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As ECB Monetizes Another €7 Billion In PIIGS Debt, Trichet Says A Prudent ECB "Is Not The Fed"

Tyler Durden's picture





 

Earlier today we speculated that the latest ECB monetization tally of insolvent PIIGS debt would be between €10 and €15 billion. Well, the final number was below the bottom end of the range or €6.7 billion (with €1.3 billion maturing). This follows €22 billion and €14.3 billion in the past two weeks, bringing the total under the ECB's debt monetization facility to €120.3 billion, a number that Germany must be simply ecstatic about. Keep in mind this is debt that local banks can not pledge to the ECB in return for 100 cents on the euro, and in essence removes liquidity from the system. What was hilarious, however, is the immediate defensive posture by the ECB's Trichet who said on the subject of whether ECB taking on too much risk, that the increase in ECB's balance sheet not as large as Fed or BoE. He also said that "Everybody understands that particularly in the present situation that the ECB would maintain a solid anchoring of inflation expectations,” Trichet told the European Parliament’s economic committee during a special session called to discuss the debt crisis. "All countries would be hampered” if they became unanchored, Trichet added. Bottom line - the most modern spin on an old maxim: "the ECB is not the Fed" - we are not sure if that is a good or a bad thing: frankly it is all central planning. What we are concerned about is that contrary to what self-aggrandizing economist PhD's, somehow the ECB did not refute the fact that there is central bank risk. Yes, even with all that fiat printing capacity.

 


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Mon, 08/29/2011 - 09:27 | Link to Comment Racer
Racer's picture

"ECB would maintain a solid anchoring of inflation expectations,”

 

Cheese has gone up 26% in the last few weeks.. and if you want to cry your eyes out because of it, paper tissues have gone up 46% in the same time  so you will use even more of them!

 

Nice wooden anchor you have there!

Mon, 08/29/2011 - 09:30 | Link to Comment Larry Darrell
Larry Darrell's picture

Of course your inflation is uncontrolled.

Trichet said the ECB is not the FED.

If they were, they could also put that fire out in only 15 minutes like the Bernank.

 

Mon, 08/29/2011 - 12:31 | Link to Comment knukles
knukles's picture

Of course the ECB is not the Fed; they're two separate clusterfucks.

Mon, 08/29/2011 - 13:25 | Link to Comment MonsterBox
Mon, 08/29/2011 - 09:50 | Link to Comment IBelieveInMagic
IBelieveInMagic's picture

It's all smoke and mirrors at this point in time -- all the swappable currency Central Banks are going to keep creating money more or less in line with each other -- as long as the world is focused on just relative values of the Reserve currencies and the emerging market currencies continue to be suppressed by their CBs to maintain their competitiveness, this game of free consumption in the developed countries can go on. Gold is just the alternate that has to be periodically suppressed and the sheep will not even notice...

Mon, 08/29/2011 - 10:08 | Link to Comment PulauHantu29
PulauHantu29's picture

good summary, Magic. Think the price of gold will rise in euros as the ECB prints...ooops, I mean monetizes more?

Mon, 08/29/2011 - 11:19 | Link to Comment IBelieveInMagic
IBelieveInMagic's picture

Gold is the mortal enemy of the fiat kings. As long as there is no cohesion among the other emerging powers (BRICS) or if there is no appetite on their part to address the fact that their reserves are junk, the reserve fiats will continue to rein -- in my view, MAD is a strong incentive to keep it going. But, invest in gold if you believe that there will be a major falling out among the major powers.

Ultimately there will be accomodation that will need to be made to include rising powers such as China into the swappable currency club -- if that can be achieved, gold will be suppressed.

Mon, 08/29/2011 - 09:26 | Link to Comment BaBaBouy
BaBaBouy's picture

Fiats System Is Failing ...

Mon, 08/29/2011 - 09:28 | Link to Comment fwchiro
fwchiro's picture

"the ECB is not the Fed - yet"

Fixed that for ya

Mon, 08/29/2011 - 09:30 | Link to Comment Mountainview
Mountainview's picture

They are about 1 year behind in monetizing, but don't worry they catch up... Buy Gold!!

Mon, 08/29/2011 - 10:00 | Link to Comment Sudden Debt
Sudden Debt's picture

I think he means that the FED will most likely pick up that tab and stick it to the US taxpayer.

 

Mon, 08/29/2011 - 13:29 | Link to Comment MonsterBox
MonsterBox's picture

FEDERAL RESERVE Audit results: http://www.unelected.org/audit-of-the-federal-reserve-reveals-16-trillion-in-secret-bailouts

this particular tab was for $16 TRILLION

what evidence do we have that the FED is not doing the same, right now, to support the EU, for "everyone's best interests?"

Mon, 08/29/2011 - 09:30 | Link to Comment IMA5U
IMA5U's picture

in the meantime greek bank merger   greek stocks ripping

 

the short squeeze/month end mark up is on so when you go out for labor day and see your buyside buddies who trade from the long side they can say...

 

" i can't believe <insert risk> got so cheep"

Mon, 08/29/2011 - 09:30 | Link to Comment Clam McCain
Clam McCain's picture

more desperation - the endgame is coming bitchez

 

Mon, 08/29/2011 - 09:35 | Link to Comment keating
keating's picture

Southern Europe Financial Zone

 

1.Portugal, Greece, Spain, Italy and Ireland all leave the Eurozone at once, and default on their loans

 

2.They establish their own currencies, at once.

 

3.Each currency is backed by a basket of commodities and vouchers from that country. These commodities would represent the goods and services required by the elderly or poor population such as wheat, olive oil, dairy, wood, bricks, vouchers for routine dental and medical care, and energy. In this fashion, each new currency would actually be backed by commodities such that if there were a run on that currency, it would produce jobs and prosperity.

 

4.Each country would have a tax rate very favorable to corporations, and a small free port, in the manner of Hong Kong.

 

5. Travel within the zone is passport required but unlimited tourist visa. Major limits on work permits and residence permits. Assimilation expected. Work permits mostly for folks who start businesses and create jobs.

 

6. Tax policy is set to reimburse zone corporations for currency transaction expenses within the zone. Even though there are five different currencies, it should be almost expense free to do business in the other zone currencies.

Mon, 08/29/2011 - 09:48 | Link to Comment LawsofPhysics
LawsofPhysics's picture

"These commodities would represent the goods and services required by the elderly or poor population such as wheat, olive oil, dairy, wood, bricks, vouchers for routine dental and medical care, and energy. In this fashion, each new currency would actually be backed by commodities such that if there were a run on that currency, it would produce jobs and prosperity."

 

How does this work out when the energy and other commodities are not immediately available?

Mon, 08/29/2011 - 09:35 | Link to Comment snowball777
snowball777's picture

"the ECB is not the Fed"

Like arguing who's tranny hooker has bigger feet.

Mon, 08/29/2011 - 09:44 | Link to Comment fwchiro
fwchiro's picture

Lol, you are not right in the head

Mon, 08/29/2011 - 10:19 | Link to Comment snowball777
snowball777's picture

Fine, I'll go "high-brow"...

We've already established what you are, Trichet...we are now merely haggling over price.

(nod to George Bernard Shaw)

Mon, 08/29/2011 - 09:36 | Link to Comment lizzy36
lizzy36's picture

Funny as Athens has its best day in 20 years and Greek banks are up 30%, Greek debt still under severe pressure. The Greek 2 yr yield is back above 45% and the 1 yr is above 60% for the 1st time. Italian yields are at 2 week highs ahead of auctions tomorrow as the impact of the ECB purchases wane with the reduced size of daily buys.

While the ECB continues to purchase Italian and Spanish debt, the market is playing a game of chicken with them knowing that once the purchases end, yields are going right back up again.

Lets see in the game of equity or credit, who wins?

 

Mon, 08/29/2011 - 10:40 | Link to Comment epwpixieq-1
epwpixieq-1's picture

No worries. Delusion has been the norm since the removal of the humanly defined physical (gold) standard, it will be for little more. In mean time, contrary to the Matrix world, the physical reality is highly constrained by our current usage of it: http://energybulletin.net/stories/2011-08-25/energy-and-water-%E2%80%93-...

Nothing new for the people used to seeing the big picture.

Mon, 08/29/2011 - 09:36 | Link to Comment topcallingtroll
topcallingtroll's picture

The ECB is trying fairly hard to be conservative, and what does it get them?

We have Asian bond buyers saying to the european bond dealers "if you have confidence in your sovereign bonds why isnt your central bank buying more like the Fed?"

The inscrutable Asian. Monetization as a sign of central bank confidence, eh?

Mon, 08/29/2011 - 09:38 | Link to Comment proLiberty
proLiberty's picture

When we create money out of thin air, it is totally different than when that careless imprudent US Fed creates air-backed money. 

Oh, Keynesians are so conflicted, maybe even suffering from deep-seated feelings of guilt about fiat money.  In my book, it is all theft of private wealth by dilution.

Mon, 08/29/2011 - 09:43 | Link to Comment fwchiro
fwchiro's picture

"maybe even suffering from deep-seated feelings of guilt about fiat money"

You are too charitable to the self-important, arrogant monsters that run this system.  They feel no guilt and deserve no charity from us.

Mon, 08/29/2011 - 09:40 | Link to Comment Version 7
Version 7's picture

And this is all hanging on by its finger nails depending on what Germany agrees or agrees not. Once the Germans say sorry but no more cash from this cow, the game implodes.

Mon, 08/29/2011 - 09:39 | Link to Comment Tic tock
Tic tock's picture

Free Market between Friends, just remember - this IMF and World Bank, the debt the Western Banks enslaved 4/5ths of the world with - under 'rules' ? - rules that Trichet cannot stomach - the retribution for those years has not yet begun

Mon, 08/29/2011 - 09:41 | Link to Comment lookma
lookma's picture

"Everybody understands that particularly in the present situation that the ECB would maintain a solid anchoring of inflation expectations,” Trichet told the European Parliament’s economic committee during a special session called to discuss the debt crisis. "All countries would be hampered” if they became unanchored, Trichet added.

What is this anchoring business?

http://www.ecb.int/press/pr/wfs/2011/html/fs110706.en.html

I see the first aseet listed on their balance sheet is "teh golds," and its marked to market. Oh. Nice anchor.

*******************************

"the ECB is not the Fed"

Well said - where's your anchor BB?

Mon, 08/29/2011 - 11:10 | Link to Comment silver surfer
silver surfer's picture

Thanks lookma, for continiusly mention this hugely overlooked eurogold fact here at ZH. I dont know why but both Tyler and ZH readers seems to hate the Euro! Maybe its because the post democratic aspects of europe is bad, but it keeps us from killing each other, at least for now...

Mon, 08/29/2011 - 09:42 | Link to Comment adr
adr's picture

I guess everything is fixed, Everything in August didn't happen and all the concerns weren't real. Rally on.

Just like spring 2009 the stupidity of this market knows no bounds.

Within the week we'll be back at pre august levels and back to $100+ crude. Reality doesn't matter as long as uncle Ben has got the market's back.

Do you think our wonderfl Fed had anything to do with European banks skyrocketing?

Just invest all your money in the market even though it will only be worth the same when inflation causes stocks and the price of everything else to double.

Dow 20k doesn't mean anything if milk is $10 a gallon and beef is $18 a pound.

Mon, 08/29/2011 - 09:43 | Link to Comment RobotTrader
RobotTrader's picture

Lots of bottom fishing going on today.

Gold getting dropped in favor of "making your year" by buying European bank stocks.

Mon, 08/29/2011 - 09:43 | Link to Comment TradingJoe
TradingJoe's picture

Look at the volume folks, nothing new here, end of month pump! And the usual selling into "strenght"! :))) Staying short!

Mon, 08/29/2011 - 09:46 | Link to Comment 101 years and c...
101 years and counting's picture

i would love to see an update of the compression trade from Friday.  oil up slightly, gold getting sold and stocks ramping on nothing.....

Mon, 08/29/2011 - 09:46 | Link to Comment RobotTrader
RobotTrader's picture

Natl. Bank of Greece now up 30%. Wow.

Mon, 08/29/2011 - 09:49 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Several banks are up, for those who bought low, time to sell into this strength.  More chances to buy as the algo oscillation continues.  This is fun!

Mon, 08/29/2011 - 10:22 | Link to Comment snowball777
snowball777's picture

Oh what a little short ban can do.

Mon, 08/29/2011 - 10:25 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Wait for it.  wait for it...   (that earth shattering kaboom)

Mon, 08/29/2011 - 09:50 | Link to Comment kaiten
kaiten's picture

At this pace, ECB can control spanish/italian yields ad infinitum. Little above 1bn per day What´s that? Peanuts.

Mon, 08/29/2011 - 09:51 | Link to Comment LawsofPhysics
LawsofPhysics's picture

If the ECB is printing, why is the dollar not strengthening?  Is this because the dollar (and the Fed) are actually behind these banks.  China and America conspiring again?  How delicious.

Mon, 08/29/2011 - 09:56 | Link to Comment SmoothCoolSmoke
SmoothCoolSmoke's picture

Dow up 300 since JH, WY.  Ber-shankie wins.  Hate it, but 'tis what it 'tis.

Mon, 08/29/2011 - 10:11 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Still not back to where I got out in July, still buying dips and selling into strengths as the algo's ocillate.

Mon, 08/29/2011 - 10:04 | Link to Comment buzzsaw99
buzzsaw99's picture

buy today or be priced out forever.

Mon, 08/29/2011 - 10:17 | Link to Comment Rick64
Rick64's picture

Fractionalized reserve banking. Its magic.

Mon, 08/29/2011 - 10:30 | Link to Comment eurusdog
eurusdog's picture

Some important questions that  I think should not be forgotten? Where does the ECB get its cash. Can they print?

Mon, 08/29/2011 - 10:38 | Link to Comment Volaille de Bresse
Volaille de Bresse's picture

"Where does the ECB get its cash. Can they print?"

 

No it's a violation of the ECB's status (whose primary goal is to keep inflation on a leash). But hey nobody will notice *he* who made the rules (Trichet) is the one who'll violate them. 

 

Maybe the European institutions should relocate from Brussels to Weimar...?

Mon, 08/29/2011 - 10:43 | Link to Comment Tic tock
Tic tock's picture

What. what do you mean they can't print? Are you being serious. The European Central Bank cannot print, - what do they do, use Bad Language?'

Mon, 08/29/2011 - 10:49 | Link to Comment choorles
choorles's picture

The monetary revolution will not be televised. You need ¡SilverRevolución!

 

http://www.silverrevolucion.com/

 

 

Mon, 08/29/2011 - 10:56 | Link to Comment Tic tock
Tic tock's picture

It can buy the collateral if it wants to.

Mon, 08/29/2011 - 12:00 | Link to Comment dcb
dcb's picture

@all, please correct me if I am wrong about anyting.

the ECb is buying debt in the secodary market, therefore it comes off of banks impared balance sheets. the banks then take tat money and use it to buy other assets. hence it is a socialization once more of bank risk and poor lending decisions.

does anyone know what the ecb is paying for these assets in the secondary market, over pay, market price, etc.

buying just by itself should of course raise the value of the assets themselves?

why isn't this called QE?

Mon, 08/29/2011 - 12:13 | Link to Comment Joebloinvestor
Joebloinvestor's picture

They already said they would OUTRIGHT LIE to protect the EU.

Why would anyone believe anything from these crooks?

Mon, 08/29/2011 - 12:18 | Link to Comment phraseshifter
phraseshifter's picture

"I am Not a crook!"

Mon, 08/29/2011 - 14:27 | Link to Comment DosZap
DosZap's picture

THis ECB crap won't matter,they and the EU is possibly in BREAKUP territoty.As it appears the DAY of recokoning has come for MERKELS GVT.

 

http://www.telegraph.co.uk/finance/financialcrisis/8728628/Euro-bail-out-in-doubt-as-hysteria-sweeps-Germany.html

Got G_O_L_D?

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shacai's picture

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