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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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.

Temporalist's picture

You cannot petition the lord (Blankfein) with prayer.

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!


Paul Atreides's picture

I would like to subscribe to your newsletter.

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.

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.




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.

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! 

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.

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.

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?

Temporalist's picture

Yes you can skin someone alive with rusty cheese graters. 

Chief KnocAHoma's picture


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


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

Dead Canary's picture

Might I suggest:

Pit of Komono Dragons.

You just can't go wrong with the classics.

redpill's picture

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


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


El Oregonian's picture

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

Temporalist's picture

There are also some incantations with which to conjure banksters.

Say the words:


Market maker

Synthetic derivative

Element's picture

You'll need a pentagram too.

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?

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!

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)

Temporalist's picture

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

Mister Ponzi's picture

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

I Got Worms's picture

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

Seasmoke's picture

Next up ALL Banks of America

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."