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"Dear Angela, Dear Francois, Dear Mario" - From Citi, With No Love At All

Tyler Durden's picture


The big banks are getting restless. Nowhere is this more evident than in the latest just released letter from Citi's European Credit Strategy, literally a letter to Europe's trio of leading politicians, which follows hot on the heels of yet another recent Citigroup missive from Willem Buiter, which was largely ignored in the noise, yet which made it all too clear that when all else fails, it is the Chairman's sworn duty to paradrop money. Because if anyone, it is the banks that know that if things aren't fixed (they aren't), it is up to the central banks to do something to prevent the vigilantes from forcing the politicians hands, as they did in the summer and fall of 2011 (which will not provide a long-term fix, but at least allow bankers to hope that the next collapse won't take place before bonus season). As Citi says, "Until the gravity of the situation is made clear, until the self-reinforcing mechanisms that already seem to be in motion are understood, we don't see how the solutions, the answers, and the certainty that market craves can be brought to the table." Which simply means that things are about to get much, much worse as it will be up to the markets to bring the world to the edge of collapse once again, just so Europe, with the help of the Fed of course, once again is forced to get over the political bickering and prop up risk assets, in yet another iteration of "this time it's different", even though it isn't. Sure enough: "Our impression is that markets will need to act as the proverbial 'attack dog', forcing the issue on the political agenda. We can't escape the sense that it is probably politically easier to let the markets run loose for the time being to make it apparent that further intervention is needed. But 1000bp on Crossover is much closer than you imagine." In other words, Citi just gave the green light for the bottom to fall from the market just so Europe's increasingly impotent political elite does something, anything. Look for many more banks to sign off on the same letter.

From Citi:

Dear Angela, Dear Francois, Dear Mario

It seems that we are at a watershed once again. Judging by the movement we have seen in the credit market and in other risk assets over the last week, a chain of events that could lead to implosion has been unleashed, unless checked by policy action.

2012 started so well. The LTROs allayed market fears about a liquidity crisis in the European banking system and created additional demand for periphery sovereign debt during the first quarter.

However, we reckon it is now time to face the fact that the market does not believe Schäuble's firewall works. Most urgently, the market fears a Greek exit, or the reintroduction of capital controls to stem deposit outflows, might spark deposit flight from banks across a number of other countries. Playing down the importance of a Greek exit now is hardly reassuring, when Mario Draghi said the consequences for the Eurozone would be 'incalculable' only last December.

While the lack of an elected government in Greece complicates matters, the market sees a growing risk any new government will not be able to make the concessions demanded by the Troika quickly enough – or at all. Then what? If a hard line is to be taken on Greece, then we reckon the firewall must be reinforced at least with a pan-European deposit guarantee scheme of some form. The market knows that it is not easy to sell politically in Germany.

It doesn't help that the Spanish spread to Bunds has drifted to record levels again, while there is no clarity on where the funding necessary to  recapitalise the Spanish banking system will come from. It may be that LTRO-driven bank demand can sustain the auctions for now, but it seems likely to us that foreign investors will continue to pull out.

Add in the prospect of Moody's downgrading more banks across Europe and North America, the persistent negative bias in the economic data  relative to consensus, the upcoming Irish referendum, all the funding Italy still needs to do this year and the prospect of Portuguese PSI discussions in only a few months – and it is small wonder that market confidence is breaking down.

Through the LTROs and extremely low interest rates policymakers have ensured that financial markets are flush with cash. We don't recall a time where the liquidity situation and the technical position of the credit market has been much stronger than now. But that isn't enough. Quite simply, the uncertainty is killing any incentive to take risk. What goes in financial markets generally goes in the wider economy too. Companies are flush with cash, but we struggle to see them investing – especially in the countries where investment is sorely needed – while there is no visibility on the Euro project. Meanwhile, things grind to a halt.

We understand the political constraints key policymakers operate under. We know that many backbenchers and ECB board members are not fully onside. We can see in the election results and the opinion polls that a large part of the electorates are not onside either. There seems to be a dangerous perception in many places that enough has been done already.

However, don't be fooled by the apparent resilience of many corporate bonds (and equities). Aside from the sheer amount of cash funds have been left with, it is only the perception that the policy intervention will come eventually, triggering a very large short squeeze that is preventing more selling. Every day seems to bring headlines that challenge that perception. We could be close to the breaking point. Already in the last week there are clear signs in credit that the selloff is becoming more systemic. If you have come across our 'five phases of grief' framework – it appears we are moving straight from 'depression' back to 'anger'.

Until the gravity of the situation is made clear, until the self-reinforcing mechanisms that already seem to be in motion are understood, we don't see how the solutions, the answers, and the certainty that market craves can be brought to the table. Our impression is that markets will need to act as the proverbial 'attack dog', forcing the issue on the political agenda. This would not be the first time that markets have had to bark to get a credible policy response. We can't escape the sense that it is probably politically easier to let the markets run loose for the time being to make it apparent that further intervention is needed. But 1000bp on Crossover is much closer than you imagine.

Moreover, every bark comes with a loss of credibility – a loss of faith in the institutional capacity of the European Union to address the fundamental imbalances. Reining in the market eventually may end up taking a bigger effort than policymakers are bargaining for.

The market needs to know what policymakers are committed to and it needs to see actions that validate those commitments. Inaction is just a carte blanche for investors to sit on the sidelines and wait for things to deteriorate further.

Yours sincerely,

Citi Credit Strategy


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Sat, 05/19/2012 - 18:45 | 2443856 Ahmeexnal
Ahmeexnal's picture

Merkollande in full blown collapse

Sat, 05/19/2012 - 18:58 | 2443867 knukles
knukles's picture

Then again, What Else Are They Gonna Say?
No more money?
Gimme some Bad Earnings?
No bonus pool?

Like WTF, it's not our money, anyhow....

Yassir yassir yassir, let the printing commence.
Europe in disarray, credit flows to seize up, spreads to widen, stocks to crash, banks to be run, cities to burn ...  And that's just Europe.
Who was it the other day observed that the total US banking system capital is something like $12T whilst the exposure (net, all hedged giggle giggle, snort snort) to Europe is something like $4T.
My oh my.....

Sat, 05/19/2012 - 21:30 | 2444035 Crisismode
Crisismode's picture

It's all bullshit, and we all know it.

Don't go looking for a diamond in a pile of shit.


Time to start checking out.

Sat, 05/19/2012 - 21:50 | 2444093 oldman
oldman's picture


How come it is ALWAYS some other dude that is to blame, China, Europe, Japan,Spain, France, Iceland,------I've missed most of them because of a very short-term memory problem, but------------never one of the sacred 'amiricans' in the us of a?

Sorry, knuckles---I just snapped in reading this trash above---'my of my' brought me out of it with a laugh

Thanks a lot!!!!                         om

Sat, 05/19/2012 - 19:09 | 2443886 Eireann go Brach
Eireann go Brach's picture

In other words, if you guys don't print like there is no tomorrow, everyone at CITI including myself will be out of a job!

Sat, 05/19/2012 - 19:16 | 2443894 Ahmeexnal
Ahmeexnal's picture

You should starts lurkin fer a jobs, paddy.

Sun, 05/20/2012 - 00:27 | 2444438 PersonalRespons...
PersonalResponsibility's picture

This is gonna be good, I need more gum.

Sat, 05/19/2012 - 19:37 | 2443925 vast-dom
vast-dom's picture

but QE will not solve a thing -- it only postones the inevitable. these banksters are as insane as they are inane.

Sat, 05/19/2012 - 19:41 | 2443932 LetThemEatRand
LetThemEatRand's picture

As has been observed here on ZH many times, inflation is not a problem for those who get the money first.  You can bet the banksters are converting their personal freshly minted bonus fiat into hard assets and that they have been doing so for years.   Deflation is the one thing that would fuck them, so they will beg for more and more QE.

Sat, 05/19/2012 - 20:21 | 2443955 vast-dom
vast-dom's picture

Rand while what you believe is partially true, it is also simplistic and lacking consideration for the type of characters composing above letter  -- they have been getting paid over and over esp since 2008 till present -- this is not case of them not considering inflation/deflation; rather, this is exclusively about them NOT appreciating endgame and believing, like insane people are apt to do, that their status quo insanity can continue indefinitely.....

Sat, 05/19/2012 - 22:49 | 2444256 RockyRacoon
RockyRacoon's picture

They sense that the music is about to stop, and the number of players vastly outnumbers the available chairs.   As long as the music plays nobody will know the extent of the damage about to befall the bankers and their political pals.   Keep the feet moving and trade on.   To the most of us, the huddled masses, the entire charade is a distraction and a hindrance to being able to carry on.   I hope the place burns to the ground.

Sun, 05/20/2012 - 00:22 | 2444432 slewie the pi-rat
slewie the pi-rat's picture

as far as i can tell, it already has, R_R, but the "news" can't travel in a vacuum?

Sat, 05/19/2012 - 20:28 | 2443968 Al Gorerhythm
Al Gorerhythm's picture

They are only insane from your perspective. They are doing the only sane thing they can do, from their perspective and that is survive, using the only strategy in their tool box; Inflate their liabilities away.  

"The market needs to know what policymakers are committed to and it needs to see actions that validate those commitments. Inaction is just a carte blanche for investors to sit on the sidelines and wait for things to deteriorate further."

Their perspective is that the markets (you and the managers of your savings) will not be allowed to sit on the sidelines while they watch their holdings "detiorate" and get destroyed. They will set up a sell side slide into oblivion like 2008, once again stripping the funds from you and your manager. Once again they will deny you the right to withdraw your funds from your managed accounts, just like they did last time. Redemptions, pah! There will be no redemptions.

You will not be allowed to sit out on the sidelines. There will be restrictions on withdrawals from ATMs as well. They will stop you there too. Markets need to know who is in control. Period.

QE will solve something alright. It capitalizes their current unfunded obligations to all of us at current prices.

Sat, 05/19/2012 - 21:40 | 2444031 Caviar Emptor
Caviar Emptor's picture

Agree with some of what you said. Not all. Yes, the EU heads and their Fed masters won't play the game of default, roll over and play dead. They are well aware what happened last time and no longer so arrogant to believe in "market fundamentalism" and that the baying hounds won't attack if allowed. 

But there in EUland as here in the US and there in Asia and everywhere in the OECD world, things will be moving in one direction, down the path already chosen: further centralization which the majority by far will support to avoid disintegration and a return to civil war and feudalism. 

Sat, 05/19/2012 - 21:52 | 2444096 Al Gorerhythm
Al Gorerhythm's picture

The implication by his statement and the regular smashing of gold and silver is evidence that market fundamentelism doesn't matter (in the short term). When you have control over the regulators and politicians, all that matters is that you don't lose control, which leaves you in control of the markets. Loss of control is bank runs, redemptions, sitting on the sidelines, buying other assets that they have no control over, once bought and held in the white-knukled grip of your hands. Our salvation is their nightmare. Right now, the majority follows them. Later, we'll lead.

Sat, 05/19/2012 - 22:07 | 2444143 oldman
oldman's picture

@al g


I'm laughing so hard at your great sarcastic comment: "They are doing the only sane thing they can do, from their perspective and that is survive,"!!!

We are truly talking about insanity when we jokingly refer to these dudes as being in 'survival mode. The funniest post here in a long, long time.

When these derivatives come apart then we truly speak of 'survival', but until then I will hold your post close to me as a means of quieting the anger within.

Thank you for lightening an oldman's heavy evening         om

Sat, 05/19/2012 - 23:47 | 2444383 Al Gorerhythm
Al Gorerhythm's picture

"If you have come across our 'five phases of grief' framework – it appears we are moving straight from 'depression' back to 'anger'."

Great that you still have a chuckle or two left Old fella. Me, I've run out of the depressive emotion that he suggests and am just over the anger thing. I have moved on to the "Acceptance" or fifth level and am absorbed in how to deal with these sociopathic parasites. I accept them as they are. They have a gene that wills them to destroy the host or at least create a zombie of the host that lives forever in the grasp of their siphoning tentacles. Not this little black duck. My tapeworm remedy is gold and silver. It's available at all natural remedy stores. Tulving is one or Apmex another. Good health.

Sat, 05/19/2012 - 19:54 | 2443940 Bill D. Cat
Bill D. Cat's picture

Come hither , drink deeply of the Merkhoolade .

Sat, 05/19/2012 - 18:50 | 2443861 ArkansasAngie
ArkansasAngie's picture

Neither a Democrat nor Republican be.

I'm not sure that the Banksters understand that the natives are getting a tad bit unhappy.  They might not be giving enough thought to backlash.  Folks are getting tired of working their arse's off only to see their life styles go down and the Banksters laugh all the way to the bonus atm.

Sat, 05/19/2012 - 19:01 | 2443871 XitSam
XitSam's picture

They understand. They don't care. There is still wealth than can be extracted.

Sat, 05/19/2012 - 21:36 | 2444034 Al Gorerhythm
Al Gorerhythm's picture

It's not that they don't care. It's just that you are on the other side of the trade and that's all that matters to them. They need someone else on the other side of the trade, voluntarily or not. 


"Ze market needs to know vat ze policymakers are committed to and it needs to see actions zat ve vill take that validates our commitments. Inaction vill allow investors to sit on ze sidelines and wait for things to deteriorate further!!!!!! Ve vill not let zat happen!!!! Ve haf vays of making you bet!"

You can check out any time you like

but you can never leave.


Sat, 05/19/2012 - 22:32 | 2444212 HungrySeagull
HungrySeagull's picture

Jawhol~ Panzer Dueschemarks Schnell!

Sat, 05/19/2012 - 19:38 | 2443927 Harbanger
Harbanger's picture

It may be Neither Democrat nor Republican but it is about ideology.  All they can do now, is print to sustain their unsustainable project.  Eventually, the entire welfare state collapses along with our currency. 

Sat, 05/19/2012 - 18:52 | 2443862 Eric L. Prentis
Eric L. Prentis's picture

The banksters call for more fixed and manipulated markets, disgusting.

Sat, 05/19/2012 - 20:26 | 2443964 FinalCollapse
FinalCollapse's picture

God forbid the price to find its equilibrium. Price is the enemy. The banksta don't believe in supply and demand. The price must always  go up...

The fucking idiots at the Fed still calculate the P/E  ratios.

Sat, 05/19/2012 - 18:53 | 2443863 no life
no life's picture

How bout try another bank stress test?  Reckon that'd do the trick.

Sat, 05/19/2012 - 19:06 | 2443882 francis_sawyer
francis_sawyer's picture

"I'll Have Another" ~ (wins Kentucky Derby & Preakness)


Sign of the times... Let the printing presses roll...

Sat, 05/19/2012 - 22:34 | 2444215 HungrySeagull
HungrySeagull's picture

No. no . no. Not since Affirmed and Spectacular Bid (Along with Silver charm) has there been a triple.

This one Another is a BIG horse....

The rest ship off to Slaughter.

Sat, 05/19/2012 - 19:07 | 2443883 midgetrannyporn
midgetrannyporn's picture

If anyone is qualified to tell Europe how to handle their affairs it is Citigroup. [/sarcasm]

Sat, 05/19/2012 - 19:08 | 2443885 Everyman
Everyman's picture

Dear Policticians and banksters,


Please FUCK OFF and DIE.  Collectively, take that shiney new handgun out of your desk, load it, and then point it at your collective heads and pull the trigger.  You will be doing the world a favor, and it would be your greatest collective gift to the world.  Your kind is no longer needed on this planet, nor will it be tolerated in the future.  You offer nothing of value, and contribute nothing to our society.  You are OUR problem, YOU are THE PROBLEM.

No more bailouts, no more spending passed your revenues, no more special deals, let's get back to real market and real investing and REAL WEALTH BUILDING!

Or you could just fucking quit.



The Global community

Sat, 05/19/2012 - 20:21 | 2443963 SilverDosed
SilverDosed's picture

I wish jumping out of office building windows would come back in style, any form of modern Seppuku is alright with me.

Sat, 05/19/2012 - 22:34 | 2444217 HungrySeagull
HungrySeagull's picture

The HUDSUCKER Proxy will give you the answer to the Window jump.

Get the DVD and watch!

Sat, 05/19/2012 - 21:09 | 2444003 LeBalance
LeBalance's picture

Dear Global Community,

We sincerely wish you all were smart enough to get out of the Matrix on your own and lead decent lives, but the very great majority of you are still entralled by porn, hollywood, and mickey mouse.

We serve you with BEER, NFL, Playboy, and CONGRESS and you are not even thinking in the slightest about leading reasonable lives on a farm somewhere.

Nope, you all work for the TEAT.  You just can't suck the Squid's dick enough.

Fucking drug addicts.


From all of us here at Circe Central, eat your burger, Fucker.

Have a Nice Day.

Sat, 05/19/2012 - 22:18 | 2444174 Everyman
Everyman's picture

Well put LeBalance.

Sun, 05/20/2012 - 00:26 | 2444437 slewie the pi-rat
slewie the pi-rat's picture

none of you meat packers at cirCent could hold mickey's tail, dickwad

Sat, 05/19/2012 - 19:11 | 2443888 ISEEIT
ISEEIT's picture


A cute response would be:

Who is John Galt?

A real response however must assume that the playay's will keep playin'.

A global print orgy is about to spray sticky, yucky, eweey, stuff on all of us.

The end of ideas.

I would love to do me some art at this point. I would love to arrange them all in a 'certain way'.

I could make a quite marvelous project out of that.

Evolution absent the mind fuck.



Sat, 05/19/2012 - 20:27 | 2443969 Everyman
Everyman's picture

As in "art" via Joker??!quotes/

Sat, 05/19/2012 - 19:14 | 2443891 insanelysane
insanelysane's picture

Love this quote, "There seems to be a dangerous perception in many places that enough has been done already."

Typical arrogant asshole gansta bankstas.  People don't think that enough has been done already.  People know that what has been done already doesn't work because you can't fix a debt problem with more debt.  The people understand what is going on because it really isn't that complicated.  The bankstas and politicians want the sheeple to think that it is complex but they are losing the propaganda battle as well as the financial battle. 

The world needs a reset where all of the debt vaporizes instead of people's capital being vaporized.

Sat, 05/19/2012 - 19:20 | 2443900 Ahmeexnal
Ahmeexnal's picture

Vaporizing debt would imply sayin goodbye to pensions, all bank accounts, all "funny money".
Got phyzz?

Sat, 05/19/2012 - 21:28 | 2444033 Caviar Emptor
Caviar Emptor's picture

Yes, will never be allowed

Sat, 05/19/2012 - 21:42 | 2444058 TonyCoitus
TonyCoitus's picture

From thin air it came, to thin air it goes!
Vaporize bitchez!

Sat, 05/19/2012 - 19:16 | 2443893 sudzee
sudzee's picture

The printing will come at some point but the man on street will never see a dime of it.

Sat, 05/19/2012 - 20:02 | 2443949 Harbanger
Harbanger's picture

He will, but they will be made of tin.

Sat, 05/19/2012 - 22:35 | 2444220 HungrySeagull
HungrySeagull's picture

The Nickels are worth more in melt value.

A birdie says so.

Sat, 05/19/2012 - 19:17 | 2443896 Sudden Debt
Sudden Debt's picture

If they are flush with cash, why are they starting to offer 5% on deposits again here in Europe?

Sat, 05/19/2012 - 19:22 | 2443907 Ahmeexnal
Ahmeexnal's picture

Monthly inflation will be 5000%.

Sat, 05/19/2012 - 19:18 | 2443897 LetThemEatRand
LetThemEatRand's picture

Dear Citi Credit Strategy,

Fuck you, you FUCKs.


Honest working people everywhere who actually earn a living and from whom you are asking various governments to steal to line your pockets.  You fucks!

Sat, 05/19/2012 - 23:47 | 2444386 StychoKiller
StychoKiller's picture

Hmm, taxpayers are ALSO supporting Gramps via Medicare and Social Security, but perhaps you're in favor of that type of robbery...

Sat, 05/19/2012 - 19:20 | 2443901 q99x2
q99x2's picture

'Investors sitting on the sidelines'

Thar she blows

Sat, 05/19/2012 - 19:59 | 2443945 Pure Evil
Pure Evil's picture

With hundreds of millions unemployed both in the US and the EU, is it any wonder the velocity of cash sloshing around the Wall Street casino has plummeted.

Investors on the sidelines? What else can they do?

My suggestion is to allow SNAP cards and welfare payments to be used to play the Wall Street craps table. At least this way we can continue to fund Wall Street instead of the liquor industry and drug cartels.

Sat, 05/19/2012 - 19:22 | 2443906 no life
no life's picture


Sat, 05/19/2012 - 19:25 | 2443911 Reese Bobby
Reese Bobby's picture

I reckon Shittybank is losing it...

Sat, 05/19/2012 - 19:27 | 2443913 buzzsaw99
buzzsaw99's picture

Dear C: You Have 0 Friends

Sat, 05/19/2012 - 19:29 | 2443917 cherry picker
cherry picker's picture

According to Wikipedia the Nimitz Class Aircraft carrier cost $4.5 billion to build.  Not many countries can afford nuclear powered aircraft carriers as the construction, operation costs and maintenance are expensive.

JP Morgan has taken an estimated $3 billion dollar loss which may increase to $5 billion when the final results are tallied and they do not seem to be too concerned as they make so much money.  The anticipated loss is more than it cost to build the carrier.

According to Forbes the world's three wealthiest men are collectively worth about $174 billion.  That would be 38 carriers between the three of them or over 12 carriers each.

Assuming an average middle class individual makes about $50,000 per year (just guessing), it would take a person 90,000 years to be able to build one aircraft carrier or the total wages of 90,000 people for one year.

The three wealthiest men in the world are basically worth the effort of 3,480,000 workers earning $50,000 each for one year.

I have nothing against an entrepreneur becoming wealthy.  Wealth has its own problems.

I just have trouble reconciling the fact a publicly traded corporation can lose the equivalent of one aircraft carrier and not be too concerned.  Where is the money coming from?

Sat, 05/19/2012 - 19:47 | 2443935 LetThemEatRand
LetThemEatRand's picture

The money is coming from future you and me (taxpayers).  The debate here and in the MSM about regulation, taxes, etc., is all just noise.  The last 40 years has been a full court press of wealth transfer from the middle class to the top.  They don't intend to give it back, and they know that the middle class is going away in the process.  The goal of QE is not to fix anything.  The end game is they own everything and we're all serfs.  They have already achieved above-the-law status as evidenced by the complete lack of criminal prosecution of anyone in the banking sector despite obvious massive fraud.   These guys want to be more than just rich.  They want to own us, literally and figuratively.  Do you think a guy like Jamie Dimon shows up at "work" every day because he needs the money?

Sat, 05/19/2012 - 21:39 | 2444052 Caviar Emptor
Caviar Emptor's picture

@LetThemEat : Agree. But the top is staring into the abyss more and more every day. They understand the power of an angry mob. And with tens to hundreds of millions unemployed the backlash would be vicious. The hope that they could re-create a society of wannabe yuppies watching Lifestyles Of The Rich and Famous while chowing down on sushi has vaporized since the crisis began. And many of the lemmings are not so ill-informed anymore as they had been in previous generations. So the hope of introducing an iron pro-elite, anti-democracy leader by coup-d'etat a la Hitler is just nostalgia. All parties will compromise in favor of maintaining the status-quo at all costs. If that means turbo-printing and price controls so be it

Sat, 05/19/2012 - 23:01 | 2444284 RockyRacoon
RockyRacoon's picture

Thanks for that.  It is what crosses this feeble old mind when I read about the things that occur during the Occupy Movement(s).   Their aim may be off, their message muddled, but the underlying discomfort and near-boiling anger is quite visible.   One doesn't have to know about all the minutiae of banking and finance to know that the hammer is coming down -- on you!

Sat, 05/19/2012 - 22:37 | 2444223 HungrySeagull
HungrySeagull's picture

And I was told the payroll is 5 billion a month on those Carriers.

I don't know if it is correct or not... At least today it's all in Binary instead of being hauled in by the greyhounds.

Sat, 05/19/2012 - 19:34 | 2443921 Peter Pan
Peter Pan's picture

How hard would it be to convert (say) 10% of depositors funds into bank share capital so that banks once again are solvent enough to then write off their losses, liquidate housing stock and then start afresh. Those newly issued shares would then over time be either bought back or else traded so that the initial amount "confiscated" could be recouped if not more.

The reason this has not been done is that the owners of banks don't want to see THEIR equity being halved and bankers will not want to face the new shareholders demanding a reduction in their bonuses and salaries.

So let's see how the bright sparks will resolve the issue given that they created it.

Sat, 05/19/2012 - 19:57 | 2443942 Joe The Plumber
Joe The Plumber's picture

It wont be as simple this time. Bailouts started the tea party and they knocked every single republican congresscritter out of office who ran that year who voted for a bailout

There is no chance for a bailout. Barney frank was even quoted saying that. The government has the tools to seize the banks now and break them apart outside of bankruptcy

Get voted out of office versus seize tbtf and break them up in an orderly deleveraging?

Dont assume we know how this ends just yet

Sun, 05/20/2012 - 10:59 | 2445059 slewie the pi-rat
slewie the pi-rat's picture

no, it won't be simple

and bank consolidation & deleveraging can mean different things, i guess:  corzine; jamieD; D'escapades' K; qadaffy?  iran?  spain?  ireland?  the US?  iceland?  canada?  china? 

no, we are truly mushrooms, here;  still in the dark [as is everyone, if you think about it] and attracted by theDurdenDiet, which contailns much less "shit"

i can testify that i have shed unwanted living, HUNGRY flesh (and hair, too!) due to:  no TV + zH + sex,drugs,and rock&roll + schwinns + anything else i freaking decide to try

and here it is may, 2012, and there isn't too much chance of partying like aNarragansett till the next time theHouse is up in '14;  and about half the site is having the whole place going hand-to-hand before november, anyhow

rPaul may still bolt, but he may also be part or most of the reason not much else is happening;  yet;  that and (see ori )

i like ronP and i like his message, at least the parts of it i can understand, and "actions speak"

but if he doesn't get on the wurlitzer as a prez selection option b/c he is a "party" guy and doesn't want to "hand the election to prez0":  then functionally, operationally, he managed a heluva lotta attention and brought it to ground in a plank of theR platform

now, that's change ya can believe in!

anyhow, with stuff like #occupy and ronP's run happening since the "debt ceiling & downgrade of the nation's credit" [making it "cheeaper" L0L!!!] the staus quo seems to have puppy paws at this point, they're so proud of themselves for handling all the dissident stuff so well

i think that may be some of the reason some are here on zH:  to see if we can figure out how to do it right, if possible, since possibilities change;  as do impossibilities

as we see here, every day, engaging each other in realTime, as tyler has the banksters sending love-notes to the pols, here

well, with all these different "jurisdictions" the banksters+pols are screaming samurai, crippling entire nations, collecting tribute;  but the "markets"?  no problemo!  the same versatile asswipes are simply our trusted wealth depositories, brokers, advisors, and "tax consultants" with int'l "markets" and freeTradeTM

and the banksters can CTRP+P = do-re-mi, which the politicians just love!

NW0?  where?

Sat, 05/19/2012 - 19:57 | 2443943 strangeglove
strangeglove's picture

If my Snap card is denied theres gonna be trouble!

Sat, 05/19/2012 - 22:37 | 2444225 HungrySeagull
HungrySeagull's picture

If you are ON the snap, you are already in trouble.


Sat, 05/19/2012 - 20:38 | 2443977 booboo
booboo's picture

that was by far the politest ransom note ever written

Sat, 05/19/2012 - 20:45 | 2443983 mcguire
mcguire's picture

"But 1000bp on Crossover is much closer than you imagine."  forgive me, what does this mean??

Sat, 05/19/2012 - 21:11 | 2444006 kiwibear
kiwibear's picture

·         I refuse to buy into the insanity of the notion that having the ECB "act as the lender of last resort" and simply buy up peripheral govt debt en masse is any sort of solution.

It may appeal to the devotees of Modern Monetary Theory, but for us mere simpletons, it doesn't pass the most basic of stink tests.

The logical extension of its premise is that sovereign central banks can just merrily issue debt ad infinitum, that we all live off the waves of liquidity that result, and if the shit hits the fan, the ECB/Fed/IMF/ FAIRY GODMOTHER will step in and save the day with Magic Money.

Similar thinking applies to the TBTF banks and their reckless gambling.

If it was all so bloody easy it would have been done for centuries.

However the only way the lunatics that are running the place will come to see the error of their ways is when the can-kicking finally doesn't work any more, and the whole Ponzi comes down in an unbelievably hideous, deadly way.

At every step of the way, taking our VERY PAINFUL medicine now will be preferable to the consequences of kicking the can down the road which are becoming more and more horrific.

 Should have been done in 2008 but wasn't so now is worse. Should be done now.

Default the unpayable debts. Let all the stupid "investors" who didn't pay sufficient attention to the potential DOWNSIDE of their bets, INCLUDING COUNTERPARTY RISK, fall, and pick up the mess afterwards.

We do not need the banking system as it currently exists or the millions of faux jobs that exist as a result. Imagine if the excellent minds that are currently funnelled to Wall St/ The City were actually engaged in productive/creative/inventive/innovative  pursuits - their potential for the betterment of humankind is massive.

If the ECB/Fed and likeminded powers that be print infinitely as so many financial types want then the ultimate reckoning will be unfathomably bad.

Let the Ponzi fall.

Sat, 05/19/2012 - 21:55 | 2444110 TonyCoitus
TonyCoitus's picture

Bravo +1

Sat, 05/19/2012 - 21:12 | 2444007 Alexandros
Alexandros's picture


...the barbarians, who forced beautiful Europe to get down Zeus’ “back” and made her a prostitute.


The end of the world is near

The ten plagues of Pharaoh “have been brought upon” the USA.

Sat, 05/19/2012 - 22:13 | 2444145 Element
Element's picture

The pot calling the kettle black.

Have a look, I think you'll find Greece is the disgrace of Europe today, and Germany is the favoured son.  It is Greece that has been visited with said plagues also.  Why pretend Germany is at the heart of Greece's or Europe's problems, or the other PIIGS issues?  What we have in the PIIGS is a failure to trade competitively, and their own blowing off their foot, via ditching their Sovereign currencies, in order to get onto the euro debt-tit.

Mission accomplished

If you don't want EU bank bailout agreements, the Euro economic death-trap, and the EU Commission, and the IMF calling the shots, then just vote it all down in June. Then you can have a war with Turkey or Persia and show the western world how great and valuable you are as a strategic bulwark again.


It's all just kulture and blame-games mate.

Sat, 05/19/2012 - 21:14 | 2444010 djsmps
djsmps's picture

Fascism is starting to be in style again.

Sat, 05/19/2012 - 21:56 | 2444022 Element
Element's picture

Just finished listening to Obama say at the wrap-up of the G8 meeting that he had 'affirmed' and was 'con-fident' that Europe had the capacity and determination to meet it's 'challenges' ... blah-blah-de-blah-blah ... either he doesn't know shit, is delusional, or is lying his arse off.

You only have to look at events and trends from 2007 on, and each year the problems have multiplied and Sovereign debt is skyrocketing.

... Assuming, accordingly, that, at some point of time, a state of over-indebtedness exists, this will tend to lead to liquidation, through the alarm either of debtors or creditors or both. Then we may deduce the following chain of consequences in nine links: (1) Debt liquidation leads to distress selling and to (2) Contraction of deposit currency, as bank loans are paid off, and to a slowing down of velocity of circulation. This contraction of deposits and of their velocity, precipitated by distress selling, causes (3) A fall in the level of prices, in other words, a swelling of the dollar. Assuming, as above stated, that this fall of prices is not interfered with by reflation or otherwise, there must be (4) A still greater fall in the net worths of business, precipitating bankruptcies and (5) A like fall in profits, which in a ” capitalistic,” that is, a private-profit society, leads the concerns which are running at a loss to make (6) A reduction in output, in trade and in employment of labor. These losses, bankruptcies, and unemployment, lead to (7) Pessimism and loss of confidence, which in turn lead to (8) Hoarding and slowing down still more the velocity of circulation. The above eight changes cause (9) Complicated disturbances in the rates of interest, in particular, a fall in the nominal, or money, rates and a rise in the real, or commodity, rates of interest……


And, vice versa, deflation caused by the debt reacts on the debt. Each dollar of debt still unpaid becomes a bigger dollar, and if the over-indebtedness with which we started was great enough, the liquidation of debts cannot keep up with the fall of prices which it causes. In that case, the liquidation defeats itself. While it diminishes the number of dollars owed, it may not do so as fast as it increases the value of each dollar owed. Then, the very effort of individuals to lessen their burden of debts increases it, because of the mass effect of the stampede to liquidate in swelling each dollar owed. Then we have the great paradox which, I submit, is the chief secret of most, if not all, great depressions: The more the debtors pay, the more they owe. The more the economic boat tips, the more it tends to tip. It is not tending to right itself, but is capsizing……


Unless some counteracting cause comes along to prevent the fall in the price level, such a depression as that of 1929-33 (namely when the more the debtors pay the more they owe) tends to continue, going deeper, in a vicious spiral, for many years. There is then no tendency of the boat to stop tipping until it has capsized. Ultimately, of course, but only after almost universal bankruptcy, the indebtedness must cease to grow greater and begin to grow less. Then comes recovery and a tendency for a new boom-depression sequence. This is the so-called “natural” way out of a depression, via needless and cruel bankruptcy, unemployment, and starvation.  On the other hand, if the foregoing analysis is correct, it is always economically possible to stop or prevent such a depression simply by reflating the price level up to the average level at which outstanding debts were contracted by existing debtors and assumed by existing creditors, and then maintaining that level unchanged.

- Irving Fisher, The Debt Deflation Theory of the Great Depression, 1933.


So as Fisher recommended, to avoid the debt-deflationary spiral type of economic depression that slaughters GDP stats, real jobs and finacial sector voodoo, the central banks have instead gone for ZIRP and reflated currencies and assets, to encourage more debt bubble-ism, especially Sovereign debt expansion (and compelled state asset sales).  And thus boosted inflation, while statistically denying it, even as wages shrunk, and buying-power retracted further, as FX gyrated, which made business planning and manufacturing for export seriously problematic and distressed. 

Thus aggregate demand is falling away into another deep and damaging recession anyway, with and due to feedbacks, sharp unemployment rises and austerity cuts to deficits any way.  Until now the deficit cutting austerity is being perceived as deflationary, inducing a death-spiral, as we enter the liquidity-trap proper.

And the new political 'solution' is to tip the boat all the more!   But this time via expanded deficit spending (as with Spain) to increase Sovereign debt load, which won't occur long, because the economic boat will now just capsize all the faster as taxes for interest and deficits rise, and disposable income retreats. 

i.e. the Krugman solution, where you re-inflate the party balloons before you capsize anyway.

And that is what Europe's periphery politicians are intending to do, one last attempt at sly deficit increases, or the suspension of cuts, thus debt-growth reflation, and hope everyone will play along with it for another year or two.

So we're still tending to capsize all the more but via Fisher's alternate path, namely maintained debt-money reflation with sustained ZIRP. 

That's the very thing that Fisher recommended had the potential to fend-off a debt-deflationary death-spiral, specifically caused to over-indebtedness, but it has simply channelled the zombie TBTF's decay into asset-price reflation, commodities, massively damaging derivative malinvestment and arbing, merely causing a delayed reaction to pending Depression, that has manifested as a building Sovereign Debt crisis.  That has variously masqueraded as a "recovery" for the past 4 years.

The very thing which Rogoff and Reinhardt's "This time it's Different" (800 years of data) identified to be the common characteristic to economic depression, and to investment malaise in the event of private indebtedness, and Govt failures to balance budgets, but to instead resort to manipulations and debasement of currency.  Which is to say that this time is no different at all - not one bit. 

It was actually the last Great Depression, after 1929, where they tried something a bit different, and it turned out pretty badly too.  So the Central Bankster's supposed 'new' solution in 2008 to the common trait of over-indebtedness (which has always been the defining core problem leading to the expression of economic depressionary capsize) has resulted in the exact same traditional historical path and result.  A Great Depression is a typical result from a region-wide Sovereign debt crisis and default.

So much for the not at all 'new' ZIRP + Helicopter theory of avoiding Great Depressions -- it has never worked, the debt has to go first, and asset prices have to be what the market will bare. 

The real solution to preventing Great Depressions is to have a financial system that can not get the whole planet into a debt-money pseudo-'growth' bubble (a misallocation of investment capital), in the first instance.

Debt-money's spiral 'growth' is what really creates a Great Depressionary capsize. 

This cause has always been of the same sort; private and public over-indebtedness combined with a delusional political ideology that asserts, falsely, that balancing budgets does not really matter, and has no serious consequences, at the level of a Sovereign State and its currency.

 If subsequent systemic 'reform' does not have combating this as its core long-term aim, but instead seeks to fan near-term growth and greed for superficial political and financial opportunists to degrade the economy ...




Well, you get a lying delusional jerk like Obama at G8 press conferences telling you all is well, even as the real-economy is tending all the more to actually capsize proper.

Over-indebtedness and failure to balance budgets means your economy WILL capsize.


EDIT: Instead of realising this fact, they think thay can just do what Japan did ... but the problem is the EU and USA can't maintain full employment, like Japan did, because demand has dried up, and it wasn't for Japan, plus the much too late (pseudo) Austerity diet means demand will fall all the more, and employment with it ... hence MMT's push for a "Jobs Guarantee", paid for via fiat printing, to goose aggregate demand and provide a pool of work ready and pysically fit and trained labour.

Sat, 05/19/2012 - 21:24 | 2444027 Atomizer
Atomizer's picture



Dear Citi Credit Strategy, 

We appreciate your heeded warnings. Frankly, our strategy is nothing more than Shooting Fish in a Barrel. As we ratchet up our crisis mode, Operation Twist comes to a close in June. We plan to continue our Shooting Fish in a Barrel motive to receive monies from the Bernanke under US National Security measures.  

Pity that you write such garbage to escalate fear in the eyes of our universal pets. We ask that you take a second look at your books. Further public nuisance letters will cause scrutiny on an oversight we’ll expose. Consider the importance on carrying the franchise privileges/benefits. Our charter will indeed manifest, with or without you. Take precautions and think of your future. We look forward to servicing long term relationship with our lower tier partners.



Angela, Francois, and Mario



Sat, 05/19/2012 - 22:39 | 2444230 HungrySeagull
HungrySeagull's picture

Dear Citi.

It will please the People to no end to see the banking as we know it today vanish from this life.

Don't look to FDIC, they cannot help you.

Sun, 05/20/2012 - 03:13 | 2444638 Olympia
Olympia's picture

How is it possible that the European Union allows the weak states to enter the international money market and borrow the money they need without help – based on their own potentials? How is it possible that the “chain” of interests of euro can let its weak “links” exposed to outside pressuresHow is it possible for a “herd” with common interests to let each “ship” defend itself against the wolves, without help, and its general security threatened? How is it possible for Greece, which represents a minor 3% of the Eurozone’s economy, to be allowed to threaten the other 97% of that economy, due to the latter’s weakness?

The European Union should be the one borrowing from the national banking system – thus dealing with profiteers itself based on its overall potential – not its weak “links” alone. The latter should be under the EU’s protection and constant monitoring. They should borrow from it at a subsequent time and if they became victims of profiteering, the problem should be kept in the bosom of the euro. Domestic profiteering should bring profits to Europe’s influentials, therefore bring profits in the euro area, and not threaten it.

From the Wall Street Crash of 1929 to the Global Financial Crisis of 2007


Authored by Panagiotis Traianou

Sun, 05/20/2012 - 05:49 | 2444738 Inthemix96
Inthemix96's picture

Dear citi executives.

We here have been doing an exhastive reaserch program over the past four years concerning the ethics and policy procedures of your outstanding business models.

Now it seems we may be in a bit of a bind here, we would like to know where the fuck you have put all that money you theiving fucking swines.

You have until mid day monday to supply the relevant information or we are going to pop round your head quarters and start removing fucking body parts from your said bodies you theiving coniving bastards.

And another thing, stop nicking the fucking staitionary you fucking pricks, dave from accounting told me you were nicking the parker pens you theiving fuck shites.

Yours sincerely

The fucking World.



Sun, 05/20/2012 - 07:29 | 2444788 Victor Berry
Victor Berry's picture

Prosecution of financial fraud is impossible.  For every management flow down utterance of "if you can't get the done, I'll get someone who can" there is an equal upflow of plausible deniability as in "I never told him to do that."

Sun, 05/20/2012 - 08:05 | 2444816 boooyaaaah
boooyaaaah's picture

, "Hi-yo, .... Return with us now to those thrilling days of yesteryear,

Pre 2008 when naked shorting --- ruled the roost, and none were the wiser

fleecing the Ameican investor in the name of liquidity, trivial misdeamenor you say!

Like running a stop sign, like income tax evasion --- oops sorry Al Capone

The simple creation of shares out of thin air --- what harm could come of that

Well it yet may be the Too Big To Fail achillies heel,


Matt Taibbi's smack down.     Accidentally Released - and Incredibly Embarrassing - Documents Show How Goldman et al Engaged in 'Naked Short Selling' POSTED: It doesn’t happen often, but sometimes God smiles on us. Last week, he smiled on investigative reporters everywhere, when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public.   The rest:    

Sun, 05/20/2012 - 13:14 | 2445256 slewie the pi-rat
slewie the pi-rat's picture


Sun, 05/20/2012 - 09:58 | 2444951 Motorhead
Motorhead's picture

Say, where's Dick "Oy vey" Bove' been lately?  Surprised he hasn't been yappin' his jaws about JPM lately.  Then again, maybe he has, but chances are if he's on a TV network, it's one I don't watch.

Sun, 05/20/2012 - 11:51 | 2445138 laspeyres
laspeyres's picture

I remember back in December, as LTRO was unveiled the same story on this site: a lot of yanks predicting the end of Europe and the end of equities and salivating about the prospect for gold.  Here we are, with the same old retards knocking out the same old arguments...

Sun, 05/20/2012 - 12:01 | 2445150 sockratte
sockratte's picture

well, did you see anything getting better? or rather getting worse? ;-)

quote from above :-) Until the gravity of the situation is made clear, until the self-reinforcing mechanisms that already seem to be in motion are understood, we don't see how the solutions, the answers, and the certainty that market craves can be brought to the table.

Sun, 05/20/2012 - 13:41 | 2445327 Let The Wurlitz...
Let The Wurlitzer Play's picture



Sun, 05/20/2012 - 15:57 | 2445634 BeerGoggles
BeerGoggles's picture

This is a buy signal

Mon, 05/21/2012 - 06:43 | 2446735 Nachdenken
Nachdenken's picture

Uncertainty is what hedge funds should balance out, asynchronic and assymetric price movements are traded,  That is a clean and free market as far as we can get right.

Banks already have loss writeoffs and taxpayer bailouts.  Citi wants guaranteed profit positions.  Well, politicians in Europe probably have got that regulated as well.  Or will, after this letter.

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