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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 | Link to Comment mrktwtch2
mrktwtch2's picture

see you at parity in 3 months..be nice if it happens before the election to get the spx down 18% from here..it would ensure that mister bo jangles is tossed and mittens takes over the helm..

Mon, 06/11/2012 - 15:51 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

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

Mon, 06/11/2012 - 16:19 | Link to Comment 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 | Link to Comment Muppet Pimp
Muppet Pimp's picture

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 | Link to Comment 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 | Link to Comment IBelieveInMagic
IBelieveInMagic's picture

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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

"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 | Link to Comment carbonmutant
carbonmutant's picture

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

Mon, 06/11/2012 - 16:21 | Link to Comment disabledvet
disabledvet's picture

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

Mon, 06/11/2012 - 16:18 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment SilverSavant
SilverSavant's picture

How about Goner-euro

Mon, 06/11/2012 - 16:40 | Link to Comment ZerOhead
ZerOhead's picture

That's an oxymoron amongst morons...

Mon, 06/11/2012 - 16:07 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment brooklynlou
brooklynlou's picture

Go big or go home baby.

Mon, 06/11/2012 - 16:28 | Link to Comment 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.

http://www.youtube.com/watch?v=JlSQAZEp3PA

Mon, 06/11/2012 - 15:52 | Link to Comment ArrestBobRubin
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NO :-)

Mon, 06/11/2012 - 15:59 | Link to Comment 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 | Link to Comment eclectic syncretist
eclectic syncretist's picture

Those would be the adults who stopped making payments to the banks.

Mon, 06/11/2012 - 15:51 | Link to Comment ArrestBobRubin
ArrestBobRubin's picture

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 | Link to Comment 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 | Link to Comment mayhem_korner
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It is illusory to refer to "Central Bank" in the plural.

Mon, 06/11/2012 - 15:52 | Link to Comment carbonmutant
carbonmutant's picture

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

Mon, 06/11/2012 - 15:53 | Link to Comment LeisureSmith
LeisureSmith's picture

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

Mon, 06/11/2012 - 15:54 | Link to Comment 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 | Link to Comment 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 | Link to Comment insanelysane
insanelysane's picture

Where's the afternoon bounce?

Mon, 06/11/2012 - 15:55 | Link to Comment carbonmutant
carbonmutant's picture

That was this morning...

Mon, 06/11/2012 - 15:59 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment Shizzmoney
Shizzmoney's picture

Text me when they get to Plan SS

Mon, 06/11/2012 - 15:58 | Link to Comment 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 | Link to Comment Encroaching Darkness
Encroaching Darkness's picture

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

Mon, 06/11/2012 - 16:09 | Link to Comment fuu
fuu's picture

The cake is a lie.

Mon, 06/11/2012 - 18:37 | Link to Comment GirlFriday
GirlFriday's picture

The cake is NOT a lie. ;-)

Mon, 06/11/2012 - 15:59 | Link to Comment Jason T
Mon, 06/11/2012 - 17:58 | Link to Comment 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.

http://www.youtube.com/watch?v=AEg6OUbfhAQ&feature=related

Edited for extra oldeschool funkyness.

Mon, 06/11/2012 - 16:00 | Link to Comment 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 | Link to Comment ArrestBobRubin
ArrestBobRubin's picture

Excellent finish today!

In gold and silver that is.

Mon, 06/11/2012 - 16:02 | Link to Comment PhattyBuoy
PhattyBuoy's picture

But can Uganda rescue Germany ?

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

Later. Not today.

Mon, 06/11/2012 - 16:03 | Link to Comment 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 | Link to Comment GrinandBearit
GrinandBearit's picture

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

Mon, 06/11/2012 - 16:09 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment ArrestBobRubin
ArrestBobRubin's picture

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

Why?

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

Mon, 06/11/2012 - 16:11 | Link to Comment 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 | Link to Comment Village Smithy
Village Smithy's picture

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

http://www.huffingtonpost.ca/2012/05/15/victoria-grant-12-canadian-banki...

Mon, 06/11/2012 - 16:31 | Link to Comment SKY85hawk
SKY85hawk's picture

iT'S THE lAWYER'S fULL eMPLOYMENT pLAN.

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

 

Mon, 06/11/2012 - 16:12 | Link to Comment 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 | Link to Comment 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 | Link to Comment ArrestBobRubin
ArrestBobRubin's picture

Feelin' lucky Ben?

Mon, 06/11/2012 - 16:17 | Link to Comment 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 | Link to Comment 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 | Link to Comment francis_sawyer
Mon, 06/11/2012 - 16:19 | Link to Comment Wood
Wood's picture

Yes, simple math says there will be default.

Mon, 06/11/2012 - 16:20 | Link to Comment 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 | Link to Comment 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 | Link to Comment FischerBlack
FischerBlack's picture

Today's candle on the RUT looks grim.

Mon, 06/11/2012 - 16:41 | Link to Comment 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.

http://www.humanevents.com/2012/06/11/epa-power-grab-to-regulate-ditches-gullies-on-private-property/

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

Mon, 06/11/2012 - 16:43 | Link to Comment 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 | Link to Comment soopy
soopy's picture

I hate anti-semantics.

Mon, 06/11/2012 - 17:01 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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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