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Europe's Stigmatized Banks On The Verge Of Crucifixion

Tyler Durden's picture


Back in the middle of March, when all was sunshine and unicorns in the post-LTRO world of recovery and another sustainable recovery, we were vociferous in our noting that nothing has been fixed and LTRO3 is not coming. Sure enough, here we are a few weeks later and the encumbering stigma that we were the first to point out (and call Draghi out on) is now wider than at any time since the LTRO program began with the banks that took LTRO loans now trading wide of pre-LTRO levels (fully stigmatized despite all that extra liquidity). Today saw the Stigma spread between LTRO and non-LTRO banks jump its most in 2 months to over 160bps (its highest in almost six months). There is however a troubling conundrum facing the ECB. The banks that need another LTRO (or liquidity) no longer have performing collateral to pledge and other banks that would like liquidity will not take it since they now understand the encumbrance and stigma that is attached to that decision. The ECB is snookered (and so is it any wonder that Draghi is playing for time) and perhaps this is why we are seeing the EUR leak lower against the USD as markets anticipate some more direct monetization mandate-busting action by the ECB (shifting the Fed/ECB balance and implicitly the flow between the two that we have also pointed out as critical). Either way, there is no LTRO3 coming anytime soon and together with this morning's jumps in liquidity funding costs, the vicious circles are ramping up again in Europe.

The LTRO Stigma jumped the most in over two months today (lower pane) and reaches up to near six-month highs - almost entirely removing any LTRO benefit well spent it seems...

And LTRO-encumbered banks are at their widest since LTRO began - while those that chose the tougher path of self-reliance remain considerably better rated by the market...

Our LTRO Stigma has proved to be one of the clearest ways to show the stress in Europe as we echo our thoughts from 2 months ago:

When one understands that the heart of Europe's problem is the rapid "vaporization" of all money good assets, everything falls into place: from the ECB's response, to Europe's propensity for infinite rehypothecation, to the rapidly deteriorating financial system.

Only this time there can be no quick collateral-type response as money-good assets are few and far between. We suspect it won't be long before the Fed comes to their rescue with extensions of the FX swap lines - but just how much of that ECB balance sheet does the Fed really want to take on as collateral when it is also nothing more than a giant CDO balanced on the dross assets of Europe's banking system (especially when one considers that ECB margin calls remain negligible in the face of asset impairments everywhere).


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Wed, 05/09/2012 - 10:38 | 2409887 Cognitive Dissonance
Cognitive Dissonance's picture

Now I lay me down to sleep,

I pray the Lord my bank to keep,

If it should die before I wake,

I pray the Lord my bank to take.

And take the central bankers while you're at it Lord.

Wed, 05/09/2012 - 10:39 | 2409899 Temporalist
Temporalist's picture

You cannot petition the lord (Blankfein) with prayer.

Wed, 05/09/2012 - 10:42 | 2409903 Chief KnocAHoma
Chief KnocAHoma's picture


Start up company seeking fresh capital - 

Our business will build the best guillotine in the World. Not only will it chop the head off any douche bag banker, it will do it slowly with as much pain as possible.

The rusty blade is dull and jagged, but cleans easily. Our guillotine often has to be dropped twice since the first drop only gashes the bank of the fucktard banker's neck. 

While he winces and cries out in pain crowds will cheer as you slowly retract the blade for another try.

Our truly unique product will bring joy to your mobs and make you the most popular hooded executioner on the block.

Call today for a company prospectus!


Wed, 05/09/2012 - 10:44 | 2409912 Paul Atreides
Paul Atreides's picture

I would like to subscribe to your newsletter.

Wed, 05/09/2012 - 10:51 | 2409944 machineh
machineh's picture

I'd like to meet his tailor.

Wed, 05/09/2012 - 10:52 | 2409952 mophead
mophead's picture


Wed, 05/09/2012 - 10:57 | 2409969 Chief KnocAHoma
Chief KnocAHoma's picture

Nice tits!

Wed, 05/09/2012 - 11:01 | 2409980 GOSPLAN HERO
GOSPLAN HERO's picture

Boob job -- not real.

Wed, 05/09/2012 - 11:12 | 2410044 GMadScientist
GMadScientist's picture

Real -- just not natural.

Wed, 05/09/2012 - 11:00 | 2409978 GOSPLAN HERO
GOSPLAN HERO's picture

BTFD in gold and silver.

Wed, 05/09/2012 - 10:56 | 2409962 Chief KnocAHoma
Chief KnocAHoma's picture

And his hair was perfect!

Wed, 05/09/2012 - 11:02 | 2409991 GOSPLAN HERO
GOSPLAN HERO's picture

Warren Zevon lives on.

Wed, 05/09/2012 - 11:08 | 2410020 Element
Element's picture

Werewolves of London?

Wed, 05/09/2012 - 11:13 | 2410046 GMadScientist
GMadScientist's picture


Wed, 05/09/2012 - 11:24 | 2410079 StychoKiller
StychoKiller's picture

"Better stay from him, he'll rip yer lungs out, Jim!"

Wed, 05/09/2012 - 11:19 | 2410061 Temporalist
Temporalist's picture

Would your startup be interested in an inventor/designer?


I am designing a room that is a complete glass inclosure and is hermetically sealed.  An offender will be placed in this room for all to see and there will be ports into the room allowing people to deposit flatulence into the room, pumping methane only in, while slowly decreasing the remaining oxygen available to the occupant.

Wed, 05/09/2012 - 11:33 | 2410116 Chief KnocAHoma
Chief KnocAHoma's picture

Dear Temporalist,

While your creative talent is admirable, we have decided to pass on your proposed death machine by farts.

The overall idea is a brilliant one but for the reasons listed below we will not have an interest in adding this product to our line.

1 - We hold to the Buffett mantra of KISS. Your machine is very technical and we don't invest in products we do not understand. We prefer baseball bats and pitch forks.

2 - While the ultimate result of your product will result in the death of said douche bag banker, it is our opinion the scum offender will enjoy the process since most of his life has been spent sucking ass.

Thank you for your interest in our company and good luck with your invention.




Wed, 05/09/2012 - 11:36 | 2410122 Cognitive Dissonance
Cognitive Dissonance's picture

You are just brutal. :)

Wed, 05/09/2012 - 12:15 | 2410166 Chief KnocAHoma
Chief KnocAHoma's picture


Wed, 05/09/2012 - 11:44 | 2410136 Temporalist
Temporalist's picture

Well there is a simplified version.  A pit that people can dump feces and urine into.  This can potentially provide a week or longer of crowd participation and television coverage.  

I cannot claim a patent on that one however it is similar to my own idea of the Port-O-Potty Of Death.

As you can tell I am a prolific creator and you'd be missing out on my unique talents if you passed me over for someone like Dick Cheney.

Wed, 05/09/2012 - 11:46 | 2410146 Chief KnocAHoma
Chief KnocAHoma's picture

Please forward a contract. Despite the obvious similarity to sucking ass, this might work since the mob could also throw stones when they tire of the stench. We want this in our mix! 

Wed, 05/09/2012 - 11:50 | 2410153 Temporalist
Temporalist's picture

If one adds a bungee cord to the legs it can also be the Cesspool Pinata Dunk Tank.

So many options, so little time.

Wed, 05/09/2012 - 11:52 | 2410160 Sauk Leader
Sauk Leader's picture

I would like to show you some of my designs of an old 2x4 with a rusty nail in it. I have worked up a few prototypes for demonstration.

Wed, 05/09/2012 - 11:58 | 2410183 Chief KnocAHoma
Chief KnocAHoma's picture

Ah the creative process is flowing today! 

Do you have designs with multiple nails? Also do you know of any process that allows for a person to actually be skinned alive?

I know that is an old saying, but is it really possible?

Wed, 05/09/2012 - 12:00 | 2410185 Temporalist
Temporalist's picture

Yes you can skin someone alive with rusty cheese graters. 

Wed, 05/09/2012 - 12:05 | 2410201 Chief KnocAHoma
Chief KnocAHoma's picture


I am so glad you did not take no for an answer! You just got promoted to senior design manager!


Wed, 05/09/2012 - 12:19 | 2410237 Sauk Leader
Sauk Leader's picture

Let me go to the lab and see what I can do. My boards are all hand picked and sourced from vacant construction sites nationwide. The nails are source from the same sites with metal detectors, then we age them in standing water for a minimum of 6 months to ensure the same quality every time. As for the skinning tool, I believe they are fairly common. It is called the Gillette Fusion Razor - 5 BLADES

Wed, 05/09/2012 - 15:48 | 2411084 Dead Canary
Dead Canary's picture

Might I suggest:

Pit of Komono Dragons.

You just can't go wrong with the classics.

Wed, 05/09/2012 - 10:49 | 2409935 redpill
redpill's picture

"You cannot petition the lord (Blankfein) with prayer."


Very good point.  Best way to summon him is with bloody muppet chum.


Wed, 05/09/2012 - 10:52 | 2409948 El Oregonian
El Oregonian's picture

This is more like a stigmata with blood leaking out from several points...

Wed, 05/09/2012 - 11:14 | 2410052 francis_sawyer
francis_sawyer's picture

Bring in the Inquisition...

Wed, 05/09/2012 - 10:56 | 2409960 Temporalist
Temporalist's picture

There are also some incantations with which to conjure banksters.

Say the words:


Market maker

Synthetic derivative

Wed, 05/09/2012 - 11:09 | 2410030 Element
Element's picture

You'll need a pentagram too.

Wed, 05/09/2012 - 11:13 | 2410040 Jena
Jena's picture

Long voodoo dolls.

Wed, 05/09/2012 - 10:50 | 2409939 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture


Wed, 05/09/2012 - 11:10 | 2410036 Element
Element's picture

Riders on the Storm?

Wed, 05/09/2012 - 11:14 | 2410047 Jena
Wed, 05/09/2012 - 11:37 | 2410125 Temporalist
Wed, 05/09/2012 - 13:28 | 2410453 Jena
Jena's picture


Wed, 05/09/2012 - 11:15 | 2410051 GMadScientist
Wed, 05/09/2012 - 11:24 | 2410078 Element
Wed, 05/09/2012 - 10:55 | 2409959 Gloomygus
Gloomygus's picture

The NATO Summit is in two weeks, with the ECB playing for time. If you wanted to hit reset, and needed a button, and needed as few as possible to see the button and you pressing it, what would the button look like?

Which events have utterly changed the dynamics in the past 100 years? Were they pleasant?

Wed, 05/09/2012 - 10:36 | 2409893 Snakeeyes
Snakeeyes's picture

Spain's housing bubble is killing their banks and economy.

Spain’s Pain Continues to Accelerate – Banks, Housing, Bad Loans, Unemployment, Nosediving GDP – Time for More Sangria!

Wed, 05/09/2012 - 10:55 | 2409956 kridkrid
kridkrid's picture

I think people have this backwards, a bit.  It isn't a housing bubble that kills the banks... it's the banks that kill housing through the creation of bubbles.  It's a symptom of a monetary system that is detached from reality.  People need to look at the cause... not symptoms.

Fiat + Fractional Reserve banking + Usury = Debt based global ponzi... it "felt" fine to most when everything was inflating, though in reality... people were basically just keeping their heads above water... but deleveraging will be a bitch (likely won't happen as WWIII will destroy us first)

Wed, 05/09/2012 - 10:38 | 2409895 Temporalist
Temporalist's picture

Why the hate on sunshine and unicorns?  Ben "The Bearded" Bernank is the phdwizard that makes them possible.  Stop hating.

Wed, 05/09/2012 - 10:38 | 2409897 Mister Ponzi
Mister Ponzi's picture

What a day... time to bring out the deer!?!

Wed, 05/09/2012 - 11:01 | 2409988 I Got Worms
I Got Worms's picture

Been a long time since the deer made an appearance. I miss him.

Wed, 05/09/2012 - 10:42 | 2409908 Seasmoke
Seasmoke's picture

Next up ALL Banks of America

Wed, 05/09/2012 - 11:01 | 2409979 chunga
chunga's picture

Frontline just made a movie about this. Didn't you see it?

They said this was just a big mistake and no one knew anything was wrong until everyone's money was all gone.

The banker people worked hard to do what was right but couldn't figure it this carpenter did.


"Below is just a small example of who the true lenders were for all the toxic loans. I have dozens of these from all the players. The Mortgage Contract was fraud in the factum and fraud in the execution and not one loan written since 2000 is valid and void as a matter of law."

"If you think the people at the top of the food chain do not know this, you are sadly mistaken."


Wed, 05/09/2012 - 11:45 | 2410143 antisepticWipe
antisepticWipe's picture

chunga hauls the mail again.

Your carpenter friend is pretty smart.

Wed, 05/09/2012 - 12:00 | 2410186 chunga
chunga's picture


That's just an illuminati conspiracy theory. With all these onerous regulations nothing like that could be allowed to happen.


Wed, 05/09/2012 - 10:42 | 2409911 Broccoli
Broccoli's picture

No worries. Just a liquidity problem caused by those Anglo-Saxon bankers. Merkel will explain it all to us later how fundamentally we are fine.

Poor Jutes, just as important as the Anglo's and the Saxon's but history has forgotten them.

Wed, 05/09/2012 - 10:45 | 2409919 machineh
machineh's picture

The swirling vicious circles have coalesced into an ominous black hole, from which no bank can escape.

Jean-Clodhopper Trichet prolly considers himself lucky to have slunk out of the ECB before the asteroid-sized turds began breaking off the fan blades.

Wed, 05/09/2012 - 10:47 | 2409920 youngman
youngman's picture

I can only dream of what is going on in a Spanish bank right now......lines of people deposing their money....I don´t think so.....lines of people trying to take their money out...I think so...

The new accounts guy must be bored as shit....

the ATM restocker is working overtime I bet

Wed, 05/09/2012 - 10:52 | 2409950 Ben Burnyankme
Ben Burnyankme's picture

Don't worry.  They will soon pass a law like other euro countries limiting cash withdrawls if they haven't done so already.  Wouldn't want to have a bank run!

Wed, 05/09/2012 - 10:46 | 2409921 Jason T
Jason T's picture

 You see, the people that own the bonds are going bat shit, they're thinking "hey, we're losing all our damn money and christmas is around the corner, and I ain't gonna have no money to buy my son the GI Joe with the kung fu grip, ok, and my wife ain't gonna want to make love to me cause i ain't got no money," right, so they sitting there and they're panicing, they're screaming sell sell cause they don't want to lose all their money ... they out there panicing now.. I can feel it.  

Wed, 05/09/2012 - 10:58 | 2409968 pods
pods's picture

+1 for the GI Joe with the Kung Fu grip!

Wed, 05/09/2012 - 11:03 | 2409995 Village Smithy
Village Smithy's picture

How about Kung Fu grip and life-like hair.

Wed, 05/09/2012 - 11:09 | 2410025 pods
pods's picture

I will have to ask Aunt Bunny.

Wed, 05/09/2012 - 10:51 | 2409928 CrashisOptimistic
CrashisOptimistic's picture

1) Stop forgetting the lesson of 2011.  They will do ANYTHING to keep the balls in the air.  If the Greek 2nd place winner who is causing trouble is a problem, he'll be removed.  This upheaval is NOTHING.  We're losing only a few % off the S&P.  We aren't even negative YTD.

2) You can't make money betting on either direction.  Just buy some 10 yr Ts and hope you get out of them before they disintegrate.  Don't think that means there is something else that won't disintegrate.  There is nothing that won't.  But bonds are where people hide.  1.79%.  It just hit 1.79%.  Bondholders have about a 30% profit since August.

3) Only oil destroys all this.  Forget oil's price.  This is about oil's quantity.  Oil is the one thing that can't be printed.  Destruction caused by insufficient quantity is forever, and they know it.

Wed, 05/09/2012 - 10:55 | 2409958 machineh
machineh's picture

'If the Greek 2nd place winner who is causing trouble is a problem, he'll be removed.'

Or more simply, CO-OPTED. 

Wed, 05/09/2012 - 11:00 | 2409975 CrashisOptimistic
CrashisOptimistic's picture

aka bought off.

Wed, 05/09/2012 - 10:49 | 2409932 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture



reminds me of this great article:

Time line of a bank collapse

1. The Board issues a statement accusing bloggers of spreading both irresponsible and factually incorrect rumours as the bank is sound and has no need of new capital.

2. The Bank issues a statement of confidence in its management.

3. The Bank tries to raise more private capital in spite of it having no need for it.

4. If this does not work the relevant government(s) express(es) complete confidence in the bank and tell us that it has a sound management structure and business model. Indeed the bank had only recently been giving the government advice as to how to run the public-sector more efficiently.

5. The relevant government(s) tell us that they are stepping in to help the bank but the problems are both minor and short-term and are of no public concern.

6. The relevant government(s) tell us that the bank needs taxpayer support but through clever use of special purpose vehicles there will be no cost and indeed a profit is virtually certain.

7.Part-nationalisation of the bank is announced and taxpayers are told that a profit will result from this sound and wise investment.

8. Full nationalisation is announced to the sound of teeth being pulled without any anaesthetic.

9. Debt costs of the relevant sovereign nation or nations rise.

10. Consequently that nation finds that its credit rating is downgraded.

11. It is announced that due to difficult financial times public spending needs to be trimmed and taxes such as Value Added Tax need to be raised. It is also announced that nobody could possibly have forseen this and that nobody is to blame apart from some irresponsible rumour mongers who are the equivalent of terrorists. A new law is mooted to help stop such financial terrorism from ever happening again.

12. Some members of the press inform us that bank directors were both “able and skilled” and that none of the blame can possibly be put down to them as they get a new highly paid job elsewhere.

13. Former bank directors often leave the new job due to “unforseen difficulties”.

Wed, 05/09/2012 - 11:10 | 2410032 Sandmann
Sandmann's picture

Otherwise known as:


Ship hits iceberg

Passengers persuaded to stuff hole with bedding and mattresses

Captain abandons ship

Crew go looking for Captain

Passengers wonder how they will sleep on wet bedding and awaiting further instructions


Wed, 05/09/2012 - 11:20 | 2410068 Element
Element's picture

Oh come on!  You just direct the fire hoses (let's call them debt-hoses) into the forward compartment, to increase water pressure inside there, thus forcing the sea to go back outwards, the way that it came in.

This time is different!

Can I have my PhD now?

Wed, 05/09/2012 - 11:21 | 2410070 Vince Clortho
Vince Clortho's picture

+1 Well done.

I might add:

14.  Rinse. Repeat

Wed, 05/09/2012 - 10:49 | 2409933 evolutionx
evolutionx's picture

EU-Bank Panic

ECB Fear Indicator: record

Banks deposited over 823  billion with the ECB

jumped 41 Billion on one day!

Wed, 05/09/2012 - 10:51 | 2409945 Rainman
Rainman's picture

Now watch the Fed go head first into the EU swaps sewer line. This rent-a-recovery scheme keeps unraveling. It always circles back to Japan.

Wed, 05/09/2012 - 10:59 | 2409974 Temporalist
Temporalist's picture

I disagree.  The Japanese just used the "tools" that the Keynesian central bankers provided them.  They were taught and, as the Japanese do so well, emulated someone else's creation.

Wed, 05/09/2012 - 10:52 | 2409949 theTribster
theTribster's picture

Here we go, the beginning of the end of the European Union and their pretty currency....

Wed, 05/09/2012 - 10:58 | 2409970 manhunter
manhunter's picture

The ECB has the ultimate collateral sitting on its balance sheet. It just has to be repriced once; that will be enough for a lifetime.

Wed, 05/09/2012 - 11:01 | 2409973 ArrestBobRubin
ArrestBobRubin's picture

"Stigmatized" you say?  Is that PC for "Utterly and Totally Insolvent"?

US taxslaves, prepare to be screwed. Again. Because regardless of what the scumbags call the next zombie bank bailout, it's we who'll be paying the tab.

Wed, 05/09/2012 - 11:33 | 2410113 Joe The Plumber
Joe The Plumber's picture

Not until after the election. IMF knows they wont get shit from the USA before november.

Wed, 05/09/2012 - 11:02 | 2409984 slackrabbit
Wed, 05/09/2012 - 11:03 | 2409997 midgetrannyporn
midgetrannyporn's picture

Hitler finds out about the eurozone crisis:

Wed, 05/09/2012 - 11:07 | 2410021 Sandmann
Sandmann's picture

The simple fact is there is Huge Overcapacity in Banking and FIRE sector. These idiots manufactured these problems by looking for margin  to pay for a vastly over-inflated Fixed Cost Base. They daisy-chained like crazies and set up SIVs and Shells to circumvent the rules of exposure and equity. The Puppet Politicians played along and have now spread what little Sovereign Equity remained far too thinly among basket case banks. They have underwritten FAKE Bond packages in some of these Synthetic CDOs and have propped up fantasy balance sheets because Banks failed to clean out the junk.


Now they have Commerzbank forced to pay 52 million in Bonuses despite losing 8 BILLION when Allianz SE persuaded Martin Blessing at Commerzbank to buy the Dresdner KLeinwort Benson bank from Allianz before it collapsed. German Taxpayers got to cover the Commerzbank losses and no doubt to pay the Banker Bonuses in London.

The CFO of Allianz who bought Dresdner Bank - Dr Paul Achleitner, formerly Goldman.  His former Goldman colleague was Frau Blessing whose husband Martin runs Commerzbank.  Achleitner advises Merkel and is now Chairman of the Supervisory Board at Deutsche Bank.  Never mind, he did try to buy AIG when it was folding - Chris Flowers flew him to New York to do a deal

Wed, 05/09/2012 - 11:50 | 2410156 blunderdog
blunderdog's picture

Massive malinvestment usually has SOME kind of upside.

Not so much when it all goes into financial scalping.

Wed, 05/09/2012 - 11:14 | 2410049 icanhasbailout
icanhasbailout's picture


Wed, 05/09/2012 - 11:17 | 2410057 francis_sawyer
francis_sawyer's picture

For 30 pieces of silver I'll tell you everything you need to know...

Wed, 05/09/2012 - 11:31 | 2410102 Joe The Plumber
Joe The Plumber's picture

Dont the banks now sell a bond to themselves then use said bond for collateral for an ECB loan? Plenty of collateral can be found that way lol

Wed, 05/09/2012 - 12:08 | 2410204 falak pema
falak pema's picture

In Memory of May 9, THE DAY OF EUROPE :




9 mai 1873. En Europe, aux USA, les Bourses plongent, la crise, le chômage... Déjà. - Le Point

Do NOT follow this link or you will be banned from the site!