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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 | Link to Comment 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 | Link to Comment Stackers
Stackers's picture

Hello $100 Silver !

Thu, 09/06/2012 - 11:10 | Link to Comment 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 | Link to Comment 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 | Link to Comment LawsofPhysics
LawsofPhysics's picture

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 | Link to Comment 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 | Link to Comment fattail
fattail's picture

We are all Zimbabwee now.

Thu, 09/06/2012 - 11:08 | Link to Comment TWSceptic
TWSceptic's picture

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

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

It's funny and sad.  Thanks for sharing!

Thu, 09/06/2012 - 10:55 | Link to Comment Jlmadyson
Jlmadyson's picture

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

Kleptos & Narcissists

Thu, 09/06/2012 - 11:37 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment dlfield
dlfield's picture

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

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

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

Thu, 09/06/2012 - 10:56 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment Manthong
Manthong's picture

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

Thu, 09/06/2012 - 11:25 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment saycheeeese
saycheeeese's picture

Quiz of the day: whih european country produce Bananas?

Thu, 09/06/2012 - 11:11 | Link to Comment 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 | Link to Comment 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 | Link to Comment Vince Clortho
Vince Clortho's picture

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

Thu, 09/06/2012 - 14:20 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment SmoothCoolSmoke
SmoothCoolSmoke's picture

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

Thu, 09/06/2012 - 11:01 | Link to Comment 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 | Link to Comment fuu
fuu's picture


Thu, 09/06/2012 - 11:04 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment slaughterer
slaughterer's picture

Correct, I have not seen a Bidermann video here in ages since he went 100% short. 

Thu, 09/06/2012 - 13:16 | Link to Comment laozi
laozi's picture

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

Thu, 09/06/2012 - 11:04 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment q99x2
q99x2's picture

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

Thu, 09/06/2012 - 11:06 | Link to Comment oldfruit1
oldfruit1's picture

sometimes the markets dont make sense and the dumb money do rather well .. just one of those things.

Thu, 09/06/2012 - 11:07 | Link to Comment ebworthen
ebworthen's picture

Central Banker Bukkake Party.

Thu, 09/06/2012 - 11:07 | Link to Comment scatterbrains
scatterbrains's picture

wow our planners almost lost control of crude and gold there for a minute... looked like they were about to lead the crack up boom to the sky until they jumped on them both  lmao!  Sooner or later our planners will lose thier grip.

Thu, 09/06/2012 - 11:08 | Link to Comment GaryNeville
GaryNeville's picture
A lesson from Germany in 1923 "A factory worker described payday, which was every day at 11:00 a.m.: "At 11:00 in the morning a siren sounded, and everybody gathered in the factory forecourt, where a five-ton lorry was drawn up loaded brimful with paper money. The chief cashier and his assistants climbed up on top. They read out names and just threw out bundles of notes. As soon as you had caught one you made a dash for the nearest shop and bought just anything that was going." Teachers, paid at 10:00 a.m., brought their money to the playground, where relatives took the bundles and hurried off with them."


Thu, 09/06/2012 - 11:08 | Link to Comment albasola66
albasola66's picture

why shouldn't we enjoy the rally ?


Thu, 09/06/2012 - 11:26 | Link to Comment ebworthen
ebworthen's picture

It's like that night at the bar where the drinks are flowing and with each round everyone gets louder and apparently happier; before the fights break out, or the drunk driving and barfing start.

Thu, 09/06/2012 - 11:32 | Link to Comment jmcadg
jmcadg's picture

+100 what an awesome picture.

Thu, 09/06/2012 - 13:00 | Link to Comment viahj
viahj's picture

the ship won't capsize until the gentle oscillations turn into massive [volatility] wretches

Thu, 09/06/2012 - 11:14 | Link to Comment Madcow
Madcow's picture

Let us be perfectly clear –


We will not not let the periphery sovereigns not default by providing a unlimited amount of limited unconditional support through the EMU, provided that certain conditions are met and others are not met, and still others are not in violation of unconditional conditionalities. 

Thu, 09/06/2012 - 11:18 | Link to Comment The Count
The Count's picture

Let's face it: Everybody has lost their freakin' minds. Bad is good, worse is better, acknowledgment of failure a reason to be bullish. I say: F.... the markets! Staying out of this game of musical chairs (where there are no chairs at all) is the only way to stay ahead. 

Thu, 09/06/2012 - 11:22 | Link to Comment oldfruit1
oldfruit1's picture

ultimately markets have been going one way since 09 .. and that is up. we are now back where we stated before the crisis. you know what they say .. IF YOU CANT BEAT EM .. might as well fucking join em and get long :)

Thu, 09/06/2012 - 11:27 | Link to Comment The Count
The Count's picture


And do you really believe they will give you a call beforehand to let you know when they decide to 'correct' the markets again?

Thu, 09/06/2012 - 11:22 | Link to Comment rubearish10
rubearish10's picture

The color RED is officially NO LONGER VALID!!!!

Thu, 09/06/2012 - 11:29 | Link to Comment jal
jal's picture

I got to fix what you said ... "But for now, as said above, we have euphoria. Enjoy it while it lasts."

... YOU have regained your losses ... SELL, SELL, SELL!

Thu, 09/06/2012 - 11:30 | Link to Comment jmcadg
jmcadg's picture

Not sure what the big deal is. Draghi has completely left it to Spain etc to pick up the baton.

He's offered nothing that isn't sterilized or with full conditions attached (as it should be).

Rajoy will be hopping mad, Monti will be hoping mad. Hungary has already said no.

Enjoy the sugar rush, because Spain is fucked.

Thu, 09/06/2012 - 12:20 | Link to Comment walküre
walküre's picture

The big deal?

Draghi has overstepped his mandate BY A MILE and NOBODY is stopping him!!! That is a huge deal!

Germany is in eternal bondage to the ECB. Germany is gagged and muzzled and HAS NO CHOICE unless - UNLESS - GERMANY QUITS THE EURO A.S.A.P!!!

Elections - WORTH SHIT

Political will - WORTH SHIT

People ??? Well .. the people are waking up .. but it will take a few years to stoke the fires and get GERMANS angry enough to BURN DOWN ECB HQ in Frankfurt.

Same as it ever was.

Bankers WIN - People LOSE

Thu, 09/06/2012 - 11:33 | Link to Comment Snakeeyes
Snakeeyes's picture

PIGS yields fell today, but that may be short lived. The US is bordering on a banana republic too.

Thu, 09/06/2012 - 11:36 | Link to Comment MoreLiver
MoreLiver's picture

I collected ECB blog comments (ZH, alphaville, etc) both before and after the event, and will update the post as the show develops.

Banks should be very happy with the result. Investors, less so. Pari passu for the big positions, seniority on the little guys (Portugal, Greece), who will default at least partially soon... When the tax man rings my doorbell, I'm not home.

Thu, 09/06/2012 - 11:53 | Link to Comment walküre
walküre's picture

I never thought it would happen in my lifetime but here we are.

Deutschland Kapitulation Versailles 2.0

If anyone believes the Teutonic nation will just get bend over and take it again - keep dreaming.


Thu, 09/06/2012 - 12:00 | Link to Comment falak pema
falak pema's picture

on this issue of banana republic banking, ECB now has fully joined the club of FED, BOE, BOJ.

As sterlising unlimited amounts is a pipe dream; unless I'm missing something.

Thu, 09/06/2012 - 12:03 | Link to Comment mammoth mo
mammoth mo's picture

I don't see Euphoria - I see control.

Tight control by desperate people.  None of them are happy.  Each day new lies come forth to protect the old lies.  The only people I see cheering this rally are the paid seals.

The economy is still in the tank, unemployment doesn't get better on market hights, housing market still sucks.

No one - even those in stocks should be euphoric about the situation.  Draghi comes out and lies.

Stocks go through the roof.

The fundamentals are still in place.

This is a sad day in a long list of sad days.

Thu, 09/06/2012 - 12:13 | Link to Comment walküre
walküre's picture

Of course stocks are rallying. What else is there to buy if you have billions in the system and face the substantial loss of wealth every minute, every hour of every day going forward.

It's a sad day when HYPER INFLATION was unleashed.


Draghi says  - ECB QE FOREVER !!!



Thu, 09/06/2012 - 13:31 | Link to Comment mammoth mo
mammoth mo's picture


Exactly -

You have given the kids cake and ice cream for breakfast - lunch - and dinner.


Thu, 09/06/2012 - 15:27 | Link to Comment GlomarHabu
GlomarHabu's picture

Wire house HFT big numbers but volume still weak.... it's just gonna be this way cause only a very foolish person would touch this market.  This is all just the wire house trading their accounts.

Sun, 09/23/2012 - 23:41 | Link to Comment cgagw
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