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ECB Buys Italian Bonds, Third Major Central Bank Intervention In Past 24 Hours As Status Quo Panic Explodes

Tyler Durden's picture




 

At exactly 9 am, half an hour into Trichet's press conference, the world's most undercapitalized hedge fund: the European Central Bank, demonstratively came in and started buying Italian bonds in hopes the market will forget just how broke the European continent truly is. This is the third major intervention by a central bank in capital markets in the past 24 hours following the SNB and the BOJ. Next up the Fed, and everything going to hell. Because even as Italian bond yields drop below 6%, the selloff in Portugal bonds is accelerating and the 10 Year yield is now 15 bps wider at 11.34%. We have a question: at what point does the ECB have to officially start printing Euros before its capitalization goes negative?

Update: we spoke too soon. ECB now panic buying Portuguese bonds too:

 

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Thu, 08/04/2011 - 09:14 | 1523424 dwdollar
dwdollar's picture

Is this bullish?

Thu, 08/04/2011 - 09:19 | 1523448 Dreadker
Dreadker's picture

Everything is bullish!  Tsunami = Uber V recovery!  120% debt to GDP = growth stimulus!  Greek default = structured settlement!

 

BUT the only sensible bullish move on all the above.... PM's ;-)

Thu, 08/04/2011 - 09:23 | 1523474 jus_lite_reading
jus_lite_reading's picture

As you said... everything bad is bullish!!! I BET YOU the WHORE STREET SCUM are hoping for a major earthquake in Cali so BEN can print more dollars!!! That is BULLISH!!!!

Thu, 08/04/2011 - 09:25 | 1523488 caerus
caerus's picture

one word...bullish

Thu, 08/04/2011 - 09:50 | 1523604 HoofHearted
HoofHearted's picture

One more word...EXTREME FUCKING DESPERATION!

(Sorry about that...Beranke's inflation got into my post. Three words is the new one word.)

Thu, 08/04/2011 - 09:26 | 1523493 trav7777
trav7777's picture

right now, the Yen move is apocalyptic...off 3%?  WTF

Thu, 08/04/2011 - 09:18 | 1523437 Caviar Emptor
Caviar Emptor's picture

Italy could be the torpedo that sinks the ship: revelations that China and other Ponzi co-conspirators are shying away from buying Italy bonds. Gold soars

Thu, 08/04/2011 - 09:20 | 1523453 Dreadker
Dreadker's picture

Ireland was the torpedo... the rest have been repeated strikes to let more water in ;-)

Thu, 08/04/2011 - 09:27 | 1523497 Yes_Questions
Yes_Questions's picture

 

 

That'll fix the liquidity shortage.

Thu, 08/04/2011 - 09:28 | 1523506 Caviar Emptor
Caviar Emptor's picture

No you don't get it: at that point China and other Asians were still playing ball and all was well...

Thu, 08/04/2011 - 09:25 | 1523441 unununium
unununium's picture

This is not a once-in-a-cycle currency war.  This is just competitive non-appreciation.  Move along!

Thu, 08/04/2011 - 09:27 | 1523480 CosmicBuddha
CosmicBuddha's picture

Don't you just love it!

Thu, 08/04/2011 - 09:42 | 1523566 problemfixr
problemfixr's picture

Maria Bartiromo does the same for me!

Thu, 08/04/2011 - 09:19 | 1523447 Caviar Emptor
Caviar Emptor's picture

Can there be any doubt about QE3 wheeeee!!!

Thu, 08/04/2011 - 09:20 | 1523452 oogs66
oogs66's picture

they are running out of tricks....this rally isn't lasting very long at all

Thu, 08/04/2011 - 09:21 | 1523460 People'sRepubli...
People'sRepublicof CT's picture

The ECB has only circa 10 billion EURs of capital.  Any haircut on bonds held would almost immediately require a call for fresh capital. How would that go over with the German public? 

Thu, 08/04/2011 - 09:32 | 1523527 Ethics Gradient
Ethics Gradient's picture

They wouldn't do it that way.

They're much more likely to state that they found €1tr down the back of the sofa in the main entrace which they've since added to their capital balance.

Thu, 08/04/2011 - 09:22 | 1523461 slaughterer
slaughterer's picture

So, now begins the Central Bank Mexican stand-off of 2011: time for BB to fasten on his six shooter.  Make way for the currency war shoot out in the Ponzi Corral.

Thu, 08/04/2011 - 09:43 | 1523570 Larry Darrell
Larry Darrell's picture

This sounds like a perfect Banzai work to come.

Thu, 08/04/2011 - 09:22 | 1523462 Dr. Engali
Dr. Engali's picture

The dollar is strong against all the other junk fiat and gold is still up.

Thu, 08/04/2011 - 09:22 | 1523465 dwdollar
dwdollar's picture

The ghost of 2008 is back.

Thu, 08/04/2011 - 09:24 | 1523468 Caviar Emptor
Caviar Emptor's picture

Tyler: don't forget Turkey's shock overnight rate cut (after the mass defection of the military with all hell braking loose) and Cyprus also in need of bailout as revolution looms

All to be placed on the ECB tab....booya!

Thu, 08/04/2011 - 09:23 | 1523471 caerus
caerus's picture

first one to the bottom wins...ready? GO!

Thu, 08/04/2011 - 09:31 | 1523472 GeneMarchbanks
GeneMarchbanks's picture

Exploding Status Quo Panic?!

Mmmmmmmmmmmmmmm ... panic... so soothing

Tyler, what's the half-life of these interventions on average? A day or two...

Thu, 08/04/2011 - 09:23 | 1523476 Vincent Vega
Vincent Vega's picture

Tyler, I hope this, from the press conference, answers your question: "The ECB will lend euro-area banks as much money as they need for six months and extend it's existing liquidity measures through the end of the year." ~J.C. Trichet

Thu, 08/04/2011 - 09:28 | 1523508 Dreadker
Dreadker's picture

So basically exactly like in the South Park episode Margaritaville where Stan has a platinum card with no limit and pays off everyones debts lol  At least we now know what they're using for research material... Next up will be Bens revelation of the Awesome-O 5000 that will fix all our problems ;-)

Thu, 08/04/2011 - 09:25 | 1523484 entendance
entendance's picture

trichet lol...th more he speaks themore we gain...short € and place tight trailing stops!

Anybody who doesn’t use stops is going to be out of business at some point. It’s not if; it’s when.

http://www.entendance.com/forums/viewtopic.php?f=17&t=783&p=18537#p18500

Thu, 08/04/2011 - 09:25 | 1523486 Sudden Debt
Sudden Debt's picture

I don't think they ECB is allowed to print without all the countries agreeing.

And voters won't like this shit at all if the euro/savings get drained to save some lame ass Italian or Greek or Spaniard or Portugese or Irish dude.

 

Thu, 08/04/2011 - 09:29 | 1523509 jstalin
jstalin's picture

Since when have pesky things like "rules" and "laws" gotten in the way of central bankers?

 

Never underestimate the power of central bankers in a panic situation.

Thu, 08/04/2011 - 09:31 | 1523523 Dreadker
Dreadker's picture

By voters you mean Germany right?  Cause they reacted so violently at the saving of greece... People are too sheepish in western culture to do anything about all this... The only way it will fall apart is when it destroys itself... Then Tyler will just put up the deer in the headlights pic and say "Peace out bitchez XXX"

Thu, 08/04/2011 - 09:26 | 1523491 Jason T
Jason T's picture

He was just saying "no comment..no comment" relating to question about why not buying italian bonds.

Basket case! The entire West is a debt basket case.

Thu, 08/04/2011 - 09:28 | 1523502 tempo
tempo's picture

I am a bit slow. Could ZH explain why the dollar increases when the market sells off? The spread between the 2,5,10,30 Treasuries contract because pension funds are forced to buy longer maturities to gain a bit of interest? Do they then buy CDS for protection which again reduces their profit knowing that the CDS's will never be honored. The value of US debt goes up in value as the Countries sinks further into the abyess?? Seems illogical

Thu, 08/04/2011 - 09:28 | 1523507 firstdivision
firstdivision's picture

I need a loan to bet against the market.  Can I write an IOU to Trichet for some spare EUR?  My debt ratio is way lower than Italy.

Thu, 08/04/2011 - 09:29 | 1523514 Curtis LeMay
Curtis LeMay's picture

Italy just announced it is backing out of the bailout for Greece...

Thu, 08/04/2011 - 09:30 | 1523517 Quintus
Quintus's picture

The ECB intervention isn't working.

If I am reading my chart correctly, the Italian 10 Year bond dipped below 6% for less than 5 minutes and has already recovered half the manipulated drop to stand now at 6.066%

Is this the shortest-lived intervention in central banking history?

Thu, 08/04/2011 - 09:35 | 1523518 unununium
unununium's picture

B-B-B-But ... this is stimulus, and good for equities, right?

And could this ECB action have anything at all to do with Kitco's site being slammed to molasses? 

The sardonic bastard in me is getting a boner.

 

Thu, 08/04/2011 - 09:31 | 1523521 Caviar Emptor
Caviar Emptor's picture

ECB has too many pots on the boil right now:

Italy, Spain, and now Cyprus and Turkey....all just as Greece is still plenty hot. 

 

Global banking cartel screaming at Bernank to start those presses on turbo now!!!!!

Thu, 08/04/2011 - 09:39 | 1523552 HedgetBedgadget
HedgetBedgadget's picture

What does Turkey have to do with the Eurozone and  for that matter, with the EU?

Are you "americanz" that ignorant and stupid? Turkey is not in the EU, and for that matter the Eurozone.

 

Please explain why does the ECB has to deal with Turkey.

Thu, 08/04/2011 - 09:51 | 1523611 Quintus
Quintus's picture

Because Eurozone banks have a lot of exposure to Turkey and any losses they suffer will affect the ECB quite a lot - since the ECB will end up having to pay for them.

Thu, 08/04/2011 - 09:59 | 1523643 HedgetBedgadget
HedgetBedgadget's picture

The turkish banking sector is predominantly controlled by turkish owned banks. And Turkey is roaring as a economy.

Why would european banks lose in Turkey, if that economy is growing?

Thu, 08/04/2011 - 20:01 | 1525067 Quintus
Quintus's picture

Yeah fine whatever.  The Eurozone banking system is perfectly stable.  Turkey is the growth opportunity of the decade.  All will be fine.

You win.  I can't argue with your flawless logic.

Thu, 08/04/2011 - 09:32 | 1523529 alter ego
alter ego's picture

This looks like a slow motion train wreck!

 

Thu, 08/04/2011 - 09:47 | 1523588 franzpick
franzpick's picture

It looks like a very long weekend coming up for the equity, bank and fiat crowd; I don't know what popcorn and coffee taste like at 530am pdt, but I will tomorrow morning.

Thu, 08/04/2011 - 09:37 | 1523544 redarrow
redarrow's picture

I bet the pump monkey (Bernake) is now putting the finishing touches on QE3. After that he will start on QE4...as the half life on QE3 will now be just 6 months and then QE4 will be 3, QE5 will be 1.5 and QE6 will be 3 weeks and then Bernake might just say F'that and may open the Fed High Frequency Trading Program that will buy anything and everything that and put Wall St HFT firms to shame. Well this assumes we get that far....in all likelyhood we shall all burn in inflation hell. 

Thu, 08/04/2011 - 09:41 | 1523560 franzpick
franzpick's picture

"The Danse MaCabre of the currencies has begun".

Thu, 08/04/2011 - 09:45 | 1523578 Die Weiße Rose
Die Weiße Rose's picture

should the CHF be the new reserve currency ?

Over the past month alone, the Swiss franc surged 12% against the euro and 10% versus the U.S. dollar to hit all-time highs. The sharp rise prompted the Swiss National Bank to step in Wednesday to try and cool the rally. The Zurich-based bank bank cut interest rates to "as close to zero as possible" and said it plans to boost the supply of Swiss francs to money markets this week. The bank said it considers the franc to be "massively overvalued," and that its strength "is threatening the development of the economy and increasing the downside risks to price stability in Switzerland." The announcement appeared to have the desired effect, with the Swiss franc losing some ground against the euro and dollar for the first time in a week.

Thu, 08/04/2011 - 09:47 | 1523589 tom
tom's picture

other sources saying the ecb bought only irish and portuguese

 

Thu, 08/04/2011 - 09:54 | 1523620 A Dutch on Meth
A Dutch on Meth's picture

Soon everyone will be a millionaire!

Thu, 08/04/2011 - 10:32 | 1523759 Jim B
Jim B's picture

Wonder if the FED will jump in to get a piece of this action.....

Wed, 09/14/2011 - 04:48 | 1667399 chinawholesaler
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