ECB Intervention Comment Du Jour: "Classic Banana Republic Banking"

Tyler Durden's picture


Today's move can be summarized in one word: euphoria. The same euphoria every previous instance of central planning intervention has engendered, only to fade days, weeks or months later. But for the time being it will suffice, and send the S&P to fresh post 2008 highs. In the meantime, below is the definitive note summarizing what has just happened, courtesy of Pierpont Securities via Bloomberg.

  • ECB Plan "Classic Banana Republic" Banking: Pierpont
  • ECB’s outright monetary transactions (OMT) indicate that the central bank “will underwrite the profligacy of peripheral Europe,” Pierpont Securities strategist Stephen Stanley writes in note.
  • OMT program will lengthen EU’s “march to insolvency,” raises the odds of a bad outcome
  • Sterilization ensures program isn’t inflationary in short-term
  • OMT will attempt to transfer wealth from wealthy countries in Northern Europe to the Southern nations, who have “squandered” their wealth
  • Transfer of wealth is what Germany and Merkel have refused to do

And, we should add, once the Greek realize they were just swindled by the ECB's refusal to implement retroactive pari passu status on the now-defunct SMP program, in the process preventing the reduction in Greek debt by tens of billions as it gets the same treatment as all other Greek debt as part of the country's recent restrcuturing, the political upheavals will return.

But for now, as said above, we have euphoria. Enjoy it while it lasts.

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Thu, 09/06/2012 - 10:53 | 2768179 vinayjha
vinayjha's picture

ECB SMP1 was failure so how can SMP2 will be success. LTRO1 and LTRO2 were non effective.


Thu, 09/06/2012 - 11:00 | 2768215 Stackers
Stackers's picture

Hello $100 Silver !

Thu, 09/06/2012 - 11:10 | 2768278 CClarity
CClarity's picture

The long "march to insolvency" continues . . . Bataan death march for the Euro and fiat.  The demise of the Euro will take down the rest of fiat currencies as well.  All government debts will be poor investments, ruinous by next decade.

Thu, 09/06/2012 - 11:11 | 2768301 Mark Carney
Mark Carney's picture

Can someone explain to me in simpler ways why this affects the $100B of Greek debt????

Thu, 09/06/2012 - 11:26 | 2768366 LawsofPhysics
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Eurobonds seem to be catching a bid everywhere.  Can someone bring up a chart on what U.S. bonds are doing?  Doesn't the fed have some repos to do shortly?

Thu, 09/06/2012 - 11:12 | 2768305 Stock Tips Inve...
Stock Tips Investment's picture

The ECB is jeopardizing the future of Europe and global economic stability. Are clearly betting on central planning of the economy. A Size Europe crisis could not have a simple solution. But the rulers and the monetary authority does not want to understand that situation. This is a game as dangerous as jumping into the void. But the market is not crazy. Markets are simply taking advantage of the mistakes of the authorities. Do not forget that accompany market while prices rise (helping keep rising). But the market also accompany them when things worse (helping to bring prices down). This is a two-way road.

Thu, 09/06/2012 - 12:58 | 2768701 fattail
fattail's picture

We are all Zimbabwee now.

Thu, 09/06/2012 - 11:08 | 2768188 TWSceptic
TWSceptic's picture

Want to laugh? Dems now agree to ban corporate profits:

Thu, 09/06/2012 - 12:01 | 2768498 Too Big 2
Too Big 2's picture

It's funny and sad.  Thanks for sharing!

Thu, 09/06/2012 - 10:55 | 2768191 Jlmadyson
Jlmadyson's picture

2007-2008 ain't got jack on this run.

Kleptos & Narcissists

Thu, 09/06/2012 - 11:37 | 2768402 gjp
gjp's picture

This movie (central bank-induced flagpole rally from post to post with barely a hiccup) has already played dozens of times since 2009 bottom.  Never gets old.

Meanwhile, oil solidly at $100, soft commodities at records, NASDAQ at 12-year highs, stocks like AMZN and CRM trade at records even as they report no earnings, and still the bankers want more.

When and what is going to end this vicious loop?

Thu, 09/06/2012 - 10:56 | 2768193 stocktivity
stocktivity's picture

Obama will take most of the credit tonight. There will be an end point but as long as they can keep printing and kicking cans, that end point could be years away. Until then, It's all Bullshit!

Thu, 09/06/2012 - 10:56 | 2768197 larz
larz's picture

Our problem is trying to understand this in a rational manner - just hit your forehead really hard with a hammer and try to get rich and not be right

Thu, 09/06/2012 - 12:04 | 2768509 dlfield
dlfield's picture

Understanding this in a rational manner would be illogical, though.

Thu, 09/06/2012 - 13:41 | 2768834 Zero Govt
Zero Govt's picture

yes as Dr Spock would say, "This is bullshit Jim"

Thu, 09/06/2012 - 10:56 | 2768198 Robot Traders Mom
Robot Traders Mom's picture

Does anyone else have mixed emotions about watching family and friends lose their money playing the casino known as the S&P?


It is always easy for me to sit back and laugh at the sheep, but deep down, these are people I care about. Ignorance is bliss to most, ZH'ers are just different. We get it.

Thu, 09/06/2012 - 11:01 | 2768226 SmoothCoolSmoke
SmoothCoolSmoke's picture

I say 99% of the people in the markets clueless .....and long.  Maybe clueless has beenthe way to be for the past 4+ years.

Thu, 09/06/2012 - 11:03 | 2768239 camaro68ss
camaro68ss's picture

F*** them, They crack jokes at my 6 month supply of food, ammo and My barbaric relics. Call me a nut job, lets see who has the last laugh.  

Thu, 09/06/2012 - 11:09 | 2768283 JPM Hater001
JPM Hater001's picture

Whoa- let's separate the common sense preparedness with the obvious schizophrenia.

These are not mutually exclusive just not part of the same equation.


Thu, 09/06/2012 - 11:11 | 2768303 hannah
hannah's picture

i split the difference...i bought food stocks, ammo stocks, and barbaric relic stocks. so when TSHTF i will be covered either way....!

Thu, 09/06/2012 - 11:11 | 2768304 Manthong
Manthong's picture

A little light on the ammo supply, don't you think?

Thu, 09/06/2012 - 11:25 | 2768362 jmcadg
jmcadg's picture

Only if you're New York's finest and you've been schooled at the fair ground ;)

Thu, 09/06/2012 - 12:05 | 2768515 Oleander
Oleander's picture

Last night I was told I should be ashamed of my Ron Paul magnet on my car. Screw them! 

Family members out waving signs for the pale faced indian today. They drink the Kool Aid and will just blame Bush.

Thu, 09/06/2012 - 12:24 | 2768510 falak pema
falak pema's picture

your son is making a all those who went counter to contrarian since jan 1 2012. 

Dax n NAsdaq made >20%; CAC40 w/O financials selection made 25%; Gold made  >8.5%.

You chose.

Thu, 09/06/2012 - 10:57 | 2768202 Hype Alert
Hype Alert's picture

It's really incredible what they are doing to people when you think about it.

Thu, 09/06/2012 - 12:29 | 2768587 slewie the pi-rat
slewie the pi-rat's picture

'they' didn't do anything to slewie

even when i attampt to cogitate

pierpont got his shorts fried with the bananas

listen:  while germany awaits the pastryChefCourt verdict angela said yesterday or the day before she had no propblemo w. marioECB monetizing the short bonds for spain

it was reported on zH Markets - Chart for U.S $ INDEX (NYBOT:DX)

now the only thing left is to see if tyler gets whiney about the volume

i guess the kiddies may have learned that when the VIX goes up a good % from bullshit lows, it doesn't ALWAYS mean the "markets" will go d.o.w.n.

as i've tried to point out for a few weeks we MAY be seeing a situ where stocks have been "cornered"

but i'm insane!  L0L!!!

anyhow, the forune-tellers and doomers can re-load and pretend we need mittens in there to "fix" everything from here;  because this is just fuking AWFUL!

prez0 may look a wee bit more "prezi-dental" tonight, eh, children?

Thu, 09/06/2012 - 10:57 | 2768203 saycheeeese
saycheeeese's picture

Quiz of the day: whih european country produce Bananas?

Thu, 09/06/2012 - 11:11 | 2768295 JPM Hater001
JPM Hater001's picture

The Dutch...colonies

I know there are palm trees in southern Ireland but I dont know if they can grow bananas.

So I guess I dont know the answer...nuts

Thu, 09/06/2012 - 11:23 | 2768359 HoofHearted
HoofHearted's picture

The French should probably have some of the "Departements Outre-mer" that produce bananas. Reunion, Guadeloupe, Martinique, Mayotte, French Guiana. (And they have the best KoolAid there in Guiana too...)

Thu, 09/06/2012 - 11:11 | 2768299 Vince Clortho
Vince Clortho's picture

Perhaps the new joke will be "olive and wine" republics ... ?

Thu, 09/06/2012 - 14:20 | 2768887 Zero Govt
Zero Govt's picture

well we've had the olive and wine mountains.. and butter, milk, wheat and cheese mountains and pretty much you name it with EU agricultural subsidies ...a complete farce everywhere you look

now they've added Jabba the Huts behind Govt desks telling fishermen what they can and cannot catch, what size, dishing out licenses on who can fish but as always these cretins know exactly zero about what they're doing

clueless Govt cretins know as much about fish stocks as they do about rocket science ..they've meddled and made a farce of just about every food product we consume

everything Govt touches turns to crap

Thu, 09/06/2012 - 11:18 | 2768335 Manthong
Manthong's picture

Norway.. The banana tree lined fiords are the winter nesting places for the "Norwegian Blue" parrot.

Thu, 09/06/2012 - 10:57 | 2768206 machineh
machineh's picture

OMT ... Outright Moonbat Transactions.

As Saddam Hussein used to say, 'Anything is possible now, my brothers!'

We've passed from the mundane world into the Mystic ...

Thu, 09/06/2012 - 11:16 | 2768323 hannah
hannah's picture

i have never known anyone that referenced quotes from sadistic mass killer dictator. when i was at the last church picnic i tried qouting hitler and it didnt go over to well......?

Thu, 09/06/2012 - 10:59 | 2768214 SmoothCoolSmoke
SmoothCoolSmoke's picture

4+ years of euphoria "fixes" everytime one is needed.  Unreal.

Thu, 09/06/2012 - 11:01 | 2768224 not fat not stupid
not fat not stupid's picture

ZH disclaimer needed: Heed the Tylers but trade the Charts.

Thu, 09/06/2012 - 11:54 | 2768470 fuu
fuu's picture


Thu, 09/06/2012 - 11:04 | 2768231 ekm
ekm's picture

This is Merkel's dream.

If Draghi and the ECB bord rebel against Merkel, they will be tagged RESPONSIBLE for the collapse by the WORLD MEDIA, not Germany.

It's going as per Merkel's plan. She would love Draghi and the board to rebel and go ahead with everything, since the system has no cure and ECB will end up being blamed for everything.

Thu, 09/06/2012 - 11:03 | 2768237 Money By Trading
Money By Trading's picture

Not saying you should sell metals (unless you are fully invested) but this is NOT the time to step on the gas.  I explain with charts:

Thu, 09/06/2012 - 11:04 | 2768242 Winston Churchill
Winston Churchill's picture

I think at this point that being a Banana Republic would be an improvement.

You would at least know exactly where you stand.

This transitory phase on the road there,is more than frustrating.

Thu, 09/06/2012 - 11:05 | 2768247 oldfruit1
oldfruit1's picture

the  people who are long may well be clueless but they are getting PAID by the market .. while ZH followers have been carried out initiating short positions .. sad but true. 

Thu, 09/06/2012 - 11:20 | 2768346 slaughterer
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Correct, I have not seen a Bidermann video here in ages since he went 100% short. 

Thu, 09/06/2012 - 13:16 | 2768767 laozi
laozi's picture

Yeah, But most people here are stackers, right? They will do well either way.

Thu, 09/06/2012 - 11:04 | 2768248 fonzannoon
fonzannoon's picture

Anyone realize the ADP was the prelude to the NFP being good and Ben doing nothing next week?

Thu, 09/06/2012 - 11:09 | 2768286 SmoothCoolSmoke
SmoothCoolSmoke's picture

Does it matter?  NFP up.  NFP bad....... market down until 10 am....then up...until 2pm, then up some more.  Once the new level reached, any news void is filled by the promise of QE.   Unreal, but true.

Thu, 09/06/2012 - 12:56 | 2768694 viahj
viahj's picture

Dem convention.  after Clinton's speach last night praising "O's" glorious job creation vs. Romney's job creation...the ECB, BLS, ADP and PPT are ensuring high notes for tonight's speech.  not that TPTB actually care who wins, they just want a massive mud-slinging back alley fight for the next couple of months to distract the sheep using their media to highlight every throw.

Thu, 09/06/2012 - 11:05 | 2768251 No Euros please...
No Euros please we're British's picture

I assume this banana republic will conform to EU Commission Regulation (EC) 2257/94.

Thu, 09/06/2012 - 14:09 | 2768922 Zero Govt
Zero Govt's picture

not a snowball in Hells chance

the rats who make Law make rat holes in the Law and own the crones that apply it

for "Rule of Law" read Rule of the Rats

Thu, 09/06/2012 - 11:06 | 2768254 Cognitive Dissonance
Cognitive Dissonance's picture

"But for now, as said above, we have euphoria. Enjoy it while it lasts."

"There is always another high" said the junkie to the other guy.

That is..........until there isn't.

Thu, 09/06/2012 - 11:05 | 2768255 q99x2
q99x2's picture

The bankers did it. Next Thursday they give it another dose.

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