ECB Surpasses €3 Trillion, Still Most Undercapitalized Hedge Fund In The World

Tyler Durden's picture

A few days ago when discussing the "stability" of Europe's biggest and most undercapitalized hedge fund, we said that "The adjusted balance sheet is pro forma for today's LTRO 2, which we noted earlier will add at least €311 billion in net assets to the ECB's balance sheet, and potentially much more. Assuming the minimum, it means the ECB's balance sheet will now hit €3 trillion." Sure enough - as of minutes ago, the total ECB balance sheet just passed €3 trillion, or €3.023 trillion to be precise (which is just why of $4 trillion based on today's exchange rate), as our estimate of net LTRO contribution was on the low side, with total assets increasing by €331 billion in the past week. Needless to say, capital and reserves has been unchanged, which means that our analysis from a week ago factoring in the ECB balance sheet expansion of the "well-capitalized" ECB was correct. Incidentally, the spike in the chart below was factored in long ago (about 20% lower in the market ago). And as we have been saying all along, the next bank on the docket to ease is the Fed, as everyone else has already done so. However before that happens stocks and more importantly crude, have to plunge by at least 15-20%, much to Dick Fisher's shock. It seems that the market is finally getting the hint today.

As for how the capitalization looks like, here is what we showed a week ago:

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
FOC 1183's picture

wait, isn't the Fed levered 58x?

Tyler Durden's picture

The seasonally adjusted number is much better. Trust us.

Tortfeasor's picture

And the hedonistic adjustments are even better.

Zero Debt's picture

Not to mention the inflation adjusted numbers.


If these cocksuckers weren't able to flush Gold and Silver prices down by force, this charade would have ended some time ago..

Ahwooga's picture

That single coloured graphic of the capitalisation is the funniest shit ive seen all day. Wonderful stuff.

Sam Clemons's picture

When you are unauditable and can create your own money, is it possible to go bankrupt?

taniquetil's picture

That my friend, is the $100 question.


It would be the $3 trillion question but it got inflated into nothing.

Elvis is Alive's picture

Estimates are the Fed is levered 50:1 to one but it is buying really stable assets: Fannie and Freddie Bonds, T bills and bonds ETC. I know a lot of people on gold loving ZH think these are terrible investments, but they really aren't and nowhere near as risky as what the ECB is buying, mostly Spanish and Italian bonds. Default is inevitable for Spain and Italy, but the U.S. has never defaulted and it doesn't have to if it gets its shit together.

GeneMarchbanks's picture

If they only answered to someone...

Jason T's picture

Worth the read.. is the ECB Florance? Will Greece be the King Edward III?

History repeats because the nature of man hasn't changed.

GCT's picture

Thanks Jason was a good read.  You might even insert oil instead of wool and other agriculture produce.

theFlyingDutchman's picture

Up up and awaaaay!

You lucky Americans are in much better shape with 8133,5 ton Gold reserves. ;)

Ted Baker's picture


ivars's picture

xcuse me for self promotion, but this chart :

is unbelievably accurate during the late peak un current silver selloff (see the little triangle peak around March 1st, green chart)  and its source chart (longterm silver prediction chart where I copy it from):

was made on October 17th, 2011. The older one, from March 13th, 2011 (red chart) does not look bad either. Interesting to see how close it will be to spot price on its yearly anniversary on March 13th, 2012.

All prediction  charts can be found here:

Theta_Burn's picture

Long term PM prediction and TA in the PM markets...

How goes the self promotion?

moonman's picture

You really got post this on every story?

cherry picker's picture

I don't know much about international finance and LTROs but I do know what I see.

In the last three weeks it has taken me less time to commute 125 miles.  Seems like the rush hour parking lots are thinner and last night I made it home in record time within the speed limit, during rush hour.

Our customers are all reporting no growth and in most cases decreasing revenues.

Usually these things are noticed first before the government or news pick up on it by a factor of 3 to 4 months.

If what I am observing is an indication, we are in trouble.

Tortfeasor's picture

The casino was packed on Sunday night, tho.

Mongo's picture

Give me all your ponzi and I shall not care who eats your cake

Bansters-in-my- feces's picture

The word "Ponzi" comes to mind......

Dr. Engali's picture

What's wrong with a little leverage? After all Merrill was only leveraged 40 to 1 and look at them. Okay bad example .... Look Lehman they were only leveraged..... Ah nevermind. We are fucked.

GCT's picture

I am not an investor per se. I do buy gold.  I am trying to follow this very closely.  So enlighten me.  The ECB is creating digital Euros and lending it to the banks who in turn are reparking the money with the ECB?  I do not get it.  This looks like a circle jerk with digital Euros or dollars that are not doing anything for anyone except making the banks look better?  What a scam.  Am I look at this wrong all?  I am not trying to be sarcastic just trying to understand this crap.  It appears to me they are creating nothing and then giving that nothing right back to the creators. 

Stackers's picture

Zerohedge covered this, they are not giving the money back to the ECB. That is other banks. But you are starting to clue into the fact that our whole "financial services" industry is basically a bunch of guys sitting in a circle and passing a rock around selling it to each other and everyone making a profit every time and everyone getting rich.

GCT's picture

Stackers thanks for the reply.  I read this site daily and some things I do not understand.  Sometimes it is hard to follow.  Thats why I asked this question.  I am trying to comprehend all of this and I only started reading up on financial in 2009.  What other banks are you talking about then.  Sorry for being stupid.  It is tough when you do not have a financial back ground at times. 

I took it in the ass in 2008 by thinking you put your money into a 401k and your investor would do their best to get you a return on your money.  I no longer do that and get better returns and made all of my losses back and then some.  But to be honest with you I do not understand it all and there are time I do not understand the jargon.  I used to dabble in gold and for the last 4 years I got serious. 

Stackers's picture

To infinity and beyooooooooond !!!

Thats not flying - Thats falling ---- with style.

slewie the pi-rat's picture

they be ok!

they are backed by the "full faith and credit" of the US and other commie regimes, everywhere!

Sandmann's picture

Can't the ECB merge with The Fed and move to New York ?

falak pema's picture

Ben n Jerry show goes on...central bankers are like Venice of middle ages.