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Flowcharting The ECB's Known Unknown Next Steps

Tyler Durden's picture


The ECB's announcement that it stands ready to act, first despised then embraced by the market, has left as many questions as it answers. Barclays has prepared a simple flowchart of the known unknowns from what has been discussed so far - starting from our premise that things have to get a lot worse before they get better since any action is contingent on countries (cough Spain cough) first losing face requesting help from the EFSF.



Source: Barclays

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Wed, 08/08/2012 - 13:45 | 2688277 GMan_
GMan_'s picture

We Will Do EVERYTHING possible to keep the Euro. And Believe me it will be enough... SPX > 1400 hahhahah

Wed, 08/08/2012 - 13:51 | 2688297 magpie
magpie's picture

300 $ Oil ?

Wed, 08/08/2012 - 13:53 | 2688306 Hype Alert
Hype Alert's picture

Go for it!  Must Stop Deflation!!

Wed, 08/08/2012 - 14:55 | 2688543 AldousHuxley
AldousHuxley's picture

they are going to print until Soros bets against them.


Any undervalued Euro stock tips?


Spain market is at 15 year lows.....

Wed, 08/08/2012 - 14:44 | 2688487 FL_Conservative
FL_Conservative's picture

Can anyone please explain to me what this red color means on my stock screen?  I'm puzzled because the numbers aren't green.....and, I mean, they're always supposed to be green, aren't they?  I thought that was what the program was????????????????

Wed, 08/08/2012 - 13:51 | 2688290 ebworthen
ebworthen's picture

Where is the "Subordinate all senior bond-holders and beg Bernanke to buy Eurobonds" box?

Wed, 08/08/2012 - 13:52 | 2688300 Hype Alert
Hype Alert's picture

Oops, another cut.

Spain, Italy Ratings Cut at DBRS as Debt Crisis Intensifies


Wed, 08/08/2012 - 13:53 | 2688304 Financial_Guard...
Financial_Guardian_Angel's picture

It's all nonsense. They know, down to every last little central cockroacher, that there is no real fix.

The answer has alway been kick the can, let me make my $$ and get out of dodge before it colapses. It's a big boy game of musical chairs, and we aint invited to the party... AMIRIGHT?

Wed, 08/08/2012 - 14:01 | 2688324 MsCreant
MsCreant's picture

There is no fix. These fuckers (pols) have agreed to be the folks in place, pretending to fix it. As in "They signed on for the job."

Think on that a while. What natural selection processes have to be in place to get this cast of clowns in the clown seats?

Wed, 08/08/2012 - 14:12 | 2688376 walküre
walküre's picture

Oh it's by natural selection alright. The kind where they literally write the book on the selection process.

Wed, 08/08/2012 - 14:46 | 2688491 MsCreant
MsCreant's picture

Knowing what little I know, I would not take the job.

Wed, 08/08/2012 - 14:51 | 2688516 walküre
walküre's picture

Because of your morals and values. Those in charge don't have any which is why we're in this mess.

Wed, 08/08/2012 - 13:54 | 2688310 Al Huxley
Al Huxley's picture

It's like flowcharting a trip down the Niagara river and over the falls.  Sure, there are a few different paths you can take, but they all end in the same place.

Wed, 08/08/2012 - 14:03 | 2688345 MsCreant
MsCreant's picture



Though in all seriousness, if we lower our standards and be happy with surviving, some of us might actually be able to make it to shore, and help others too, while the rest go over. Not saying I'll make it, but we gotta try and we have to help others where we can. That is all that is left. 

Wed, 08/08/2012 - 14:46 | 2688493 Al Huxley
Al Huxley's picture

Wish I shared your optimism, but I'm not sure anybody's going to make it to shore this time, or maybe that surviving this trip's going to have more to do with luck and being right place right time than being prepared.  Hope I'm wrong...

Wed, 08/08/2012 - 13:55 | 2688312 Remington IV
Remington IV's picture

Hope and Change

Wed, 08/08/2012 - 14:00 | 2688330 timbo_em
timbo_em's picture

Barclays forgets that if the ECB spends one more Euro on its SMP then German politicians (and not just the backbenchers) will go postal and demand Draghi to resign. So is Draghi ready to piss off the ECB's largest shareholder?

Wed, 08/08/2012 - 14:09 | 2688360 i8emallup
i8emallup's picture

No, Germans know they have to print, otherwise forget about euro system that Germany relies on for its export strength, just like China knows they have to buy US assets.  

Greece is about to scab off and whither away in terms of obligations to Germany, it will take a bit longer for Spain and Italy, but the Euro system was designed to prevent war, not poverty.

Wed, 08/08/2012 - 14:41 | 2688477 timbo_em
timbo_em's picture

I agree that the ECB has to print to keep the Euro alive and keep the German export bubble alive. Yet, if one looks at the recent comments from German politicians, esp. the conservatives who want to get re-elected in 09/2013, expect outrage once the Draghi presses Ctrl P.

Wed, 08/08/2012 - 14:06 | 2688337 Dr. Engali
Dr. Engali's picture

Where does WWIII fit into the chart?

Wed, 08/08/2012 - 14:03 | 2688346 highwaytoserfdom
highwaytoserfdom's picture

LOL at the Keyanisans. The Germans have intergrated East Germany, lived through the Wiemar and understand the economics that allows tryanary. The banksters and the talking head financial terrorist are in economic terms on the one hand sincurist and on the other criminal gamblers.      Yes Germany saves and now 1 in 10 jobs in the US are German based.   

Wed, 08/08/2012 - 14:06 | 2688350 MsCreant
MsCreant's picture

Ben and his bank will eat bonds and put the good ole USA on the hook for it. Put that in the chart.

Wed, 08/08/2012 - 14:12 | 2688373 Commander Cody
Commander Cody's picture

I love flowcharts.

Wed, 08/08/2012 - 14:14 | 2688379 Hype Alert
Hype Alert's picture

Say it isn't so.

"The euro weakened against its most-traded counterparts as a drop in German industrial production, lower U.K. growth forecasts and ratings cuts for Spain and Italy raised concern Europe’s sovereign-debt crisis is worsening. "

“It’s still keeping us negative on the euro over the next two or three quarters.”




Wed, 08/08/2012 - 14:17 | 2688392 walküre
walküre's picture


Silver at $28 is cheap as dirt. Gold at $1600 is cheap.

I have seen the future and it ain't pretty unless you have PMs and if you're name is Draghi, you should stop worrying about hair loss.

Wed, 08/08/2012 - 14:19 | 2688403 vertexa
vertexa's picture


Food Doom: Supermarkets looting in Spain; First The Spanish city of Girona has decided to lock supermarket rubbish bins to stop people scavenging for food!!


Is happening all over Again ..

like on argentina on 2001 .. now is happening on spain

Union leaders in Spain loot a supermarket ,

they call it “Expropriation” in order to supply a community

food center, for people who cant afford the basics



Wed, 08/08/2012 - 14:39 | 2688463 walküre
walküre's picture

The unions need to march to Brussels and stop en-route in Strassbourg.

Only a concerted effort by European unions will end the madness and put the banksters in the deepest darkest dungeons where they belong.

Wed, 08/08/2012 - 14:43 | 2688485 Scalaris
Scalaris's picture

More unanswered questions = more bullishness.

Unspecificity is promptly substituted by anticipatory hopium, via conjecturable bullshit.


Or is there a different reason for Dow rallying 1200 pts since June 1st?


Wed, 08/08/2012 - 15:26 | 2688657 Remington IV
Remington IV's picture

get the guns and ammo ready

Wed, 08/08/2012 - 22:07 | 2689737 GoldbugVariation
GoldbugVariation's picture

1.  EFSF purchases in primary market -> primary market auctions at low yields successful, bond price high

2.  Reality sets in -> yields rise, value of bonds held by EFSF falls on a mark-to-market basis

3.  ECB purchases in secondary market -> yields fall again (especially if ECB announces its action so private sector front-runs it), value of bonds held by EFSF (and existing bonds held by ECB) rises

4.  Austerity/conditionality limit GDP growth of debtor nations -> yields rise, value of bonds held by EFSF and ECB fall on a mark-to-market basis

Seems to me like EFSF is guaranteed to lost money, classic "buy high, sell low" strategy.  ECB purchasing in the secondary market will stem EFSF losses for a period, so ECB purchases can be justified to the guarantor nations as being in their interests too.  But eventually - who knows when - this will all have to be paid for as the losses will be real.



Thu, 08/09/2012 - 01:15 | 2690129 Peter K
Peter K's picture

But then the ECB/Euroland can re-roll out the "redemption" fund idea and keep the ponzi going for another couple of months. And so on, and so on :)

Remember, it's just a matter of time (caugh, caugh) before Euroland starts generating real GDP above the long term rates of interest that they are paying on their existing and new borrowing. :)

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