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ECB Monetizes €14.3 Billion In Insolvent Peripheral Debt Last Week; €111 Billion In Total

Tyler Durden's picture


Following last week's €22 billion in secondary market bond purchases, this week we get a new total of €14.291 billion in settled Italian and Spanish bonds monetized: the third highest weekly total ever, bringing the cumulative total E110 billion. This follows on the heels of the BOJ intervening (or not) in the JPY market and the SNB buying 1 month CHF futures (leverage, leverage, leverage). What can one say but free, efficient, and central-bank free markets as far as they eye can see. Also guess what will happen when political pressures push the ECB to stop monetizing: all the moves tighter will be unwound in a manner of nanoseconds, and then a whole lot of "some."

From the European Central-planning Bureaucrats:

As announced by the Governing Council on 10 May 2010, the ECB conducts specific operations in order to re-absorb the liquidity injected through the Securities Markets Programme (SMP). In this regard, the ECB will carry out a quick tender on 23 August at 11.30 in order to collect one-week fixed-term deposits with settlement day on 24 August. A variable rate tender with a maximum bid rate of 1.50% will be applied and the ECB intends to absorb an amount of EUR 110.5 billion. The latter corresponds to the size of the SMP, taking into account transactions with settlement on or before Friday 19 August, rounded to the nearest half billion. As the SMP transactions which settled last week were of a volume of EUR 14,291 million, the rounded settled amount - and the intended amount for absorption accordingly - increased to EUR 110.5 billion. The benchmark allotment amount in MROs takes into account the liquidity effect of non-standard measures, assuming an unchanged size of the SMP and full sterilisation of this amount via the above mentioned liquidity-absorbing operation. Fixed term deposits held with the Eurosystem are eligible as collateral for the Eurosystem's credit operations. The ECB intends to carry out another liquidity-absorbing operation next week.


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Mon, 08/22/2011 - 09:46 | 1585652 lolmao500
lolmao500's picture

They need to print more! MOAR!!!!!!!

Mon, 08/22/2011 - 09:49 | 1585661 maxmad
maxmad's picture

hyperinflation, bitchez!

Mon, 08/22/2011 - 10:31 | 1585820 redpill
redpill's picture

OT: Former Moody's Analyst turns whisteblower, describes rating agency as "rotton to the core"



Mon, 08/22/2011 - 10:39 | 1585837 Herbert_guthrie
Herbert_guthrie's picture

Hey, in order to reduce the "Roubini pushback" effect, can we all just stick with the term "devaluation".

Mon, 08/22/2011 - 11:45 | 1586141 trav7777
trav7777's picture

this must be the tailwind to the Gold price

Mon, 08/22/2011 - 09:49 | 1585666 Tense INDIAN
Tense INDIAN's picture

Fantastic free E-bOOK ur Nag-Hammdi libraries and other Ocultism books....u never know when that KILL SWITCH comes along::

Mon, 08/22/2011 - 09:50 | 1585667 maxmad
maxmad's picture

So how is this different than monetizing their debt?

Mon, 08/22/2011 - 09:51 | 1585676 Paralympic Equity
Paralympic Equity's picture

Because it is called SMP, you see no similarities...

Mon, 08/22/2011 - 09:50 | 1585668 fuu
fuu's picture

We approach ludicrous speed.

Mon, 08/22/2011 - 09:56 | 1585694 Long-John-Silver
Long-John-Silver's picture

All fiat paper turns plaid when the threshold of ludicrous currency is crossed.

Mon, 08/22/2011 - 15:03 | 1587116 Lazlo Toth
Lazlo Toth's picture

Let me know when we have gone the plaid.

Mon, 08/22/2011 - 09:51 | 1585673 Sudden Debt
Sudden Debt's picture



Mon, 08/22/2011 - 09:58 | 1585701 Long-John-Silver
Long-John-Silver's picture

and their Bansker Parents.

Mon, 08/22/2011 - 10:03 | 1585715 Sudden Debt
Sudden Debt's picture

Today I had a very funny reaction from the man behind the counter at the gas station.

I was buying a pack of sigarettes and it seemed the price of 4.8 euro went up to 5.2 euro.

So I was kind of looking like a retard to him when he said 5 20 and I responded with a brilliand "He?"

He looked back at me with empty eyes and said: "It's a collect for the Greeks"

and I answerd: "We're not supposed to talk about this you know"

Than I laughed and as I turned my back he kept on mumbling about our politicians.

and all the rest in line was responding with arguments like "Fuck those fuckers", "Bastards"...

It was kind of funny :)



Mon, 08/22/2011 - 10:05 | 1585730 Josh Randall
Josh Randall's picture

Nice - kicking beehives at the local gas station or watering hole is how revolutions start. Just hope the blame gets put on the governments and banksters and not the people of the "at risk" PIGS

Mon, 08/22/2011 - 10:08 | 1585743 achmachat
achmachat's picture

you still shouldn't smoke... and you know it!

Mon, 08/22/2011 - 10:14 | 1585766 fuu
fuu's picture

Does achmachat stand for Nanny in some language?

Mon, 08/22/2011 - 10:40 | 1585845 achmachat
achmachat's picture

fuu, you misunderstood,

i couldn't care less if it was about your health etc. yadyadayada...

you shouldn't smoke just because it's the easiest way for "the man" to tax you even more. 

Mon, 08/22/2011 - 10:43 | 1585852 fuu
fuu's picture

Fair enough.

Mon, 08/22/2011 - 11:49 | 1586158 tip e. canoe
tip e. canoe's picture

2 words : pipe tobacco

3 mo words : grow ur own

Mon, 08/22/2011 - 10:08 | 1585747 Pegasus Muse
Pegasus Muse's picture

5,20 Euro!!  I thought cigs were expensive US.  That's like $7.50 a pack.  Glad I quit.



Mon, 08/22/2011 - 10:13 | 1585768 MichaelG
MichaelG's picture

They're around $12 in Great Britain.

Mon, 08/22/2011 - 10:23 | 1585796 SheepDog-One
SheepDog-One's picture

Cigs are $10 in NYC.

Mon, 08/22/2011 - 09:53 | 1585682 Everybodys All ...
Everybodys All American's picture

"Pass the donuts Sir Charles"

Mon, 08/22/2011 - 09:54 | 1585686 entropos
entropos's picture

This does a fine job of explaining Europe and well, everything else:

The End of the World in 3 Minutes. 

"Well done! You've lost a million dollars!"

"What do you mean, well done!??!?!?"

"Well, you've lost ONLY a million dollars!  Well done!" 

Mon, 08/22/2011 - 09:55 | 1585691 misterc
misterc's picture

I don't get it. ECB buys up government bonds in the secondary market, driving up prices, handing the sellers of the bonds newly created money. Then they say the sterilize with their tender operations, where one can deposit securities at the ECB and get a 1.5% yield for it? So, again, new currency will spring into existence?! How is that not extending the amount of € floating around?

Mon, 08/22/2011 - 10:02 | 1585718 maxmad
maxmad's picture

Plz do not play attention to the man behind the curtain! 

Mon, 08/22/2011 - 09:56 | 1585695 lizzy36
lizzy36's picture

As the US capital markets are on their knees begging for more QE one has to ask, what exactly is the mandate of a Central Bank?

I actually think some of what Bernanke did in 2008/2009 was necessary. Having all the worlds banks go bankrupt at the same time would have created chaos beyond comprehension.

Now, why is QE even being contemplated? Because the S&P is 17% off its YTD highs?

You know what a viable poltical candidate should be doing, not talking about eliminating the Fed (because that ain't going to happen.....yet) but rather outlining how they would rein in the mandate of the Fed. Clear, conscise language on what the mandate of the Fed is, and what powers the Fed has to carry out its mandate.

I have a dream that intelligence and rational thought/action can actually become a decent alternative to what passes for political discourse in the US.

Mon, 08/22/2011 - 10:01 | 1585712 Tyler Durden
Tyler Durden's picture

Ironically said "chaos beyond comprehension" (completely ignoring for a second the complete falacy of that statement as a global pre-pack in which financial debt is written down to viable levels would have allowed banks to continue operating... but, oh yes, equity would have been wiped out making billionaires into panhanlders, which the status quo will never allow) would have been the only thing that can fix 98 years of Fed-inspired catastrophic policy which plunders from the future, while exchanging nothing but accrued volatility and 666-sigma events for it. Paying the piper will be inevitable, but yes, next time around we will "all be prepared." Sure...

As for reining in the Fed, why, the most corrupt politician in DC, Bob Corker has been doing so for 6 months now. Surely that is the end all solution to it all...

Mon, 08/22/2011 - 10:05 | 1585728 IBelieveInMagic
IBelieveInMagic's picture

Tyler, you realize that plunder the future is really plunder the resources of other nations now before they wake up.

Mon, 08/22/2011 - 10:13 | 1585760 vast-dom
vast-dom's picture

there will come a point when Teh Fed will not be able to impact the markets -- we are on the verge of neutered Fed. the funduhmentals are wretched and the structural problems too great for fake monies. you need to peg policy/$'s onto some kind of reality and that reality is PM's and other tangible commodities. 


insane volatility and various bankster disinformation only obfuscates for so long.....zirp to 2013 is excellent case in point; only making matters worse as in priced as vaporware into ether pricing.

Mon, 08/22/2011 - 10:30 | 1585815 SheepDog-One
SheepDog-One's picture

Right....who is left to really believe in this BS? No one...3 strikes and yer out.

Mon, 08/22/2011 - 10:15 | 1585771 lizzy36
lizzy36's picture

We will never be fully prepared.

However, everyone going to their ATM and getting the blue screen of death, at once, wouldn't have merely made panhandlers out of billionaires. Especially in a well armed nation such as the US.

However, since then, we have missed many opportunities to perform a pre-pack on banks (cough BAC/C), and do exactly what you outlined above.

Perhaps there is no in between. Perhaps chaos, civil war, is the only available route.

But like i said i am a dreamer.

Mon, 08/22/2011 - 10:02 | 1585721 IBelieveInMagic
IBelieveInMagic's picture

You thought you had a dream but when you woke up you see, all you got is this lousy nightmare.

Mon, 08/22/2011 - 10:28 | 1585807 SheepDog-One
SheepDog-One's picture

Lizzy they should have faced the music in 2009, the only thing theyve accomplished is now it will be FAR worse than what we would have faced then. But I agree with your point 'why is QE3 even being contemplated with the S&P a bit down, 15% or so...yea why? Because now that theyve set the 'new economy' which is based upon money printing itself, its their only option.

So in 2009 they wouldnt rip off the bandaid and apply some alcohol and a couple stitches, now gangrene has set in and amputation is the only answer. 

Just great.

Mon, 08/22/2011 - 11:51 | 1586170 trav7777
trav7777's picture

the debt-money system makes printing inevitable when credit cannot grow organically.

This is very simple math.  Debtmoney exists in a state of defacto default at all times.  The only thing preventing a great unwind is the expectation that the future will hold more borrowing.  If it does not, the interest owed on existing money begins to cannibalize the monetary base.

If the Bernank is smart, he will be seen as the Mises or Fisher or Keynes of the next century for his "monetary phenomena in CONTRACTIONARY economic climates."  Literally, this is greenfield for the economics profession.  Nobody has ever studied anything other than growth.

Mon, 08/22/2011 - 13:01 | 1586497 falak pema
falak pema's picture

Oligarchic symphony of asset contraction in regulated mode all the while printing like mad to maintain liquidity, biflation, collateralised deflation orchestrated world wide in fiat money, what a green fields project of awesome magnitude. Better not get it wrong, as all the balls up in the air could fall at once. Mind boggling.

Mon, 08/22/2011 - 10:01 | 1585714 PaperBear
PaperBear's picture

The silver short squeeze continues, intra-day high so far is $44.16/oz.


Mon, 08/22/2011 - 10:05 | 1585729 Bob Paulson
Bob Paulson's picture

"central-bank free markets as far as they eye can see"

Sounds like a gangsta Marc Faber.

Mon, 08/22/2011 - 10:30 | 1585816 Zero Debt
Zero Debt's picture

To be spoken in a heavy Swiss-German accent while pointing at an exponential chart of the US national debt...

One of Marc's very nice lectures:


Mon, 08/22/2011 - 10:05 | 1585731 digalert
digalert's picture


ECB not monetizing because the loot is sterilized...

because nobody likes dirty money.

Mon, 08/22/2011 - 10:07 | 1585737 Irish66
Irish66's picture

Can you say mortgage delinquincies

Mon, 08/22/2011 - 11:00 | 1585809 falak pema
falak pema's picture

The FED/ECB printing press is the writing on the wall of the West : we must bring down our debts in fiat money, our standard of living in real goods, and prepare the world for a true reset when we are good and ready...

When will that be?

"When the pain has spread to the EMs who are full of our outsourced surpluses, when the slow down in DCs will allow energy paradigm change, when international labour arbitrage allows us to bring back work to West. That will be in ten years time, IF THE CHINDIANS AND THE ARABS, play the game and accept huge hair cuts of debts as well as assets which will allow us all to grow again.

As this is a complex, incestuous situation of world Oligarchy play, they will get their share once WE are ready. Only can be solved at global level by us Oligarchs who hold ALL the cards." 

Trouble is, as the European Apocalypse has proven, the LAST oligarchy play of European Oligarchs (the Imperial nation states) took us ALL to Armageddon... One thing an Oligarch cannot stand is another Oligarch who is not of his fold, culture, mind set, breathing down his neck, just because the host was kind enough to invite him to  the party. When the garlic smell of barbarian oligarch hits those genteel nostrils, it'll be time to hit the mattresses, we'll be in the Godfather serial for real. Wait n see the Oligarchs sing their sterile song of 'we all love each other hunkey dorey, one big family, pulling the global boat to safe shores like one big happy famiglia'...Putana, Luca Brazi sleeps with the fishes, tonite, tonite!

In the meantime MAin street sizzles to overheat in biflation and total defeat. All over the world. That's THEIR disjointed, desperate vision of things, a midsummer's night dream gone wrong. We are destined all to be Calibans and Quasimodos in the coming Tempest, as Notre Dame burns. 

RE-EDIT : Right on cue TD brings us the next Oligarchical sequel of 'The Godfather' serial :


Bundesbank: "Mein Entschluss: Anschluss-Plus" - Germany Reveals The European Annexation Blueprints

Oh the insidious smells of garlic, of sauerkraut, of corn dogs, of russian Bortsi, of chinese duck soup....


Mon, 08/22/2011 - 10:29 | 1585810 sudzee
sudzee's picture

The race is on. Who can print more, the FED or ECB. Print digital quadrillions and re-value into SDR's that are not available to the masses.

Mon, 08/22/2011 - 10:29 | 1585811 PulauHantu29
PulauHantu29's picture

Is there a chart showing the amount of increase in ECB money supply? Shadow Stats shows some great ones for the Fed but is there one for the ECB?


Mon, 08/22/2011 - 10:55 | 1585894 Zero Debt
Mon, 08/22/2011 - 10:32 | 1585821 The Gooch
Mon, 08/22/2011 - 10:33 | 1585825 SheepDog-One
SheepDog-One's picture

All just smokescreen anyway now that Libya is 'over' time to start up Syria invasion in which Iran and Russia and China will also be involved in, against us. Yahoo bring on the party times!

Mon, 08/22/2011 - 14:25 | 1586922 PulauHantu29
PulauHantu29's picture

USO for's cheap right now. That's why JPMorgan bought 30 mil of the 60 mil barrels Barry released last month at $92 a barrle. They expect oil to rise substantially.

Mon, 08/22/2011 - 10:35 | 1585832 SheepDog-One
SheepDog-One's picture

Pretty bad when Hugo Chavez is apparently the most sane leader on the world stage.

Mon, 08/22/2011 - 10:44 | 1585856 Dick Darlington
Dick Darlington's picture

And fellows, don't forget the 60 billion of covered bonds ECB monetized in 2009 and 2010. Just to keep the over inflated housing markets and the ponzifinance going.

Mon, 08/22/2011 - 11:22 | 1586021 waldocktrades
waldocktrades's picture

The Euro countries and the U.S. are beginning to face unpredicted competition in the credit markets. China is rapidly westernizing their credit markets through Hong Kong and ramping up their open market treasury sales.


Mon, 08/22/2011 - 12:20 | 1586231 Gold Man-Sacks
Gold Man-Sacks's picture

Oh, but Michele Caruso Cabrera said that it's not quantitative easing because it's been "sterilized," which is so much better.  Why limit yourself to a specified quantity of money printing when you can just set a target interest rate and print to infinity?

Mon, 08/22/2011 - 13:11 | 1586533 ThirdCoastSurfer
ThirdCoastSurfer's picture

"To re-absorb the liquidity injected through the SMP, the ECB will carry out a quick tender to absorb an amount of EUR equal to the 110.5 billion injected. 

This variable rate tender will have a maximum bid rate of 1.50%. "

Thus you see, in order to plug ongoing liquidity shortfalls, EUR is initially created from thin air but is then promptly returned once the flash crisis has subsided. The ECB then shows its thanks for creating the crisis by paying max of 1.5% for dutifully returning the money. 

The fiat created, as it were, is really just this 1.5% that remains once the operation is complete. 

However, as was seen in the case of Greece's Proton Bank yesterday, this strategy doesn't always work as intended.  

Mon, 08/22/2011 - 14:16 | 1586858 youngandhealthy
youngandhealthy's picture

Dont look any further than to the FEDs extension of their balance sheet and then make the same investigation on the ECB balance sheet and you will find some HUGE differences.


Whatever you say....the FED is working with RED HOT printers and the ECB have barely started! Why on earth do you smart people beleive the Euro is still at 1.44 against the USD?  THINK and stop be so patriotic in your thinking...if you continue that path your hard earned money will be GONE!

Mon, 08/22/2011 - 17:28 | 1587717 PulauHantu29
PulauHantu29's picture
"Sell your house"


U.S. housing prices are likely to lose another 20% over the next couple of years, Shilling said. There’s still a huge oversupply of available housing, he added, and a 20% decline would simply bring values in line with their long-term historical trend — and 45% below their 2006 peak.

“Sell your house or second home or investment housing property,” Shilling said.

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