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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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Thu, 06/28/2012 - 13:38 | 2569886 mrktwtch2
mrktwtch2's picture

no gold no loan..sorry!!

Thu, 06/28/2012 - 13:39 | 2569893 Skateboarder
Skateboarder's picture

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

Thu, 06/28/2012 - 13:41 | 2569897 knukles
knukles's picture

Shit'll be held in a segregated collateral account.

Won't be assigned, it'll be Corzined

Thu, 06/28/2012 - 13:48 | 2569957 Dr. Richard Head
Dr. Richard Head's picture

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

Thu, 06/28/2012 - 13:53 | 2569974 hedgeless_horseman
hedgeless_horseman's picture

 

 

Is Corzined the verb form of Donkey Punch?

No.  Frothy walrus.

Thu, 06/28/2012 - 13:55 | 2569984 strannick
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.

Thu, 06/28/2012 - 14:03 | 2570014 Aziz
Aziz's picture

Vlad Dracula's bailout program:

"I WILL LET YOU SUCK ON MY LIQUIDITY IF YOU LET ME SUCK SOME LIQUIDITY FROM YOUR NECK!"

Thu, 06/28/2012 - 13:52 | 2569978 sunaJ
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.

Thu, 06/28/2012 - 14:09 | 2570044 Nothing To See Here
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?

http://www.youtube.com/watch?v=2Dj9v9s9buk

Thu, 06/28/2012 - 13:45 | 2569907 TruthInSunshine
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?

Thu, 06/28/2012 - 13:46 | 2569934 knukles
knukles's picture

Frozen reindeer turds.

Thu, 06/28/2012 - 13:46 | 2569939 Skateboarder
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...

Thu, 06/28/2012 - 17:52 | 2570041 TruthInSunshine
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

-and

The American Dream

-and-

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.


Thu, 06/28/2012 - 13:43 | 2569913 Jonas Parker
Jonas Parker's picture

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

Thu, 06/28/2012 - 14:02 | 2570016 battle axe
battle axe's picture

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

Thu, 06/28/2012 - 14:11 | 2570050 No Euros please...
No Euros please we're British's picture

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

Thu, 06/28/2012 - 13:40 | 2569890 GeneMarchbanks
GeneMarchbanks's picture

Genius.

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

Thu, 06/28/2012 - 13:48 | 2569956 Nothing To See Here
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.

Thu, 06/28/2012 - 14:34 | 2570167 OneTinSoldier66
OneTinSoldier66's picture

Agree absolutely 100%.

Thu, 06/28/2012 - 16:06 | 2570782 Ghordius
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

Thu, 06/28/2012 - 13:40 | 2569896 Snakeeyes
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.

http://confoundedinterest.wordpress.com/2012/06/28/imf-to-discuss-greece-re-negotiating-debt-france-and-us-should-pay-close-attention-particularly-after-supreme-court-upholds-obamacare/

Thu, 06/28/2012 - 13:44 | 2569921 Abraxas
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.

Thu, 06/28/2012 - 13:44 | 2569926 knukles
knukles's picture

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

Thu, 06/28/2012 - 13:42 | 2569899 hedgeless_horseman
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

Thu, 06/28/2012 - 13:43 | 2569915 LawsofPhysics
LawsofPhysics's picture

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

Thu, 06/28/2012 - 13:42 | 2569908 LawsofPhysics
LawsofPhysics's picture

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

Thu, 06/28/2012 - 13:49 | 2569963 slackrabbit
slackrabbit's picture

maybe they can use their gold etf's as collaterol

lol

Thu, 06/28/2012 - 13:42 | 2569912 Temporalist
Temporalist's picture

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

Thu, 06/28/2012 - 13:43 | 2569914 slackrabbit
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...

Thu, 06/28/2012 - 13:43 | 2569917 marginview
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.

Thu, 06/28/2012 - 13:45 | 2569933 Abraxas
Abraxas's picture

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

Thu, 06/28/2012 - 13:56 | 2569988 Nothing To See Here
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.

Thu, 06/28/2012 - 14:03 | 2570019 michael_engineer
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.  

Thu, 06/28/2012 - 17:09 | 2571130 Rollerball
Rollerball's picture

Depends on who prices the oil.

Thu, 06/28/2012 - 13:47 | 2569940 LawsofPhysics
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.

Thu, 06/28/2012 - 15:03 | 2570340 debtor of last ...
debtor of last resort's picture

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

Thu, 06/28/2012 - 13:44 | 2569924 FieldingMellish
FieldingMellish's picture

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

Thu, 06/28/2012 - 13:46 | 2569937 LeisureSmith
LeisureSmith's picture

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

Thu, 06/28/2012 - 14:02 | 2570017 SilverRhino
SilverRhino's picture

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

REALLY good day to be buying.  

 

Thu, 06/28/2012 - 13:47 | 2569943 Let them eat iPads
Let them eat iPads's picture

Italy can put up Sicily as collateral.

Thu, 06/28/2012 - 14:07 | 2570038 Whoa Dammit
Whoa Dammit's picture

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

Thu, 06/28/2012 - 17:12 | 2571146 Rollerball
Rollerball's picture

Or the Vatican.  Eminent domain beoche.

Thu, 06/28/2012 - 13:48 | 2569946 Cognitive Dissonance
Cognitive Dissonance's picture

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

Buy buy buy the dip motherf**kers.

Thu, 06/28/2012 - 13:54 | 2569983 Colonel
Colonel's picture

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

Thu, 06/28/2012 - 14:11 | 2570051 Unprepared
Unprepared's picture

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

Thu, 06/28/2012 - 14:40 | 2570221 OneTinSoldier66
OneTinSoldier66's picture

I LIIIIIKE it! Great one.

Thu, 06/28/2012 - 15:54 | 2570689 GMadScientist
GMadScientist's picture

Impetuous.

Thu, 06/28/2012 - 13:48 | 2569952 Conman
Conman's picture

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

Thu, 06/28/2012 - 14:34 | 2570168 slewie the pi-rat
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...

Thu, 06/28/2012 - 13:49 | 2569960 Temporalist
Temporalist's picture

Ambrose Evans-Pritchard from May 29:

Europe’s debtors must pawn their gold for Eurobond Redemption

http://www.telegraph.co.uk/finance/financialcrisis/9298180/Europes-debto...

Thu, 06/28/2012 - 13:54 | 2569982 falak pema
falak pema's picture

Finland is holding the euro athletics at helsinki. All they have to do is confiscate all those gold & silver medals won by club med.

Thu, 06/28/2012 - 15:51 | 2570665 GMadScientist
GMadScientist's picture

Or win one...for the biathlon.

Thu, 06/28/2012 - 13:58 | 2569995 No Euros please...
No Euros please we're British's picture

But why would they take an arcane relic that is at the top of a bubble as collateral. It doesn't make sense. When gold collapses to $800/oz the Germans will be screwed. In fact it may not even reach Germany if they send it by boat.

Thu, 06/28/2012 - 14:04 | 2570022 noses
noses's picture

In that case: More margin calls.

Thu, 06/28/2012 - 14:04 | 2570027 Jim in MN
Jim in MN's picture

I dunno...aren't beaches and women collateral too>?  Or is that not polite to say yet in Europe....

Thu, 06/28/2012 - 14:09 | 2570048 GubbermintWorker
GubbermintWorker's picture

All your gold are belong to us!

Thu, 06/28/2012 - 14:11 | 2570053 benbushiii
benbushiii's picture

Once the collateral pledge game starts, that asset will get sold down because the loans will eventually default and the holder of the collateral realizes everyone else holds the same collateral and will sell or hedge.  Whatever is used to secure loans will plummet in value, just as real estate did, copper (in China), Oil, etc.  Gold will go a lot lower if it is pledged.

Thu, 06/28/2012 - 14:13 | 2570058 Bag Of Meat
Bag Of Meat's picture

I first thought this article was about the deal between Greece and Finland , by which Greece had to pay cash as collateral for the finnish loan . The first part of that "collateral" , some 350mil euros was transferred to Finland by the previous greek government, and now Finland is looking to invest this money in the US...
At least that's what I read somewhere.. 

Thu, 06/28/2012 - 14:15 | 2570069 Whoa Dammit
Whoa Dammit's picture

When will the PIIGS figure out things are not going to get better for them if they keep playing the banker's game?

 

Thu, 06/28/2012 - 14:21 | 2570095 john39
john39's picture

since the bankers own the "leaders" the Piigs will do exactly what the bankers want until every last piece of value of stolen and stripped...  then the start a war and pull the plug.

Thu, 06/28/2012 - 14:18 | 2570087 dojufitz
dojufitz's picture

Have a meeting to agree to devalue all currencies against Gold massively.....remember Gold prices Fiat....not the other way around....Gold then is No#1 assest and kept in vaults rejigs Govts ledger to make them Solvent...then Gold price is floating after revaluation.....and all Govts still get to keep their Gold.....and shrimps who delayed consumption and stacked laugh all the way to the bank....Debt problem solved.

Thu, 06/28/2012 - 15:30 | 2570483 Quinvarius
Quinvarius's picture

The solution is so easy.  But it makes the assumption that certain people would not become massive losers due massive amounts of gold they borrowed from the government and sold on the market.

We are back to banks being all LTCMed up and raging at the free markets.

Thu, 06/28/2012 - 14:23 | 2570088 TomGa
TomGa's picture

"The women. How much for the women?"

Thu, 06/28/2012 - 14:41 | 2570228 Ted Baker
Ted Baker's picture

GREAT ZH WE ARE FINALLY TALKING LIKE FOR LIKE AND IN THE SAME WAVELENGTH - ALTHOUGH PHYSICS LAWS WILL BREAK....COMMON LIABILITY OF SHORT MATURITY BACKED WITH GOLD IS THE ONLY TOOL LEFT IN THE BOX AND FRAU MERKEL KNOWS IT INDEED...ALLES KLARE WONDERWARD!!!!!!!! THE REST IS RUBISH AND MEDIA TWIST..

Thu, 06/28/2012 - 15:50 | 2570645 GMadScientist
GMadScientist's picture

Come now....surely they have something they can hock? Pride? Firstborn? Ah...naming rights!

Welcome to Santorini by Shittibank.

Thu, 06/28/2012 - 17:52 | 2571294 o-antonio-maria
o-antonio-maria's picture

Gold as collateral? I doubt that this might be the game. Spain has 281.6 tones of gold, a merely 11 264 000 000 euros value. Ten times less tha banking bail-out for now....

Thu, 06/28/2012 - 22:19 | 2572029 omi
omi's picture

By the way, what happened to USSR gold? 

USSR had shitload of debt

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