Europe's Most Parabolic Chart Goes Parabolic-er

Tyler Durden's picture

Two weeks ago, we showed that when it comes to parabolic charts, Europe sure has a variety to choose from. Yet none are quite as parabolic as the chart enabling it all: the Bundesbank's TARGET2 claims toward the rest of the Eurosystem, or as we have repeatedly explained (and as Jens Wiedmann confirmed), the sunk cost that Germany will have to foot once the Euro experiment ends, and the EMU falls apart.. which judging by recent developments in Greece, and now Spain, could be as soon as in a few weeks. The number as of April 30? €644,182,010,456.05, which is exactly 25% of German GDP, and an increase of €28.6 billion in April and €181 billion in 2012 alone! Putting this number in perspective, imagine that the Fed had "assets" totalling $3.85 trillion that everyone knew are totally worthless, and meant that it would have to print a like amount in fresh money as replacement "capital" when D-Day came. This "money" represents a receivable that the Bundesbank will never, repeat never, get back, once Greece exits the Eurozone, and sets a precedent for all the other insolvent European countries, leading to the end of the European monetary experiment. It also means that the asset base backing the liability side of the Bundesbank will soon get obliterated. So the real question is: do German taxpayers feel like sinking costs which will never be repaid, and which serve merely to preserve the myth of viable German export markets, thereby keeping the illusion that the German intra-Eurozone export industry is alive and well, while in the process obliterating the balance sheet of their far more prudent central bank? Or will the German population say "genug" and force the Bundesbank to stop funding the current account deficit ways that it has been enabling for years? The choice is theirs. Just don't come crying to the Fed when this number is 100% of GDP and everything falls apart.

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Manthong's picture

Cleese makes a good jumbo sized Hitler and Palin makes a great Himmler.

Regarding our German friends, if perpetual slavery to an un-repayable debt burden is good enough for us, it’s good enough for them.

malek's picture

Nice one!

Too bad almost nobody outside ZH can laugh with me - which people know what rehypothecation and LTRO really mean...

jayman21's picture

Yes, agreed!

What did we do four years ago?

Thanks ZH.  Waking the sheeple up since 2009

I hope to to see your 4 birthday and many many more.

The Watchman's picture

What's the big deal? It's just a runaway exponential equation. You never reach infinity. It's all good.

DaveyJones's picture

and given that I've seen a lot of charts that look like that lately, that must diffuse the effect ...right?

worbsid's picture

Roger that! The one of unemployment under 25 follows this one right off the top of the page.  No kids working ... no ponzi. 

AUD's picture

imagine that the Fed had an "assets" totalling $3.85 trillion that would eventually be utterly worthless

So it has "assets" worth 1 odd trillion that are utterly worthless now. What's the fucking difference ZH?

flacon's picture

I think that's his point. What's the FUCKING difference? (rhetorical question of course)

unununium's picture

I was gonna say ... that does not require much imagination at all.

mjcOH1's picture

Two years or $2.85 trillion?

zorba THE GREEK's picture

It's amazing how fast debt disappears in hyper-inflation.

Cursive's picture

@zorba THE GREEK

Not sure if serious.

flacon's picture

Since debt is money, you could substitute the word debt for money. But in the case of Zimbabwe the money both disappeared (went to zero) and simultaneously people were drowned in money ($100,000,000,000 for three eggs). 


Fiat money is a curious beast because more zeros can always be drawn on it after the "1" but eventually it returns to it's intrinsic value of just zero. No topic is more interesting for thinking men to study. 

TN Jed's picture

Yup, just as Jim Sinclair explained.  It all happens at the same time leaving deflationists only half right yet completely wrong.

Sam Clemons's picture

Amazing that after a decade of inflating away debts that the deflationists still believe in it.  If inflation and deflation played in a baseball game, deflation may win a few innings, but the "survival" of the system is linked to inflation winning the game.

All Risk No Reward's picture

Do you you understand the strategy of the mega financial interests that control the Federal Reserve?

It isn't a baseball game, it is a game of insiders making a play for power and control over reality.

Do they get that be hyperinflating their trillions in debt ownership and cash and bailing out debtors?

Or do they finish their monetary looting operation, bust main street, roll up their assets under their corporate fronts take the nation into receivorship?

Sun Tzu said you have to understand the strategy of the enemy or you will be defeated.

mjcOH1's picture

But it still has a BTU value.

TN Jed's picture

Hungary likes this.


Man, at least we have fuckin trees.  I can hear the musical now....How many billion for a B T U?

cheesewizz's picture

 I bet I could get a real tan over there in Zimbabwe.  But seriously, Can i?

Peter Pan's picture

"It's amazing how fast debt disappears in hyper-inflation." (Zorba)

Wheelbarrows also disappear if left unattended.

Cursive's picture


This "money" represents a receivable that the Bundesbank will never, repeat never, get back, once Greece exits the Eurozone, and sets a precedent for all the other insolvent European countries, leading to the end of the European monetary experiment.


So, "Money Heaven" then?

Random_Robert's picture

Vaporized, MF global style...

This just in's picture

Corzine should be on the US $100,000,000,000 bill, flipping us all the bird

LongSoupLine's picture

The money gets "southparked"...

Aaaaand it's gone.

SgtSchultz's picture

Stan:  "Wait I had one hundred dollars"

Banker:  "Not any more you don't......poof"

Peter Pan's picture

That's not money heaven. It's just the rules of monopoly. At the end of the game the money all goes back into the box. Nobody gets to keep it after the game is over. And the game is nearing its end.

Ar-Pharazôn's picture

in that case i m going to the bank and i will indebt myself like hell!!!

wee-weed up's picture

To da moon, Alice!

illyia's picture

Just don't come crying to the Fed when this number is 100% of GDP and everything falls apart.

But that is the WHOLE IDEA!!! The Americans run to rescue their European Brothers and Sisters - for the good of Humanity.

And, thus, To da Mooon, Alice!

Dr. Acula's picture

Too bad. It was fun getting free stuff from the idiot mercantilists while it lasted.


Joe The Plumber's picture

May be the best investment right now is to buy things you will consume in the future and fill your house up to the roof

navy62802's picture

By the way, that's not parabolic. It's a power function. This graph can only be flattened on a logarithmic scale.

the 300000000th percent's picture

It is also exponential e^x a real exponential function crosses the y intercept at (0,1) and then increases to a factor of e^x

LetThemEatRand's picture

"do German taxpayers feel like sinking costs which will never be repaid"

Kind of like every bailout since they started in 2008?  Answer -- no, but it doesn't matter. Most people don't know what's going on and they will blame someone else.

Joe The Plumber's picture

Damn those Greedy CEO's and their bonuses!

Its their fault.

Cursive's picture


Most people don't know what's going on and they will blame someone else.

I literally chuckled.  Very cathartic.  Thank you.

Freebird's picture

Nice stroke. That shut him up. Lol.

Xkwisetly Paneful's picture

Like blaming the bankers and the military spending all  the while inifinite plus one unfunded social obligations the world over is at the bottom of everything?

Joe The Plumber's picture

Wow what a mirage of credit and leverage

I guess the lesson is that you cant run permanent surpluses and loan the surplus back to deficit countries to buy your shit. It ends at some point.

Has china learned the lesson yet?

Errol's picture

I'm pretty sure the Chinese Poliburo is more concerned with keeping the serfs employed  (however poorly) and themselves in their phoney-baloney jobs, than the ultimate value of paper promises.

areopagetica's picture

Your comparison to the Fed is stupid.  If the Fed has assets that turn out to be worthless it does not matter.  Insolvency for a central bank in a fiat currencty system is an oxymoron.  It prints its way out of any deficiency. Get a clue.

Tyler Durden's picture

Yes, yes, infinite debt = infinite printing = infinite prosperity. The MMT blog is just down the street

The Watchman's picture

Right on TD my brother. Where do I sign up for my infinite SNAP card?

areopagetica's picture

Not endorsing printing or MMT, Tyler, the point is that Bundesbank cannot print, making their bad assets a genuine solvency issue, not comparable to the Fed.

BigJim's picture

Once the euro comes to grief the Bundesbank will again be granted the power to print. The german government will have no choice.

Why everyone in Europe isn't rushing to get their hands on as much physical as they can is beyond me. If the crash back in 2007 couldn't stir these people to research the monetary system, what will?