European Bailout Stigma Shifts From Banks To Sovereigns As Bundesbank Refuses PIG Collateral

Tyler Durden's picture

Back in early February, the ECB's Margio Draghi told a naive world when discussing the implication of taking LTRO bailout aid, that “There is no stigma whatsoever on these facilities." We accused him of lying. Additionally, we also suggested to put one's money where Draghi's lies are, and to go long non-LTRO banks, while shorting LTRO recipients. In two short months the spread on that trade has doubled...

... which intuitively is not surprising: after all, as a former Goldmanite (and according to some - current), Draghi is merely treating Europe's taxpayers like the muppets they are. As such, fading anything he says should come as naturally as Stolpering each and every FX trade. Yet what that little incident shows is that despite all their attempts otherwise, the central planners can not contain every single natural consequences of their artificial and destructive actions. Today, we see learn that the same Stigma we warned about, and that Draghi said does not exist, is starting to spread away from just the bailed out banks (becuase we now know that the LTRO was merely a QE-like bailout of several insolvent Italian and Spanish banks), and to sovereigns. From Bloomberg: "Germany’s Bundesbank is the first of the 17 euro-area central banks to refuse to accept as collateral bank bonds guaranteed by member states receiving aid from the European Union and the International Monetary Fund, Frankfurter Allgemeine Zeitung reported." And where Buba goes, everyone else is soon to follow. And what happens then? Since it is inevitable that Spain and Italy will be next on the bailout wagon, what happens when over $2 trillion in bonds suddenly become ineligible for cash collateral from the only solvent central bank in the world (aside for that modest, little TARGET2 issue of course). Will it force the ECB to be ever more lenient with collateral, and how long until the plebs finally realize that the ECB has been doing nothing but outright printing in the past 5 months? What happens to inflationary expectations then?


The Bundesbank won’t lend to banks against bank debt guaranteed by Greece, Ireland and Portugal from May, the newspaper said, citing unidentified officials. The Frankfurt- based central bank currently has less than 500 million euros ($667 million) of those bonds on its balance sheet, FAZ reported.

Remember: we already indicated that the Bundesbank is at the center of a whole lot of receivables, which it will never collect on, at the heart of Europe's banking system.

Is the first "enough" uttered by Germany? Or is this nothing but more posturing? We will find out rather soon, once things sping out of control once again.

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nope-1004's picture

LTRO stigma, Muppitchez!


CPL's picture

I don't understand.  Isn't Germany working this freak show?


Why won't their shitty bank take the shitty promise of their shitty government and the ECB?

DorseyCecil68669's picture

my friend's aunt makes $72/hr on the internet. She has been without work for six months but last month her payment was $19183 just working on the internet for a few hours. Here's the site to read more .....

Winston Churchill's picture

Been to her site.

One UGLY bitch in the nude.


HardlyZero's picture

The walking and talking PIG will soon have PIIGS and then the EU will make bacon.  Yummy breakfast in Europe.  Then the bond vigilantes will move across the pond.  Where is WB7 to illustrate this freakium.

Greyhat's picture

"Why won't their shitty bank take the shitty promise of their shitty government and the ECB?"

German criminal law is a little different. There is a borderline named "Untreue" (infidelity in business).


Gully Foyle's picture

Would it help Europe that if I win the 642 million I could rent Lichenstein for 40k pounds a day.

I could rent the country for nearly 40 years.

I bet I could even negotiate a better deal than 40k, maybe say the rest of my life and will them whats left over.

Fuck I could eat or drink anything or stay anywhere and have medical coverage for the rest of my life.

Pretty cool.

ACP's picture

I thought the Germans liked pork? I'd take a pig as collateral, just not PIIGS debt.

ekm's picture

If printing debt is a product, which it is, it is easy to understand that, producing money/debt is one thing, but having it accepted is another thing.

There is an over-supply of printed loans and not many users.

Conman's picture

Its just posturing, it's apparently clear to me the world has gone full retard and there's no coming back.

DeadFred's picture

When the bakeries in Zimbabwe were raising their prices Mugabe just told them what they had to charge for bread. I'm sure the EU can just tell the banks they have to accept PIG collateral. There, it's all fixed.

GeneMarchbanks's picture

Bb vs ECB(Goldman basically) was bound to happen sooner or later. Now it's surfacing as THE decider for Europeons. Well, that and Nabucco.

slaughterer's picture

Goldman Sachs has given ZH a whole new set of verbs:

Stolpering world currencies

Draghiing sovereign bonds and Eurozone banks

O'Neilling the BRICs

Hatziusing the FOMC

GeneMarchbanks's picture

And finally Muppet-izing everyone else.

HardlyZero's picture

MFing customer segragated accounts with Muppetised Corzinian zombie slaves injected with pink slime.

Unprepared's picture

And Corzining Customer Accounts

HardlyZero's picture

And the MFing customer segregated accounts (behind their the alley!)

lolmao500's picture

All your lebensraum are belongz to us!

Tsar Pointless's picture

This is either one of three things for equities.

You pick:

1) Bullish;

2) Super-duper bullish; or,

3) Extra-extra bullish.

Ljoot's picture

Bernankabank would buy that for a $1.

Dingleberry's picture

Tru dat!

In the meantime....Sieg Heil....Bitchez!!

Vince Clortho's picture

People you can trust.

sitenine's picture

The death throws of a failed system... What did they expect? Well, it seems to me that 'they' expected to accumulate (via collateral or ownership) virtually all of Earth's resources before the 'system' collapsed (as designed). There is no doubt, in my mind, about intent. The only doubt now concerns the success of what I consider to be the greatest outright theft operation in all of history. So, what is important is who owns real unencumbered assets post system failure. The machinations we are observing are very telling, no? 'Assets' or 'collateral' are being invented from thin air in a last push to procure the last remaining real assets left outstanding before the system is finally allowed to expire. Forget about inflation/deflation on the micro scale - it is irrelevant, as all fiat will be worthless in the end. We know damn well what the game is. If you still have cash, trade it for unencumbered assets that you can hold in your hand. As individuals are forced to play on the micro scale, we must all understand the macro endgame if we want to stand any chance of avoiding abject poverty and unquestioned servitude to the State in which we live.

azzhatter's picture

IMF= International Monetary Fraud

flyingpigg's picture

Market is not really shocked: FBTP Jun futures at Eurex up 1.08 today! (i.e. Italian 10Y yield went down for those not familiar with FBTP).


Big Ben's picture

Someone forgot to tell Bundesbank that Europe has been fixed.

Those silly guys still seem to think that Portugal, Ireland, and Greece are likely to default.

debtor of last resort's picture

Muppets. What does a frog say when it gets squeezed.

Better: what will miss Piggy say when her French frog won't be reelected.

slewie the pi-rat's picture


house0'crads, but i think this is a "banking" decsion and perhaps some other "bank" might be more liable to help

the EU seems to have died with the joker'sGrin on its face for the weekend, and the dollar gets marked down a bit and somedody sold some bonds and somebody bought some, too...

whenever i think of all the dead wood being carried at a nice valuation in debt and equities, i hafta shudder; and yes, this could get very "market-worse" very fast on "sentiment"

we've known for at least a year that the EU "solutions" won't fix anything but just kick the beer truck down the road;  the entire world is a planetary debt bomb being sucked along the milkyWay by it's parent, a medium sized BiCh-star

it is a very naught child, indeed, but have you seen the rest of the family?  fuking moons and asteroids everywhere; and comets; and trash;  beer cans everywhere

StychoKiller's picture

The WORST part of the party:  cleaning up afterwards! :>D

Paracelsus's picture

  I am only guessing but I think in the near future:

A.  A large French bank goes under from the Italian trash,causing CDS mayhem in NYC.

B. A large Spanish bank goes under from Portugese trash """"""""""""""""""""""""""""

I am not relying on curves of graphs but the unbelievably desperate,paranoid statements

being made by the top bananas,experts that they are.

There are some very worried people having guillotine nightmares.....


swani's picture

This is just the next step towards the pre-planned Italian Gold Confiscation by the Central Banks.