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Congressional Research Service Finds US Exposure To Europe At $640 Billion And "Could Be Considerably Higher"

Tyler Durden's picture


If there is one thing that matches John Paulson's dramatic conversion to the anti-Midas of our times, it is Tim Geithner's uncanny ability to say something only to be proven to be a pathological liar within months if not weeks (who can possibly forget: "Is there a risk that the United States could lose its AAA credit rating? Yes or no?”  "No risk of that."). Now we can add hours. Because it was only yesterday that in testimony to Congress, he said in an attempt to be the latest to defend Morgan Stanley, that "The direct exposure of the U.S. financial system to the countries under the most pressure in Europe is very modest."  Really? That's funny because none other than the Congressional Research Service said that U.S. bank exposure to the European debt crisis is estimated at $640 billion, according to Dow Jones. Wait, that is impossible: even Morgan Stanley, the bank that stands to see a bear raid if the CRS' conclusion is valid, said that its net exposure is negligible. And none other than CNBC confirmed that gross exposure is irrelevant, regardless that AIG taught us that in a state of insolvency contagion net becomes gross, and bilateral netting can be thrown out of the window (what happens when that counterparty you hedged your exposure with... goes bankrupt? Ask Hank Paulson, Lloyd Blankfein and Joe Cassano, they know). But wait there's more: "The CRS says, however, there are two other factors that could cause a dramatic reassessment. The estimate doesn't include U.S. bank exposure to European bank portfolios that include assets in the weak member countries. Also, it doesn't account for euro-zone assets held by money market, pension, and insurance funds. "Depending on the exposure of non-bank financial institutions and exposure through secondary channels, U.S. exposure to Greece and other euro-zone countries could be considerably higher." So... someone is lying you say?

What is the take home here? That US exposure is $640 billion or "considerably higher" despite what Morgan Stanley and Geithner are lying? Not at all. The truth is the nobody has any idea how to quantify US exposure to Europe. But it is not only massive, but that all hedges that banks have in place will promptly be rendered worthless when the dominoes, and thus counterparties start falling. So the only conclusion is that anyone who tells you to ignore gross, or that the number is under control, is nothing but a pandering liar. And anyone investing based on such trite promises will guaranteed lose all their money.

More from Dow Jones:

While U.S. Treasury Secretary Timothy Geithner says the U.S. banking sector's vulnerability to the euro zone problems is "very limited," the Congressional Research Service estimate is one of the first public assessments provided by the U.S. government that quantifies the potential risks.


"The direct exposure of the U.S. financial system to the countries under the most pressure in Europe is very modest...very limited," the Treasury Secretary told the committee. Besides, Geithner added, U.S. banks have much stronger capital positions than in 2008, when Lehman Brothers collapsed.


Officials there are now scrambling to bulk up their banking system as a default could freeze lending throughout Europe, forcing the collapse of some banks.


"Given that U.S. banks have an estimated loan exposure to German and French banks in excess of $1.2 trillion and direct exposure to the PIIGS valued at $641 billion, a collapse of a major European bank could produce similar problems in U.S. institutions," the research service warned lawmakers. The PIIGS--Portugal, Ireland, Italy, Greece and Spain--have come under increasing attack by markets fearing unsustainable government debts and weak financial sectors.


The research service papers note their figure is only a rough guess. It includes two types of assets, direct holdings such as loans, and "other potential exposures" such as derivative contracts, guarantees and credit commitments. Analysts say the estimate could be much higher or lower because it's hard to quantify exactly "other potential exposures." For example, a bank could hold two different derivative contracts that effectively cancel each other out.

In conclusion we will ask any TV commentator, analyst, executive or simply bag of hot air to please read the following explanation why bilateral netting is a wrong, wrong, wrong concept when you have a global financial collapse. Unless of course, said bags, execs, etc, have an urge to sound like they have no idea what they are talking about...

The problem with bilateral netting is that it is based on one massively flawed assumption, namely that in an orderly collapse all derivative contracts will be honored by the issuing bank (in this case the company that has sold the protection, and which the buyer of protection hopes will offset the protection it in turn has sold). The best example of how the flaw behind bilateral netting almost destroyed the system is AIG: the insurance company was hours away from making trillions of derivative contracts worthless if it were to implode, leaving all those who had bought protection from the firm worthless, a contingency only Goldman hedged by buying protection on AIG. And while the argument can further be extended that in bankruptcy a perfectly netted bankrupt entity would make someone else whole on claims they have written, this is not true, as the bankrupt estate will pursue 100 cent recovery on its claims even under Chapter 11, while claims the estate had written end up as General Unsecured Claims which as Lehman has demonstrated will collect 20 cents on the dollar if they are lucky.


The point of this detour being that if any of these four banks fails, the repercussions would be disastrous. And no, Frank Dodd's bank "resolution" provision would do absolutely nothing to prevent an epic systemic collapse.

But don't take our word for it: a former advisor to the IMF told all of this, and much more, to the BBC a few days ago:


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Fri, 10/07/2011 - 15:45 | 1750810 CashCowEquity
CashCowEquity's picture

brown shoots

Fri, 10/07/2011 - 15:50 | 1750839 Cash_is_Trash
Cash_is_Trash's picture

"I would reccomend you panic"

Hugh Hendry, bitchezzzz

Fri, 10/07/2011 - 15:53 | 1750854 Fish Gone Bad
Fish Gone Bad's picture

This will be the first DEPRESSION that everyone saw coming, and yet did nothing to get out of its way.  Paralysis by analysis.

Fri, 10/07/2011 - 15:59 | 1750881 MillionDollarBonus_
MillionDollarBonus_'s picture

I've said it before and I'll say it again. It is CRITICAL to our success as a nation that our Federal Reserve fully bails out Greece. And I'm not talking just a few currency swaps - I mean full scale debt monetization. US banks form a large part of our economy and if Americans want to maintain their standard of living they need to listen to the experts on this issue. This is not a time for people to make decisions for themselves. Time of crisis require coordinated action by economic professionals, and we must act NOW or it will be too late.

Fri, 10/07/2011 - 16:02 | 1750907 legal eagle
legal eagle's picture

YOU MUST HAVE forgot to hit the sarcasm button.  LMFAO

Fri, 10/07/2011 - 16:03 | 1750926 mtomato2
mtomato2's picture

Seriously.  That was a good one, it was!

Fri, 10/07/2011 - 16:05 | 1750932 Ahmeexnal
Ahmeexnal's picture

Six Million dollar man, meet the Six Trillion dollar bailout.

Fri, 10/07/2011 - 16:08 | 1750946 LawsofPhysics
LawsofPhysics's picture

LOL!  Someone needs to tell that troll that those with all the fiat can fucking bailout greece and the pigs, nothing but PM holders on this site.

Fri, 10/07/2011 - 17:57 | 1751269 Cynical Sidney
Cynical Sidney's picture

"I've said it before and I'll say it again. It is CRITICAL to our success as a nation that our Federal Reserve fully bails out Greece. And I'm not talking just a few currency swaps - I mean full scale debt monetization. US banks form a large part of our economy and if Americans want to maintain their standard of living they need to listen to the experts on this issue. This is not a time for people to make decisions for themselves. Time of crisis require coordinated action by economic professionals, and we must act NOW or it will be too late"

google translation:

milliondollarbonus said it before and he'll say it again. it's CRITICAL to our success as a national ponzi scheme that our Federal Reserve fully bails out other ponzi schemes. And he's not talking just a few currency swaps - he means full scale fraud monetization. US banks form a large part of financial fraud network and if Americans want to maintain their integrity they need to slaughter all the experts like banksters with milliondollarbonus.  This is not a time for principled americans to square it with themselves. Time of crisis require coordinated action by financial criminals to act NOW or our ponzi schemes will be too late to save.

Fri, 10/07/2011 - 16:16 | 1750976 Nascent_Variable
Nascent_Variable's picture

We can reprint it.  Faster.  Inkier.  Worthlessier.

Fri, 10/07/2011 - 16:18 | 1750986 Dr. Richard Head
Dr. Richard Head's picture

The sooner we can get more people to realize that the bailouts are to keep those who are rich in debt controlling the resources, the sooner we can end this game of hide the sausage.

Fri, 10/07/2011 - 16:30 | 1751034 seek
seek's picture

He's getting better at it. I'd give this post a 0.7 on the 0-1.0 HamyWanger scale.

Fri, 10/07/2011 - 16:59 | 1751143 goldfreak
goldfreak's picture

he forgot to hit the moron button

Fri, 10/07/2011 - 16:03 | 1750918 Abitdodgie
Abitdodgie's picture

  MDB You really are fucking clueless

Fri, 10/07/2011 - 16:05 | 1750935 mtomato2
mtomato2's picture

Love your bio, Abit.  Let's take a long walk on the beach.  Preferably in the rain.



Fri, 10/07/2011 - 17:19 | 1751170 Idiot Savant
Idiot Savant's picture

Who's clowning who? ZH bios, who knew?

Fri, 10/07/2011 - 16:04 | 1750928 Al Gorerhythm
Al Gorerhythm's picture

<Sarc on>

I've said it before and I'll say it again. It is CRITICAL to our success as a nation that our Federal Reserve fully bails out Greece. And I'm not talking just a few currency swaps - I mean full scale debt monetization. US banks form a large part of our economy and if Americans want to maintain their standard of living they need to listen to the experts on this issue. This is not a time for people to make decisions for themselves. Time of crisis require coordinated action by economic professionals, and we must act NOW or it will be too late.

<Sarc off>

There. Fixed it.

Fri, 10/07/2011 - 16:33 | 1751049 devo
devo's picture

I've said it before and I'll say it again. It is CRITICAL to our success as a nation that people like myself either pay fair taxes or jump off the nearest bridge.



Fri, 10/07/2011 - 16:40 | 1751063 piceridu
piceridu's picture that's funny. The ZH Lounge Show strikes again.

Fri, 10/07/2011 - 16:49 | 1751102 Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

HA HA HA HA HA HA HA HA...MDB you're killing me LOL too funny.  I always look forward to reading your posts!

Fri, 10/07/2011 - 16:52 | 1751111 marcusfenix
marcusfenix's picture

so let me get this straight, you're saying we should trust the very same economic "professionals" that sank the ENTIRE PLANET into this mess in the first place?

we should trust them while we sit here and watch them doing the very same stupid shit all over again, along with some brand new stupid shit...

and you are expecting a different result why?

trust them...yeah you go ahead and do that, let me know how it works out.

Fri, 10/07/2011 - 17:20 | 1751158 MillionDollarBonus_
MillionDollarBonus_'s picture

"yeah you go ahead and [trust them], let me know how it works out"

We trusted economic advisors at our Federal Reserve to set interest rates, and they have been enormously successful. Interest rates are at RECORD LOWS despite the economic turmoil we are suffering. If rates were determined by the free market they would be much higher, and would cripple our fragile consumer economy. Only the brightest economists in the world should be involved in setting prices and capital allocation, for maximal prosperity and liberty. Smart economists are able to do the hard work for us so that we don’t have to worry about vastly complex economic issues. People like you are a dying breed – long live the PROGRESSIVE REVOLUTION. OBAMA/BERNANKE 2012.

Fri, 10/07/2011 - 18:37 | 1751221 Cynical Sidney
Cynical Sidney's picture

we trusted banksters' enablers at our federal reserve to set interest rates, and they have been enormously treacherous. interest rates are at record lows on account of the economic turmoil savers are suffering. if the rates were determined by the free market they would be much higher, and would cripple our fragile wall street. only the most crooked economists in the world should be involved in setting prices and capital allocation, to maximize economic inequality and to enslave the masses in fiat debt. 'smart' banksters are able to do the hard work for us so that we don't have to worry about vastly complex financial weapons of mass destruction that will rob you clean and suck you dry. people like you are a dying breed, because obama, bernanke and their masters from wall st robbed you killed you slowly and buried you six feet deep under fiat debt. long live 2012 it'll be the last calendar year for humanity.

there all fixed for ya   

Fri, 10/07/2011 - 17:46 | 1751237 Ira Fuse
Ira Fuse's picture

MDB can you float greece a couple mill I hear they are paying great bond rates

Fri, 10/07/2011 - 18:22 | 1751328 Al Gorerhythm
Al Gorerhythm's picture

MDB, you're such a slut.

Fri, 10/07/2011 - 16:56 | 1751128 fonestar
fonestar's picture

MillionDollarBOGUS >than subtle trolling

Fri, 10/07/2011 - 17:14 | 1751174 tmosley
tmosley's picture

Did you call the White House about your $1,000,000/year minimum wage yet?  I think that would take care of the domestic front at least.


Fri, 10/07/2011 - 17:19 | 1751183 Alvaro de Esteban
Alvaro de Esteban's picture

Do you really think that bailing out Greece will solve anything???

Thinking, not too much, just a litlle bit, before writing will avoid you a lot of embarrassment

Fri, 10/07/2011 - 19:06 | 1751417 Schmuck Raker
Schmuck Raker's picture

" Thinking, not too much, just a litlle bit, before writing will avoid you a lot of embarrassment "

So true.

Fri, 10/07/2011 - 17:20 | 1751187 CapitalistRock
CapitalistRock's picture

Why did that wonderful centrally planned economic system not save the old Soviet Union?

Fri, 10/07/2011 - 17:57 | 1751257 Cynical Sidney
Cynical Sidney's picture

. *moved*

Fri, 10/07/2011 - 18:18 | 1751323 Nobody For President
Nobody For President's picture

You are truly fucking hilarious man. I NEEDED this on this Friday afternoon - makes me ready to go party, which for me is to go fly in a low and slow airplane and appreciate life.

But you are GOOD at the game you play in this group - props for being able to screw with a maximum amount of heads who think you are for real. Have a nice weekend dreaming up more ways to fuck with the troops...

Fri, 10/07/2011 - 16:00 | 1750887 legal eagle
legal eagle's picture

I like the paralysis by analysis stichk....I think I might be guilty of that myself.

There came into Egypt a Pharoh who did not know.


Fri, 10/07/2011 - 15:59 | 1750890 Cheesy Bastard
Cheesy Bastard's picture


Fri, 10/07/2011 - 16:00 | 1750897 SheepDog-One
SheepDog-One's picture

'The US exposure'...hel with that I didnt tell anyone to lend money to Europe! This is the BANKS debt, not mine!

Fri, 10/07/2011 - 16:03 | 1750915 legal eagle
legal eagle's picture

A cogent point missed by 99.999999% of Americans, and the world.

Fri, 10/07/2011 - 16:03 | 1750921 Popo
Popo's picture

Except this shouldn't be a depression for everyone.   We can easily ringfence the savings and bank accounts of every American citizen.   "They" will keep trying to call this an "American" problem.   But it is really a problem for the 1%.  

Protecting the savings of Americans under the FDIC is COMPLETELY do-able.   (Yes, the FDIC will need additional backstops).

But (and lets be clear about this):  The wealthiest Americans will be utterly and completely devastated.  Shareholders in the Fortune 500 will be devastated.  Bank shareholders will literally be wiped to zero.

That's not an "American" problem though.  It's a problem for "some Americans".

Those are different things.

Fri, 10/07/2011 - 16:11 | 1750951 legal eagle
legal eagle's picture

As if being an American citizen protects you or denotes a privileged class anymore, hell, you can be hunted by a secret panel, deemed too dangerous to live, and killed by an unarmed drone without a trial or even charges being levied against you.  Come to think about it........yes, good government, please, you can have all my fiat, please take it and let me be.

Peak intimidation, peak tyranny, and peak despotism.  The Founding Fathers would never have accepted this!

Fri, 10/07/2011 - 16:22 | 1751004 Cast Iron Skillet
Cast Iron Skillet's picture

ummm ... how do the unarmed drones you mention actually get you? Just crash into you? Run for your life!! ;-)

Fri, 10/07/2011 - 17:10 | 1751165 Gene8696
Gene8696's picture

Yea, I read something about that.. You're talking Bonnie & Clyde, I mean John Dillinger, oh.. I mean Billy the Kid...??

We have been hunting down and killing our own people for years...

Fri, 10/07/2011 - 17:45 | 1751230 kinganuthin
kinganuthin's picture


Fri, 10/07/2011 - 17:54 | 1751260 Gene8696
Gene8696's picture

As a matter of fact, there was no FBI chasing Billy the Kid, or any off the pre 1920 outlaws. As for a warrant, most where added to the "Dead or Alive" list by Governors, Territory Boses, or local Sheriffs... Not to mention the possies and linch mobs.

Fri, 10/07/2011 - 17:44 | 1751232 kinganuthin
kinganuthin's picture

yes, and those people had warrents out on them.  Evidence submitted to a judge.  FBI lists. Opportunity for turning themselves in. District Attorney building a case..  You know.. all that DUE PROCESS stuff.  Even a "Dead or Alive" poster is a warrent, a notification based on a little thing called EVIDENCE. 
This is a "bad man, cause I say so, so let me be clear, he must die."


Fri, 10/07/2011 - 17:12 | 1751172 A Lunatic
A Lunatic's picture

It's unfucking believable actually. Where is the outrage?

Fri, 10/07/2011 - 16:10 | 1750957 LawsofPhysics
LawsofPhysics's picture

Exactly.  Perhaps more people would care if more people were holders of the wealth.  Fuck them, let it all burn, only then will compensation return to people who are actually worth a shit.

Fri, 10/07/2011 - 16:20 | 1750994 bsdetector
bsdetector's picture

"[T]he FDIC is COMPLETELY do-able." That is a statement worth exploring and publicizing. How much will it cost the government to backstop the depositors vs. backstopping the bondholders, equity owners and depositors? 

Fri, 10/07/2011 - 17:47 | 1751240 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

peak ass reaming.   luvya Popo

Fri, 10/07/2011 - 17:09 | 1751163 Panafrican Funk...
Panafrican Funktron Robot's picture

Some key information way down at the bottom of the article:

The CRS says, however, there are two other factors that could cause a dramatic reassessment.

“Depending on the exposure of non-bank financial institutions and exposure through secondary channels, U.S. exposure to Greece and other euro-zone countries could be considerably higher,” the CRS said.

The estimate doesn’t include U.S. bank exposure to European bank portfolios that include assets in the weak member countries. Also, it doesn’t account for euro-zone assets held by money market, pension, and insurance funds.

Fri, 10/07/2011 - 18:59 | 1751395 TheFourthStooge-ing
TheFourthStooge-ing's picture

brown shoots

...don't make it!'t_Make_It


edit: fixed the hatemail (html - the crux of the biscuit is the apostrophe)


Fri, 10/07/2011 - 15:46 | 1750815 dick cheneys ghost
dick cheneys ghost's picture

Peak Lies?.........Peak Oil.........Peak Fiat..........Peak Water..........Peak Protest............

Fri, 10/07/2011 - 15:47 | 1750820 HelluvaEngineer
HelluvaEngineer's picture

When do we hit Peak Anger?

Fri, 10/07/2011 - 16:12 | 1750964 mtomato2
mtomato2's picture

In 2008

Fri, 10/07/2011 - 18:28 | 1751059 Pancho Villa
Pancho Villa's picture

Just after we hit Rock Bottom.

Sat, 10/08/2011 - 07:17 | 1752462 Al Gorerhythm
Al Gorerhythm's picture

"Anyone who wakes up in the morning and isn't angry, is an idiot".

Dr Monroe. 

Fri, 10/07/2011 - 15:52 | 1750848 Cash_is_Trash
Cash_is_Trash's picture

Peak fitness

Peeking (not planking)

Fri, 10/07/2011 - 15:58 | 1750886 sabra1
sabra1's picture

Peak Freans!

Fri, 10/07/2011 - 16:11 | 1750958 LawsofPhysics
LawsofPhysics's picture

Peak humanity and stupidity.

Fri, 10/07/2011 - 17:13 | 1751173 Gene8696
Gene8696's picture

Peak'ing duck?

Fri, 10/07/2011 - 15:47 | 1750819 Hman
Hman's picture

Considerably higher is the key phrase ....

Fri, 10/07/2011 - 15:59 | 1750889 Dr. Richard Head
Dr. Richard Head's picture

What part of the $250T derivative pie are we talking about here?  Twat a farce this game is.

Fri, 10/07/2011 - 16:03 | 1750914 SheepDog-One
SheepDog-One's picture

Right, wheres the rest of the $1.5 Quadrillion derivitives debt apart from this TINY $640 billion 'exposure revelation'?

And BTW, its not my debt! Suck it, banks!

Fri, 10/07/2011 - 16:14 | 1750969 mtomato2
mtomato2's picture

Would somebody be so kind as to hook me up with a reference explaining this Derivative bomb I hear so much about?  I really don't understand it, thus don't fear it.

Fri, 10/07/2011 - 16:21 | 1750997 Dr. Richard Head
Dr. Richard Head's picture

This is a great piece to help out.

Fri, 10/07/2011 - 16:21 | 1750998 Dr. Richard Head
Dr. Richard Head's picture

This is a great piece to help out.

Wed, 10/19/2011 - 17:38 | 1790444 mtomato2
mtomato2's picture

Knew I could count on you, Dick...

Fri, 10/07/2011 - 17:28 | 1751205 schadenfreude
schadenfreude's picture

Even by netting the shortfall is 10% But what is 25 trn. in Fiat? I hope Benny and the Inkjets are prepared. I always wonder how large a Trillion Dollar Note is going to be.

Fri, 10/07/2011 - 15:48 | 1750821 Racer
Racer's picture

Anytime that the CHEAT speaks now take bets on how long it will be before it will be proven to be a lie!

Can he beat the fantaseconds of HFTers?

Fri, 10/07/2011 - 15:48 | 1750823 Belarus
Belarus's picture

Now isn't that ironic: another 700 billion TARP in the makings....

Fri, 10/07/2011 - 15:53 | 1750825 falak pema
falak pema's picture

All for one one for all...and the Oligarchy is the new Internationale. 'C'est la lutte finale...'. Whats a trillion between comrades of the uber alles class? Let them eat cake.

"Our toxic fruit cake in USa is much bigger than that" whispers Ben to Timmy..."Yes, but don't tell them that"...Timmy shoots back from the hip. "Buddy, I'm your debt buddy for life" is what they sing amongst skull n boners now, in their secluded meetings of uber-alles elites. 

Fri, 10/07/2011 - 16:04 | 1750904 Dr. Richard Head
Dr. Richard Head's picture

The French had a certain je ne sais quoi in dealing with these banksters back in the day.  I guess the Neocons called French fries freedom fries as an insult to the French (who wished not to get involved in Iraqi genocide). I now look back and understand what freedom fries indeed are the banksters time is coming soon to an end me thinks.  Ketchup anyone?

Sat, 10/08/2011 - 06:07 | 1752416 falak pema
falak pema's picture

The french made the same hubristic mistake when FDR told them 'your time in colonial France is up', as he and successors did to GB. The Brits complied  but not the French. It got them into Dien Bien phu and Battle of ALgiers, this hubris. They nearly lost their republic, if de Gaulle hadn't done an about turn; so the French learnt the hard way the value of 'french fries'. And yes, de Gaulle told Banktsa USA 'it's exorbitant privilege, this USD hegemony...' and he was right for dishing out more french fries to Johnson/Nixon. Pity hubris is such an infectious, recurrent disease, as it inevitably brings down  the 'happy few' who think the laws of gravity don't apply to them. Irrespective of Nation or creed.

Fri, 10/07/2011 - 15:49 | 1750829 DoChenRollingBearing
DoChenRollingBearing's picture

My own opinion on this one is that something this big and complex, WHO KNOWS what our exposures are to Europe?

That is yet another reason to keep an eagle-eye on what happens in Europe, and what that may mean soon thereafter in the USA.  Tyler Durden, thanks again for keeping informed of what happens in Europe, thanks to ZH members commenting from there as well!

Fri, 10/07/2011 - 16:07 | 1750943 Dangertime
Dangertime's picture

The financial state of the Nation is a matter of National Security.

I put forth the notion that we shut down any TBTF entity that so threatens our National Security by assuming too much leverage and/or risk.

Fri, 10/07/2011 - 16:42 | 1751074 Pancho Villa
Pancho Villa's picture

Would that include the US government?

Fri, 10/07/2011 - 15:49 | 1750832 Motley Fool
Motley Fool's picture

A few trillion? That's smallchange nowadays isnt it? :P

Fri, 10/07/2011 - 15:52 | 1750833 GeneMarchbanks
GeneMarchbanks's picture

We're in full defection mode. Geithner has no credibility anywhere.

Fri, 10/07/2011 - 15:58 | 1750877 Linus2011
Linus2011's picture

geithner has been told to "f--- off" even by these EU top morons. that is like "being niggered" by a black man.

Fri, 10/07/2011 - 16:05 | 1750934 GeneMarchbanks
GeneMarchbanks's picture

Wow... apparently "fuck" is less offensive now than "niggered" ... ... learn something new everyday here.

Fri, 10/07/2011 - 16:57 | 1751131 Aguadulce
Aguadulce's picture

Ha..i also thought that was f'ing hilarious.

Fri, 10/07/2011 - 15:50 | 1750835 PAPA ROACH
PAPA ROACH's picture

In the famous words of gunnery sargent Hartman, "Well, No shit"


Fri, 10/07/2011 - 15:50 | 1750836 Poetic injustice
Poetic injustice's picture

What's 640 Billions between good pals?
Treat this information as visible part of iceberg.

Fri, 10/07/2011 - 23:26 | 1750841 JR
JR's picture



Ackermann, Ackermann, he’s our man;

If he can’t do it, nobody can.

He’s Jewish!

Go Deutsche Bank.

Fri, 10/07/2011 - 15:51 | 1750843 kaiten
kaiten's picture


Fri, 10/07/2011 - 15:53 | 1750855 centerline
centerline's picture

Ooooohhh, got there right before me as I was posting!  Nice.

Fri, 10/07/2011 - 15:59 | 1750873 kaiten
kaiten's picture

Thanks :) And another possibility is TARP2 ;)

Fri, 10/07/2011 - 16:03 | 1750920 centerline
centerline's picture

Great point. Trial balloon maybe or carrot on a stick.  See how the players react - or attempt to put a temporary floor under the market / financials.

Fri, 10/07/2011 - 15:52 | 1750852 centerline
centerline's picture

My bet is on "considerably higher."

But at least we now have a figure for QE3.0....  $640 billion.

Fri, 10/07/2011 - 15:55 | 1750867 Cash_is_Trash
Cash_is_Trash's picture

When do we QE 3.14 for Pi day?

Chug, chug, print, print, print....

Fri, 10/07/2011 - 18:36 | 1750970 Manthong
Manthong's picture

More propaganda from the masters of manipulation, intervention and disinformation.

We can't possibly be exposed for less than a few trillion at the least.

Fri, 10/07/2011 - 15:54 | 1750853 PulauHantu29
PulauHantu29's picture

Define "very modest."

Maybe Timmy is using Anthony Wiener's definition of "very modest?"

Fri, 10/07/2011 - 15:53 | 1750856 vote_libertaria...
vote_libertarian_party's picture

When was this released?  Kind of interesting it is during market hours.

Fri, 10/07/2011 - 15:56 | 1750868 kengland
kengland's picture

Under what scenario would the US lose that kind of money? A complete collapse?

Fri, 10/07/2011 - 15:56 | 1750869 SoCalBusted
SoCalBusted's picture

Double it, then you might be close

Fri, 10/07/2011 - 15:57 | 1750874 SwingForce
SwingForce's picture

Don't scare me! Philip Morris (PM) has only 24% exposure to Europe.

(And NO exposure to the USA- but it pays a 4.75% dividend).

Fri, 10/07/2011 - 15:57 | 1750875 pauhana
pauhana's picture

Watching the market this past half hour and I'm nauseous from the wild swings.  It's like a giant quivering tower of Jello.  No conviction.  Death throes?

Fri, 10/07/2011 - 15:58 | 1750876 sopel39
sopel39's picture

How could that be that there is a possibility of a melt down in 2, 3 weeks and banks are still hiring? Isn't a meltdown a bit exaggerated? How about all those PMIs that beat expectations recently? Event if it happens, it is hard to believe that half of the finance sector could be wiped out quickly. Maybe stiupid questions, but I am new here.



Fri, 10/07/2011 - 16:09 | 1750952 Dangertime
Dangertime's picture

Never worry about hiring when Uncle Sam is there to socialize your losses.

Fri, 10/07/2011 - 16:11 | 1750961 Jeff Lebowski
Jeff Lebowski's picture

Bank of America is hiring, provided you are a robot or ATM.  They will soon have 30,000 openings from the previous humanoid workforce.

Fri, 10/07/2011 - 16:22 | 1751000 sopel39
sopel39's picture

BAC is maybe toast, but other troubled banks like UBS do still hire. Apart of that, I don't see many more people living on the streets (if any).

Fri, 10/07/2011 - 17:31 | 1751209 Panafrican Funk...
Panafrican Funktron Robot's picture

Why would they live in the streets, when they can live rent free in their defaulted homes, and get food stamps and 99 weeks of unemployment benefits?

They've gotten really damn good at keeping this out of the wider public conscious, even amongst those most directly affected.  

Regarding UBS hiring, I realize they hired 4 dudes recently from Credit Argicole, but that doesn't make up for the thousands of cuts being planned or already in play for BNY Mellon, HSBC, Credit Suisse, Morgan Stanley, Barclays, and even our dear old friends, Goldman Sachs.

Fri, 10/07/2011 - 16:18 | 1750984 sopel39
sopel39's picture

Another example would be Switzerland. Everybody seems to be apocalyptic about high CHF value (which is still pretty high after pegging CHF to EUR), however unemployment there declined to 2.8% (!), a rate seen nowhere in EU. What are the changes or a quick global meltdown anyway? Shouldn't it be a long decline instead (given the size of a system).

Fri, 10/07/2011 - 17:48 | 1751243 schadenfreude
schadenfreude's picture

They do not have a lot of aliens coming into their country?

Fri, 10/07/2011 - 17:49 | 1751248 sopel39
sopel39's picture

About 20% total. One of the highest number in Europe. However they do import only highly qualified staff.

Fri, 10/07/2011 - 16:26 | 1751023 Piranhanoia
Piranhanoia's picture

Because the only personnel they are hiring are security.

Fri, 10/07/2011 - 16:30 | 1751032 sopel39
sopel39's picture

Not true. They do hire ITs, Analysts, Graduate Programs. Hedge funds also hiring. If there is a meltdown possibility, shouldn't they be dropping people? I am not trying to defend them, but they would be rather conscious of a possible meltdown.

Fri, 10/07/2011 - 17:10 | 1751164 Reformed Sheep
Reformed Sheep's picture

 If there is a meltdown possibility, shouldn't they be dropping people?


Not uncommon for a company to outwardly project a "business as usual, nothing to see here, move along..." face to the public, investors, shareholders, right up until the countdown hits zero (or, the people 'that matter' have grabbed their parachutes...)

Fri, 10/07/2011 - 17:32 | 1751212 Panafrican Funk...
Fri, 10/07/2011 - 17:51 | 1751222 sopel39
sopel39's picture

I am not lying. I am just talking from my personal experience (I was proposed a job in IT at ING not so long ago) and my GF is in contact with UBS for Graduate Training Program.

Fri, 10/07/2011 - 16:00 | 1750891 M.B. Drapier
M.B. Drapier's picture

(who can possibly forget: "Is there a risk that the United States could lose its AAA credit rating? Yes or no?” "No risk of that.")

The minute the US is formally declared to have re-entered recession, I'll have another, similar little gem for you all. No use in spoiling it just yet. Just watch this space.

Fri, 10/07/2011 - 16:00 | 1750892 myztix
myztix's picture


What is the % in comparison to our debt? GDP?

.6 T  to 14 T... to say the least.

sounds little to me! LAUGH!

Fri, 10/07/2011 - 16:00 | 1750893 digalert
digalert's picture

But wait there's more...

Can't go into the weekend feeling smug.

Fri, 10/07/2011 - 16:00 | 1750895 OutLookingIn
OutLookingIn's picture

$600 billion? Much more when factoring in the OTC derivatives.

Remember the Depository Trust Clearing Corporation?

Responsible for the Trade Information Warehouse, for over-the-counter credit derivatives, under the umbrella of the Warehouse Trust Company.

Well these entities since February 2010 are now subsidiaries of the Federal Reserve Sysytem, which is now the guarantor in this game of backstopping the derivative market.

Mr. and Mrs. John Q. Public are now on the hook! Again! How much is the total notional amount of the US derivative market? I smell bailout to infinity and beyond!

Fri, 10/07/2011 - 16:11 | 1750960 OutLookingIn
OutLookingIn's picture


Forgot to mention where this bailoiut cash will come from;

PRINT - to infinity and beyond of course!

Fri, 10/07/2011 - 16:28 | 1751027 JR
JR's picture

In the bail-out trail of money, the taxpayer dollar is lifted from the citizen and heads straight to the banks.  And where does the trail end? Why at Goldman Sachs, Morgan Stanley, Deutsche Bank AG, JP Morgan, et al. In short, it’s the hardworking taxpayer who’s assumed the massive risk—and trillion dollar losses--while the high risk takers, who lost, rake in the gambling chips.

Does this increase in government obligations correspond to the decreases in Americans’ property values and standards of living as Bernanke shifts the treasury to Wall Street firms who perpetrated the corruption, the derivative time bombs and the subprime mortgages loans? You bet it does.

And now the taxpayers, IMO, are feeling less an obligation to go along with, as someone put it, “schemes that are opaque, perilous, unaccountable and ad hoc" to keep Bernanke and his pals afloat.

Worldwide tolerance is ending for private companies such as Goldman Sachs that packs its people into financial power positions here and around the world when their actions clearly benefit the private banks at the expense of the people and their national economies.


Fri, 10/07/2011 - 16:01 | 1750899 myztix
myztix's picture

Oh man. this .6 T is going to bring us back to a recession. oh man. oh man..

Fri, 10/07/2011 - 16:03 | 1750910 LookingWithAmazement
LookingWithAmazement's picture

The markets are screaming: PUT ON THAT PRINTING PRESS!! What will happen if the "leaders" in Europe come up with a massive money-printing-bond-buying program? Hyperinflationary crisis/collapse/Armageddon? No, the contrary: a worldwide massive relief rally and returning growth. Ok, the taxpayers sheeple get screwed to their bones, but the banks and markets will be saved. Free money and rid of their PIIGS crap! What more do you want? The double digit price inflation will be "transitory" and just hit the sheeple, PMs might first go sky high, but "transitory" too. After a few weeks or months, anyone will realize the eurocrisis is over. No more crap on the balances. Growth can return again, housing and consumption too. So there's a painful solution, it's a matter of willing to choose it. The leaders will, to prevent worse. So in a few months, the crises will be over. Paul Krugman, the Keynesian (Marxist), will be having his finest hour. No Armageddon. You know. But is has a cost. Next month the 27th: first Sunday of the Advent. Therefore: merry Christmas and a crisisfree 2012. Mark my words.

Fri, 10/07/2011 - 16:06 | 1750941 SheepDog-One
SheepDog-One's picture

Yea markets are screaming for PRINTING!! 

Oh wait....4 day 120 point ES rally...oh well maybe next weeks markets will squeel in the mean time effortless melt ups of markets continue daily. Nothing to see here, move along.

Fri, 10/07/2011 - 16:12 | 1750962 s2man
s2man's picture

Germany had a booming economy as they printed, printed, printed. Business screamed when they tried to stop printing. It worked, for a while.

Fri, 10/07/2011 - 17:05 | 1751155 SheepDog-One
SheepDog-One's picture

Yea but German Weimar was far different than what we have today. The Germans printed and the PEOPLE had the money! Thats how when it did start imploding they had a wheelbarrow full of money to go buy bread. Who has the money today? All in the banks, and theyre not lending.

Fri, 10/07/2011 - 17:55 | 1751264 schadenfreude
schadenfreude's picture

Right. But. The banks have to feed the pension. I think the big fight is not between sovs, but between old vs young people amongst the western civilization.

Fri, 10/07/2011 - 16:24 | 1751009 Hansel
Hansel's picture

No dude, you've got it all wrong.  MY PROPHECY IS THE CORRECT PROPHECY.

Fri, 10/07/2011 - 17:42 | 1751227 LookingWithAmazement
LookingWithAmazement's picture

And that is?

Sat, 10/08/2011 - 20:30 | 1753679 LooseLee
LooseLee's picture

Consider your words, 'marked'. I'm anxious to see 2012 a year of growth and free of crisis.

Fri, 10/07/2011 - 16:02 | 1750911 s2man
s2man's picture

Should we call him Timmy Lie-thner?

Fri, 10/07/2011 - 16:06 | 1750929 devo
devo's picture

This is what the U.S. exposure to European banks is:

1. Massive when Geithner wants a quick resolution heading into a weekend.

2. Minimal when Geithner wants Morgan Stanley stock to rise on Monday.

On Holidays, it's like a falling tree in a forest that maybe makes a sound.


Fri, 10/07/2011 - 20:11 | 1751569 TheFourthStooge-ing
TheFourthStooge-ing's picture

This is what the U.S. exposure to European banks is:

1. Massive when Geithner wants a quick resolution heading into a weekend.

2. Minimal when Geithner wants Morgan Stanley stock to rise on Monday.

On Holidays, it's like a falling tree in a forest that maybe makes a sound.

In the "science" of economics, this phenomenon is known as the Geithnerturd Uncertainty Principle. The US exposure to European banks is in a quantum superposition of idiocy and entangled spin. Thus, the exposure is entirely dependent on the intended observer of Geithner's blithering outbursts.

Speaking of pseudoscience, now that the real Nobel Prizes are being awarded, who do you suppose will win this year's fake Nobel Prize in economics handed out by Sveriges Riksbank?


Fri, 10/07/2011 - 16:04 | 1750930 jarboejl
jarboejl's picture

Anyone else notice that today's intraday chart is almost the exact inverse of Tuesday's...damn that's eery!

Fri, 10/07/2011 - 16:06 | 1750940 LongSoupLine
LongSoupLine's picture

Boy did I f'ing nail it!

Moments ago...

"What's important here is we finished higher on the week." - Bob Pisani CNBS

Predictable, brainless, earpiece parroting, ballmouth!

Fri, 10/07/2011 - 16:08 | 1750947 SheepDog-One
SheepDog-One's picture

Exactly, thats the only REAL important thing...stock finish higher. No matter how it happened or how insane or criminal it was, the important thing is stocks march higher daily. 

Fri, 10/07/2011 - 16:13 | 1750967 Tsar Pointless
Tsar Pointless's picture

You know, you can save yourself the aggravation by not watching CNBC. I stopped doing so about two years ago.

Just a suggestion.

Fri, 10/07/2011 - 16:45 | 1751085 LongSoupLine
LongSoupLine's picture

yeah, but it's like watching a train know you shouldn't, but you just can't look away.

Sat, 10/08/2011 - 20:34 | 1753684 LooseLee
LooseLee's picture

'Piss-On-Me" is a conformist, tool of the elite with a bulls-eye on his forehead..

Fri, 10/07/2011 - 16:06 | 1750944 nah
nah's picture


Fri, 10/07/2011 - 16:12 | 1750963 richard in norway
richard in norway's picture

what happens when european banks start selling american muni bonds to raise cash? or is that a stupid question

Fri, 10/07/2011 - 16:18 | 1750981 Ahmeexnal
Ahmeexnal's picture

Answer: Muni's can buy back their bonds on pennies on the dollar. And then they can buy whole european cities -serfs included- with the gold they bought with the lent money.

Fri, 10/07/2011 - 16:24 | 1751011 Scalaris
Scalaris's picture



Stop worrying.

I'm sure it's nothing, and that Geitner's recent trip to Poland where he begged for more capital injection ASAP while promoting his 2008-style super-leverage plan had absolutely nothing to do with the current matter regarding the US risk exposure to the European banking system. 

Nothing whatsoever.

Fri, 10/07/2011 - 16:26 | 1751017 devo
devo's picture

Just a suggestion, but in the spirit of the Occupy Wall St movement...can we start a protest that asks every American to stop contributing to their retirement funds until the government and their banks puts the middle class first? Without working class contributions, these banks are nothing.

The Occupy Wall Street movement is refreshing to see, but the words are not backed by dollars, so the message goes in one ear and out the other.

Fri, 10/07/2011 - 16:29 | 1751030 Goldtoothchimp09
Goldtoothchimp09's picture


In the spirit of Occupy Wall Street - I pulled together links to a bunch of good educational videos so that people can learn more about our financial system.  If we are ever to meaningfully address wealth inequality -- it will require more people to become educated about the Federal Reserve system - debt money - fractional reserve banking.


Fri, 10/07/2011 - 16:36 | 1751055 Messianic
Messianic's picture

I've been wondering for a while what Geithner does except act as a bold-faced liar for the admin. He's literally paid to lie through his teeth.

Fri, 10/07/2011 - 16:58 | 1751133 marcusfenix
marcusfenix's picture

...but that's DC for you isn't it? a culture of lies, they don't know how to do anything else, the truth, any form of it is alien and poison to these people.

Fri, 10/07/2011 - 16:46 | 1751091 Undecided
Undecided's picture

Soon all the printed money will be needed to keep us warm in a big bonfire!

Fri, 10/07/2011 - 16:56 | 1751126 f16hoser
f16hoser's picture

Geithner doesn't seem to care so why should we? (rehtorical)

Fri, 10/07/2011 - 17:02 | 1751145 Pancho Villa
Pancho Villa's picture

What I want to know is: Who underwrote all of these CDS? They must be in a world of pain right now.

Fri, 10/07/2011 - 17:12 | 1751171 Poetic injustice
Poetic injustice's picture

Probably at least half of them in Dexia.

Fri, 10/07/2011 - 17:46 | 1751148 kevinearick
kevinearick's picture

AC/DC Conversion

So, they have eliminated access to their own talent farm system, independent business, and Congress wants to bail out local and state government to the tune of $500B, which can only come out of local and state government in EurAsia, at a deleveraging cost of $2T immediately and the rest embedded in the global credit spreads over time. The big sharks are eating the medium sharks, which is what you want.

As a buck, you walk over the next mountain to the next meadow, and mate with whichever doe follows. The corporations employ money to promote sloth/leisure as the reward for participating in a rigged lottery ponzi economy, with a mouse trap competition. To balance, small independent business employs current to promote productivity, using itself as bait to set the shark trap. In this round, we are training small business to operate globally. Who is best at using themselves as bait?

As soon as the kids congregate, Caesar’s minions smother them and “lionize” their chiefs. Steve Jobs and Bill Gates were the best thieves. Now, the intelligent kids can hide right under Caesar’s nose because the minions are completely consumed, which is what you want. Build your community bank, currency, accordingly, to keep Caesar in check and mate at will.

Always set up your auto system so increased energy is required for variable input. When marginal energy is removed, the corporate system runs on automatic until its black hole reaches the required threshold to propel small business into the next orbit.

Past the tipping point, Congress can only apply more control over less and less of the economy, which is why Pelosi’s brother-in-law got that fat contract. Turns out Palin couldn’t withstand similar scrutiny as the Alaska pipeline goes dry. Government is imploding, net.

The stock market values corporations (public, private, and non-profit) based on their ability to draw wealth out of the economy and the passive investors are suddenly surprised that they are being liquidated from the bottom-up, Buffet is one of the lead whores, and that intelligence is the means of production, which the leading edge of dc technology has been eliminating by example globally. Now, the cattle need cars that drive themselves. Go figure.

What does it tell you when every other commercial is for a pill to replace basic life function? That’s it, systematically eliminate sexual desire in your mate with anxiety to take control short-term and become sexually frustrated long-term. Yet another solution brought to you by Pharma breeding.

Who is in the dc economy, who is not, and why? Look at net 0 change in economic participation, the transformation, over time. It’s all about breeding intelligence and the dc system is embedded with a teenage mentality. “I want it and I want it now.”

Who is in charge of breeding, you or the medical industrial complex? Does the doctor work for you or do you work for the AMA? Have you taken a look at an emergency room bill lately relative to the actual work performed? Who is paying? The corporations have never trained anyone to do anything but be passive stupid. Parents raise intelligent children and independent small business transfers that talent to Corporate.

The consumption economy runs backwards.

("Eric Cantor says Wall Street protesters are ‘mobs’ as Democrats offer support; Dexia plays a significant role in the $2.9 trillion global municipal debt market. The bank backstops debt on the state and local government level across the world and across America, including New York City issued bonds. Noting that just 3 years ago the Federal Reserve was spending more money propping up Dexia than any other bank in the world." that sums it up)

Fri, 10/07/2011 - 17:04 | 1751151 vipmoneymachine
vipmoneymachine's picture

So what ? I am Bernank and I can create $600 billion in one hour out of thin air. Nothing to see here. My goal is to protect Dow 11000 and nothing else.

Fri, 10/07/2011 - 17:13 | 1751168 jmc8888
jmc8888's picture

"(what happens when that counterparty you hedged your exposure with... goes bankrupt?"


How many hundreds of trillions are hedged? Oh yeah.....



Fri, 10/07/2011 - 17:14 | 1751175 Volaille de Bresse
Volaille de Bresse's picture

Europe said to the U.S. "I really like you. Let me put an anvil around your neck". The U.S said to Europe : "I really like you too. Let me put an anvil around your neck". 


And in 2007 everyone decided to jump into the water... Brilliant! :-(

Fri, 10/07/2011 - 17:24 | 1751194 Big Ben
Big Ben's picture

In 2007, Bernanke and Paulson were telling everyone that subprime was 'contained':

If the US is so insulated from the Europe, why was Tiny Tim just over there telling them to get their house in order, NOW!

Why was Obama just accusing Europeans of scaring the world?

Fri, 10/07/2011 - 17:27 | 1751204 Caviar Emptor
Caviar Emptor's picture

The full extent of the trans-Atlantic Ponzi has yet to be revealed. It is so massive that it's still top secret after 4 years. And after 4 years of massive global intervention we've onlly scratched the surface. 

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