Finland's Proposal: Cash For Collateral

Tyler Durden's picture

The strawmen are coming thick and fast from the EU Summit as they break for an evening snack. Between banking union 'plans' by year-end and ESM credit seniority exemptions for Spain, the Finnish Minister for European Union Affairs, Alexander Stubb, just suggested that EU rescue funds (ESM/EFSF) could potentially partly guarantee Italy's and Spain's bonds if the two countries provide collateral. Such 'covered bonds' reduced his country's borrowing costs during an economic crisis in the 1990s, and now "could be a solution which would bring down the interest rates of Spain and Italy." As Bloomberg notes, the proposal was "a halfway house" between no help at all for weaker eurozone members and full debt mutualization, and a response to those "trying to say that governments such as Finland, Germany and the Netherlands keep on (only) saying no." Unfortunately, as we are all too well aware, despite this being a "constructive proposal from the Finnish government", there is no quality collateral (and certainly trusting earmarks on tax revenue is unlikely to spur demand) leaving the only government asset worth thinking about - Gold - which leads us back to Germany's uber-solution the whole time. "At the end of the day, EU Summits are always some kind of compromise" Stubb added, by which we assume the periphery compromises its sovereignty (and gold) and the Core compromises its taxpayers.

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mrktwtch2's picture

no gold no loan..sorry!!

Skateboarder's picture

So they're running a pawn (read as porn) shop now?

knukles's picture

Shit'll be held in a segregated collateral account.

Won't be assigned, it'll be Corzined

Dr. Richard Head's picture

Is Corzined the verb form of Donkey Punch?  Yes, I believe it is.

hedgeless_horseman's picture



Is Corzined the verb form of Donkey Punch?

No.  Frothy walrus.

strannick's picture

"At the end of the day, EU Summits are always some kind of compromise" Stubb added, by which we assume the periphery compromises its sovereignty (and gold) and the Core compromises its taxpayers".

Exactamundo. ZH bats it out of the park again.

Aziz's picture

Vlad Dracula's bailout program:


sunaJ's picture

It seems fairly obvious to me that governments have never wanted to surrender their gold (a last resort collateralization).  So why would people be any different?  Just waiting for the word to get around on that one.

Nothing To See Here's picture

Oh, well, people should not think that gold is money. You know, governments keep gold just as a tradition. Yes that's it, a long term tradition.

Wait... what is money again?

TruthInSunshine's picture

As just one example of the "high quality assets" that The Non-Federal Reserve-less Bank of IOU Printing took in in exchange for boatloads of FRNS, The Red Roof Inn hotel/motel/roach-tel chain was sufficient, which prompted them to overpay for it by a ratio of approximately 1500%, thence stuffing it into Maiden Lane (one of the Maiden Lane slush funds, I through XXXXXXVII).

I wonder what Finland's standards would be?

Skateboarder's picture

Putting up hard assets or any hard collateral for fiat notes.... *puke*

In the US, you usually take a "government" and "economics" class in the senior year of high school. Most people sleep through it. I say real economics should be taught starting kindergarten - teach 'em that currency =/= paper / some digitally stored number / credit...

TruthInSunshine's picture

I have proposed that ZH members join up with some other young turks and distribute free copies of


The Creature from Jekyll Island


Supplemented by:

The Secret of Oz


The American Dream


The Story of Your Enslavement


The course would be titled "Fractional Reserve Banking Ponzi Scheme 101; Only Fiat, Not Wealth, Grows On Trees/Can Be Printed," and would be taught beginning in the 7th grade (although inquisitive and intelligent younger students could audit the course, also).


Banking was conceived in iniquity and was born in sin. The [fractional reserve] bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take away from them the power to create money and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.

--Josiah Stamp, former Director of the Bank of England & coincidentally estimated to be the 2nd wealthiest Brit in his lifetime; selected quote allegedly taken from speech made (it's true enough to be cited whether really stated or fabricated) to an assembly at The University of Texas in 1927.

Jonas Parker's picture

Italy has it made! "Pizza Bonds (with high-yield pepperoni)!

battle axe's picture

Just hand the Gold over to Germany, so we can get to the end game faster. 

No Euros please we're British's picture

That's the UK screwed then, no wonder they kept out of fiscal pact.

GeneMarchbanks's picture


I'm certain this is in the 'works' not just baseless rumour.

Nothing To See Here's picture

What's more than genius?

The PIIGS are going to pay Germany in gold for the privilege of being able to pay their bureaucrats in euros paper money, whereas they could use the gold themselves as money to pay for whatever socialist program they want and be protected against debasement. But of course, that would mean having less socialist programs, which of course they are not willing to consider.

How smart is that? I've always said that there are no boundaries to a socialist's imbecility. I might still have underestimated it.

Ghordius's picture

you should condemn this barbarism. asking for gold as collateral is just barbaric. btw pass me that vanquished enemy skull filled with beer and sell me your daughters

Snakeeyes's picture

Look. The PIGs and France are terminal spenders. Only way to MAKE them behave is some draconian measures to control their insanity. The US is insane too with Dread Pirate Roberts voting for the repression of personal freedom.

Abraxas's picture

You just prey for those drakonian measures, Snakeeyes, and you just might get them. They are no fun, believe me, because they hit the poor first and then the middle. If you think the "measures" are going to be fairly distributed, you have another thing coming.

knukles's picture

Frau HerrDoctor Obergruppenführer Merkel says so.
My way or the roasties for you

hedgeless_horseman's picture



"At the end of the day, EU Summits are always some kind of compromise" Stubb added, by which we assume the periphery compromises its sovereignty (and gold) and the Core compromises its taxpayers.


“In any compromise between food and poison, it is only death that can win. In any compromise between good and evil, it is only evil that can profit.”

-Ayn Rand

LawsofPhysics's picture

Prescisely why it may be worth making a sizable bet on the banks to win in November.

LawsofPhysics's picture

Possession is the law.  All paper is junk, but especially paper promises.

slackrabbit's picture

maybe they can use their gold etf's as collaterol


Temporalist's picture

Gold bond - for the chaffing you get from fascist shackles.

slackrabbit's picture

cash for gold....just like junky adverts

how about a toilet duck as wel......maybe then we can see whats under the  rim...

marginview's picture

Zerohedge wrong on gold again (down again today well below 1600) - almost as much as stolper on FX. Stop slagging Bernanke about printing too much and maybe he'll do some again.

Abraxas's picture

I know. BB probably reads ZH frequently and sets his policies accordingly.

Nothing To See Here's picture

Blame Ron Paul for making the FED a political issue if you want. He has indeed made it more difficult for central banksters to go full steam ahead with their debasement theories.

michael_engineer's picture

I don't think it is Ron Paul at fault.  Consider the following :


Regarding "printing" by the ECB or FED as a way to kick the can down the road, many have hoped and opined as printing being a way to alleviate some of this financial crisis in some places.  Yet, right now printing is being resisted, and that is interesting to examine.   In the case of the ECB, a lot of the resistance to that effort comes from Germany as it is perceived that the German economy and/or balance sheets will be affected in a negative way as a result.  If true, that explains the German stance.  


In the case of the FED, the situation is somewhat different.  When the FED prints, does that dilute the holdings of foreigners who have purchased large amounts of US Treasuries like China or dilute the investments of other holders of US denominated capital and debt?  If so, would they pushback against printing?  If the value of Treasuries, etc. is going to be diluted by successive printing, then why hold onto those investments?  


In the past, printing may have been a popular way for countries to try to inflate their way through and out of economic crises.  As long as the expected pushback to printing wasn't perceived to be as bad as the underlying crisis, then printing generally occurred.  But now one has to ask if the pushback effects are getting so large as to be countering the ability to print.  

Rollerball's picture

Depends on who prices the oil.

LawsofPhysics's picture

Just checked on the physical. Still weighes the same, same for the silver.

Wake me when it goes under my dollar cost average of $300.  Pssst, if you don't hold the physical asset (applies to more than just gold) you don't own it.

debtor of last resort's picture

That's because gold and silver are more patient than bond markets.

FieldingMellish's picture

Cash-for-gold.... what a novel idea. I'm sure no one has tried this before. LOL!

LeisureSmith's picture

Gold/Silver ratio at 59+ I think i'm gonna get my silver stack on...any objections?

SilverRhino's picture

It's a bad fucking day to be selling PM's

REALLY good day to be buying.  


Let them eat iPads's picture

Italy can put up Sicily as collateral.

Whoa Dammit's picture

Italy should put the Milan branch of GS up as collateral.

Rollerball's picture

Or the Vatican.  Eminent domain beoche.

Cognitive Dissonance's picture

Gold and Silver on sale now. Price increases coming soon so hurry.

Buy buy buy the dip motherf**kers.

Colonel's picture

Tyler should get that silk screened on his tshirts. "BTFD! Gold bitchez!"

Unprepared's picture

Or change the motto: "On a long enough timeline, gold becomes edible"

Conman's picture

Duhh - spiderman towels are the ultimate collateral. Problem solved. Give them the money.

slewie the pi-rat's picture

dammit c_man!

those spidey towels are already hypothecated 5X !  i can't give them noMo unless wunderWooman sez it's ok

ya know i'd help if i could...  moMoney is 4 the sammieSummit-0m0 plastique-0n0-handmade soap competitions to be held in Turkey next week...

mebbe sumpin'll shake lose for dem after dat, bebe...

Temporalist's picture

Ambrose Evans-Pritchard from May 29:

Europe’s debtors must pawn their gold for Eurobond Redemption