The ESM/EFSF Bluff

Tyler Durden's picture

Via Peter Tchir of TF Market Advisors,


Holding 10, Queen, not suited, small stack, is it time go all in?

Both EFSF and ESM rely primarily on guarantees which we know Most European politician think is as valuable as toilet paper, so why not provide more?  The ESM does have some paid in capital, but the plan is for minimal paid in capital and maximum usage of guarantees.

With the momentum from LTRO why not throw all in? 10, queen not suited isn't the worst hand and if the blinds are going to kill you in the end, why not try?  You might win.

This talk is mostly just that. It is all guarantees. It is the hope that it takes all pressure off the market.  There is no shot of raising all the capital. It is a distraction from their failure to leverage EFSF or to get new (non European bank) funding from the IMF.  It's not a solution, barely even feasible. Maybe they will catch some economic growth on the flop but without some luck this may be just one more step towards the endgame. I would expect some of the players - Finland and Holland in particular, to pick up their remaining chips and walk away from this ploy.

In the end there are only a couple of guarantors that matter and the rest is circular and even the viable grantors might not be able to produce the money if it's needed (at least not until the ECB gives it to them).

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vote_libertarian_party's picture

Sooooooooo what you're saying is everything is fixed?


buy buy buy

FinHits's picture

Guarantees are guaranteed to fail. Failures failed to guarantee.

ebworthen's picture

ECB = 2,7 offsuit betting the kids college fund before the flop.

DoChenRollingBearing's picture

"Don't worry, they'll just print the money." 

- my banker, 2007

GeneMarchbanks's picture

Spain has 6 months to start Iran embargo according to the foreign minister

Italian PM Monti says Italy is diversifying oil supply sources



All of this is more relevant than what you're still following.

LawsofPhysics's picture


Western World; "You must accept our paper for oil and trade as well as when trading for other commodities around the world."

Iran; "Fuck You, these BRICs are willing to trade commodities with us directly for oil as well as their paper."

Game on. 

1eyedman's picture


WW:  bring it!  maybe a stronger $ vs BRIC currencies might get them in line.  no more miami condos for brasil. 

BRICs:  hmm, iran- you got gold too right?


iranian revol holiday:  Feb 11 

Frank N. Beans's picture

there is a very strange color showing in the markets today, sor of looks like a sunset, or like blood.  Strange.

Cast Iron Skillet's picture

Red in the morning, traders take warning ....

Blank Reg's picture

Red at night, traders take flight.

Oh regional Indian's picture


Isn't that what CDS were meant to be also? Look how that Guarantee ended up, eh? 

The only thing in the whole world you can Guarantee with surety is the emptiness of a container, never how much and what it is full of.



ZippyBananaPants's picture

Bloomberg radio right now, Greek guy saying things are not good.

Silberadler's picture


although Mr. Regling will jump over the barricades in your face with naked ass first - if you just mention the word:

Here it is again, specially for Herr Regling:


C D O !

so. we're really impressed by Herr Schäuble's announcement of the 'Hebelung' (a.k.a zhee lheeveradge).

I just wonder:

I my gouvernment that *naive* or are they that *smart* ?

tWhen TV interviewed some representatives after 'zhee vote' about the EFSF in German Parliament - it rather left the impresseion that them folks really do not have a bloody clue what this was about.


Handelsblatt reports on 20 Sept 2011:


that the Bundestag votes on a 'BlackBox'.

So - rather : Keine Ahnung: no clue..


Now what can we all expect of this naive ignorance ?

I'd go for: maximum destruction potential.

Whish it were option 2: smart. but it is not.

So: Tank EURO, Tank.



Lone Deranger's picture

It's amazing that EU nations keep finding ways to recycle their paper.  My guess one reasons are all the planes EADS sells to places like Asia and the Middle East.  Note all the new A320 orders  - like a thousand of them, and look at a sampling of airlines bought them - Air Asia 375 (Malaysia), IndiGo 275 (India).  Qantas, American Airlines, and JetBlue are also customers, but so are Russian, Chinese and an assortment of Middle Eastern countries (UAE, Qatar, etc.).  When flying in Asia, it seems that every flight is packed to gills with passengers. 

Banks finance these massive deals, so that countries like Malaysia, India, and a host of others can find some place to cycle all the cash back to the Western Hemisphere.  As a general note, it's amazing to see all the unprecedented aircraft deals for both Boeing and EADS.  What will really be interesting is if the Euro craters, and how these orders will pan out.

Instant Wealth's picture

"Holding 10, Queen, not suited, small stack, is it time go all in?"


... of course not, but Lagarde and the Mario Bros. are about to raise, to stay in the pot.

Dick Darlington's picture

Very true Mr Tchir, very true. Of course there is the only real, viable long term solution: defaults, breaking up the monetary union, etc etc. but the central planning cartel pretend it's not there. And that's a HUGE mistake.

falak pema's picture

Like in poker it all depends what the other guy has in his hand...PT is too simplistic in his scenario to trash Euro construct. 

Not that defending the 5 legged euro is easy per se; but when you have a geriatric greenback in front of you force fed on steroids, and Germany as back up,  you may, just may, have a chance of survival. As your  competitor as reserve C is obese and under productive but  albeit king of the world. He has many enemies, especially in the young Turk camp of BRICs.

The game of strip poker goes on.

emsolý's picture

Certainly helps knowing that Schettino doesn't have a boat.

littleenglander's picture

I mentioned this a few weeks ago, we really don't know how much of a bluff the EFSF is.

The EFSF is a private company registered in Luxembourg (probably because it is the most "offshore" country in the EU)

In terms of capital, we have no idea how much it really has (only it has around 28million SUBSCRIBED) so for all we know in terms of PAID UP capital it could be €0.17!

It always was a bluff to come out with a big number.



slewie the pi-rat's picture

christine asked for a $Tril!  Hahahahahaha! 

she might get it, but not till the 11th hour and then prob only half at best

maybe the G20's got it?  Hahahaha! 

what about recapitalizing the EU banks?  i've heard this shit for a year!  no one has explained how this works.  doesn't some other bank hafta borrow the money to buy them out? dexia's still flappin in the breeze, too, huh?  what happened to the "oil money"?  i guess escrow didn't close, huh?  hard to see why someone would pony up all those billions to kiss a bunch of dexia ass, anyway

be careful you don't get in the wrong line, there!

but, ...the pictures and numbers on the paper are sooo real!