.

Mon, 06/11/2012 - 15:50 | 2515805 bank guy in Brussels
bank guy in Brussels's picture

EU staff privately say they are working on the 'Fiscal Union' assumption ... But I don't think there is the realistic ability to push and hold this upon the 'austerity' victims in the European streets.

Mon, 06/11/2012 - 16:05 | 2515864 disabledvet
disabledvet's picture

as usual the New York centered "Tylers' Durden" refuse in the words of Karl Marx to "take their argument to their logical extreme." In this case "Europe itself is to be faded" not merely "the bailout." hence a CONFIDENCE game. since there in no "explanation of the obvious" i will not bore you with one of course. you do have to ask yourself do you not "are you going to believe me or lying eyes" tho do you not?

Mon, 06/11/2012 - 17:56 | 2516152 bagehot99
bagehot99's picture

LOL, Fiscal Union??? Based upon what? Italy's S&P Rating? Germany's reserves? This sucker's going down. There's no appetite outside the EU cocoon for more integration; most people feel like it has hurt them.

Mon, 06/11/2012 - 15:50 | 2515806 Everybodys All ...
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Are there any adults in the EU willing to admit that writing this debt off is the only solution?

Mon, 06/11/2012 - 15:52 | 2515817 Cognitive Dissonance
Cognitive Dissonance's picture

Not until they make more debt. If you're gonna explode, do it really really big.

Mon, 06/11/2012 - 16:01 | 2515844 brooklynlou
brooklynlou's picture

Go big or go home baby.

Mon, 06/11/2012 - 16:28 | 2515914 Manthong
Manthong's picture

The money is not in the instrument or the interest… it’s in the fees, margins,  commissions and bonuses that must continue until it all implodes from its own weight. There is no unwind possible or turning back, so they have to ride it out to the end.

Mon, 06/11/2012 - 15:52 | 2515818 ArrestBobRubin
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NO :-)

Mon, 06/11/2012 - 15:59 | 2515840 EscapeKey
EscapeKey's picture

Write debt off?

Oh don't worry, the bankers are far ahead of you. They started by writing off the debts held by your pension fund.

Mon, 06/11/2012 - 16:17 | 2515892 eclectic syncretist
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Those would be the adults who stopped making payments to the banks.

Mon, 06/11/2012 - 15:51 | 2515809 ArrestBobRubin
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Bailouts can only happen when anyone has any actual money with which to bail anything out.

Guess they'll just print it.

Mon, 06/11/2012 - 15:51 | 2515810 devo
devo's picture

as it appears traders have become more aware of reality

This implies computers have higher reasoning capability.

Mon, 06/11/2012 - 15:51 | 2515811 mayhem_korner
mayhem_korner's picture



It is illusory to refer to "Central Bank" in the plural.

Mon, 06/11/2012 - 15:52 | 2515820 carbonmutant
carbonmutant's picture

Burn me once shame on you, Burn me twice...

Mon, 06/11/2012 - 15:53 | 2515822 LeisureSmith
LeisureSmith's picture

Self-pleasuring? Yep, they are all wankers! Wanker-Bankers

Mon, 06/11/2012 - 15:54 | 2515824 junkyardjack
junkyardjack's picture

So its come to this, bailouts cause markets to collapse.  Well let's see what the Bernak has up his sleeve now.....

Mon, 06/11/2012 - 16:01 | 2515845 EscapeKey
EscapeKey's picture

What DID he ever have under his sleave but a thinly veiled threat of perpetual printing?

Mon, 06/11/2012 - 15:54 | 2515825 insanelysane
insanelysane's picture

Where's the afternoon bounce?

Mon, 06/11/2012 - 15:55 | 2515830 carbonmutant
carbonmutant's picture

That was this morning...

Mon, 06/11/2012 - 15:59 | 2515837 insanelysane
insanelysane's picture

I missed the bounce?  I can't buy high if there isn't a bounce.

Mon, 06/11/2012 - 16:05 | 2515863 junkyardjack
junkyardjack's picture

I got to almost top tick VZ at $42.87.  Had to kick back out, rinse wash repeat...

Mon, 06/11/2012 - 16:07 | 2515867 Taterboy
Taterboy's picture

Pity poor Maria. She can't say "We're off the lows of the day!"

Mon, 06/11/2012 - 16:08 | 2515829 bnbdnb
bnbdnb's picture

If the dow is at 10k come election time, Obama will be re-elected....this means gas will be $2/gallon.

Mon, 06/11/2012 - 15:58 | 2515834 Shizzmoney
Shizzmoney's picture

Text me when they get to Plan SS

Mon, 06/11/2012 - 15:58 | 2515835 neptunium
neptunium's picture

The more I observe the markets the more they remind me of a mentally disabled child being periodically being goaded with a sharp stick, a few excited spasms later it is as if the stimulus/response dynamic has been fundamentally futile. 

In this case they goad the poor child with another piece of sponge cake, except it is whisked away at the last moment. 

Rinse and Repeat enough times and you have the endless stimuli, as if someone expects the world to become numb to what is happening in time for the magical mystical growth curve to come and save us all. 

Anyway, moar cake please. 

Mon, 06/11/2012 - 16:07 | 2515868 Encroaching Darkness
Encroaching Darkness's picture

There is no cake - and GLADOS is looking for you.

Mon, 06/11/2012 - 16:09 | 2515878 fuu
fuu's picture

The cake is a lie.

Mon, 06/11/2012 - 18:37 | 2516250 GirlFriday
GirlFriday's picture

The cake is NOT a lie. ;-)

Mon, 06/11/2012 - 15:59 | 2515836 Jason T
Mon, 06/11/2012 - 17:58 | 2515880 LeisureSmith
LeisureSmith's picture

No offence, but that shit sucked all the way to a nother dimention..Me, ill stick with the old stuff, thank you very much.

Edited for extra oldeschool funkyness.

Mon, 06/11/2012 - 16:00 | 2515839 Al Huxley
Al Huxley's picture

Really - markets finally losing faith in the belief bankrupt entities bailing out other bankrupt entities is the key to fixing the world's problems? 

Mon, 06/11/2012 - 16:01 | 2515848 ArrestBobRubin
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Excellent finish today!

In gold and silver that is.

Mon, 06/11/2012 - 16:02 | 2515850 PhattyBuoy
PhattyBuoy's picture

But can Uganda rescue Germany ?

Mon, 06/11/2012 - 16:30 | 2515916 Black Forest
Black Forest's picture

Later. Not today.

Mon, 06/11/2012 - 16:03 | 2515855 Cursive
Cursive's picture

The Risk Basket bulltards are already trapped.  We will see vertical bounces from here, but we ain't re-visiting any highs.

Mon, 06/11/2012 - 16:09 | 2515871 GrinandBearit
GrinandBearit's picture

I have a funny feeling that tomorrow will be yet another turn-around-Tuesday.

Mon, 06/11/2012 - 16:09 | 2515873 ArrestBobRubin
ArrestBobRubin's picture

Faux biz news bending over backward telling me "how unexpected this lousy finish is after all the optimism earlier today over all the good news from the eurozone over the weekend.

I turn it on after closes to pick up golden comedic lines just like that one.

They seldom disappoint.

Mon, 06/11/2012 - 16:09 | 2515874 devo
devo's picture

Is it irrational/fear to go all in on gold and silver?

I just don't see how this can end without a massive repricing of gold to pay off debt. My only question, and what is preventing me from doing this, is at what rate they'll tax my gains and/or if a healthy underground barter system will be formed if the tax rate is too high. Obviously the tax rate should be zero on constitutional money, and I think we should all spend more time and effort lobbying for that.

Mon, 06/11/2012 - 16:41 | 2515949 jimmyjames
jimmyjames's picture

I just don't see how this can end without a massive repricing of gold to pay off debt

Obviously the tax rate should be zero on constitutional money, and I think we should all spend more time and effort lobbying for that.


There's a can of goldbug worms in that statement-

"If" they reprice gold and use it to increase the money supply to that level-the Government/Fed would have to declare gold as money-imo- and there is no gain tax on money-at least not yet-

Mon, 06/11/2012 - 16:53 | 2516007 devo
devo's picture

Yeah, that is true.

But I just find it hard to believe TBTB will allow average guys like me and dudes living in bunkers to become millionaires. They'll screw us somehow. I'm just wondering how. Maybe alternative platinum metals like iridium and osmium will skyrocket as the government comes for our gold, silver, and platinum?

Mon, 06/11/2012 - 17:08 | 2516049 jimmyjames
jimmyjames's picture

But I just find it hard to believe TBTB will allow average guys like me and dudes living in bunkers to become millionaires. They'll screw us somehow. I'm just wondering how

Maybe alternative platinum metals like iridium and osmium will skyrocket


I don't think there's enough gold in private hands (us serfs) to bother with-

It's the TPTB that are the major holders and i doubt they would hurt themselves-just a guess on my part-

I do hold a few REE companies because i think their value will increase-unless China has a change of heart-

Mon, 06/11/2012 - 16:09 | 2515875 Conman
Conman's picture

So what will Europe try tomorrow? Its starting to get fun, maybe they can put out another 3 or 4 letter fund to bail out everyone. Can that can get kicked again? Its getting awefully dented.

Mon, 06/11/2012 - 16:09 | 2515876 Encroaching Darkness
Encroaching Darkness's picture

I hope you have you preparations made - the Crunch believes in you, whether or not you believe in the Crunch.

Silver, gold, shelf-stable food, bunkers, whatever Bitchez!

Mon, 06/11/2012 - 16:24 | 2515909 ArrestBobRubin
ArrestBobRubin's picture

Yes, lay up as much food as possible right now. This month.


Because fiat paper ain't the only thing getting a whole lot more radioactive as 2012 goes on.

Mon, 06/11/2012 - 16:11 | 2515881 eclectic syncretist
eclectic syncretist's picture

OK let me see if I get this right. 

1. Government cedes power to issue money to central bank.

2. Central bank issues non-existent cyber money and loans it to member banks who then loan it to government.

3. Government pays increasingly burdensome interest on exponentially increasing cyber money "loans", passing on all costs to taxpayers.

4. Banks fix the problem be creating more non-existent money to loan to governments so that they will be able to continue making their interest payments back to the banks.

5. and then the economy gets better????????

Is that all there is too it????? 

When does everyone wake up and realize we're being stolen from????

Mon, 06/11/2012 - 16:16 | 2515890 Village Smithy
Village Smithy's picture

Yes, you nailed it. It's so simple that even a 12 year old can get it.

Mon, 06/11/2012 - 16:31 | 2515919 SKY85hawk
SKY85hawk's picture


LFEP c/b the next source of Hopium for tomorrow's open!


Mon, 06/11/2012 - 16:12 | 2515884 Mordan I
Mordan I's picture

Creatures of a day! What is a man?
What is he not? A dream of a shadow
Is our mortal being. But when there comes to men
A gleam of splendour given of heaven,
Then rests on them a light of glory
And blessed are their days
So shall we let it stand?

Mon, 06/11/2012 - 16:14 | 2515887 firstdivision
firstdivision's picture

With WTI and DX_F at these levels, no way in hell would I be sitting short overnight.  Ben's left hand has been sitting on Ctl, all that needs to happen is a finger twitch to hit "p".

Mon, 06/11/2012 - 16:19 | 2515900 ArrestBobRubin
ArrestBobRubin's picture

Feelin' lucky Ben?

Mon, 06/11/2012 - 16:17 | 2515893 slewie the pi-rat
slewie the pi-rat's picture

you may smoke several joints but don't ever sign on a jointly & severally liable line unless you are the most BK person on the page

and you must be certain

with EU accounting and make-believe, these seem like  good reach-arounds?  but not for germany?  yes!  that would be correct!

and as tyler has been saying for waaay over a year now:  they can't do it b/c they don't have enuf money!

they may promise you to jump over their own knees twenty times next week, but they are not able to do it once, today?  maybe ya better be careful whatcha agree to here...

Mon, 06/11/2012 - 16:26 | 2515911 disabledvet
disabledvet's picture

but the Tylers' Durden told me there would be a fix. "Their fix" as it were. Who are we to believe then? What are we to turn to?

Mon, 06/11/2012 - 16:40 | 2515955 francis_sawyer
Mon, 06/11/2012 - 16:19 | 2515898 Wood
Wood's picture

Yes, simple math says there will be default.

Mon, 06/11/2012 - 16:20 | 2515901 The Swedish Chef
The Swedish Chef's picture

So Spains domestic banks hold about as high percentage of gov´t debt as the Fed holds US debt...

Mon, 06/11/2012 - 16:32 | 2515925 ArrestBobRubin
ArrestBobRubin's picture

If that bite of AAPL today tasted a bit... wormy, well there's a good reason:

Apple integrates Facebook into iPhone software

Word is the handheld device was adamant it "didn't want that crap onboard" but lost out in shady HQ power play.

Siri is pissed too.

Mon, 06/11/2012 - 16:37 | 2515942 FischerBlack
FischerBlack's picture

Today's candle on the RUT looks grim.

Mon, 06/11/2012 - 16:41 | 2515957 DosZap
DosZap's picture

And while we are Distracted with European issues............they come like the plauge.

All you would be,wanna be, current landowners..........this is why you are not gonna be able to contain the fascists if THEY continue to run over the Congress, and Us like Train.

With luck this bullet will be dodged,something has give.

Mon, 06/11/2012 - 16:43 | 2515976 cdude
cdude's picture

This latest charade of a Spanish bank bailout reminds me of the guy who tried to get a free meal by attempting the "if you can eat it it's free" 72oz. steak.  He goes to the restaurant still full from lunch, with no money but is turned away at the door because because he is not wearing a jacket and tie.

Mon, 06/11/2012 - 16:44 | 2515979 soopy
soopy's picture

I hate anti-semantics.

Mon, 06/11/2012 - 17:01 | 2516017 Miles Kendig
Miles Kendig's picture

Or, the credit of the EFSF/ESM, if called upon to provide funds in large
size, either calls upon the credit of Germany, or fails; i.e., it
probably cannot fund, to the extent needed to save the credit of one
(and probably imminently two) countries that had hitherto been
considered 'too big so save', without joint and several guarantees."

That should be joint and several bankrolls.  Guarantees from the addicted have no viability.  Time for the big money to bring their bankroll or just stay home and stop pretending they actually have money.  It's time for what supposedly represents the money to put up or shut up.

Mon, 06/11/2012 - 17:05 | 2516026 razorthin
razorthin's picture

Which is why we'll see those guarantees and QE3 within the week.  If the 200 day moving averages do not hold and are breached again in the US markets, the world is toast very rapidly.

Mon, 06/11/2012 - 17:12 | 2516052 Miles Kendig
Miles Kendig's picture

I disagree.  We won't see anything beyond swaps and such until the fiscal authorities cede their sovereignty to Frankfurt (BuBa subordinated ECB) .. with a rehypo agreement in place with the trading desk at 33 Liberty (for the gold and other notable collateral).  Until then governments are gonna be left to twist.

Mon, 06/11/2012 - 17:34 | 2516092 Chopes
Chopes's picture

Take the 100B, guarantee the depositors at the insolvent banco's de crapio.  Then there would not be a run on the banks because the deposits are insured, the banco's go bankrupt, end of story. 

Mon, 06/11/2012 - 20:14 | 2516436 Yen Cross
Yen Cross's picture

 Every, { Cross Collateralized} , scheme will be employed, until the Idiots that concieved them,(ideas) is deployed to a " FEDERAL PENITENTiARY !

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