ECB's Balance Sheet Now Far Bigger Than Fed's, More Levered Than Lehman, PIIGS Exposure Up 50% In 6 Months

Tyler Durden's picture

While well-known to most, what may be lost on all those calling for the ECB to commence outright printing, is that as today's Bloodmberg chart of the day shows, the ECB's balance sheet is not only far greater than the Fed, at $3.2 trillion compared to $2.9 trillion for Ben Bernanke, but at 30x leverage, has the same risk as Lehman did at its peak. However, one major distinction between the Fed and the ECB is that while the Fed continues to be shrouded in almost impenetrable secrecy on an absolute basis, it is transparent as a wet t-shirt competition during Spring Break at Panama City Beach compared to the ECB. From Bloomberg: "Without information on the quality of assets on the ECB’s balance sheet or how far it’s willing to allow leverage to increase, investors may doubt the bank’s ability to prop up the financial system, and demand higher yields to buy some countries’ bonds, he said. "Sovereign spreads could rise again if investors become uncomfortable with ECB leverage without a fully detailed rescue package,” said Tyce. “The ECB is providing liquidity and confidence to the banking system, yet all the while its own leverage and balance sheet size is hitting new highs. It seems likely that the market will begin to watch the rising leverage with interest and growing concern."

Technically the market should have been watching said leverage long ago, but then again, it is "the market" which lately tends to compete with the rating agencies in how far behind the curve it is. Because where the market may be surprised, is that as think tank Open Europe indicates, "Through its government bond buying and liquidity provision to banks, we estimate that the ECB’s exposure to weaker eurozone economies has now reached €705bn, up from €444bn in early summer – an increase of over 50% in only six months, raising fresh questions about its credibility, independence and possible losses it may face in the case of future sovereign defaults." Bottom line: the world's biggest hedge fund - ECB Capital LLC, Onshore Austerity Fund, is also the world's most insolvent. Which by implication means that when the ECB fails, and it will, it will be up to the Fed to bail it out.

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EscapeKey's picture

I don't think even Lehman at its prime had $705bn of subprime assets.

This time is different! No, really!

kaiten's picture

Did Lehman have printing presses?

FEDbuster's picture

Pay no attention to the man behind the curtain


trav7777's picture

uh...a central bank in a fiat world cannot be "leveraged."  They just print shit.  There is no asset backing anything.

Djirk's picture

yeah but German sentiment beat expectations...rally on

Sam Clemons's picture

No, and they also had to do accounting.  Fools.

slaughterer's picture

Does Draghi have a psychoanalyst?  He must be suppressing a tremendous amount of worry and fear. 

JPM Hater001's picture

I picked a terrible time to quite methamphedomines.

Global Hunter's picture

I picked a terrible time to go broke and have no printing press so I can buys my methamphedomines

rufusbird's picture

Well, one difference between Lehman and the ECB is that, unlike Lehman, the ECB doesn't have competitors who will benefit from it's demise...

Ruffcut's picture

why don't cha, just keep putting the Pedal to the metal and shoot for the stars. THe only way cars can fly is off the cliff. No one respects wisdom, anymore. I guess MF global was the first turd to float to the top, from the sewerhole.

The holidays is near enuff, is it too early to start drinking? Fuck it I like the holidaze.

Irish66's picture

balance sheet, mother of mercy, call it leverage sheet

JPM Hater001's picture

Meh, Balance sheet is right.  On the one side you have a giant steaming pool of worthless poop.  And on the other side you have the crying masses asking them to pile on more.

The Limerick King's picture



The ECB assets are crap

Junk bonds from the land of G-Pap

Their fall is complete

With a bad leverage sheet

There's no getting out of this trap!

dereksatkinson's picture

And the Fed's balance sheet is filled with such strong assets..

Like MBS.

TheFourthStooge-ing's picture

Your observations are astute, your highnesty.


Freegolder's picture

What is never mentioned by anyone, ever (ZH included) is that these figures are for the Eurosystem, not the ECB.

You can estimate all you like, but at least we should all understand that the VAST majority of this balance sheet relates to individual govt central banks.

The Euro will not be sacrificed like the dollar, watch and see.

Zeroexperience2010's picture

I guess we FOFOA readers are in the minority here ;)

GeneMarchbanks's picture

Monti's a Goldmanite. So is Draghi. They cannot fail. Carry on! May the spirit of Corzine be with thee..

SheepDog-One's picture

Blowing the bubble so huge that when it all implodes it guarantees total devastation. 

There wont be any 'FED bailing it out', it will be 1 World bank, 1 currency 1 govt.

disabledvet's picture

I don't know about one bank but definitely one currency (the dollar) and one government (USA)

Falcon15's picture

Petrodollar, baby! Sell oil for gold? We invade your country and kill you. Make policies we do not agree with? We invade you - under the guise of fighting terrorism and seeking WMD's- and overthrow your lawful government. Decouple your currency from the fiat system and move to back it with gold? You are labeled a tin-pot dictator, we incite insurgents with psy-ops, pay them handsomely, equip them and invade your country to aid the insurgents in the name of "democracy" and kill you. 


It all boils down to control and money.

Ethics Gradient's picture

They tried moving towards that in a place called Europe. It didn't work out. The concept was flawed and were unable to keep it together. Eventually the whole thing fell to pieces catastrophically leading to cold wars and depression.

-Sent from the year 2013

SheepDog-One's picture

Right, but nevertheless they're all-in now.

EscapeKey's picture

I always hated the "bailed out by the Fed" bullshit. The banks were bailed out by the taxpayers, aka the wealth creators, and those with savings.

The Fed does nothing but print coloured pieces of paper with arbitrary denominations. They're fucking socialist scum wealth distributors at best, through managing inflation, crony capitalism enablers, through distributing newly created money to the elite, at worst.

Fuck the Fed.

FEDbuster's picture

"Taxpayers" (or victims) provide 57 cents of every dollar the spends, the rest is borrowed from idiots, banksters and the FED.  The FED (owned and controled by the TBTF banksters) bailed out their member banks by buying trillions in crap "assets". 

The FED (and now the ECB) are the "zombie" banks.  They can take on as much crap as the banks and governments can create, as long as, we are living in a fiat currency world.  If you use gold and silver for money, not so much.  The ponzi would be over, and the collapse would be epic.

kridkrid's picture

Who is the bigger idiot, those of us who pay our taxes or the idiots who loan the gov't money?  We pay taxes, in part, to support the slow bleed of a society destroyed the idiots you describe.

FEDbuster's picture

"Who is the bigger idiot, those of us who pay our taxes or the idiots who loan the gov't money?"

Since one does it by choice and the other through force, I will go with the idiot who lends the government "money". 

kridkrid's picture

Perhaps... but one is paid handsomely to loan what isn't theirs.  The other pays directly from what is theirs, never to see it again.  I'm still on the shorter end of the stick, I think.

FEDbuster's picture

In the case of the bankster shills, you are right (money for nothing).  But for the poor, scared Tbond buyer putting his life savings by choice into a "safe" 2% 10yr., not so much.

kridkrid's picture

Language creates a false reality.  I would posit that the bigger issue isn't a matter of who exactly did the "bailing out"... though you are correct in what you say... the bigger problem is with the actual phrase "bailed out".  I think the phrase implies some sort of finality or solution.  The financial system isn't "rescued" by the bailout, the inevitable may be delayed and burden may have shifted slightly, but nothing was really "bailed out"... at least in the way that the phrase is usually used.

If appropriate descriptive language were used to explain the fed "bailout", people would have a far different opinion of the matter.  This is by design.

GeneMarchbanks's picture

'Language creates a false reality.'

Rhetoric, pre-packaged PR talk, monotone speech that seems unassuming but actually is quite hazardous; those create a "false reality" and have nothing to do with 'language'.

"The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum.”
? Noam Chomsky

kridkrid's picture

I'm a big fan of Chomsky and was thinking of him when I wrote what I wrote.  I don't think we disagree, except for, perhaps, semantics.  Rhetoric is language.  Using a word to "label" an entire idea is language.  Labeling an activity a "terrorist" activity which then shapes the perception of an event is using language.

pineyard's picture


As stated .. the author doesnt even  know .he admits ... what the ECBs ASSETS consist of

WITH WHAT will the Fed Bail out the ECB ?

Since it is EUROPE who is OWED 2.3 Trillion USD from American Banks ..   NET ...and NOT the other way around

Come on .. there must be some FED AUCTIONS coming up !

As judged by the RHETORIC !


Falcon15's picture

So the $16 Trillion NET of U.S. taxpayer dollars floated in secret bailouts from the Federal Reserve to European banks do not count, eh? The GAO micro-audit of the Federal Reserve Bank exposed that little gem months ago. Try again, chief. They owe us their firstborns and their appendages. They are leveraged beyond belief to what is THE U.S. Bank. Even taking away $2.3 Trillion owed, there is a balance of $13.7 Trillion owed. It is all relative. Since the ECB and the individual European Central Banks are linked, forming the Central Banking System of Europe, well, you get the picture. The taxpayers in every country are screwed because of the ponzi. Bank on it.

disabledvet's picture

I think predicting the failure of the ECB is WAY premature. Stick to your knitting of the ESF issues Grandma Durden.

chinaguy's picture

What's an "EEEE-CEEE-BEEE" and when is Dancing with the Stars on?

disabledvet's picture

Dr. McGillicuddy. With a pint o Guinness on the side.

brew's picture

Goldfein, son of Abraham...

Paul Thomason's picture

Nothing Really Matters, It's All Palaver These Days - What's The Point, Who Cares. 

NEOSERF's picture

I am starting to think that nihilism, atheism and reality tvism might be the new religion

rocker's picture

Must be why Futures are soaring as Bloomberg says.  Bloomberg also reported last night that Europeans are simply merry about their future. LOL

Martial's picture


Now where did I put my fluoride?

Jlmadyson's picture

Very good news for the markets right, right.

Risk on. Haha.

Lehman you say what's that?

Saxxon's picture

Greece will play the role of Judas Goat, and be kicked out; then the EU will make a great show of closing ranks and appearing 'all the stronger for it'.

The EUR will soar as will U.S. equities.  Shorts will be left in a state of horrified disbelief and teeth-grinding paralysis a-la 2009.